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Why Shares of Phathom Pharmaceutical Jumped This Week

What happened

Shares of Phathom Pharmaceuticals (PHAT 6.74%) were up 44.6% this past week, according to data provided by S&P Global Market Intelligence. The stock closed last Friday at $8.61, then closed at $12.36 on Friday. Despite the rise, the stock is down nearly 40% from its 52-week high of $19.95. 

So what

Phathom is a clinical-stage biotech company that specializes in treating gastrointestinal tract disorders. In 2019, it was spun off from Takeda Pharmaceuticals and Frazier Healthcare.

Its lead therapy is Vonoprazan, a potassium-competitive acid blocker. The drug’s possible approval by the Food and Drug Administration (FDA) as a treatment for erosive esophagitis has been pushed back because the regulator had concerns about trace levels of nitrosamine impurities in the drug, the company said on Jan. 3.

A few days later, Phathom announced positive Phase 3 trial information regarding the drug as a treatment for symptomatic non-erosive gastroesophageal reflux disease (NERD). Its the third positive Phase 3 trial for Vonoprazan, all on different indications. The company had hoped to launch the drug in the U.S. market this quarter, and if the company can solve its safety issues regarding the drug, it has the chance to be a blockbuster.

Now what

Investors are reading between the lines to see if perhaps the company is close to fixing its problems regarding Vonoprazan. It’s a risky stock at this point. The company reported a loss of $51.1 million in the third quarter up from $36.7 million in the same period last year. Phathom’s management has said that it has enough cash on hand to last it through 2024.

Jim Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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