Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Q2 2025 Earnings Conference Call. 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.

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 our 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 2. On the call today are David Meeker, our Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International is on the line joining us from Europe. On Slide 3, 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. With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

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 start-ups beyond the simple struggle to survive often don't have the luxury of looking longer term. At Rhythm, we have more than survived. And in quarter 2, we laid the foundation for significant future growth. I'll briefly review those elements on this call. We had another solid quarter of BBS sales growth. Why is that important? We are now 3 years post-launch of an extremely promising but very challenging opportunity. Our North American and 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 or finding an expert through to gaining access to the only approved medication. The projected epidemiology seems right. The patients are benefiting and the healthcare 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 15 years. In terms of significance, I don't think we have had a more impactful quarter. The Phase III readout of setmelanotide in acquired hypothalamic obesity and the Phase III readout of the first of our 2 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 5 years, and we are on track to complete U.S. 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 million raise. On Slide 6, I'll remind you again of the meaningful opportunities ahead of us. BBS with an estimated 5,000 patients in the U.S. and similar numbers in Europe, acquired hypothalamic obesity with 5,000 to 10,000 patients in the U.S. and as noted, a growing level of confidence in the upper range of that number with similar numbers estimated for Europe. The Japan opportunity looks equally promising. Finally, we look forward to the EMANATE readout in the first quarter of next year. Importantly, we have the time to fully develop these opportunities. Setmelanotide composition of matter patent is up in 2032, but importantly, the formulation patents extend to 2034 in the U.S. Our next-generation compounds will extend that protection to 2040 plus. On Slide 7, I want to share a little more color as to what the patients are experiencing. 30 patients or their caregivers who participated in our Phase III trial of setmelanotide in acquired hypothalamic obesity participated in a qualitative 1-hour interview. These results were presented at ENDO last month. 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 8, 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 9. The setmelanotide 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 setmelanotide, 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 are equally excited to get the results of the Phase II bivamelagon trial. 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 600-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 setmelanotide data at 12 and 16 weeks from the Phase II and III trials in acquired hypothalamic obesity in patients aged 12 and above. As you can see, the patients decreased their BMI by 9.7% and 10.1% at 12 and 16 weeks, respectively, as compared to 9.3% for the 600-milligram dose cohort at 14 weeks in an intent-to-treat analysis. We expect 600 milligrams will be our target dose going into Phase III trials. We will request an end of Phase II meeting with the FDA and request scientific advice from the CHMP of the EMEA to share the data and gain alignment on the design of the Phase III trial and a path to registration. Finally, Al Garfield, our CSO, and I had the privilege of joining Yann 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 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 Yann and his team have built with that community. Finally, Slide 13 highlights a number of the upcoming milestones. We remain on track for U.S. and EMEA filings this quarter for setmelanotide 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 718 weekly Phase II study in HO patients in 2026. We'll also release top-line data from the Japanese cohort from our Phase III acquired HO trial in Q1, and we will release top-line data from the EMANATE trial in Q1. We aim to complete enrollment of the congenital HO trial in the first half of 2026. And finally, we will initiate our Phase III study with bivamelagon 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.

Thank you, David. I'm going to be starting today on Slide 15. June 2025 marked the launch of IMCIVREE in BBS. The community continues to grow at a steady pace, and we have delivered consistent and steady progress in establishing IMCIVREE as the first and only therapy that addresses the underlying cause of hyperphagia, a pathological hunger that leads to abnormal food-seeking behaviors 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. We are seeing steady growth in new first-time prescribers and repeat prescribers writing prescriptions for second patients and more following a positive first experience with IMCIVREE. With the label expansion down to 2 years of age received late last year, we are now seeing more patients younger than 18 come on therapy the last 2 quarters. Importantly, our teams are preparing to launch IMCIVREE in hypothalamic obesity, pending FDA approval. I'll touch on each of these positive themes from the quarter. Next slide. First, prescribers. In the second quarter, we saw continued growth in the number of IMCIVREE prescribers for BBS patients. We recorded a 38% growth in the cumulative number of BBS prescribers from Q2 2024 to Q2 2025 as well as a 9% growth in the cumulative number of BBS prescribers from Q1 2025 to Q2 2025. Next slide. The FDA-approved label expansion down to 2 years of age enabled us to renew engagement across physicians who treat younger patients. We leveraged the expanded indication to amplify a strong message that IMCIVREE, due to its efficacy and safety, can be used in patients as young as 2 years of age, differentiating MC4R diseases and the early onset obesity from the population with general obesity. This focused messaging resulted in a growth in prescriptions coming from both pediatric and adolescent patients in Q2. 40% of prescriptions in the quarter were for patients under 12 years of age, up from 27% in Q1, and 27% of prescriptions in the quarter were for patients between 12 and less than 18 years of age, up from 23% in Q1. These positive trends stem from a combination of patients younger than 6 potentially waiting on their label expansion as well as moving older children and adolescents on to treatment. Though we saw a 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 3 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 IMCIVREE. Payers also appreciate the difference. And while we face similar challenges faced by any rare disease therapy, payers are providing coverage of IMCIVREE 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. As David outlined, we are confident that the number of U.S. patients with acquired hypothalamic obesity is in the upper bound of our 5,000 to 10,000 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 Yann.

Thank you, Jennifer. I'll begin on Slide 20, and we are pleased to report that IMCIVREE is now available for BBS and/or POMC/LEPR deficiencies either as fully reimbursed therapy or named patient sales in more than 20 countries outside the United States. It also includes 2 countries where we have achieved pre-EMA approval paid early access for patients with hypothalamic obesity. We are seeing a steady increase in the overall number of patients on IMCIVREE in the international region, and we are very pleased with the results of the second quarter. The main growth drivers for the international region this quarter were IMCIVREE sales in approved indications, BBS and POMC/LEPR deficiencies, as they made up the larger increase in patient numbers and paid early access for HO patients in France and Italy., which drove the largest percentage increase in sequential quarterly growth. Reimbursed 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 patients on therapy, and the patients appear to be benefiting as well. Last but not least, we are seeing additional countries come online in terms of named patient sales. We have talked about Turkey and Greece previously, and new this quarter, we are seeing patients from Poland and the Czech Republic. In Japan, we are building out our team with a focus on regulatory, medical affairs, marketing, and market access. Next slide. 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 Jesús Argente from Spain and Professor Sadaf Farooqi from the U.K. 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. Initially, it focused on genetic pathway diseases and BBS and now it includes HO. There were also 43 poster presentations and 3 impactful workshops. Participants attended 2 of these 3 workshops, which covered optimal care for rare MC4R pathway diseases, multidisciplinary care and treatment perspectives for patients younger than 6 and comorbidities and communications for patients with acquired HO. At the end of the poster presentations, the committee selected 3 winners, the results from a European retrospective study and monogenic obesity, the Dykens' 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, IMPROVE has turned into an important opportunity for so many experts to get together. Nearly 40% of attendees were practicing endocrinologists and more than 25% were pediatricians and the feedback was overwhelmingly positive. Important themes emerged at discussions this year, the uniqueness of MC4R pathway diseases, the early onset of obesity in these patients at a young age as 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 IMPROVE and many additional efforts, Rhythm is playing an important part in growing the international community of MC4R pathway disease experts. And now I will turn the call over to Hunter.

Thank you, Yann. Today's business update is encouraging, reflecting a strong quarter for global commercial revenue, successful data readouts, and a successful equity offering in July. We ended the second quarter of 2025 with $291 million in cash. Last month, we completed an equity offering where we sold approximately 2.4 million shares of common stock at $85 per share, yielding net proceeds of $189.2 million for Rhythm. We appreciate the support from both existing and new long-only and healthcare-focused investors. In July, we paid $40 million to LG Chem, marking the second of two tranches related to the licensing agreement for bivamelagon announced in January 2024. This cash payment is not included in the cash we had as of June 30. The remaining commitments to LG involve post-approval milestones and royalties; the fixed part of the agreement is fully satisfied. Rhythm's cash reserves, alongside last month's net proceeds, projected revenues from the upcoming launch of IMCIVREE, and ongoing revenue from approved indications offer a cash runway of at least 24 months. This liquidity indicates that Rhythm's balance sheet is the strongest it has ever been. For the second quarter, global revenue was $48.5 million, a 29% increase from the previous quarter. U.S. revenue represented 66% of this total, amounting to $32 million, while 34%, or $16.5 million, came from international markets. The number of reimbursed patients increased by approximately 12% quarter-over-quarter. U.S. revenue grew by $7.6 million, or 31% from the prior quarter. The number of reimbursed patients in the U.S. continued to grow at mid-single-digit rates. In Q1, Rhythm Specialty Pharmacy dispensed $4.1 million more to patients than it ordered, and inventory fell below 10 days. In Q2, the difference between product shipped to the pharmacy and product dispensed was approximately $0.5 million, positively impacting revenue. The specialty pharmacy held about 10 days of inventory on hand at June 30. Excluding these inventory considerations, sequential U.S. revenue growth from patient demand in Q2 was roughly $3 million, which is around 10.5% from $28.5 million to $31.5 million. Internationally, growth was about $3.2 million, or 24%. Currency appreciation contributed approximately $1.2 million to this growth. The primary revenue growth came from increased sales in France, the U.K., and Italy, as well as named patient sales in various countries. In terms of patient demographics, our approved indications of BBS, POMC, and LEPR led to a significant increase in patient numbers, while early access programs for hypothalamic obesity patients saw a higher percentage of growth. Patients with reimbursed hypothalamic obesity now make up a significant portion of total reimbursed patients in Rhythm's international markets. Compared to Q2 2024, net product revenues rose by $19.4 million, or 67%. The gross-to-net ratio for U.S. sales was 83.9%, consistent with historical levels. Cost of sales for this quarter was 11.4% of net product revenues, and we expect this to range between 10% to 12% moving forward. R&D expenses for Q2 were $42.3 million, up from $30.2 million in the same quarter last year, marking a sequential increase of $5.3 million, or 14%, primarily due to CMC work for bivamelagon and RM-718. Increased headcount and stock compensation also played a role in rising expenses. SG&A expenses were $45.9 million for Q2 2025, compared to $36.4 million in Q2 last year, reflecting a sequential increase of $6.9 million, or about 18%. This rise was attributed to higher headcount and marketing expenditures. For Q2 2025, there were 63.7 million weighted average common shares outstanding. Cash used in operations was around $22 million for the quarter. Our GAAP EPS for Q2 2025 reported a net loss per basic and diluted share of $0.75, which includes $0.02 per share from accrued dividends on convertible preferred stock. For operating expenses this quarter, a total of $88.2 million included $15.9 million in stock-based compensation. Our non-GAAP operating expense guidance for the full year of 2025 remains unchanged, with expectations between $285 million to $315 million, split into non-GAAP SG&A expenses of $135 million to $145 million and non-GAAP R&D expenses of $150 million to $170 million. Now, I'll turn the call back to David.

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

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. David, can you just frame for us what the study is? Is it an exploratory study? Or is this a high conviction study because there is a history of setmelanotide being 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, Tazeen. Yes, I would describe this as exploratory. Our initial study from 2019 had negative results, but we believed the trial design had challenges such as a low dose and short timing. There is strong reasoning based on the biology of Prader-Willi syndrome that the MC4R pathway is significant. In the current open-label study, we are increasing the dose; all patients will be raised to 5 milligrams as tolerated, compared to the maximum of 2.5 milligrams in the last trial. This study will last for 6 months, and we will analyze the data then. The exploratory nature comes from our confidence in the biology and the MC4 pathway’s role in the disease, but we acknowledge the complexity of the disease, the history of drug failures, and the influence of behavioral aspects that might obscure potential benefits. These factors lead me to classify this as exploratory.

And how many patients worth of data would that be?

We can enroll up to 30 patients in the open-label trial, though we don't expect to reach that full number. Our goal is to recruit between 10 and 20 patients and aim to provide meaningful insights by the end of the year. In a disease like this, it's important not to make conclusions after just 2 or 3 patients due to the noise in the system, which can make it hard to be confident in the results. Therefore, we hope to share insights based on reliable data by the year's end.

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 of what sort of level of follow-up you're expecting?

In many diseases, especially rare ones, if patients are seeing benefits, it's important to keep them on treatment. Typically, you wouldn't conduct even an early-stage study and abruptly stop at its conclusion. That approach would be difficult for patients and illogical. Some of the most valuable insights are gained from long-term follow-ups with these individuals. Your final submission must consider all available evidence, and while you may have your Phase III results, they can be significantly bolstered by one to two years of follow-up data from patients treated early on. At the six-month mark, we will assess the data to better understand our findings, but those patients will continue their treatment beyond that timeframe as long as we see positive effects, and we are moving ahead with the overall clinical development for Prader-Willi.

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 bivamelagon? Is that something you consider taking forward in this indication as well?

Yes, historically we have indicated that most, if not all, of our future development work will focus on our next generation. This approach is logical for several reasons, including the potential for improved drugs and extended patent life. However, if the data is convincing, we are open to the possibility of advancing with setmelanotide right away. We will assess how the timing aligns for getting 718 through its initial proof-of-concept phase with the data from our trials on Prader-Willi and then make final decisions. If we proceed, we will definitely be utilizing one or both of our next-generation molecules. The key question is whether we should quickly move forward with setmelanotide.

Congratulations on a productive quarter. We wanted to follow up on Prader-Willi by looking at some good data. There appear to be several important elements, including BMI decreases, reductions in hunger, and consistency across the patient population. David, could you share your thoughts on what you need to see in order to move forward? What would constitute good data regarding weight loss effects on hunger and consistency?

Thank you for your question, and I apologize for not addressing it earlier. The main focus here, aside from ensuring safety and tolerability, is weight. Soleno's drug was approved based on a hyperphagia endpoint, marking a significant milestone for the community as it was the first drug to receive such approval, establishing a pathway for hyperphagia as an acceptable endpoint. Our drug, by its biological function, provides a satiety signal, which helps decrease hyperphagia and increase energy expenditure. Therefore, if we achieve weight loss and a decrease in BMI, we should, by extension, see an improvement in hyperphagia. The level of change we are aiming for differs from our other diseases related to the MC4R pathway due to the additional complexities posed by this condition. However, it is important to note that there are no current treatments that effectively induce weight loss in this disease. According to FDA guidelines for obesity drugs, a weight loss of 5% or more would signify approval, making that our target after one year. Our objective is to ensure we see a change in BMI that is either at or is consistently trending towards at least a 5% decrease. Additionally, we are collecting data on hyperphagia, including using an HQ-CT, which was an endpoint for Soleno’s approval. However, interpreting those patient-reported outcomes can be more complex in an uncontrolled study setup, but we will provide that data as well.

I think it's 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 million quarter-over-quarter is significant and beyond our direct control because it's just driven by the stock price.

Maybe on the other clinical update expected later this year, you now have the 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 HO use, I think you said that there is meaningful ex U.S. utilization. But do you have any visibility on whether there are HO patients getting IMCIVREE off label here in the U.S.?

Yes. Regarding the Part C aspect, my initial goal was to say something about 718 by the end of the year. However, it has taken us longer to get operational, and while we are now up and running, that has caused some delays. As a result, we have pushed the completion of enrollment to the first quarter. This means it is highly unlikely that we will have any updates on 718 by the end of the year, and it is more probable that we will be looking at 2026 for that. In the U.S. for rare diseases, off-label use is not very common. The positive aspect is that payers are very loyal to the approved label. However, unlike some other diseases, there isn’t significant off-label usage.

Just one question on 718. You guys did a good job with the bivamelagon 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 set up these drugs. For the 718 study, I know you're getting started with the HO portion now, but what are you expecting for the patient mix? 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?

Yes, that's a great question, Paul. It's similar. This is a trial for participants aged 12 and older, so you can anticipate us presenting the data in a comparable manner. We already have reference points from previous work and are optimistic that we'll fall within a similar range, keeping in mind the small number of patients and the relatively short study duration, which could introduce some variability. We're aiming for the 718 data to be in a similar range. I want to emphasize that the primary question regarding 718 is not whether it acts as a good MC4 agonist, as we are confident in that aspect. The key issue is whether we have the appropriate dosage since we are transitioning to a weekly pharmacokinetic profile, which is a change. I believe that’s the aspect that will clarify things and help us feel more assured about the outcomes. Okay. Well, thanks, everyone, again, for tuning in. We're really pleased where we are. We're making good progress. Had a lot to do. So we look forward to our next update. Thank you.

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