Q3 2024 Rhythm Pharmaceuticals Inc Earnings Call
Thank you.
Good day and thank you for standing by.
Welcome to the rhythm pharmaceutical start quarter 2024 earnings conference call. At this time, I'm a participant on a list-moly mode.
At the speaker's presentation there will be a question and answer session. So as the question during the session you will need to press star one one on your telephone. You will then hear an automated message of advising your hand is raised. To withdraw your question please for star one one again. Please advise that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to you this week of today, David Connolly, Head of Investor Relations and Corporate Communications. Please go ahead.
David Connolly: Thank you Shannon. I'm Dave Connolly here at rhythm farmer's circles for those of you participating on the conference call. Our slides can be accessed and interled by going to the investor section of our website IR.rhythmtx.com.
This afternoon, we issued our press release that provides our third quarter 2020-24 financial results and business update, and that press release is available on our website. We are coming to you today from San Antonio, the site of obesity week, the annual meeting of the obesity society.
David Connolly: Wilson on Fly 2 is our agenda. On the call today our David Meeker, our Chairman, Chief Executive Officer, President.
David Connolly: and Jennifer Lee, Executive Vice President, Head of North America, Hunter Smith, Chief Financial Officer, and Yann Mazabraud, Executive President, Head of International, is on the line joining us from Europe. On slide three, I'll remind you that this call contains
David Connolly: remarks concerning future expectations, plans and prospects which constitute forward-looking savings. Actual results make different materialy. From those indicated by these forward-looking savings as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC.
In addition, any forward-looking statements, representatives on our views, as of only today, and should not be relied upon in its representatives on the our views as of any...
David Connolly: subsequent dates.
David Connolly: We specifically disclaimer any obligation to update such statement.
Speaker Change: with that. I'll turn the call over David Meeker, who will begin on slide five.
David Meeker: Thank you David. So thank you all for joining today. We realize we're probably not the lead story today, November 5th, election day.
David Meeker: But we are really pleased with both the quarter and the progress we have made in 2024. We recognized at the start of 2024 this would be a year of execution with the highly anticipated redouts coming in 2025.
David Meeker: We have executed and in addition to the expected redouts, we have one unexpected redout which was presented today at the TOS meeting. In early look at the real world data in French hypopholamic obesity patients, I'll say a little more about that shortly.
David Meeker: As shown on slide five, we remain focused on our three main value drivers. First, the team continues to drive results through a strong execution of our global commercial strategy. Secondly, our position to expand this patient opportunity to include high-beth biomedical obesity, and we have increased confidence in the potential for this indication based on the new real world data.
David Meeker: and Jennifer, have a good day to the early access program in France.
David Meeker: We remain on track to report top line data from our Phase 3 trial and acquired Hyperflime Equipity in the first half of 2025.
David Meeker: Third, we continue to make progress with our MC4R Agnist pipeline with Dave Rake Data, presented at the obesity societies obesity week demonstrating potential new expansion opportunities in genetic indications.
David Meeker: and we continue to progress our next generation MC4R Agonis, the weekly RM718 in the oral and daily small molecule, during Melagon.
David Meeker: City Growth Continues with an in-sibry Revenants for the third quarter coming in at 33.3 million driven primarily by BBS sales globally. We continue to identify patients, physicians continue to prescribe in-sibry and payers are supporting access.
David Meeker: We have an experience rare disease team executing and challenging environments and I'm note we are only two years post approval in the US and continuing to introduce new markets internationally. It is early in the commercial lifespan of this opportunity.
David Meeker: Our clinical programs are progressing as we remain on track, report top-line data from the Phase 3 HOTRIL in the first half, 2020-5. The dropout rate remains less than 10%. We are targeting full enrollment of the Japanese cohort of patients by year-end.
David Meeker: Our small, molecule program has 50% of the targeted number of patients toast or in screening.
David Meeker: For the RM-718 study, we are completing the RAP and non-human primate toxicology studies, and we'll submit those along with an amendment to allow those in patients with hyperphalanic obesity for more than four weeks to the FDA.
David Meeker: We are targeting dosing the first type of lamb at the BC Patients with 718 and the first quarter of 2025.
David Meeker: We're doing this college day set from a beach to the week and I want to highlight two of our poster presentations. First, are the full results from the daybreak trial. This was an ambitious undertaking where we saw two of the real patients with genetic variants in any one of 30 genes, which literature suggested may be linked to the MC4AR pathway.
David Meeker: On slide 6, you can see the design of the two-part trial, and the open label part 1 we reported out last December, patients who lost 5% are more after 16 weeks were eligible to enter the double blind randomized withdrawal part 2, where patients were randomized 2-1 to either continue to set blind, set melanotype therapy or placebo for 24 weeks.
David Meeker: On the slide 7, you can see the patient demographics, 49, responder patients entered part 2 and 39 patients completed this part of the trial. We had equal numbers of adults in pediatric patients on average they lived with severe obesity based on their BMI or BMI disease measurements.
David Meeker: Slide 8 shows the summary results with a mean decrease in BMI of 12.4% in the 32 patients on continuous septimal anti-therapy for a total of 40 weeks.
David Meeker: and 84% of patients on setmelanotide maintained or further decreased their BMI beyond the initial 5% as opposed to only 29% of patients randomized to placebo during the 24-week stage two of the trial.
David Meeker: On slide 9, you can see the individual spaghetti plots for the four of these genes or gene groups. The blue lines represent sepmal antide, whereas the green lines represent the placebo patients.
David Meeker: Also note that scales on the graph for each gene are different and were adjusted to accommodate those patients with the greatest decrease in their BMI for that gene group.
David Meeker: I won't go through each of the panels, but if you look at the PHIP gene in the upper left, you can see the adult patients on the left and the pediatric patients on the right. In general, those continuing onset melanocytes have a good response, whereas the three patients randomized to placebo regained weight.
David Meeker: The PHIP gene was the gene with the highest overall percentage of responders, particularly in those who completed Part 1.
David Meeker: The key learnings from this trial are that there are patients who seem to have a clear response to sepmal antides suggesting their variant is impairing signaling through the MC4R pathway.
David Meeker: The challenge for future development will be identifying those patients with true loss of function variants, recognizing for many of these genes relatively little work has been done on the different variants, leaving most variants classified today as VOOS, or Variants of Unknown Significance.
David Meeker: Our expectation is that we will do additional research on one or more of these genes, but that work will be done with one or both of our second generation programs.
David Meeker: Now, I want to finish my introductory comments talking about HL.
David Meeker: We know there's a significant unmet medical need with no approved therapies We believe the prevalence is in the range of five to ten thousand patients in each of the US and Europe as we've described Previously and we believe there may be similar numbers of patients in Japan
David Meeker: Importantly, unlike BBS, most of these patients are diagnosed and under the care of endocrinologists.
David Meeker: We reported out Phase 2 data in mid-2022 and moved directly to the randomized placebo-controlled 60-week Phase 3 trial.
David Meeker: Both France and Italy, in recognition of the significant unmet medical need, the absence of approved therapies, and the strength of the Phase II data, in an unusual move, have made setmelanotide available through paid early access programs.
David Meeker: Patients from France began enrolling late last year, and Italian patients are just beginning to receive treatment under the program. Real-world data from the initial French patients, which was presented today at TOSS, is shown on slide 10.
David Meeker: Eight adult patients with a mean age of 31 who had undergone brain surgery 12 years earlier at the mean age of 19 have been followed for three to six months on semilanatide.
David Meeker: As you can see from the slide, they were severely affected with a mean BMI of 44. On average, these eight adult patients had a mean BMI decrease of 5.6% and 12.8% at one and three months, respectively, after initiating treatment.
David Meeker: Patients have continued to lose weight, with five patients who have reached the six-month time point experiencing a 21.3 percent, on average, decrease in their BMI.
David Meeker: We see this data as important for multiple reasons. It is the first new data we have presented since the original Phase 2 readout in 2022.
David Meeker: We had relatively few adult patients in the Phase II trial and almost no adults in the long-term extension, leaving us with an important unanswered question. Would adults be less responsive than children who are being treated in closer proximity to the onset of their HO?
David Meeker: This data set goes a long way in answering that question.
David Meeker: These patients were adults with a mean age of 31, as I said, who are on average 12 years out from the time of their injury.
David Meeker: The response to date has been consistent.
David Meeker: And that's one of the most remarkable things, is the consistency of the response, and robust, further strengthening our conviction in the importance of the MC4R pathway in this disorder and the potential role set melanotype may play in the management of high-performance obesity.
David Meeker: So, finally on slide 11 is a summary of our upcoming milestones, the PDUPA date for our U.S. and survey label expansion to include patients ages 2 to up to 6 years, old is December 26th, and Jennifer will touch on that.
David Meeker: Based on the progress of initial enrollment and sites opening, we expect to complete enrollment in the 12-patient Japanese cohort of our Phase III-acquired hypothalamic obesity trial by the end of this year.
David Meeker: We also expect to complete enrollment in two of the M&A substudies, PALM-C PCSK1-HETS and SH2B1, by the end of the year. We do not anticipate being able to achieve full enrollment in the other two substudies, LEP-R and SRC1.
David Meeker: In the first quarter of 2025, we anticipate we will complete enrollment in the 28-patient Phase II trial, evaluating Viva Melagon, and also in the first quarter, begin dosing patients with acquired hypothalamic obesity in Part C of our Phase I trial with a weekly MC4R agonist RM718.
David Meeker: And, as we have said many times, our top-line data readout from the Pivotal 120 patient cohort in our Global Phase III trials at Melanotide and Acquired Hypothalamic Obesity is on track for the first half of the year.
David Meeker: And with that, I'll turn the call over to Jennifer.
Jennifer Lee: Thank you, David. I will start today on slide 13.
Jennifer Lee: We are continuing to see growth in prescriptions, approvals for reimbursement, as well as increased breadth and depth amongst prescribers.
David Meeker: In the third quarter, we received approximately 100 new prescriptions and approximately 80 approvals for reimbursement, resulting in a steady increase of commercially reimbursed patients.
David Meeker: We are pleased with the sustained growth and the continued demand for a therapy that addresses the root cause of hyperphagia and severe obesity in BBS patients.
David Meeker: This growth is driven by increases in both the number of first-time prescribers as well as repeat prescribers. With positive experience with patients on MCIVRI, the number of physicians with two or more prescriptions continues to increase.
David Meeker: At any point in time in the future, this quarter or prior quarters first-time prescribers may become a repeat prescriber as they are now more in tune to recognizing the symptoms of BBS and diagnosing additional BBS patients in their practice.
David Meeker: As you would expect to see in rare diseases, these physicians are becoming experts in their city and region.
David Meeker: which helps to create a network of BBS disease experts throughout the nation to support the optimal care of BBS patients.
Jennifer Lee: The breakdown by specialty remains consistent with about half of prescribers falling into the endocrinologist bucket and about half in the primary care or pediatrician bucket with a small number of prescribers in other specialties including medical geneticists, nephrologists, and ophthalmologists.
Jennifer Lee: We remain pleased with the consistency of payer approvals as initial approvals for reimbursement continue at a steady pace.
Jennifer Lee: as have reauthorizations, which allow patients to maintain on therapy. Consistent with prior quarters, there remain a small number of denials for reauthorization, and we continue to work with patients and providers through the appeals process to regain reimbursement.
Jennifer Lee: Next slide.
Jennifer Lee: The recognition of the differentiation of BBS patients from the population with general obesity as well as the differentiation of incivory as a target therapy for BBS patients is appreciated by both ACPs and payers.
Jennifer Lee: To further support this differentiation, we are looking forward to potentially expanding the label from SIVRI to include patients as young as two years of age in the US in our current indication.
Jennifer Lee: Early onset obesity that goes untreated can lead to multiple comorbidities and negatively affect quality of life and life expectancy. We believe that treating patients at an early age will positively impact the lives of these children and their families.
Speaker Change: Last quarter, Yann reported the European Commission expanded the marketing authorization for MCIBRI to include children as young as two years of age.
Speaker Change: and the FDA has accepted with priority review our SNDA for the same expansion and assigned a PDUFA date of December 26, 2024.
Speaker Change: Our submission was based on our Phase 3 data in children that demonstrated a 3.04 mean reduction in BMI Z-score, a measure of body mass index deviation from what is considered normal.
Jennifer Lee: and an 18.4% mean reduction in BMI in 12 patients at 12 months onset melanocytes therapy.
Jennifer Lee: Approval in the U.S. on top of EMA authorization would reinforce NCIVIRY's unique position in the market and recognize and differentiate rare MC4 pathway diseases and associated hyperphagia and severe early onset obesity from general obesity.
Jennifer Lee: While the overall patient numbers may provide modest growth, we are excited about what this potential opportunity means for patients and their families.
Jennifer Lee: Early-onset obesity and hyperphagia-driven behaviors are more identifiable in children than in adults, and their caregivers are often more engaged and actively seeking answers. This will be an important and meaningful milestone for the BBS community.
Jennifer Lee: On to my final slide.
Jennifer Lee: We are preparing for a positive outcome in our phase three trial in acquired hypothalamic obesity and are investing to prepare for the next potential launch.
Jennifer Lee: We are engaging in market research to gain insights from physicians, payers, and patients and families and actively engaging with patient advocacy groups.
Jennifer Lee: Also, we are planning to expand our different field and support teams in 2025 as we anticipate increasing physician engagement efforts to provide education on acquired hypothalamic obesity.
Jennifer Lee: The unmet need in hypothalamic obesity is significant and there are no approved therapies.
Speaker Change: We look forward to sharing more details with you next year as we prepare for top-line data and get closer to a potential FDA submission and launch. I'll now turn it over to Yann to provide an update on the international region.
Speaker Change: Thank you, Jennifer. I will start from slide 17.
Yann Mazabraud: The international region is an important contributor to tourism success and this quarter we delivered a strong revenue growth.
Yann Mazabraud: IMSIBRI is now available for POMC, lipar, myelenic, or VBS, or both, in more than 15 countries outside the United States, with reimbursement through various government-administered programs on inpatient cells.
Jennifer Lee: The initial months for the BBS launches in Spain and Italy have started well, but the main drivers of revenues for the ex-US countries continue to be France and Germany.
Jennifer Lee: In Germany, our DBS launch is steady and mirrors the consistent growth pattern of the U.S. And we are benefiting from expanding the number of centers that are now treating DBS patients.
Speaker Change: As Jennifer mentioned, this summer the EMA expanded the marketing authorization for emceery to the treatment of children as young as two years old in approved indications.
Jennifer Lee: And last month, in Germany, the Federal Joint Committee, or GBA, voted to exclude emcee briefs for children 2 to 6 years old from the country's lifestyle exemption list, and thereby make it eligible for full reimbursement for both PPL and BBS.
Jennifer Lee: While this was expected, we are pleased that the committee entertained very little debate on this topic, which illustrates that Germany recognizes the need to treat patients with MC4R pathway disease because these rare diseases are distinct from general obesity.
Jennifer Lee: Talking about Germany, I would like to share an MCV success story from a German patient, one of several.
Jennifer Lee: One 12-year-old girl with BBS, with pronounced hyperphagia, a BMIZ score of plus 1.5, and the fear of needles.
Jennifer Lee: began therapy more than six months ago. At first, she refused injection, but our Rhythm at Home nursing team helped her overcome her fears and develop within a few weeks a routine for injection.
Jennifer Lee: After one month, she started to inject herself and now we see a normalized hyperphagia, normalized to what is considered healthy by her treating physician. She has lost 9.1 kilos and has now a normal body weight for her age.
Jennifer Lee: And importantly, her family reports that she has a new sense of independence she did not have before.
Jennifer Lee: Anecdotes like these from Germany and elsewhere in the international region underscore the difference we can make in many lives with MCV and also our patient support program.
Jennifer Lee: In France, the reimbursed early access program for BBS has been ongoing for more than one year now, while we continue to negotiate reimbursement with the authorities.
Jennifer Lee: Once we complete negotiation, we will be able to promote MCRE through physician engagement activities. We will be in a strong position to build on the success of the Early Access Program as we are extending the number of clinical centers with positive MCRE experience.
Jennifer Lee: Next slide.
Jennifer Lee: We also have in place paid early access programs in both France and Italy for patients with hypothalamic obesity.
Jennifer Lee: In France, we began treating patients earlier this year, and we are already seeing positive data reports, as David shared.
Jennifer Lee: We are quite pleased that patients with hypothalamic obesity have access to cefalanetide, are responding well to the therapy, and that treating physicians are reporting positive outcomes.
Jennifer Lee: The uptake of set melanocytes through this program has been increasing, with an approval decision process led by a joint federal multidisciplinary committee which meets monthly, a process that is similar to how access is allowed for patients with BBS.
Jennifer Lee: In Italy, we are seeing the first patients with hypothalamic obesity begin therapy with septum enalatide under the low 648 Early Access Program.
Jennifer Lee: The process is a little different than France, as the physician directly asks the Ministry of Health to enable his or her patients to participate in the program. Also this program is limited to patients between 6 years old and 24 years old whose hypothalamic obesity was caused by craniopharyngeal.
Jennifer Lee: Next slide.
Jennifer Lee: Our BBS launch is beginning this quarter in England and Wales, following the positive recommendation from NICE. We expect to start the first BBS patients on reimbursed therapy during the fourth quarter. We anticipate the uptake for NCB in the UK to be more measured than Germany, as the NICE recommendation limits reimbursement to patients who are younger than 18 years old when they begin therapy.
Jennifer Lee: In the UK, there are four National Health Service BBS specialized clinics that provide care for patients with BBS, two centers that treat adults and two centers that treat children.
Jennifer Lee: Each center sees a handful of patients with BBS each month, and we know that the treating physicians will discuss emcee-related therapy as a new option with these patients and families. If they decide to proceed, they will be educated on emcee-related therapy and trained on the daily administration.
Jennifer Lee: Following on the positive experience from our launch in Germany, we have commissioned a very comprehensive patient support program with nurses visiting homes, assisting in the administration, and addressing any questions or concerns.
Jennifer Lee: The BBS community of patients, families, physicians, and other members of the clinical care team have been very supportive of one another and supportive of RISM in our approval and launch efforts in England. We are very excited to bring them in Syria.
Jennifer Lee: Next slide and my last slide.
Jennifer Lee: One of our strategic priorities is to continue engagement with and support for the growing network of physicians who are becoming experts in rare MC4R pathway diseases.
Jennifer Lee: With that, I want to offer details on two events where we are focused on supporting and building up this network.
Jennifer Lee: On October 30th and 31st, we sponsored TRANSFORM, a scientific meeting designed to engage with and educate the experts of tomorrow, or physicians in the early part of their career, on rare MC4R pathway diseases.
Jennifer Lee: It was attended by 44 physicians from 14 countries.
Jennifer Lee: This event was endorsed by the European Association for the Study of Obesity, the European Society for Pediatric Endocrinology, and the European Society of Endocrinology, and co-chaired by Professor Volkan Yumuk, the President of the European Association for the Study of Obesity himself.
Speaker Change: And next week, we will have a strong presence at the 62nd Annual Meeting of the European Society for Pediatric Endocrinology, which is from November 16th to 18th in Liverpool.
Jennifer Lee: We are expecting strong attendance at our satellite symposium entitled Early Treatment of Hyperphagia and Early Onset Severe Obesity in Children with Rare MC4R Pathway Diseases with a focus on BBS and other rare MC4R pathway diseases.
Jennifer Lee: Professor Sadaf Faruqi of the University of Cambridge is the event chair, and she will be joined by Professor Philip Bills of the University College of London, among others.
Jennifer Lee: We also have three abstracts accepted for oral presentation, all on our sequencing data and analysis from RAW.
Jennifer Lee: our European Genetic Sequencing Program, as well as real-world data from the French Early Access Program for hypothalamic obesity. These new pediatric data are from pediatric patients with hypothalamic obesity following three to six months on set melanotype therapy. And now I turn the call over to Hunter.
Hunter Smith: Thank you, Yann.
Hunter Smith: Turn to slide 22.
Hunter Smith: Net revenue from global sales in observory continued to grow steadily and came in at thirty three point three million in Q3 As compared to twenty two point five million during the third quarter of last year
Jennifer Lee: On a sequential basis, Q3 revenue represents 14% growth over the second quarter of this year.
Jennifer Lee: U.S. revenue in the third quarter was $23.3 million, accounting for 70% of product revenue during the quarter and an increase of 8% in U.S. sales on a sequential basis over the second quarter.
Jennifer Lee: Driving this growth was an increase in the number of reimbursed patients on therapy and corresponding increase in volume of bio-dispense to patients. Growth to net for U.S. sales in the third quarter decreased slightly quarter over quarter to 85 percent, from 86 percent in the second quarter of the year.
Jennifer Lee: International revenue was $10 million, which accounted for 30% of product revenue and represented an increase of 35% over Q2. More than half of U.S. sales continue to come from the commercial launch in Germany and the early access programs for both PBS and HO in France.
Jennifer Lee: We are also seeing solid revenue contributions from main patient sales in several countries and the launches in Italy and Spain, which are still in their early phases but progressing well. We are now generating revenue in more than 15 countries outside the United States.
Jennifer Lee: Some of these countries received shipments on a more intermittent basis, once or twice a quarter, and hence we believe some of our Q3 revenue represented a pull forward of demand in Q4. Nonetheless, we're excited that we hit the $10 million mark on international quarterly revenue in Q3.
Jennifer Lee: Cost of sales during the quarter was $3.8 million, or approximately 11.5% of net product revenue, versus 10.1% of net product revenue in the second quarter of this year and 10.7% during the same quarter last year.
Jennifer Lee: The primary driver of COGS continues to be the 5% royalty to Ipsen under our licensing agreement for Percent Malanatide, as well as higher labor and overhead costs capitalized to inventory based on high production in Q2, which was expensed to COGS in Q3 based on shipments.
Jennifer Lee: R&D expenses were $37.9 million for the third quarter compared to $33.6 million during the third quarter of last year. Sequentially, we experienced a 25% increase from R&D expenses of $30.2 million in the second quarter.
Jennifer Lee: due to a $3 million benefit recorded for changes in scopes to the Daybreak and M&A trials during Q2.
Jennifer Lee: Plus, there were additional cost increases in both of those trials this quarter and increased manufacturing development work related to Bivimalagon, formerly known as LB54640.
Jennifer Lee: SG&A expenses were $35.4 million for the third quarter compared to $30.5 million for the same quarter last year.
Jennifer Lee: Q3 SG&A expenses represent a $1 million decrease sequentially versus $36.4 million for the second quarter of 2024. The quarter-over-quarter decrease was largely driven by a reduction in payroll taxes.
Jennifer Lee: Payroll tax expense based on changes in French equity tax laws for non-qualified options this quarter. For the third quarter, weighted average common shares outstanding were $61.2 million. Now let's move to slide 23.
Jennifer Lee: As of September 30, 2024, we reported $298.4 million in cash and cash equivalents.
Jennifer Lee: Cash used in operations was approximately $22.6 million in Q3. This was the first quarter as a public company in which Rhythm used less than $25 million in cash for operations, another significant milestone.
Jennifer Lee: The trailing 12-month quarterly average cash burn was approximately $28.7 million, so we continue to generate improvements in operating leverage as revenues grow. On a year-to-date basis, cash used for operations was $89.3 million, a reduction of 11 percent versus the comparable period of 2023.
Jennifer Lee: Third-quarter operating expenses included total stock-based compensation of $11 million for the quarter, compared to $10.4 million in the previous quarter. Reported GAAP EPS for the third quarter was a net loss for basic and diluted share of $0.73, which includes accrued dividends on convertible preferred stock of $1.3 million.
Jennifer Lee: As a reminder, this ongoing dividend accrual will be $1.3 million per quarter, or $0.2 cents per share.
Jennifer Lee: at the current share count. No cash dividends are payable prior to the end of the second quarter of 2026.
Jennifer Lee: Turn to slide 24.
Jennifer Lee: Today, with only one quarter remaining in the year, we have reduced our 2024 OPEX guidance to a range of $245 to $255 million, from the prior guidance range of $250 to $270 million.
Jennifer Lee: This updated guidance is comprised of R&D non-GAAP operating expenses of approximately $137 million and SG&A non-GAAP operating expenses of approximately $113 million, both of which represent midpoint numbers of these components in our updated estimated guidance range.
Jennifer Lee: Lastly, we continue to expect cash on hand to be sufficient to fund planned operations well into 2026, potentially beyond multiple value-creating milestones, including the top-line data readout from our Phase III trial in hypothalamic obesity currently planned for the first half of 2025.
Speaker Change: With that, I'll turn the call back over to David.
David: Thanks Hunter. So in summary I think you've heard a very good quarter and we're entering finishing the year and entering 2025 with a lot of momentum so we look forward to future updates. With that we'll open the call for Q&A.
Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again.
Speaker Change: Our first question comes from the line of Phil Nadeau with TD Cowan. Your line is now open.
Speaker Change: It's a little imprecise, and it depends, obviously, on the timing and the nature of these orders, but sometimes if they come late in the quarter, we think it's more attributable to the future quarter. So that's, we estimate that could be around a half a million bucks in Q3.
Speaker Change: Okay, that is very helpful. Thank you.
Speaker Change: And then second question, on the Daybreak Trial, congrats on the data. They continue to look strong. Can you talk about what you need to see to advance one of those populations to a pivotal study, and when you think you might be in a position to make a go, no-go decision on those populations? Thanks.
Speaker Change: So I think the general answer to that is for each of these genes, the better we can understand the variance, as I said in my remarks,
Jennifer Lee: in terms of defining which of the variants are true loss of function because to the extent that we can do that post hoc, you do improve the results.
Jennifer Lee: In other words, the...
Jennifer Lee: And right now, many of those loose patients, I'm sure, have benign variants, in which case they're...
Jennifer Lee: We wouldn't expect that to be driving their underlying disease. So that's the general comment is we've got to understand that better.
Jennifer Lee: A gene like PHIP, we have not a bad sense today. I think there's more work that can be done. That's a gene that has on the order of prevalence numbers, which again are soft, but sort of BBS-like in the order of 4,000. That's a gene we might look to go earlier on, but earlier would mean we would do it with a next-generation program.
Jennifer Lee: One or both of those would need to have cleared Phase 2.
Jennifer Lee: and H.O.
Speaker Change: That is very helpful. Congrats again on the progress, and thanks for taking our questions.
Jennifer Lee: That moves that out. That's a 2026 kind of activity, not a 2025, if we were to do that.
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
Speaker Change: Thank you. Our next question comes from the line of Derrick Archuleta with Wells Fargo. Your line is now open.
Derrick Archuleta: David Meeker, David Connolly, David Connolly,
Jennifer Lee: Hey guys, this is Adam on for Derek. Thanks for taking our questions today and congratulations on the quarter. Maybe just a couple on HO from us. Do you think real-world data from CRAN's HO patients will be predictive of what we can see in the phase 3 study in terms of BMI reduction? And then also the five patients who experienced weight loss at six months.
Jennifer Lee: Can you let us know which patients had previously been on GL1P? Thank you.
Jennifer Lee: I think that...
Speaker Change: Well, what we would say, the reason this data, I think, is so incredibly helpful, A, the original phase 2 was only 18 patients, one patient who didn't take the drug, so 17 patients who took the drug. Now we have another 8 patients, and what's most reassuring is literally every patient who has taken the drug with this diagnosis has had a good response. So, in terms of reading through to phase 3, consistency in any clinical trial is incredibly reassuring.
Jennifer Lee: The magnitude of the decrease now, I think, remarkably, we're seeing very good percent decreases in the BMI, but we've discouraged trying to stay out of the arms race around percent decrease. For these patients that have nothing, simply not gaining weight would be...
Jennifer Lee: victory for them. So, again, you know, we're seeing good percentage decrease, but the more important part of this is the consistency, and I think that predicts well for a positive outcome in the Phase 3 trial.
Jennifer Lee: And then for the five patients, I don't have the breakout.
Jennifer Lee: which of the patients were on the GLP-1 specifically, so I can't answer your question whether they were on it. But the doses they were on, of the four patients, one of the patients stopped the GLP-1 before they started the trial, so only three of them, of the eight, were actually on a GLP-1 during. And they were on, as I understood, for the treatment of their diabetes more than a specific attempt to get an obesity weight reduction. But beyond the drug, if they were losing, actively losing weight, they would not have been enrolled in this early access program.
Speaker Change: Got it. And then maybe just one more from us. At our dinner at Obesity Week, we had a KOL's...
Speaker Change: that noted that they believe that the HO population may be close to 5,000 to 10,000 or even above in the U.S. and they contributed that somewhat to many patients who have brain tumors who receive radiation may also end up with HO over time. Is this a patient population you've been aware of, and if so, do you have any estimates on how many of these patients may exist? Thank you.
Speaker Change: Yeah, I think so this whole area of HO injury and how do you get it is part of the evolution. We've focused on those who have the benign
Speaker Change: moment of injury, if you will, when they go to surgery. There are other ways you can injure the hypothalamus. We hear anecdotally from physicians that they see a similar picture in some of those patients, including radiation patients. So I think there's more to be learned there. We're very interested, obviously, in learning more about that. I have no...
Jennifer Lee: estimate as to what number of patients there might be, and I think there's more to be learned about their response, but the anecdote you're describing, we've heard that.
Speaker Change: Got it. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Corinne Johnson with Goldman Sachs. Your line is now open.
Corinne Johnson: Hi, good afternoon guys. Maybe a couple of questions from us.
Corinne Johnson: First, how should we think about the contribution from Europe as we look into 2025 and do you anticipate that it will become sort of a larger share of overall revenue as we get further into that launch? And then could you also provide us some updates on what you're seeing with respect to adherence and compliance in the BBS patient population? Thanks.
Speaker Change: So I'll take this first question. Corinne, I think, you know, we built a solid base in International and we continue to
Corinne Johnson: We continue to foresee growth there, but the degree to which it keeps pace with the U.S., which is starting from a larger base, I think is going to be variable quarter to quarter.
Speaker Change: Okay.
Speaker Change: Thank you. Thank you.
Speaker Change: Okay, and the second question was on adherence. So are you talking about the discon rate? Is that what you're focusing on? Yeah, exactly.
Speaker Change: Yeah, so that's remained, as we said last time, we've checked up closer to 30% in general and that hasn't changed. Maybe Jennifer can provide a little more color on what we're doing to continue to work that problem because I think we have some good insight and can do something.
Speaker Change: Yeah.
Jennifer Lee: To answer your question, I think like when we take a look at the discons, there's different things that we have learned. Many of these are coming early.
Jennifer Lee: And with this insight, we have continued to really focus a lot of our efforts just in terms of educating and really setting clear expectations. Initially, it was more on the AE profile of the drug, but we also recognized that we needed to provide more expectation around the timing of efficacy impact in patients as well. So we learn as we go just in terms of being able to maintain those patients on therapy.
Jennifer Lee: And I think one other piece that is also important is that, you know, there are a lot of different reasons that a patient's discon, there may be.
Speaker Change: different reasons from a life perspective that may make them potentially interested in coming back. The vast majority of these patients are consented. So our patient support teams are able to maintain engagement with them. And we have seen patients who have been interested in getting back on therapy as well.
Speaker Change: There you go.
Speaker Change: Thank you. Our next question comes from the line of Simas Fernandez with Guggenheim Securities. Your line is now open.
Simas Fernandez: Thanks so much. So just wanted to talk a little bit about, a little bit more about HO and the pipeline assets.
Simas Fernandez: just to start with the data coming out of the eight patients in France.
Simas Fernandez: Obviously, an impressive result in the adult population.
Simas Fernandez: I wanted to just get a little bit more color on the opportunity to continue expanding the early access.
Speaker Change: with that data. Is that something that you're able to mobilize and then bring more patients on to therapy sooner?
Speaker Change: with that result. And then the second question is really on the pipeline. You know, obviously I know there's a strong view that Insibri or setmelanotide will continue to be very durable, but I think the opportunity to avoid the MC1 receptor.
Speaker Change: is certainly quite compelling from our conversations with physicians. So just wanted to get a better sense of how those trials are progressing. And, you know,
Speaker Change: when you would hope to really share those data. I believe you said mid-year in the past, but didn't know if there are any updates from a recruitment perspective and execution. Thanks so much.
Speaker Change: Yeah, so Yann, do you want to provide a little color on how the HO process is working and your expectation? Is that going to ramp or stay steady? What would you say?
Speaker Change: So, thank you. Thank you.
Yann Mazabraud: Thank you. Yes, so for sure in France it will help. I think local physicians always...
Speaker Change: like to have local data on top of global data, so it will help. For sure, it will also help the takeoff in Italy as well. The French and Italian experts talk a lot and look at their data, respectively.
Speaker Change: And on top of that, I can say that there are not so many countries with large early access programs like France and Italy, but there are other smaller countries.
Yann Mazabraud: where we have named patient cells which will look at this data and likely decide to start some patients which are currently already identified and in need.
Speaker Change: Great, and we'd be glad to hear your second question Seamus on the next generation programs which we agree with you are incredibly important.
Speaker Change: So, for the weekly, the 718, as we've said previously, there's no new update there in the sense that we need to submit the rodent, the six-month rodent, and the nine-month non-human primate. Those studies are wrapping up. We need to submit those reports to the FDA.
Speaker Change: and also, at the same time, an amendment which will allow us to treat patients for more than four weeks, which is how the original protocol was written, and as we said, we had trouble. The physicians didn't think they could recruit if patients could only get the drug for four weeks because the first four weeks are quite intense.
Speaker Change: So the bottom line is obviously we want to be able to provide longer term treatment for those patients. So that's the 718 program. Our goal, we've moved it out a bit, is based on the timing of that amendment submission, is to dose the first patients in that program in 718.
Speaker Change: The Bivimelagon, we had a very slow start. We got an early, back mid-year, I think, first patient in, and then we had a tough summer and just getting sites open. I won't go through all the laundry list of reasons, but we have the sites open now and we're up and rolling. And so, the update today is that, you know, we've got more than 50 patients.
Speaker Change: Complete enrollment of that trial in the first quarter, which means that a mid-year readout is still possible for the Small Molecule Program.
Speaker Change: Great. Thanks so much for the update. And then maybe just as one final question.
Speaker Change: You know, the opportunity for HO in Japan is something that you've talked about in the past.
Speaker Change: Thank you.
Speaker Change: Give us a sense of how the HO opportunity is likely to emerge there and is it something that you still feel confident that it is something that RHYTHM can take on on its own.
Speaker Change: Yeah, so, like we said, we're at Obesity Week. I met with Dr. Tanaka, who is the lead investigator in Japan today.
Speaker Change: As I highlighted in my script, our expectation is that we'll complete enrollment of the twelve Japanese patients required by the end of this year. He was very positive, again, about how this is going. The sites are working well together. So, if you're asking about our optimism about Japan, I think it's not at all diminished. If anything, it's increased.
Speaker Change: Can we handle it? Again, I think rare diseases, if you have the right people, again, it's not so much a function of the size of the country necessarily, but if you have the right people, and I think we do as a starting point, you can go it alone. And so that's still our plan today.
Speaker Change: Thanks so much. Congrats on the quarter.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Dagon Ha with CFO. Your line is now open.
Speaker Change: Hey, good afternoon guys. Thanks for taking the questions and congrats on all the data this week. I guess I'll just focus more on the hypothalamic obesity side. Just a couple of questions there. For 718 Part C data, before you go in there, is there any intention from you guys to share the Phase 1 Healthy Volunteer, just so we can get a sense for the PK as well as the hyperpigmentation side of the profile?
Speaker Change: As we think about the milligon...
Speaker Change: I guess when you think about the trial itself, how much of an overlap is there between the trial participating in that, I guess, sites participating in that Bivimelagon signal trial versus the phase 3 hypothalamic obesity? I recall it was over-enrolled, and so I would imagine some of that could bleed into, if you will, and perhaps fast-track the Bivimelagon enrollment.
Speaker Change: and then...
Speaker Change: I guess lastly, just thinking about the broader opportunity, going back to Phil's question, Daybreak and M&A, just wanted to get your sense on sort of the commercial opportunity here. Are you guys, you know, thinking about hypothalamic obesity and maybe going after something like a profitability goal first, or would you be looking after more expansion opportunities by going after M&A and Daybreak subsets that might be promising? Thanks so much.
Speaker Change: Okay, I may have to come back to that last time, just to clarify. So, your first question was about 718 Part C. Will we share the A and B parts? We haven't made any plans for that. I'm not saying we won't. We'll have to think a little bit about where we would do that in terms of the meeting. But, you know,
Speaker Change: We have a number of sites which were not part of the original, or not part of our Phase 3 HO trial. As you said, we did overrule, but most of these sites are new, but I can't tell you for sure that we don't have some overlap there, so maybe we can get back to you offline.
Speaker Change: I think the question of a tradeoff between investment in a registrational strategy for M&A and daybreak and profitability.
Speaker Change: and what the revenue that we would be generating from HO at that time would be. So there's a lot of moving parts. We can consistently try to evaluate them, you know, prospectively, but I think it's a little too early to...
Speaker Change: to say. What I would say is, as we've said repeatedly,
Speaker Change: We are very dilution sensitive as a company. We're all shareholders here. And at the same time, we recognize that the biggest opportunity for the company is to, you know, maximize the area under the curve in terms of generating cash flow.
Speaker Change: for our shareholders. So we're trying to optimize all those parts for the best we can.
Speaker Change: Great, well congrats again. Yep, yep, sounds good and have a safe trip back home.
Speaker Change: Thank you. Our next question comes from the line of Whitney Ijeom with Canaccord Genuity. Your line is now open.
Whitney Ijeom: Hey guys, thanks for taking the question.
Whitney Ijeom: Just one follow-up on the... Can you guys still hear me okay?
Whitney Ijeom: We'll follow up on the Japan opportunity, can you remind us, I know you said the filing in Japan is based on the analysis of the overall study plus the Japanese cohort, is it the full Japanese cohort out to a year of follow-up or is there potential for an interim cut with less follow-up of the Japanese cohort in particular?
Speaker Change: Yeah, it's the former, so what we've been clear about is the first 120 patients will form the basis for the EU and the U.S. filing.
Speaker Change: And then there's an additional 11 patients, which was the over-enrollment, plus the 12 Japanese patients. When they finish, and the Japanese patients will be gating in that, that'll be... So it's the last Japanese patient out at a year, that's the filing.
Speaker Change: Understood. Okay, great. Thank you
Speaker Change: Thank you. Our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is now open.
Jeff Hung: Thanks for taking my questions. The French real-world study suggests that patients who had a resection over a decade ago can still derive a benefit.
Jeff Hung: from Set! Melanotide. Are you seeing any patterns on BMI or hunger score that correlates with time since resection? And if not, do you think that Set! Melanotide would be an ideal therapy regardless of time since resection? And then I'll go follow up.
Speaker Change: Thanks, Jeff. You're highlighting what I think is the most amazing part about this.
Speaker Change: I do think it's exactly what you said, which is the time doesn't seem to make a difference. The drop in hunger and the BMI changes are perfectly consistent with what we saw in the HO trial, despite the fact that the original Phase 2 trial was 13 pediatric patients out of the 17.
Speaker Change: So, yeah, I think it says it doesn't matter. It's the defect. It's the biology of the defect. No matter when you had it, you've interrupted somehow impaired signaling to this MC4 pathway and MC4 agonist seems to be the solution.
Speaker Change: Great, and then a few weeks ago you announced the partnership with Exovia in VBS. Can you just talk about what you hope to gain from it and will that help you gain greater access to the UK registry to reach additional VBS patients? Thanks.
Speaker Change: I'm going to let Yann comment on the access to the UK registry. What we announced a week ago is that we don't fill bills very well. We work closely with them, obviously.
Speaker Change: You know, one of the leading experts in the world and he's doing work now, you know, trying to develop a...
Speaker Change: treatment for the eye findings and Barta Biedl. So one, we wanted to support that. Two, we have a shared interest in terms of understanding the epidemiology of BBS, so it made sense to work together. And yes, he's got deep data, which I don't think he would deny us, but, you know, this is an opportunity to put it together. But Yann, maybe a couple of comments just on...
Speaker Change: Your thoughts on that?
Speaker Change: Speak up a little bit, Yann.
Speaker Change: Thank you. Thank you. Thank you.
Yann Mazabraud: Can you hear me?
Speaker Change: You're very, you've got to speak into your phone.
Yann Mazabraud: Okay, is it good now?
Speaker Change: I can add that we already support the BBS registry. Phil Bills and his team have worked on it for many years in collaboration with the BBS UK.
Speaker Change: Patient Association and and we have started to support this effort maybe I would say one year ago now and we will continue to do so.
Speaker Change: Great, thank you.
Speaker Change: Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America Securities. Your line is now open.
Tazeen Ahmad: Hi, thanks for squeezing me in. In terms of the phase three data that you're expecting for HO, I think you've given a little bit of a broad guidance for the first half of 2025.
Speaker Change: Should we be expecting that timeline to be condensed maybe early next year sometime or is that the guidance that you're going to maintain, what's going to need to happen in order for that timeline to condense?
Speaker Change: GLP-1s with that drug, and I know you're not doing studies on that per se, but commercially speaking, would that be a good thing? Thanks.
Speaker Change: Yep.
Speaker Change: So, your first question, which is totally fair, I mean, what we've said...
Speaker Change: which is just you know we've given you as best we could the math so you know last patient dose you know literally at the first day of February it's a 60 week trial last patient last out so you can do the math on 60 weeks from then and then
Speaker Change: You know, you've got to close the trial out and the like so we'll be working as aggressively as we can
Speaker Change: to close it out efficiently, but it's not instantaneous. So I don't think we're going to be able to update it a lot better than that.
Speaker Change: It's not going to be June 30th. I think you can all do the math on that and conclude that's not the case. I'm not sure we'll be able to refine it publicly much more than that, but I don't know.
Speaker Change: I'm not helping you very much there, beyond the math.
Speaker Change: I'll be honest.
Speaker Change: Thank you.
Speaker Change: Your second question was on the HO combination therapies and there is interest, I mean the whole world is focused on combos in general.
Speaker Change: In our world, as we've discussed, I think we gain weight for different reasons, so any given patient who has a deficit in their MC4R pathway signaling and does well on setmelanotide, they may plateau. They may also have gained weight for other reasons, which may be amenable to another drug, a GLP-1, for example.
Speaker Change: And anecdotally, we know that GLP-1s have been added to patients who have been on cephalanotide. In some of those cases, they've had incremental weight loss.
Speaker Change: which I think is consistent with that hypothesis. So, I think your last question was, is that a good thing? To me, a good thing is anything that gets a patient a better outcome. And we know that the medications can be used together. We know in a mouse model they were additive.
Speaker Change: So it makes sense from that standpoint. There's a little bit of overlap in the toxicity. They both have nausea, GI complaints is part of that, and so using the two drugs together, it's a little more work, maybe the case, but it can be done.
Speaker Change: Okay, thank you.
Speaker Change: Thank you. Our next question comes from the line of Joseph Stringer with Needham & Company. Your line is now open.
Joseph Stringer: Hi, thanks for taking our question. Just back on the BBS launch, you're seeing pretty steady growth in new patient ads, another 100 US TRX in the quarter. Just wondering if you can describe the BBS patients that are new to drug at this point in the launch. Are the vast majority newly diagnosed?
Speaker Change: Where and how are they being identified and or diagnosed? Any color on this would be helpful.
Speaker Change: Okay, so we'll start with Jennifer and then Yann if you have any thoughts on international you can go there, but Jennifer.
Speaker Change: Yeah
Jennifer Lee: So, I think it's a mix in general. I think that our teams overall are doing a lot of outreach to
Speaker Change: you know, physicians they have been in contact with over time and through the education and back and forth. Those physicians, you know, for a rare disease, it's...
Speaker Change: being aware and heightened just in terms of as patients come their way to actually get that patient to suspect understanding the you know the
Speaker Change: The various different symptoms and actually getting that patient to a diagnose
Speaker Change: This is how, you know, as I explained, we have some initial first-time prescribers where they have finally gotten to a patient diagnosis and understand the value of the SIFRE as well as repeat prescribers as well. Both are contributing.
Speaker Change: Thank you. Yann, anything? Yeah, maybe we'll leave it there. Is that good? Okay.
Speaker Change: Yeah, great. Thank you for taking our question.
Speaker Change: Thank you. Our next question comes from the line of Raghuram Selvaraju with H.C. Wainwright and Company. Your line is now open.
Raghuram Selvaraju: Thanks so much for taking my questions. Just wanted to see if you could comment at all on activities that are planned in congenital hyperinsulinism over the course of 2025, if we should expect any updates on that front.
Speaker Change: And also, if you could give us some additional color on where you anticipate there might be additional reimbursed early access programs instituted for set melanotide over the course of 2025. Thanks.
Speaker Change: Okay, so for the second part of your question, Yann, I don't know if you've got any other...
Speaker Change: countries where you would want to highlight at this point, but I'll come back to you in just a minute. The first question was on congenital causes, and I think I would put this in the category of the earlier question we got about rabies.
Speaker Change: on a
Speaker Change: I will commit to updating in 2025. We won't have further updates here in 2024, but we are making good progress and our interest remains high.
Speaker Change: and the CHI.
Speaker Change: With that, Yann, any other sort of additional early access countries where we would be looking at?
Speaker Change: You've got to go back to your...
Yann Mazabraud: Oh, I am very close for my laptop. Is it better now?
Yann Mazabraud: Yeah
Yann Mazabraud: Okay, sorry. So yes, thank you for your question. So not so many countries in fact, but for good reasons. First, we are, as I said earlier, already in more than 15 countries ex-US.
Yann Mazabraud: and a good chunk of these countries are countries where we have early access programs or paid early access.
Yann Mazabraud: Two, we pick our countries very carefully. So we could be in much more countries, but...
Yann Mazabraud: It would come with
Yann Mazabraud: with less time on more important countries first. And we also want to make sure that when we start somewhere, there will be some sustainability. So we pay real attention to where we go. So based on that and back to your questions, we will likely be in two or three additional countries in the next 12 months, but not more than that. Again, by choice and by design.
Speaker Change: Thank you very much.
Speaker Change: Thank you. Our next question comes from the line of John Wollobin with Citizens JMP. Your line is now open.
Speaker Change: Hi, this is Catherine on for John. I have two questions on reimbursement. The first question is, what is the current paid rate and how much room is there to improve upon this and what can be done to improve upon this? And the cause of denial currently in the U.S.
Speaker Change: And then just any color on early discussions with payers regarding HO and reimbursement there and just kind of how to identify which patients can get the drug early since we you did have shown that it works in patients that have had diagnosis for years now so just.
Speaker Change: See you later. See you later.
Speaker Change: Uh, Hunter, do you want to comment on the paid rate or Jennifer? Well, I, I, by the paid rate, um, are you speaking to what our, our coverage among payers where we've been pretty consistent is that we
Yann Mazabraud: get essentially no coverage from Medicare by statute because we are an obesity med weight indicated for weight loss
Yann Mazabraud: We have a high level of coverage.
Yann Mazabraud: you know, very high levels, you know, plus 80% plus of covered lives of Medicaid.
Yann Mazabraud: So that's kind of where we where we've been saying We've said that the number of scripts that go to free. I'm sorry the number of patients that transition to free drug has been running about 20% of scripts
Yann Mazabraud: The price of the drug per se has not been the issue for denial. It's been more policy related Do they cover obesity drugs in general for example Medicare? That's the reason we don't get covered by Medicare So does that answer your question or?
Speaker Change: So that does answer my question. Thank you so much.
Yann Mazabraud: OK.
Speaker Change: Thank you. I would now like to turn the conference back over to Dr. Meeker for closing remarks.
Speaker Change: For more information, visit www.FEMA.gov
Dr. Meeker: Okay, well thanks again to everybody for tuning in here on a busy day and an unconventional end-of-the-day earnings call. And as I said, we're excited about where we are and look forward to our next update. Thanks all. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Yann Mazabraud: Thank you.
Yann Mazabraud: Add them up for free.
Yann Mazabraud: Thank you. Thank you. Thank you.
Yann Mazabraud: and many more. Thank you. Thank you.