Rhythm Pharmaceuticals, Inc. (RYTM) November 11, 2026 Conference Transcript

All right, great. Thanks very much. Happy to be here with Hunter Smith, CFO of Rhythm Pharmaceuticals. I'm sure folks know the story well, but I think to just level set, I'll have you, Hunter, maybe just briefly give us a quick update on what you just talked about with how the MCBRE launch is going in HO, and then we can dig into that, and then we'll talk about PWS. How does that sound?

That sounds great. And first of all, thank you to Paul and the entire Steeple team for this conference, which is always a highlight of the year. It's a great location. There's always great swag. I was expecting a swell bottle. I don't know if that's what I'm getting this year or not, but expectations. Expectations?

You'll get a vest, and you'll like it.

Okay. Expectations are high. Expectations are high. So, no, really happy to be here, and it is a very exciting time for Rhythm. So, you know, most of you are paying close attention. We just announced our third quarter results last week, and I would say we were super enthusiastic about the way our launch and acquired HO, hypothalamic obesity, is going thus far. So we were approved back in March, and last week we reported over 700 start forms launched to date, and we had around 500 unique HCPs that wrote prescriptions for MCVRI and AHO, of which 25% were repeat prescribers. So we think that breadth across the number of 700 start forms is a really terrific number. Because most of those physicians come from our top two tiers of endocrinologists that we've been calling on, and that means they have multiple HO patients in their practice, right? So that's a very strong launch base to build off of. That number of 300, over 300 in the second quarter, very aligned with what our expectation has been. You know, if you back out the clinical trial patients that we had in Q2 and Q3, we think we've seen that pace continue through October in Q4, and we have every reason to expect it will continue beyond that. So very, very pleased about that. Second item we'd want to highlight is we were approved on October, middle of last month, for acquired hypothalamic obesity in Japan. Very exciting opportunity. The Japanese environment, Japanese regulatory and reimbursement authorities have really charted a change in the path to address the drug lag that the market was feeling, kind of a path very different to what we're seeing in developed Europe, and so very positive reception for our efforts from Sibri there. We've identified over 1,000 patients with AHO in Japan, and we have started launch and have patients on therapy. We've cautioned folks to have modest expectations for the first 12 months because first 12 months post-launch, there are restrictions on the duration of prescriptions, so patients have to return to their HCP every two weeks to get prescriptions renewed. That's burdensome both to the patient and the HCP. That's designed for enhanced monitoring of a new therapy. And so once that lifts, we expect sort of the real trajectory of the launch to take hold. But obviously, that's going to take a little while. And then the third major thing that we talked about at the quarter was we announced an amendment to our licensing agreement for BIVA-Malagon, where we committed to a fixed payment of $350 million over four years to buy down the BIVA-Mellagon royalty from somewhere in the 5% to 7% range to 1% flat with our partners, LG. And that, I think, is a statement about how strongly we feel about the potential of BIVA as a therapy. There were some, despite our best efforts, there were some disincentives to further development, economic disincentives to further development of BIVA that were inherent in that licensing agreement, and this amendment gets rid of those. And so now we have every incentive to be full speed ahead with BIVA, both in HO, but also just as importantly in Prader-Willi syndrome, where we've said that BIVA will go first among our next-gen assets in studying Prader-Willi syndrome, and we hope to meet with the FDA next year. And then secondly, hopefully get to starting of a hyperphagia-focused study in patients with PWS in 2027.

Excellent. So, I am with you that the dispersion of the prescriber base is a very, very interesting kind of leading indicator, not just for, you know, there's going to be broad adoption, but also just the implication of how many patients that are out there. You know, from a physician behavior perspective, are most of these physicians kind of calling in patients to write the drug, or is this kind of coming up in sort of the natural course of visits that would have already might have happened?

So, from what I have been learning from our commercial team and what they've been sharing in both market research and actual field experience, first of all, it speaks to the fundamental capacity challenges that endocrinology faces as a specialty. So endocrinologists are very, very busy. I think even in the major metros in the country, they book out a year in advance. Many of them are closed to new patients unless they have very severe conditions. So endocrinology is a very constrained specialty. The result of that, as we understand it, is that they tend to add patients as they come in for updating their hormonal supplementation that has occurred concurrently with their AHO. So many of them have a diabetes insipidus or hypopituitarism or some other forms of hormonal deficits that occur as a result of the treatment for their underlying tumor. And so that means that even if a physician is well-educated on the disease, has diagnosed patients, and is ready to prescribe imcivary, there may not be a movement of that patient up in the queue. Until they're coming in on a regularly scheduled basis. And that's just a natural governor on uptake, even if there's a lot of desire for adoption.

Yeah. Okay. But I guess ultimately that dynamic, is that part of what underlies your confidence that, you know, the run rate you're seeing, you know, roughly could be sustainable? Okay. Okay. Makes sense. And then, you know, I know you have not formally updated that 2000 patient number. You've just said, hey, it's higher and continues to increase. But as it relates to the 700 or so start forms, can you at least speak qualitatively to the mix of these patients that, you know, Are you either going on therapy or likely to go on therapy that maybe you didn't actually know were identified before pre-launch?

Yes. So there's a couple of different components. One is the vast, vast majority of the patients are coming from prescriptions written by tiered physicians. So physicians we were targeting when we started the launch, that's a good fact pattern. So in BBS, for example, where we launched in 22, we regularly had about a third of patients that were what we call fly-ins, i.e., you know, the prescription just comes in, often from primary care, because the BBS patients were scattered, usually one patient in one specific practice in most cases, right? These patients are much more concentrated in endocrinology, and these patients are also... You know, these physicians tend to be ones we're already calling on. So I don't want to say that all of the patients were identified. But I do want to say the bulk of them came from physicians that were in our target group, right? I think the second thing we would say is we continue to get reach and penetrate our Tier 1, Tier 2, and even Tier 3 physicians. It's a prioritization question. It's an access question. That's the dynamics of managing a large field force. So we continue to get reach across our tiered physicians, and that then further generates future opportunity for prescription.

Okay. Okay. What do you think you need to get right at Rhythm to maintain or come close to maintaining this patient ad rate over the next 6 to 12 months in the U.S.?

So obviously, continued reach, depth of prescription, which we think if somebody's written once and the patient's had a good experience, which most patients have. They're inclined to write a second time. Broadening of the diagnosis rate through disease education, primarily, and through ongoing medical education and peer programs and things of that nature. And then, you know, just continued adoption across the program.

And you've said a quarter or about a quarter of these physicians have written more than one script. For the 75% of physicians who haven't yet, do most of those physicians treat, you know, materially more than one HO patient?

Yes, because, you know, our tier one is five plus, our tier two is, I think, two to five, you know, that kind of thing.

And most of these physicians fit into that box. Tier one and tier two, yeah. Um, anything else that's like surprised you so far with this launch?

I would say the payer adoption of positive policies has been certainly more rapid than BBS, and we view it positively.

Do you think that's just because the drug was already out there, because the data is better?

It's a combination. Drug was out there, data are better, New England Journal paper. And then I just always go back to the acute nature of the original injury. I mean, in so many of these cases, you're dealing with a child between the ages of 4 and 11 who has just gone through a brain tumor and then has all of these terrible consequences, complications following the brain tumor removal, and it's going to be hard for a payer to not stand up and pay attention.

Yep. Yep. Okay. Makes sense. On the ex-US market, you've talked a lot about Japan being potentially the second biggest market for this drug. Maybe just expound upon that. Like, why is that? How do you think about demand there, pricing power, things like that?

Sure. So interestingly, Japan has an enhanced incidence of craniofringioma compared to the United States and Europe. We do not have a good explanation for that, but it's fact, and craniofringioma is the largest individual driver of AHO with rates that are variable depending upon the case series you look at but tend to converge around 50% of patients who develop craniofringioma. Myofringioma, eventually developing AHO. Usually driven by the degree of hypothalamic involvement either in the tumor or the resection or both. So that drives, you know, an epidemiology that we range in 5,000 to 8,000 as compared to around 10,000 in the United States, so for a much smaller country, right? So that combination with what we expect to be a higher diagnosis rate and, again, the very, you know, sort of supportive regulatory environment, medical affairs environment has been a real positive for what we think is the future potential for launch in Japan. And then there are a number of different factors that drive pricing and reimbursement in Japan, but we were able to get to an attractive overall price level pretty quickly. And then Japan has a program of price maintenance, which distinguishes it from European markets, which typically can have a program of, thank you for all the extra work you've done, your price is going down.

Got it. Makes sense. And so you've said Japan, because of this regulatory dynamic, is likely to be a minor contributor in year one. How do you think about the kinetics of the HO revenue ramp elsewhere, ex-US?

Yes, so the primary markets that we're focused on outside the U.S. are the EU4 plus the United Kingdom. We're going to go through a process that we've gone through before in Germany where we are initially prohibited from reimbursement because we are indicated for weight loss, which is described in Germany as a lifestyle condition. We go and we provide supplemental information about the disease state and the patient response and all of that, and then they give us an exception. So that restricted list. We've done that for POMC. We've done it for BBS, and we expect to do that successfully for AHO. That should happen sometime in the first quarter, and then we will launch. So that's Germany. France, we already have had paid early access in Japan, I'm sorry, in France, and been able to keep patients on therapy for a number of years now at an attractively reimbursed level. We're fully reimbursed in France for BBS, and so it's a supplemental price negotiation, which usually is, you know, a more expeditious process than the initial negotiation, and also with AHO data being stronger, plus the multiple, the long stretch of... of early access leads to the opportunity to, you know, we think have a good launch experience at some point in 27 in France. And then we've also had early access for cranial pharyngioma patients below a certain age in Italy. And so, again, all of these markets, they have their own dynamic. None of them are easy. I would say the UK stands out in that not particularly easy regard. But we have a very experienced team that's been able to garner market access with rare disease reimbursement in each of these markets. And hopefully we can get going in all of them in 2027. And to conclude there, we'll be more specific about those timelines as we kick off the new year.

Great. Let's talk about Prader-Willi. Do you want to set the stage and just talk, at least generally speaking, about how you think about getting bivumelago into market there? Yeah.

So Prader-Willi is a very challenging disease with significant early mortality, in many cases driven by the consequences of obesity and hyperphagia. There is a clear tie to the MC4R pathway through the knockout of chromosome 15, which leads to the deletion of the MAGEL-2 gene, and we are very pleased with the phase 2 data we showed in about 17 patients for MCIVRI, and that's the basis on which we're pursuing a registrational study, hopefully in 2027. There were several things that led to us to lead with BIVA. First and foremost, there's a clinical supply component where BIVA is running ahead of RM718. Second of all, the perception from talking to KOLs that a daily routinized therapeutic administration is preferable actually to something weekly, which would sort of run counter to what a patient without the sort of OCD challenges It is that PWS patients might prefer something weekly, so there's a little bit of a, you know, maybe it's going to be preferred from an administration point of view. So those are the two factors, and then obviously the renegotiation of the royalty component obviously removes the final barrier to leading with bivomellagon. We hope to have an FDA meeting about our Phase III plans in the new year and then start a study in 27, And we've indicated that our study will be a six-month placebo-controlled hyperphagia study with HQCT as the primary endpoint.

Yep. Okay. And from an FDA sign-off perspective, not much mystery there? I mean, you're kind of following established precedent at this point.

That's our view, yeah.

Okay. Okay. Got it. Makes sense. I mean, the data in PWS look quite promising. I asked you this earlier. I'm sure you get this question a lot. You know, it's open-label. Hyperphagia is a severe symptom, but the endpoint has some element of subjectivity. You know, what's given Rhythm the comfort here that the effect size you've seen, effect size, excuse me, transcends any sort of likely placebo effect in this indication?

Sure. So I want to say we had 11 patients in the phase two with clinically meaningful hyperphagias defined and measures of hyperphagias defined by HQCT, of which six were adults. All six had a clinically meaningful reduction in HQCT through six months, and three of five of the kids did. Um, and, um, so, so very promising in, in that respect. And I think what we've learned both from talking to investigators and, you know, some of you may know, we have both a relatively new chief medical officer, uh, A.J. Joshi, who came from Salina, where he was chief head of clinical development there, and then, um, one of our senior, uh, physicians, Ashley Shoemaker, who was well known to the investment community for having run an endo, a PETE endoclinic at Vanderbilt for a long time. So in being informed by both of them, as well as the history of trials, indicates that placebo effects in HQCT tend to have run their course after a couple of months of, you know, of therapy, of a new therapy, which may be a placebo. And so, therefore, we would expect that by a six-month period, you would see a true, you know, adjustment to the reality of the behavioral disturbances that HQCT measures, and therefore, if our therapy is having an effect in the active arm, that you would see both, you know, normalization of any placebo effect as well as a true response to the active arm.

So, for PWS, it's not, as I understand it, you correct me if I'm wrong, it's not totally homogeneous as it relates to the genetic issue there, right? These can be variable delusions or mutations or things like that. Is there a way you can try to better enrich the phase three population to be most likely to respond well to the MC4 mechanism?

So, I'm just going to speak to the, I'm not going to speak to the BMI component of that, because from a genetic point of view, you know, I don't think we've made any determination that, as of now, there would be any genetic sub-criteria for the study in BMI terms. So, therefore, it's more about the fact that clinically meaningful hyperphagia, as defined by HQCT, would have to be an entry criteria.

Okay. Okay. But the thesis is, you know, this mechanism should potentially be broadly applicable, not just to certain populations.

That's what we believe, yes.

Okay. Okay. Got it. Any questions from the audience for Hunter? I'm going to mention the ultimate Hail Mary. There was a Wall Street Journal article, if you saw it, around Rhythm recently. Care to comment anything about that?

Yeah, you know, we don't comment on market rumors, and those were market rumors.

Okay, fair enough. Okay. As it relates to 2027, I'll spare you with any follow-ups there, and we'll just kind of ask one more question to wrap it up, unless there's anything from the audience. If we're sitting here in the second half of 2027, you guys are not going to guide, as we've talked about, but how do you think about how you're going to set goals, and how should we be judging the way the HL launch is going this time next year?

Sure, and it's very timely because as anybody who's worked inside pharmaceutical and biotechnology environments understands, this is the time of year when that is, you know, top of mind for management teams and compensation committees and field incentive comp planning. It's all going on right now, right? So, you know, at the corporate level, you're really focused on, you know, broadening the number of patients on therapy as the first priority because that's what we have the greatest ability to influence. There's always a revenue component, but revenue component is secondary because certainly in the U.S. case, there are non-reimbursed patients. You don't want to have any, you know, you don't want anybody to be thinking about, okay, we're bringing on only, trying to get only reimbursed patients and things like that. You're really trying to maximize the number of patients that you can get onto therapy and maximize the field team's utility in that regard. So you do measure that in terms of, you know, patient adoption. You do measure that in terms of start forms, and you do measure that in terms of ultimately we still need to be responsible for what we believe will be significant continued revenue growth year over year. with a nice increase, you know, don't want to overbuild expectations, but with a nice increase in the ex-US contribution associated with AHO starting to take hold next year as well. So those things will be exciting, and again, we're going to be looking at a broad base of indicators. There's the things we look at qualitatively. There are things we look at quantitatively around, you know, field force effectiveness and the behavior of writers and the continued segmentation of HCPs and hopefully more of them with MCVRI awareness, more of them with a positive view of MCVRI as a treatment for AHO, and more of them ready to prescribe or having prescribed.

Great. And then as it relates to just spending and balancing, getting to sustainable profitability, all sorts of things like that, launching XUS is expensive. What's your view on just from this point on, rhythm is self-sustaining, doesn't need additional external capital?

So, we do believe that RYTHM is self-sustaining and doesn't need external capital, and part of the purpose of the term loan that we just secured was not only to focus, I'm sorry, to finance the fixed consideration that we promised to LG Chem, associated with the BIVA-Mellagon in licensing, But it was also to ensure that as, you know, as and when spending, you know, if we continue to have negative cash-burning quarters, which we should for some time yet, that the dip in liquidity associated with that is balanced by available liquidity in sufficient quantities that we don't need to, you know, issue additional equity. So very excited to be at this moment in that sense, right? You know, maybe I don't need to raise anything ever, ever, you know. I might now someday. We'll see. But putting that to the side, I mean, I think we absolutely will have, we haven't quantified it yet, but we will have a step up in spending year over year. And I would say there'll be three primary drivers of that step up in spending. First and foremost will be the beginning of the two phase three studies. We want to initiate with Bivameligon over the course of 27, first AHO, and second Prader-Willi syndrome, the second being the CMC and clinical supply associated with both Bivameligon as well as formulation development, the autoinjector, and clinical supply for what we will use RM718. And then the third will be the growth in individual markets where we are launching MCIVRI for AHO primarily in Europe, as well as the annualization of the costs associated with Japan. So those will be the three biggest drivers of spending year over year, and as we've done traditionally, we will attempt to quantify that in a range so that folks can help think about the level of cash consumption and or generation as well as the path to profitability in the next couple years.

Great. Awesome. Well, thank you, Hunter. Best of luck. Thanks, Paul.

Appreciate seeing you as always.