Rhythm Pharmaceuticals Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 5, 2025

Key Takeaways

  • Positive Sentiment: Solid global sales growth for Emcypreia in Bardet-Biedl syndrome with a 29% sequential revenue increase and steady patient uptake.
  • Positive Sentiment: Positive Phase III results for cetaminotide in acquired hypothalamic obesity (19.8% placebo-adjusted BMI reduction) and Phase II readout for the first next-generation compound showing up to 9% BMI decrease, enabling planned U.S. and EU filings in Q3 2025.
  • Positive Sentiment: Completed an oversubscribed $189 million equity raise in July, boosting cash to $291 million and securing at least a 24-month runway for R&D and commercial expansion.
  • Positive Sentiment: International momentum accelerating with reimbursed Emcypreia access in over 20 countries and growing early access programs for hypothalamic obesity in France and Italy.
  • Negative Sentiment: Q2 net loss of $0.75 per share reflects rising non-GAAP R&D and SG&A expenses—up 14% and 18% sequentially due to formulation work, auto-injector development, and headcount growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Rhythm Pharmaceuticals Q2 2025
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Q2 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

Operator

You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Connolly, Investor Relations. Please go ahead.

David Connolly
David Connolly
Head - IR & Corporate Communications at Rhythm Pharmaceuticals

Thank you, Tanya. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com. This morning, we issued a press release that provides our Q2 financial results and a business update, and that press release is available on our website. Our agenda is listed on slide two.

David Connolly
David Connolly
Head - IR & Corporate Communications at Rhythm Pharmaceuticals

On the call today are David Meager, our Chairman, Chief Executive Officer, and President Jennifer Lee, Executive Vice President, Head of North America Hunter Smith, Chief Financial Officer and Jan Mazzabro, Executive Vice President, Head of International is on the line joining us from Europe. On slide three, I'll remind you that this call contains remarks concerning future expectations, plans and prospects, which constitute forward looking statements. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed on our most recent annual or quarterly reports on file with the SEC. In addition, any forward looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent dates. We specifically disclaim any obligation to update such statements.

David Connolly
David Connolly
Head - IR & Corporate Communications at Rhythm Pharmaceuticals

With that, I'll turn the call over to David Meeker, who will begin on slide five.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Thank you, Dave. Good morning, everybody. Thank you for joining. Today marks the first earnings call where we can truly start mapping the long term future of Rhythm. Early startups beyond the simple struggle to survive often don't have the luxury of looking longer term.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

At Rhythm, we have more than survived and in quarter two we laid the foundation for significant future growth. I'll briefly review those elements on this call. We had another solid quarter of VVS sales growth, Why is that important? We're now three years post launch of an extremely promising but very challenging opportunity. Our North American international teams have entered a classic ultra rare disease community with all the challenges they face, from lack of disease awareness, difficulty getting to a diagnosis expert, through to gaining access to the only approved medication.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

The projected epidemiology seems right. The patients are benefiting, and the health care system is working with us. All of that translates to sustainable, steady growth, which is what you are seeing this quarter. We expect BBS will be an important part of these quarterly earnings calls for the next fifteen years. In terms of significance, I don't think we have had a more impactful quarter.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

The phase three readout of cetaminotide and acquired hypothalamic obesity, and the phase three readout of the first of our two next generation compounds, sets us on course for our next phase of growth. Although we previously reported those results, I will briefly review them, they are worth revisiting. We had a productive meeting with the FDA, the first in person meeting in five years, and we are on track to complete US and European regulatory filings in Q3. We will update you upon acceptance of the filings. Finally, we're very well capitalized following our recent oversubscribed $189,000,000 raise.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

On slide six, I remind you again of the meaningful opportunities ahead of us. BBS with an estimated five thousand patients in The US and similar numbers in Europe, acquired hypoglycemic obesity with five thousand to ten thousand patients in The US, and as noted, a growing level of confidence in the upper range of that number, with similar numbers estimated for Europe. Japan opportunity looks equally promising. Finally, we look forward to the MN8 readout in the first quarter of next year. Importantly, we have the time to fully develop these opportunities.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Setmelanotide composition of matter patent is up in 02/1932, but importantly, the formulation patents extend to 2034 in The US. Our next generation compounds will extend that protection to 2,040 plus. On slide seven, we want to share a little more color as to what the patients are experiencing. 30 patients or their caregivers who participated in our phase three trial of cetlanotide in acquired hypothalamic obesity, participated in a qualitative one hour interview. These results were presented at ENDO last month.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

I encourage you to read the representative quotes on the slide, I'm not going to read them, but these individuals who may have been living a relatively normal life prior to their injury, brain tumor, in most of these cases, suddenly were confronted with rapid weight gain, increased hunger, a severe preoccupation with food, all accompanied by a lack of control. Once on treatment, they could, as they described it, feel good and find joy in their lives again. On slide eight, you can see that of the 30 patients participating in the interviews, they almost all experienced the increase in hunger, the increase in fatigue, and a decrease in their physical activity. This disease is not about simply adding a few additional kilograms. Moving to slide nine.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

The cetmelanotide phase III acquired hypothalamic obesity results we reported out in April were hugely validating, both in terms of the underlying biology. This is a disease driven by impaired MC4R signaling, and the effect of cetmelanotide, a functional analog of the endogenous hormone alpha MSH, which had a consistent and meaningful impact on the primary and key secondary endpoints. As shown here, the placebo adjusted difference was 19.8% reduction in BMI. Importantly, this result was consistent across all age groups in both male and female patients. We were equally excited to get the results of the Phase II BIVIMELIGON trial.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

These were the first results in patients, and we are learning. As shown on slide 10, the placebo cohort gained weight, there was a clear dose response, and the six hundred milligram cohort decreased their BMI by more than 9%. On slide 11, as you remember, we made our best attempt to draw an apples to apples comparison with the cetamlanotide data at twelve and sixteen weeks from the phase II and III trials in acquired hypoglycemic obesity in patients aged 12 and above. As you can see, the patients decreased their BMI by 9.710.1% at twelve and sixteen weeks, respectively, as compared to 9.3% for the six hundred milligram dose cohort at fourteen weeks in an intent to treat analysis. We expect six hundred milligrams will be our target dose going into Phase III trials.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

We will request an end of Phase II meeting with the FDA and request scientific advice from the CHMP of the EMA to share the data and gain alignment on the design of the Phase III trial and a path to registration. Finally, Algarfield, our CSO, and I had the privilege of joining John and his team at the IMPROVE meeting in Prague. He will describe in greater detail, but it is a unique event focused on MC4R pathway diseases. While the meeting was more genetically while the prior meetings were more genetically focused, this meeting had significant discussions about HO and a sharing of some of the early real world treatment experience in Europe. The fact that approximately 150 physicians from around Europe would attend a Rhythm sponsored meeting speaks to the quality of the science, which was shared, and the level of trust Jan and his team have built with that community.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Finally, slide 13 highlights a number of the upcoming milestones. We remain on track for US and EMEA filings this quarter for semolantide in HO. Our goal is to disclose preliminary results from the Phase II Prader Willi trial before the end of the year. We aim to complete enrollment of the seven eighteen weekly Phase II study in HO patients 2026. We'll also release data, top line data, from the Japanese cohort from our Phase III alpha acquired HO trial in Q1, and we will release top line data from the M and A trial in Q1.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

We aim to complete enrollment of a congenital HO trial in the 2026, and finally we will initiate our Phase III study with BIVMELAGON in acquired HO in 2026, and we'll further refine the timing once we have feedback from regulators. With that, I will now turn the call over to Jen.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

Thank you, David. I'm gonna be starting today on slide 15. June 2025 marked the launch of Encepria in BBS. Community continues to grow at a steady pace, and we have delivered consistent and steady progress in establishing Encereus the first and only therapy that addresses the underlying cause of hyperphagia, a pathological hunger that leads to abnormal food seeking behavior, and severe obesity in patients with rare MC4R pathway diseases like BBS. We had a strong second quarter, and we continue to see solid growth in new prescriptions and new patient starts, driven by our fine tuned patient identification efforts.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

We are seeing steady growth in new first time prescribers, and repeat prescribers are writing prescriptions for second patients and more following a positive first experience with MCFRI. With the label expansion down to two years of age received late last year, we are now seeing more patients younger than 18 come on therapy the last two quarters. And importantly, our teams are preparing to launch Encefri in hypothalamic obesity, pending FDA approval. I'll touch on each of these positive themes from the quarter. Next slide.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

First, prescribers. In the second quarter, we saw continued growth in the number of Encequidri prescribers for BBS patients. We recorded a 38% growth in the cumulative number of BBS prescribers from Q2 twenty twenty four to Q2 to twenty twenty five, as well as a 9% growth in the cumulative number of BVS prescribers from Q1 twenty twenty five to 2025. Next slide. The FDA approved label expansion down to two years of age enabled us to renew engagement across physicians who treat younger patients.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

We leveraged the expanded indication to amplify a strong message that Emsivri, due to its efficacy and safety, can be used in patients as young as two years of age, differentiating MC4R diseases and their early onset obesity from the population with general obesity. This focused messaging resulted in a growth in prescriptions coming from both the pediatric and adolescent patients in Q2. Forty percent of prescriptions in the quarter were for patients 12 years of age, up from twenty seven percent in Q1. And twenty seven percent of prescriptions in the quarter were for patients between 12 and less than 18 years of age, up from twenty three percent in Q1. These positive trends stem from a combination of patients younger than six potentially waiting on their label expansion, as well as moving older children and adolescents onto treatment.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

Though we saw positive contribution of prescriptions from younger patients due to our focused messaging around the label expansion, we expect this label expansion to be a minimal incremental opportunity for us moving forward. Over these last three years, BBS commercial performance has continued to be strong. With improved understanding throughout the community of the impact of early onset hyperphagia and severe obesity, BBS has been differentiated from general obesity. Physicians are engaged, diagnosing patients and writing prescriptions for M. Ciprian.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

Payers also appreciate the difference. And while we face similar challenges faced by any rare disease therapy, payers are providing coverage of Opensivri for these patients. And most importantly, patients are starting and staying on therapy and seeing benefits. Next slide. We are excited about the next stage of Rhythm's potential growth in hypothalamic obesity, leveraging what we have learned and put in place since the BBS launch.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

As David outlined, we are confident that the number of US patients with acquired hypoglycemic obesity is in the upper bound of our five thousand to ten thousand prevalence estimate. We are approaching this as a specialty launch focused on endocrinologists, both adult and pediatric. Our ongoing physician profiling and patient identification efforts are underway, and we remain excited to launch upon approval. We look forward to providing you more details on the HO launch readiness efforts on September 24 during our in person event in Boston, which will also be webcasted. Stay tuned for registration details and feel free to contact Dave Connolly. With that, I'll turn the call over to Jan.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

Thank you, Jennifer. I begin on slide 20. And we are pleased to report that IMC Re is now available for BBS and or POMCV power deficiencies, either as fully reimbursed therapy for an inpatient sales in more than 20 countries outside The United States. This also includes two countries where we have achieved pre EMA approval, paid only access for patients with hypothalamic obesity. We are seeing a steady increase in the overall number of patients on in series in the international region, as we are very pleased with the results of the second quarter.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

The main growth drivers for the international region this quarter were in sales in approved indications DBS and POMCV par deficiencies, as they made up the larger increase in patient numbers, and pay early access for HO patients in France and Italy, which drove the largest percentage increase in sequential quarterly growth. Reimbursed out HO patients now account for a meaningful percentage of total reimbursed patients in the international region. As a reminder, in France and Italy, these early access programs allow patients to gain access to federal reimbursement before the approval in Europe. Both programs are progressing well and seeing increases in patient therapy. And the patients appear to be benefiting as well.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

Last but not least, we are seeing additional countries come online in terms of named patient cells. We have talked about Turkey and Greece previously. And news this quarter, are seeing patients from Poland and The Czech Republic. And in Japan, we are building out our team with a focus on regulatory, medical affairs, marketing and market access. Next slide.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

On slide 21 are more details on the third IMPROVE meeting where approximately 150 physicians, scientists and researchers gathered to learn from one another. Attendees came from 19 countries, including Japan. Reasons support this conference, but the scientific agenda is built by a panel of leading experts, co chaired this year by Professor Jesus Argente from Spain and Professor Sadaf Faroukhi from The UK. The scientific agenda is built on plenary lectures, peer to peer scientific exchange and sharing of best practices. The scope of the agenda has grown over the years too.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

Initially, it focused on genetic pathway diseases and BBS, and now it includes HO. There were also 43 poster presentations and three impactful workshops. Participants attended two of these three workshops, which covered optimal care for rare MC4R pathway diseases, multi disciplinary care and treatment perspectives for patients younger than six, and comorbidities and communications for patients with acquired HO. And of the poster presentations, the committee selected three winners: the results from a European retrospective study on monogenic obesity, the DICANS hyperphagia questionnaire as a screening tool for monogenic obesity and an assay for variants in the ASIP gene. As the only medical and scientific conference focused on MC4R pathway diseases, improved has turned into an important opportunity for so many experts to get together.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

Nearly forty percent of attendees were practicing endocrinologists and more than twenty five percent were pediatricians. And the feedback was overwhelmingly positive. Important themes emerged at discussion points this year: the uniqueness of MC4 pathway disease, the early onset of obesity in these patients at a young age as a key for diagnosis and of course hyperphagia. These face to face discussions are helping these physicians to change their clinical practice when it comes to how they identify, diagnose and treat these patients. With improved and many additional efforts, ReSOM is playing an important part in growing the International Committee of MC4R Pathway Disease Experts.

Yann Mazabraud
Yann Mazabraud
Executive VP & Head of International at Rhythm Pharmaceuticals

And now I will turn the call over to Hunter.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Thank you, Jan. Today's business update is positive based on a strong quarter for global commercial revenue, successful data readouts, as well as an upsized and oversubscribed equity offering in July. Let's start with the balance sheet on slide 23. We ended the 2025 with $291,000,000 in cash on hand, and last month we completed the equity offering in which we sold approximately 2,400,000.0 shares of common stock at $85 per share, resulting in net proceeds to Rhythm of $189,200,000 We are grateful to have received so much support from many existing, but also several new long only and healthcare dedicated investors in this transaction and on an ongoing basis. We note here that we paid $40,000,000 to LG Chem in July, the second of two tranches associated with the licensing agreement for Bivamelagon that was announced in January 2024.

Hunter Smith
CFO at Rhythm Pharmaceuticals

This cash payment in July is not reflected in our cash on hand at June 30. The remaining obligations to LG are post approval milestones and royalties. The fixed consideration component of the agreement is fully satisfied. Rhythm's cash on hand, combined with the net proceeds from last month's stock offering, forecasted revenues from the anticipated launch of Emsivri and acquired HO, as well as ongoing revenue from approved indications, and currently planned R and D and commercial activity provides cash runway of at least twenty four months. This level of liquidity indicates that Rhythm's balance sheet is the strongest in its history.

Hunter Smith
CFO at Rhythm Pharmaceuticals

On slide 24, global revenue for the second quarter was 48,500,000.0, an increase of 29% quarter over quarter. 66% of Q2 revenue or $32,000,000 was generated in The United States, and 34% or 16,500,000.0 was generated outside The United States. Quarter over quarter, the global number of patients on therapy, reimbursed patients on therapy, increased by approximately 12%. US revenue increased $7,600,000 or 31% over the prior quarter. The number of reimbursed patients on therapy in The US continued to grow at mid single digit percentage rates.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Recall that in Q1, Rhythm specialty pharmacy dispensed 4,100,000 more product to patients than it ordered from Rhythm, and inventory days on hand dropped below ten days. In the second quarter, the difference between products shipped to our specialty pharmacy exceeded product dispensed to patients by approximately 500,000 a more modest but positive effect on revenue in the quarter. The specialty pharmacy carried approximately ten days of inventory on hand at June 30. Excluding these inventory factors, sequential US revenue growth from patient demand in Q2 was approximately 3,000,000 or roughly 10.5% from 28.5 to $31,500,000. Outside The United States, quarter over quarter growth was approximately 3,200,000 or 24%.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Appreciation of the euro and other currencies contributed approximately 1,200,000 of this increase. Geographically, revenue growth was primarily driven by increased sales in France, The UK, and Italy, as well as increased named patient sales in various countries, the latter of which is more variable quarter to quarter. Looking at growth by indication, as Jan mentioned, our approved indications of BBS, POMC, and Leppar provided the larger increase in patient numbers in the quarter. Yet early access programs for patients with hypothalamic obesity in France and Italy drove the higher percentage increase in patient growth. Reimbursed hypothalamic obesity patients now account for a meaningful percentage of total reimbursed patients in Rhythm's international region.

Hunter Smith
CFO at Rhythm Pharmaceuticals

On slide 25, in comparison to Q2 twenty twenty four, net product revenues increased $19,400,000 or 67% for the 2024. Gross to net for US sales was 83.9%, in line with levels we have experienced historically. Cost of sales this quarter was 11.4% of net product revenues. We generally expect cost of sales to be between 10% to 12% of net product revenues for the foreseeable future, with variation due to how our inventory balances are changing and the corresponding capitalization of labor and overhead costs. R and D expenses were $42,300,000 for Q2 compared to $30,200,000 in the same quarter last year.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Sequentially, R and D expenses increased $5,300,000 or 14% over Q1 twenty twenty five. This increase was primarily due to CMC work related to formulation for Bivomelagon and auto injector development for RM718. Increased headcount and stock compensation also contributed to this increase in expenses. Clinical trial costs were relatively flat quarter over quarter. SG and A expenses were $45,900,000 for Q2 twenty twenty five, as compared to $36,400,000 in Q2 last year.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Sequentially, SG and A expenses increased by $6,900,000 or approximately 18% compared to Q1 twenty twenty five. Increased spending in SG and A from Q1 to Q2 is due to increased headcount and marketing costs. The headcount costs are inclusive of stock compensation. For the second quarter twenty twenty five, there were 63,700,000.0 weighted average common shares outstanding. Cash used in operations was approximately 22,000,000 during the second quarter.

Hunter Smith
CFO at Rhythm Pharmaceuticals

Our GAAP EPS for the 2025 was a net loss per basic and diluted share of $0.75 including $02 per share from accrued dividends on convertible preferred stock of $1,300,000 On slide 26, there's a little more detail on operating expenses for the quarter and guidance for the full year. For the second quarter, operating expenses of 88,200,000.0 include a total of 15,900,000.0 in stock based compensation. Non GAAP operating expense guidance for the full year of 2025 remains unchanged. We anticipate approximately $285,000,000 to $315,000,000 in non GAAP operating expenses comprised of non GAAP SG and A expenses of 135,000,000 to 145,000,000, and non GAAP R and D expenses of 150,000,000 to $170,000,000 With that, I'll turn the call back over to David.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Thanks, Hunter. So I think as you've heard, we're pleased, really pleased, report out a good quarter, and incredibly excited about the future ahead of us. So with that, we'll open it up for questions. Operator?

Operator

Certainly. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. Your line is open.

Tazeen Ahmad
Tazeen Ahmad
MD - US Equity Research at Bank of America

Hi, guys. Good morning. Congrats on a good quarter. I wanted to maybe ask a question on what I think is your next upcoming pipeline catalyst. That's the Prader Willi data.

Tazeen Ahmad
Tazeen Ahmad
MD - US Equity Research at Bank of America

David, can you just frame for us what this study is? Is it an exploratory study or is this a high conviction study? Because there is a history semolinazapine looked at in this indication before, and I think people would just appreciate getting a sense about how you're feeling about what data would be good data, and what the next step would be if it is good data. Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, thanks, Christine. Yeah, I've characterized this as exploratory. As you noted, I mean, our original, our initial study done back in 2019, quote unquote, was negative, meaning it did not show a positive result. But as we've explained, that was a difficult trial design and we thought the dose was too low, the timing was too short and there was good reasoning based on the underlying biology of the greater WILI to believe that the MC4R pathway plays an important role. So the current trial, open label study, the dosing as in our last study had a maximum dose of two point five.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

This study goes up to all patients are dose escalated to five milligrams as tolerated. And the duration that trial patients were on for a maximum of sort of four to eight weeks on a certain dose. This trial will go out six months and we'll look at the data at that point. What would be good and the reason I characterize it exploratory, I've characterized and will continue to characterize it as a fiftyfifty, a very legitimate fiftyfifty. The reason for that is I think we have high conviction about the underlying biology and the importance of the MC4 pathway in the disease, but we know the disease is challenging and a lot of drugs have failed and there's a behavioral component to this disease which can often create noise or obscure a potential beneficial effect.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

So those are things that give me pause and that's why I would characterize this as exploratory.

Tazeen Ahmad
Tazeen Ahmad
MD - US Equity Research at Bank of America

And how many patients worth of data would that be?

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, so the trial is where we can enroll up to 30, it's an open label trial, we won't enroll up to a full 30 patients. Our goal is to get north of 10 patients, so 10 to 20 patients and hopefully have a meaningful or ability to say something meaningful by the end of the year. Again, a disease like this, you don't start talking after two or three patients, there's just too much noise in the system and you can't be confident in what you're seeing. So our goal is to say something by the end of the quarter, which hopefully will be based on data we can have confidence in. Sorry, end of the year, apologies.

Tazeen Ahmad
Tazeen Ahmad
MD - US Equity Research at Bank of America

End of the year. Okay, thank you.

Operator

And one moment for our next question. Our next question will be coming from Mike Old of Morgan Stanley. Mike, your line is open.

Michael Ulz
Michael Ulz
Executive Director - Biotechnology Equity Research at Morgan Stanley

Yep, good morning. Thanks for taking the question, and congratulations on all the progress. Maybe just a quick follow-up on the Prader Willi question. I appreciate the color on the number of patients, but can you give us a sense on what sort of level of follow-up you're expecting? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Follow-up, again with all these many diseases, but certainly in rare diseases, if patients are benefiting you keep them on treatment. You don't tend to run even an early stage study and just stop at the end of it. That's challenging for these patients and doesn't make sense. Some of the most valuable data you gain is a long term follow-up of these patients, and your ultimate submission is a totality of the evidence approach, so you may have your phase three, but it's strongly supported perhaps by one year to two year data out of your early treated patients. So these patients, six months is the point at which we will look at the data and begin to try to determine what we have, but those patients will continue on beyond six months.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

And they'll continue on indefinitely as long as we believe that there is an effect and we are proceeding with overall clinical development for Prader Will.

Michael Ulz
Michael Ulz
Executive Director - Biotechnology Equity Research at Morgan Stanley

Got it, that's helpful. Maybe I could just ask a quick follow-up. Assuming if the data is positive, how do you think about some of your next generation MC4Rs like Bivomegolon? Is that something you consider taking forward in this indication as well? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, again it's Beni. I think historically we've said that most if not all of our subsequent development work would be done with our next generations. It just makes sense for multiple reasons, potentially better drugs, longer patent license, etcetera. However, if the data is compelling and we're convinced, the possibility of going immediately with cetamlanotide is absolutely on the table. And so we'll see how we do with a timing getting seven up through this initial proof of concept period and how that matches up with the proof of concept data we get on Praetor Willi in our current trial and then we'll make final decisions.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

But we'll certainly be, if we're going forward, we will for certain be doing it with our next gen, I think one or both of our next generation molecules. The question is do we go rapidly with semilanotide.

Michael Ulz
Michael Ulz
Executive Director - Biotechnology Equity Research at Morgan Stanley

Thanks very much.

Operator

And our next question will be coming from Phil Nadeau of TD Cowen. Your line is open Phil.

Philip Nadeau
MD - Health Care & Biotechnology Research Analyst at TD Cowen

Good morning. Congrats on the productive quarter. A follow-up from us on PREDAWALL E2, just circling back on what is good data. It seems like there's a few elements to the data we'll all be looking at, BMI decreases, reductions in hunger as well as the consistency across the patient population. David, could you give us some sense as to how you, what you want to see to move forward?

Philip Nadeau
MD - Health Care & Biotechnology Research Analyst at TD Cowen

What would be good data in terms of weight loss effects on hunger and consistency?

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, yeah, thanks, I didn't answer that earlier. So I think the primary endpoint here, aside from safety and tolerability, is weight. As we all know, Slano's drug was approved on a hyperphagia endpoint and that was a huge breakthrough for the community because it was the first drug approved and it did in a sense define a pathway for hyperphagia as an endpoint to be approved. And we know our drug, by definition, the way biology works is we provide a satiety signal, so we decrease the hyperphagia and we increase the energy expenditure. So if we get weight loss, BMI decreased, almost by definition we should have an improvement in hyperphagia.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

The magnitude we're looking for here is different than in our other MC4R pathway diseases, and that's I think because of the overlay about the other challenges with this disease. But nothing gives you weight loss in this disease. So anything 5% or greater is approval based on FDA guidelines, some for obesity drugs. So that would be our target and that's at a year. So our goal would be to have confidence that we were seeing a change in BMI that either was at or moving consistently and steadily toward at minimum a 5% decrease in BMI.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

The one caveat on the hyperphagia data, we're collecting all of that data. We also use an HQCT which was an endpoint that Celano got approved on. It's an uncontrolled study and so those kind of patient reported outcomes are a little more challenging to interpret perhaps in that setting, but we will have that data as well.

Philip Nadeau
MD - Health Care & Biotechnology Research Analyst at TD Cowen

Great, and one quick housekeeping question for Hunter, if I might. In terms of OpEx, your guidance for the non GAAP operating expenses is very clear, but in terms of stock comp, there's $15,900,000 in Q2. I think you had like $30,000,000 in stock comp for all of 2024. So how should we think about stock comp going forward in the 2025?

Hunter Smith
CFO at Rhythm Pharmaceuticals

I think a fair question, Phil. Obviously, we've seen a significant increase in stock comp due to the change in the price of the equity of Rhythm. And so I don't think we're in a position to give full year guidance, but obviously, an increase of essentially $3,000,000 quarter over quarter is significant and beyond our direct control because it's just driven by the stock price.

Philip Nadeau
MD - Health Care & Biotechnology Research Analyst at TD Cowen

Got it. So this is a good baseline to use as we think it's

Hunter Smith
CFO at Rhythm Pharmaceuticals

a fair baseline as we move forward. Yeah.

Philip Nadeau
MD - Health Care & Biotechnology Research Analyst at TD Cowen

Perfect. Thank you.

Operator

And our next question will come from David Arkela of Wells Fargo. Your line is open, Derek.

Derek Archila
Derek Archila
MD & Equity Research Analyst - Biotechnology at Wells Fargo

Hey, good morning. It's Derek on. Just had one question for David here and then one for Hunter. So David, just will you be providing updated estimates for HO prevalence during the commercial day of September? And I guess, what gets you confident that they're at the higher end of the range, as you said in the prepared remarks?

Derek Archila
Derek Archila
MD & Equity Research Analyst - Biotechnology at Wells Fargo

And then just a quick one for Hunter, just in terms of the growth that you've been reporting ex US for the past two quarters, how should we be thinking about that moving forward? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

So Derek, I'm gonna plead needing a little more time. We haven't defined the exact agenda. Our goal is to give you as best sense we can about our current understanding of HO. Obviously a lot of work's being done. Jennifer's team is doing a lot of work now in the field.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

I think on the epi side of it, as we've said, we've moved from sort of our initial estimates of five to 10 to quote unquote being more confident that we're at the higher end of that five to 10,000. And it's comprised of a number of things. Mean, you start out as you do in rare diseases, you've got whatever is out there in the literature, we've done claims data work now in The US and Germany most specifically, but Japan, so we have more than one country that's informing that. And then a big part, and this was a big part of our BBS revised estimate when we did it, was teams being out in the field and validating some of those numbers. And it's not so much that you validate it on a number by number standpoint, but there's a gestalt that this feels about right.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

So I'm not sure, it's a long way of saying, I'm not sure we're gonna update our assessment at that point. We can reconfirm where we are, but we are learning a lot and we'll try to give you a sense at that day where we are in terms of what the field teams are learning, probably that's the biggest piece which will be new.

Hunter Smith
CFO at Rhythm Pharmaceuticals

And Derek, respect to revenue growth, I think you know, we did highlight the currency effect during the quarter, which was responsible for about 36% of the growth, so 1,200,000 up 3.2. So that's obviously something that we can't predict, and I certainly wouldn't model. But separate from that, I would say we have had a strong run-in the past two quarters in international. Q3 in general can be a little quieter in terms of new patient starts in Europe, just the vacation effect that people have, and that has an effect on growth, and not named patient sales are also less predictable. Some countries take a shipment for a few months at a clip, and there was certainly some effect of that in Q2, so it's not as clear when those types of countries come back in for another set of shipments.

Hunter Smith
CFO at Rhythm Pharmaceuticals

But overall, we're pleased with the growth in international, and we expect it to continue.

Derek Archila
Derek Archila
MD & Equity Research Analyst - Biotechnology at Wells Fargo

Great. Thank you very much, guys.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Thanks, Eric.

Operator

And as a reminder, in the interest of time, please limit yourself to one question. Our next question will be coming from Corinne Johnson of Goldman Sachs. Your line is open.

Corinne Johnson
Corinne Johnson
Vice President at Goldman Sachs

Good morning, everyone. Maybe on the other clinical update expected later this year, you don't have that first patient enrolled in Part C. Could you provide any clarity on the nature of the data you could possibly share later this year, recognizing that enrollment is going to continue into next year? And then on the age of use, I think you said that there is meaningful ex US utilization, but do you have any visibility on whether there are age of patients getting delivery off label here in The US? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, so on the Part C piece of this, what we've said, and we've moved our, my goal originally as you know, or many of you know, was to say something about seven eighteen by the end of the year. It's taken us longer to get up and running, and we are up and running now, but that's delayed us a bit. We moved the completing enrollment to quote unquote first quarter. So that means that it's extremely unlikely that we'll have anything to say about it is an open label study, but that we will say anything about 07/18 by the end of the year. It's more likely that will be into 2026.

Jennifer Lee
Jennifer Lee
EVP & Head - North America at Rhythm Pharmaceuticals

And regarding the HO off label usage in The US, I would say that right now we do have a couple. It's like a handful, very minimal, just in terms of what we have received from an Rx perspective to date in that indication.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

It's fair to say, rare diseases in The US, off label uses, people are the good news is they're very allegiant payers, very allegiant to label, but on the flip side there isn't the kind of off label use you might see in some other diseases.

Operator

Thank you. And our next question will be coming from Paul Matteis of Stifel. Your line is open, Paul.

Paul Matteis
Paul Matteis
MD & Head - Therapeutics Research at Stifel Financial Corp

Hey, good morning. Thanks for taking my question. Just one question on seven '18. You guys did a good job with the Bivinoligon study on preparing us for the caveats to comparison and some of the demographic differences between trials that will sort of inform how you can stack up these drugs. For the 07/18 study, I know you're getting started with the portion now, but what are you expecting for the patient mix?

Paul Matteis
Paul Matteis
MD & Head - Therapeutics Research at Stifel Financial Corp

And what are some of the things we should keep in mind as we sort of gauge whether or not this is matching the efficacy of your other drugs? Thank you.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, that's a good question, Paul. Mean, it's similar. I think, again, it's a 12 and older trial, so you can expect us to present the data in a very similar way, you've already gotten out the reference points, because we've done that work, and are hopeful that we'll be in range, again, recognizing very small number of patients, relatively short duration, so that you can have noise around it, we're looking for seven eighteen to be in a similar range. I'll just remind people, again, biggest question about seven eighteen is not is it a good MC4 agonist, and we know that. The question is do we have the right dose, Because again, we're moving into a weekly pharmacokinetic profile here, and so that's different.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

I think that's the part that hopefully this trial will sort out and give us a good feeling for.

Paul Matteis
Paul Matteis
MD & Head - Therapeutics Research at Stifel Financial Corp

Do you think you've maxed out the efficacy of this mechanism at this point, or could greater exposure actually drive more benefit?

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

I do think we've maxed it out. We've done enough. We've treated enough different populations. I'm not convinced. There's occasional patients who may need a higher dose and we don't dose based on weight and obviously there's a very big difference from a fifty kilogram pediatric patient and a two hundred kilogram adult patient.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Those are the kind of differences where dose may on the margin make an issue, but I think your basic question is have we maxed out? Yeah, I think we've likely maxed out.

Paul Matteis
Paul Matteis
MD & Head - Therapeutics Research at Stifel Financial Corp

Fair enough. Thank you.

Operator

And our next question will be coming from Seamus Fernandez of Guggenheim. Your line is open.

Seamus Fernandez
Senior MD & Equity Research Analyst at Guggenheim Partners

Thanks for the question. David, I think in the past we've talked about the opportunity for rhythm to become, you know, quite a bit more important, in the overall scheme of the, you know, sort of specialty market. Can you just help us understand a little bit better the opportunity that you see? You've talked about BBS as a 15 opportunity for growth. AHO in the mix, how do you think about the opportunity there?

Seamus Fernandez
Senior MD & Equity Research Analyst at Guggenheim Partners

You're talking about 10,000 patients, but it seems like over time as you expand the market opportunity, we could see numbers north of that over time and obviously the company potentially becoming more important from a strategic perspective. So just wanted to get a better sense of how you're thinking about the overall launch characteristics, in AHO and the markets that you're gonna most urgently reach into, but the opportunities that you see beyond just the, you know, sort of standard, Japan, Europe and US opportunity? Thanks so much.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, thanks, Jen. That is a bit of theme of today's call in the sense of how does rhythm grow. So you started where I would start is on BBS and we have, by now a lot of confidence in the BBS numbers. It will grow over time and I think the biggest variable for me is not so much will we get to some projected peak kind of revenue and maybe these kind of rare disease opportunities often don't peak, but they just tend to grow which is why I picked fifteen years out of the year. Of course I don't have any insight that it's going to be fifteen, but what I do know about rare diseases, and this is from my past history, is they do grow for decades, and they do tend to continue to grow for decades.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

And they grow both inside the markets where you started, but then you also continue to add markets. And we've been very focused from the beginning of being global, and we realized that it was going to be hard, and you start slow. Jan highlighted this morning, we have a new patient or patients, there are a handful of patients in The Czech Republic and Poland, that's how it works. And you start with one or two, and those first patients are incredibly important because they signal a willingness of the system to start paying and to work with you and the like. It just builds over time.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

So that's VBS. Acquired HO, bigger epidemiology, we had questions this morning and we'll continue to get a lot of questions about how big could this be. I think where we are now, a lot of confidence in our current projections. Could it be bigger? Absolutely.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Will it have some of the same dynamics as these kind of ultra rare diseases? AHL sits a little bit in the middle. It's absolutely a rare disease, quite rare, five to ten thousand puts it in the very rare category, but it's very specialty like, given the concentration, more patients diagnosed, an attentive specialty up by definition. AHO So may have a slightly different ramp, if you will, steeper than BBS because of those factors, but the other aspects of AHO are going to be very similar, which is think about steady growth over time. Don't think about inflecting this is something that's explode out of the gates the way some of these quote unquote specialty opportunities do.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

That's going to be more rare like, but it will be steeper and it will grow for a very long time. And we may be wrong in the epidemiology, meaning that it could be larger, and given enough time, I think that's likely. And then finally, back to HO, again, opening up new countries. I mean, we're in Japan, but we're still early in terms of assessing Asia and other markets like that. And so we will get there, but that's how you grow an opportunity like this.

Operator

Thank you. And one moment for our next question, which will be coming from Dennis Ding of Jefferies. Dennis, your line is open.

Dennis Ding
Dennis Ding
VP - Equity Research Analyst at Jefferies Financial Group

Hi, good morning. Thanks for taking my question. I had one on Trader Willie. So just given the availability of VICAT and the fact that your Phase two is being done at a single center, what sort of guidance are you giving Doctor. Miller in terms of who to enroll in the study versus maybe who she uses VICAT?

Dennis Ding
Dennis Ding
VP - Equity Research Analyst at Jefferies Financial Group

Specifically, like what types of patients would go on to the study And you think that would make it more difficult potentially for set melanotype to show an efficacy signal there? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah, and Dennis, it's a really good question. So the guidance is the inclusion criteria, and inclusion criteria is it's Prader Willi patients six and above. There's no exclusion for the use of Vicard, so if patients are stable on that drug, they're allowed in that trial and we will have some of those patients. One is we were interested in what that combination would look like and two, it's standard of care now and that's the world we'd be moving into to develop this drug, that's not uninteresting. So that's the guidance.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

I think who she's enrolling, there's a group of patients who, so diabetics for example, it's more challenging to use Vicart in that population. I mean it inhibits insulin release and so it can make your diabetes worse. So I already know we have some patients with diabetes in this open label study and that's, yeah, your point is could those be more challenging patients? And we know by definition, yeah, diabetics can be more challenging, particularly in a weight loss study and they have other stuff going on which makes them difficult to manage. So, yeah, that's it.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

It's going to be much more of a mix and we'll have to analyze it with that context.

Dennis Ding
Dennis Ding
VP - Equity Research Analyst at Jefferies Financial Group

Okay, got it. Understood. Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Thank you.

Operator

One moment, Cory. Our next question. Our next question will be coming from Raghuram Selvaraju of H. C. Wainwright and Company. Your line is open.

Raghuram Selvaraju
MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC

Very much for taking my question. This pertains to CMC. I was just wondering if you could comment on the status of the development of the smaller pill for Bivamilagon and also the key objectives in your auto injector development work for RM718, including but not limited to the possibility of developing a formulation that might be dosable less frequently than once weekly? Thank you.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

So in terms of smaller pill, that's not a big challenge right now in the sense that the bigger challenge, which the CMC group has surmounted, was getting the formulation change. So our current two hundred milligram pill, we can now get six hundred milligrams in a single pill. So basically a 90% drug load in that single pill, going down to four hundred and two hundred milligram pills with 90% drug load just means you're gonna have a smaller pill and that technically, in a sense, that's done. The auto injector goal, it's for a weekly formulation. We do not have any plans at this point, everything's possible and that's a natural path to continue to try to extend your frequency of injection, but for the moment this is all completely aimed at our weekly program.

Raghuram Selvaraju
MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC

Thank you.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Thank you.

Operator

And our next question will be coming from Fizai Khershid of Leerink Partners. Your line is open.

Heidi Jacobson
Equity Research Associate at Leerink Partners

Hi, this is Heidi Jacobson on for Cecil Kershed. Thanks for taking our question. Can you share any updated thoughts on the Phase III study design for Bipomelagon in acquired H. Including dose, study size, and what is left to get done before that study can get rolling? Thanks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Yeah. So what's left to get done is we need to our meeting request to the FDA and the EMA, and then we submit a briefing package with a synopsis or proposed trial design that they react to. We may or may not get a meeting or a call to see what happens with that. But that's step one in terms of the regulatory process. I think in terms of design, we've learned a lot about studying HO, so we'll draft off that.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

You can think about a design that's highly similar. We've talked about my wish list in the past, which is I would like to see if we don't have to do a double blinded study. We have a historical control group now from our current Phase III study, which we'll propose as a potential comparator. We'll see whether the FDA accepts that or not. Lots of advantages to that.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

May also go back in asking for a readout at an earlier time point. You will definitely need to provide data on patients treated for a year, but we'll propose an earlier readout. So those are the kind of things, I think that's clearly wish list. I mean, the FDA has been pretty standard in terms of their responses to this kind of thing. So we may well end up with a study that looks more like our current age old trial. Are the things we're thinking about.

Heidi Jacobson
Equity Research Associate at Leerink Partners

Got it. Thank you.

Operator

And I would now like to turn the conference back to David Meeker for closing remarks.

David Meeker
David Meeker
Chairman, President & CEO at Rhythm Pharmaceuticals

Okay, well, everyone again for turning in. So, we're really pleased where we are. We're making good progress. Not a lot to do. So we look forward to our next update. Thank you.

Operator

And this concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
Analysts
    • Hunter Smith
      CFO at Rhythm Pharmaceuticals
    • Tazeen Ahmad
      MD - US Equity Research at Bank of America
    • Michael Ulz
      Executive Director - Biotechnology Equity Research at Morgan Stanley
    • Philip Nadeau
      MD - Health Care & Biotechnology Research Analyst at TD Cowen
    • Derek Archila
      MD & Equity Research Analyst - Biotechnology at Wells Fargo
    • Corinne Johnson
      Vice President at Goldman Sachs
    • Paul Matteis
      MD & Head - Therapeutics Research at Stifel Financial Corp
    • Seamus Fernandez
      Senior MD & Equity Research Analyst at Guggenheim Partners
    • Dennis Ding
      VP - Equity Research Analyst at Jefferies Financial Group
    • Raghuram Selvaraju
      MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC
    • Heidi Jacobson
      Equity Research Associate at Leerink Partners
Powered by Quartr