Company: PHAT
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0000950170-25-034183
Chunk: 350

Company: Phathom Pharmaceuticals, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 8
Chunk 350
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 ultimately be sold to the end user and returned, and (2) the limited returns history on which the estimated returns rate is based. The reserve for product returns is sensitive to the level of inventory in the distribution channel, which could exceed future market demand and be subject to return.

    How We Addressed the Matter in Our Audit
    To test the reserve for product returns, we performed audit procedures that included, among others, testing the accuracy and completeness of the underlying data used in the calculations and evaluating the assumptions used by management to estimate the Company’s reserves. We tested the industry data used in the calculation of the estimated returns rate by inspecting industry publications. In addition, we tested the Company’s analysis of inventory held at various stages in the distribution channel. We obtained third-party confirmation of prescription data and tested inventory in the distribution channel reported by significant customers. We also inspected agreements with significant customers to validate the rights of return and performed inquiries with management, including the Commercial and Legal departments, regarding any changes to the terms and conditions of customer contracts. We also performed a sensitivity analysis over the Company’s returns rate to assess the effect of changes in assumptions.

/s/ Ernst & Young LLP                                                                    

We have served as the Company’s auditor since 2019. 

Iselin, New Jersey

March 6, 2025

F-3

PHATHOM PHARMACEUTICALS, INC.

Balance Sheets 

(in thousands, except share and par value amounts)

    December 31,2024

    December 31,2023

    Assets

    Current assets:

    Cash and cash equivalents
     
    $
    297,263

    $
    381,393

    Prepaid expenses and other current assets

    20,866

    13,194

    Accounts receivable, net

    38,797

    1,637

    Inventory

    3,208

    1,208

    Total current assets

    360,134

    397,432

    Property and equipment, net

    1,476

    2,146

    Operating lease right-of-use assets

    613

    1,475

    Restricted cash

    2,862

    2,863

    Inventory, non-current

    11,540

    8,234

    Other long-term assets

    1,693

    1,692

    Total assets