Rhythm Pharmaceuticals, Inc. (RYTM) September 2026 Conference Transcript

All right, good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Goltz, one of the biotech analysts here, and it's my pleasure to introduce David Meeker, President and CEO of Rhythm Pharmaceuticals. And just as a quick reminder, the format for today is a fireside chat, but if anyone in the audience has a question, please raise your hand and we'll try and address it in our discussion. Before we get started, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com backslash research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, maybe I'll hand it over to David to make some introductory comments, and, you know, thanks for sharing your time with us today.

Yeah, thanks, Mike. Yeah, so just to set the stage on Rhythm a bit, it's a good moment for the company, for those who are following. And we like to set the company framework up, getting people to think about three pillars. Obviously, we're working on melanocortin-4 pathway. Our first approved drug in Sivri, first generation product, was approved in 2020. It's now approved in a couple of genetic, Bartir-Betel syndrome in 2022, and most recently HO in the spring of this year. So the three pillars we're focused on are a genetic pillar, and we think there's a number of genetic causes of impaired signaling through the melanocortin-4 pathway. We did the M&A trial and the Daybreak trials, which were not positive, but they provided us a lot of information and I think gave us a sense of how we were going to tackle that pillar next, which is taking the genes of most of greatest interest and focusing on trying to determine the variants that have true loss of function because with that understanding, then you can run those trials with a much higher probability of success. I think we're pretty confident that the biology, of course, is going to work there. The middle pillar is hypothalamic obesity, 10,000 patients, significant opportunity. I'm sure we'll talk a little bit more about that. Launch is underway. And then the third pillar is Prader-Willi. And we released some preliminary data out of an open-label study by Dr. Miller using setmelanotide. We've told the world, which we will update everybody on which assets specifically we'll take into Phase 3 and then try to give people some sense of timeline, some before the end of the year. Prader-Willi is, as I said, a third pillar, and it's a significant opportunity. I think we're quite convinced that the biology is real and works there, and we plan to invest accordingly. And so that will be a major effort for RHYTHM going forward in 2027.

Great. Thanks for that introduction, David. And maybe we'll start with the middle pillar, which is HO, and maybe just give us a brief background there, maybe on the disease, the unmet need, and how MCIVRI helps these patients.

Yeah. So HO is interesting. I'll contrast it with Barta-Beetle syndrome, our first approval in 2022, which is, as I said, about 5,000 patients and really a classic ultra-rare disease. It's a genetic disease. It's a syndrome. These patients have classic ultra-rare disease challenges, trying to get to a diagnosis, very few experts. There was only one Center of Excellence in the U.S. when we launched. We've now helped the development of about five other centers. But that's a world where you continue to find patients and you'll continue to find patients for the next decade, two decades. I mean, it'll just, we expect that opportunity to grow and grow steadily, but a modest pace. And it's driven very much by it just takes time for these patients to come to awareness. And part of the challenge is there's not a concentrated way to tackle that disease. They are often cared for by primary care physicians. There's no dedicated specialist who's taking care of them, although they may see any number of specialists to get to a diagnosis. There's not a concentrated point where they're being taken care of uniformly. HO, in contrast, which is this entity most commonly due to occurring when patients who have a tumor in that area of the brain, hypothalamus and pituitary in that region, they get it resected. These are benign tumors, but in the process of that treatment, resection, and or radiation, the hypothalamus, that part of the hypothalamus gets damaged where this pathway sits, and so they lose the signaling. They have a loss of alpha-melanocyte-stimulating hormone, which is the key signaling hormone in this pathway, and they literally come off the surgical table hungry and are gaining a pound or two a week. I mean, that's the classic presentation post-surgery. There's a very clear before and after to these patients. And so up until now, patients going into surgery, about 80%, 85% of them will have one or more hormonal deficiency, hypothyroid, adrenal insufficiency, et cetera. And they are educated on that when they go into surgery. I mean, the surgical team will tell them you may develop hypothyroidism, but we can treat that. We can replace your thyroid medicine. It's okay. As a rule, they are not told that hypothalamic obesity is a possibility, and that occurs in about 50% of the patients. Part of the reason they're historically not told is, A, the surgical team may not be so cognizant of it. Secondly, even if they are, it's one of those situations where they tell the patient about a potential complication, and the patient and their family go, okay, so what do we do if that happens? Well, we don't really have a treatment. And so you've created a level of anxiety in the patient and their family without being able to give them some reassurance that you have a way of dealing with that. So that's the world that we've entered into, really a devastating complication. And the beauty of this treatment is an HO, it's really a pure, the drug itself taught us what was the cause of that disease. It was a little bit, I think there were a number of hypotheses not so clear going into our trials, But the response to a precision medicine, this melanocortin for receptor agonist, literally a hormonal replacement, taught the world that that is the underlying biology for this. And so that's where we are. So the team out of the gate, what's been surprising as we get a little bit surprising to me, maybe it shouldn't be based on what I just told you, is the level of awareness even among endocrinologists is, I would say, modest. It's not like they're taught about this during fellowship training and the like. It's a relatively new disease, back to being defined as much by the medication. The medication has really given definition to that and defined it as a distinct entity. Number one. Number two, many endocrinologists don't like treating obesity. Obesity treatments become very much writing scripts for GLP-1s, and so they'll manage other endocrine problems, but I don't do obesity, and they'll send the patient to an obesity clinic or some other part of the organization. And so this part of their disease may well be outsourced, if you will, to another part of the system and the like. And so we're entering this world where we've got to create awareness. We've got to help create more experts. And like I said, I think there's a prevalent population here which is out there and not just, you know, not carrying a diagnosis. Those are the classic rare disease challenges. On the upside, this is a classic specialty opportunity. Unlike Mardit-Beetle, which is dispersed and being cared for maybe by multiple different specialists and or primary care physicians, these patients will reliably pass through and or be primarily cared for by an endocrinologist. So as a company, we approach this in a very different way, which is we can cover all endocrinologists. So we had a sales force of about 16 people for Barted Beetle because that was not the strategy. We've hired 42 dedicated salespeople for HO because the goal will be to knock on certainly all of the top-tier endocrinologists, which is about half of that 10,000 number as a start. So a lot of advantages, some residual challenges, and, of course, we're positive about our first quarter.

Yeah, so maybe we can talk about the early launch trends. You shared some promising, you know, start forms, so maybe talk about that.

Yeah, so at the first quarter, we had about, not about, we had about 400-plus start forms that were written by 300 physicians. And, you know, so, A, you know, people ask, is that, you know, how is that relative to expectations? Going into a launch, these things are really hard to calibrate, but that was a really positive signal. I think it told us that there was a high level of interest, people were willing to write scripts. The 300 docs who wrote those 400 scripts also tells us that it wasn't a small number of docs who were believers in the rest of the world, not that they wrote a disproportionate number. But we have, I think, very broad-braced uptake. Since the first quarter, we had the New England Journal of Medicine article published. I think that's the kind of addition to the whole picture that makes a big difference. It's not that often that endocrinology articles get published in the New England Journal of Medicine, so they get a disproportionate amount of attention. And so, again, I think all of the signals we've had before is that we're very positive about the uptake here, but also very appreciative of the fact that we are early and we have a lot of work to do on the education side, particularly, like I said, the endocrinologist and for sure in the community endocrinology set.

Can you just talk about the early physician feedback and since education is part of your strategy, maybe walk us through how that works. Is it pretty easy for physicians to understand and then, oh, I have patients and it's a pretty easy, it's just a matter of getting to the numbers or how's that looking?

Yeah, easy is a typical word.

It's not the right word.

No, no, it's fair. So the conversations, this is easy to describe, right? The classic presentation, which is, you know, you have an incident event. You had your surgery. You had trauma or something. There's an incident event, and the before and after something changed, rapidly gaining weight. You have these associated, you know, pituitary insufficiency problems. So when you talk to an endocrinologist and you say, do you have patients with HO, they may or may not say, I have some who are diagnosed, but invariably they will say, but I have some patients who fit that clinical phenotype. I just haven't given them a diagnosis. I need to get them back in, have that conversation with them and the like. So when we gave you a number last fall of about 2,000 patients who the field teams had identified through their interactions with physicians in the field, the majority of that 2,000 number were in the suspected category, not patients who carry the diagnosis of H.O. And so that's what's happened. And like I said, we're in the process of some of those patients coming in. The second issue here is, maybe not surprisingly, getting into the endocrinologist's office is not straightforward. And so I think the general reaction has been, I will bring this up with them when I see them next, at their next scheduled appointment. So they're not out there actively calling these patients in. It just is what it is. I think, you know, their practices are pretty tight. So that's been, I think, the second major challenge here is, you know, creating that sense of urgency and the ability to, you know, have patients pulled back in.

And maybe you can talk about just payer adoption, any payer pushback. You know, there was talk before the launch of maybe step edits.

You know, what's kind of the latest there? uh yeah so no step edits um we didn't have step have not had step edits with bardic beetle syndrome and we haven't had here in a rare disease world i think the the pair world tends to adhere very closely to the label so uh and of course that was not part of our trial number one number two um we did have for example the glip world would be a you know a common question about you know will you be step-edited through a GLIP? And as I said, they adhere to the label, one. But two, about 25% of the patients in our, you know, 140-patient phase 3 trial were on a GLIP, either historically on a GLIP, about half of that number, or continually on a GLIP during the trial. We had most of their curves before the trial and then what happened. And, you know, what you could see very clearly was if you give most people a glip, they will have some weight loss. I mean, it's just, you know, that mechanism creates an aversion. You know, people at least, you will lose some weight. What turns out is if you have a deficit in this pathway, you may lose some weight and plateau well above where you want to be. You may lose some weight for a while and then start to regain. And that was very much the pattern of all the patients with a history of glip use. And then when they went on setmelanotide, in Sivir in that case, they had a very consistent, if not even greater, response to the drug as everybody else in the trial. So we have that data to support it. As I said, payers tend to follow the label, so no step edits.

Makes sense. And you mentioned maybe 10,000, or your estimate is 10,000 patients in the U.S., and you prior to the launch had about sort of 2,000 identified or suspected. I guess, you know, how quickly can you sort of increase that 2,000 number? What are the hurdles? You mentioned some already, but, you know, what's the key?

Yeah, I mean, that's outlined the most significant hurdles there. The 2,000 number has increased significantly since last September. We're a year later, not surprisingly. We won't update that number again. It's a softer number. It's a number, you know, we gave you that similar kind of number at the start of the BBS launch. We gave it to you for HO, the world. Now we're into the launch, the start forms. Revenue has become a much better metric, and, you know, that softer number we probably won't update. But what's interesting in today's world, not surprisingly, with all the tools that you have, claims analysis, the ability to follow patients on their trajectory through the health care system by tokenizing them, and you can go, we have a much better sense as to what we might expect when we go into a physician's office, like how many patients they might be caring for. We don't know who the patients are, but, you know, so it supercharges that conversation, literally. And we found the feedback from the field has been that when they go in, the conversations they're having are matching their expectations in terms of what they thought that, you know, physician might have and the like. And so those are huge advantages when you're trying to launch.

You mentioned start forms, and over time, you know, revenues are going to be a good way to sort of think about how the launch is progressing. But I guess, you know, two questions there. Will you continue to share start forms, and do you think you might provide some revenue guidance at some point in the future?

So we will definitely continue to share start forms for the foreseeable future. I think what we did with BBS is once, you know, revenues became a more reliable metric, they capture sort of all parts of the dynamic. You know, we stopped giving start forms, so we won't do that indefinitely, but we will for certainly the near term. Of course, the revenues will continue to keep up there. Sorry, what was the second part of the question? Guidance. Guidance, yes. No, you know, A, it's hard to do, and historically we haven't done it. What we've tried to do is help people understand rare disease launches. We've used the word lumpy in the past. I mean, it's just a function of you're dealing with smaller populations. There's a variety of different reasons why things may go up and down in a quarter, and so we've just tried to get people to not be completely quarter-on-quarter focused, but look at the trajectory over time, and I'll look back and say it again. I think, you know, this is an opportunity we expect to grow steadily. We do not expect it to peak, and we'll continue to penetrate into that 10,000. These kind of rare disease opportunities, BBS and probably HO, back to a dozen peak, you don't fully penetrate. So we'll see where we go.

Yep, makes sense. You're also planning to launch in Japan by the end of this year. I think Europe, first half of next year. So maybe just talk about those market opportunities, how they're different from the U.S. And in terms of the strategies, are the strategies different in those geographies?

Yeah, let's start with Japan. I think, and Jan will provide a deeper dive at the November earnings call on the overall Japan picture. But high-level, Japan, we've said there's about 5,000 to 8,000 patients there as compared to 10,000 patients in the U.S. So on a population basis, it's a more prevalent disease in Japan. Don't totally know why. Maybe a higher incidence of cranial fringiomas in that population, number one. Number two, pretty well organized in the sense of reasonable level of awareness, you know experts you know centers where these surgeries are done so it's very much think about it as a u.s. kind of you know that would be the comparison here and the we're we're going to go direct so we have 50 people on the ground in japan and they've been on the sales force has been hired pre-launch as was the case in the u.s. and so they've had time to be out in the field and interacting with the clinicians and getting a sense of that market. So we'll update the status of Japan, but in approval in August, we'll work through getting our pricing and be ready to launch by the end of the year. The European launch will go country by country in a pretty standard way. Germany should be the first out of the gates early in the first quarter, and then we'll see how we do. We had the market access dossiers basically filed within a week of approval last year, So we were well positioned here, but the process takes time.

Can you maybe talk about just pricing and how to think about it in those two geographies relative to the U.S.?

Yeah, so Japan pricing, we'll see how we do. We describe it as being somewhere we expect it to be between the U.S. and Europe pricing. They do reference other countries, including the U.S., of course. So, yeah, we'll see how we do, but we expect to do no worse than Europe and hopefully somewhat better. The European pricing structure, the nature of that system is each time you come back with a new indication for the same drug, you revisit the pricing discussions and you take a haircut in general with the belief that you're now serving a larger population and therefore you don't need as much per patient. That's the rule. Our expectation and hope is that We're going in with HO, which has a very strong data set, and so our goal, obviously, but maybe not on reasonable expectation, is that that haircut will not be significant.

Makes sense. Maybe we can shift gears now to some of your next-generation programs. You have two MC4R agonists, so maybe just remind us some of the key advantages of those next-generation programs.

Yeah, I mean, so there's two obvious ones. One is convenience and oral, daily oral or weekly injectable. The second is the hyperpigmentation. So I think we've got good evidence. These are much more specific for the MC4 receptor. They don't hit the MC1 receptor. And just to put that in some context, about 5% to 6% of patients who start the drug discontinue because of hyperpigmentation. So 95% don't. I mean, it's not like the biggest problem, but not everybody likes it. Some do, but not everybody likes it, even if they stay on drug. And secondly, we don't have a good sense for this. I certainly don't, but I know they are out there. There are patients who are on the sideline who are worried about the increase in pigmentation getting darker and that that's a reason why they're not starting the drug. And so I think, you know, having options out there that don't have hyperpigmentation, There's no physiologic benefit to that. I think we'll be a significant advantage here. And then, you know, yeah, better, more convenient drugs are always a good job.

Makes sense. You talked a little bit about the safety side. What about the efficacy side for both those programs and HO, and what have you learned so far?

Yeah, I mean, remarkably, and HO was such a gift in so many different ways. is it's such a sensitive disease model that it was perfect to test these new drugs in, in the sense that we could run a relatively small trial and know whether it worked. And our view going in was if we don't see anything in HO, we're stopping because, I mean, that tells you we don't have a good MC4-R agonist. And that was one. And then two, both of them worked, as we've shown. And remarkably, the pattern and the rate of weight loss has been remarkably consistent. So it's back to, yeah, I mean, a heterogeneous disease, they were all losing sort of 10%-ish kind of weight at three months, some 12, 14 weeks. So all very encouraging. We weren't looking to do better. I think one of the things about setmelanotide and the doses we're using, I think for the most part, we've pretty much extracted maximal efficacy. I don't think it's a world where you can be more potent and get more activity. Now, Prader-Willi, we're using slightly higher doses, and so that's a disease where if we need higher doses, we can go to higher doses with setmelanotide. But I think there's not a lot of room on the efficacy side to do better.

Can you talk about next steps for those programs in HO? I think for Bivomegalon, you plan to start a Phase III by the end of this year, So maybe just talk a little bit about timelines, your current thinking on design of that study as well.

Yeah, so HO, we'll start the adult portion of that trial. The goal is by the end of the year. The pediatric will start first quarter-ish next year. The separation there is that we need an oral dissolvable tablet for the pediatric, and so that part of our development program is on its way coming. From a design standpoint, BMI has been our weight, it's been our endpoint for basically all of our studies. In this case, we will likely run a combined, we are going to run a co-primary endpoint of hyperphagia and BMI for the adults, and the pediatrics will just be the BMI. And part of our challenge with getting hyperphasia into the indication statement in a way that might be helpful here in the United States is that the tool itself wasn't, we didn't have a single tool that could be used across all of our age groups. And if you remember, we did our phase-free trial in HO, we had a child as young as four and an adult as old as 66. So, you know, that's a full range. We were trying to find an endpoint that ran across that. So by breaking these into a 12 and above and below in terms of this end point, I think it will allow us, A, to use a consistent hyperphagia measurement and have that as hopefully part of the indication statement and then basically a best-of-both-worlds strategy.

And for 718, you plan to take that forward also in HO, and what may be timelines around that?

Yeah, so for both HO and Prader-Willi, very significant opportunities for us. We would anticipate likely developing both agents in both diseases. It's a timing question. Now, for the genetic pillar, if you will, we would not anticipate developing both agents in each gene that we might try. So you can see how we might mix and match a bit there. But let's take Prader-Willi, for example. Almost for sure we will do more than one trial. We will likely do both of those agents. And it's just a question of which one we start with. In the case of HO, we've already made the decision. We're going forward with Vivamelagon. There's not the same urgency to get going with 718, so I don't know if that will be a 2027 activity to bring 718 into HO. but I can imagine that that will come into HO and be part of our development strategy going forward.

And maybe we can switch a little bit to just Prater-Willi now. You shared some initial data for setmelenotide. Maybe just talk about what you learned there and maybe how it compares to available treatments.

Yeah, and there's only one approved treatment, as we know by CAT, and that was a huge advance for the field. One is it has clear activity. It's a drug that has some side effects. It's not appropriate for every patient with Prader-Willi. But it established a regulatory framework, you know, in which you can get the drug developed. So what we've said and what I've talked about historically is when we first started the program, we were very focused on weight change and BMI because, A, we thought we can do that, still think we can do that. If we got weight loss, then almost by definition we would have a reduction in hyperphagia. hyperphagia, that's how the drug works. So that was our approach. In the intervening time, Solano gets approved based on the hyperphagia study, and, you know, we believe, we haven't had our meeting with the FDA yet, but our proposal will be we will absolutely look to run a six-month hyperphagia study as opposed to a 12-month weight reduction study. So that will be our, I'm sorry, That'll be our strategy going in. I think you asked what we learned from our Dr. Miller study. What was most instructive about hers was 18 patients, highly heterogeneous, some patients more challenging than others. But of the four different metrics that we looked at, so we had BMI, we had DEXA scans, looking at fat and lean, and we had the two scores, one HQCT, the hyperthagia score, and the other was this anxiety distress syndrome score. Not perfectly, but in general, they all moved in the same direction. Now, some more significantly than others. Those patients who were on VICAT might have had lower hyperphagia scores to start with. That's how that drug works. But even if they were on VICAT, their lower score tended to drop and move down. And we know symptomatically, from what Dr. Miller tells us, that the trial's done, patients could stop. They all want to stay on drug. So there's a desire to stay on drug, and they seem to be happy on drugs. So I think that's the thing we're taking away. Now the challenge going into phase three is, of course, you can't write a label that says patients are happier. We need to measure that and make sure that we're capturing the endpoints that translate to a meaningful label.

In HO, you mentioned earlier, you saw a very consistent efficacy across all three programs with improved hyperpigmentation. With Prater-Willi, obviously you just have set melenotide data so far. Do you expect the same to be true? The next gens will kind of have a similar program.

I mean, you know, so we're going to go right into a phase three. And part of the reason for that is I do think this is a MC4 agonist question. So Setmelanatide told us that MC4 agonists should work in Prater-Willi. The HO efforts with Vivimeligon and 718 told us that both of those are good MC4 agonists. So I don't think the leap of faith is much there, to be honest.

Makes sense. and when do you plan to sort of give an update on, you know, the final determination of, you know, when you take these two drugs into phase three or one versus the other? Yeah, so before the end of the year. Okay, got it, yep. The exact vehicle we haven't exactly locked down, but before the end. Oh, makes sense. And maybe just in the last few minutes now, we can go through a couple survey questions. You know, we've been asking all our biotech companies sort of in these key themes. So the first one is just, you know, innovation coming out of China, your views on that, and has it sort of changed your sort of views on your programs in terms of, like, competitive positioning or anything like that?

So for Rhythm, not specifically. I think, you know, every company, particularly as you create value, There may be other companies that come in, and there's some other companies that have early programs in our space. But whether they come from China or elsewhere, that doesn't so much change ours. The rare disease dynamic may be a little different than some of these more common targets where you can have five plus or minus companies working on exactly the same target. So I'm not sure. Like I said, we don't see China as the same threat that another program might in that sense.

Makes sense. The second question is just the AI question. How are you using it? How might you use it in the future, and what kind of impacts is it having now and in the future?

Yeah, I mean, I think we're all watching this on a daily basis. So the way we look at this is that AI is increasingly being embedded in many of the tools, commoditized in that sense. We don't need to be cutting edge. We just want to be using things that make sense to make our business more efficient, for sure. On the clinical development side, where there's some really interesting advances back to being more efficient and accelerating, I think we are learning, again, not looking necessarily to be on the cutting edge, but don't want to be left behind, very cognizant of some of the sensitivities around how you manage your data, where you put your data and the like, and what's happened in the past few weeks, just about the increasing concern about AI and the like, just says, yeah, you can go into all of this with your eyes wide open. The third part we don't plan, which is using AI to discover new drugs, the like where there's companies that are set up and built around that as a business model. That's not us. So we'll watch that with interest.

Yeah, makes sense. And then just maybe last question here, I guess which policy variable, whether it's FDA, Medicare negotiation, MFN tariffs or global pricing, you know, matters most to you guys?

I think, you know, for us, the short answer on MFN is, A, we're not one of the companies that's negotiated a deal. Two, we sell in 26 countries outside the U.S., so we don't have an active decision to make. Are we going to launch or not launch? I think the area that we are certainly most interested in is how the FDA evolves here. Again, we've got new leadership in place coming. We're, like everybody else, following that closely. There's just so much opportunity there if it's done well, and, of course, an FDA that doesn't function is really a problem for this industry.

Okay, great. Looks like we're out of time or just about, so why don't we end it there. David, thanks so much for your time today.

Thank you, Mike.