Rhythm Pharmaceuticals, Inc. (RYTM) November 9, 2026 Conference Transcript

Great.

Well, good morning, everyone, and thanks for joining us today here for another of Guggenheim's annual conferences, our Healthcare Innovation Conference 2026. To my left is the CEO and President and Chairman of Rhythm Pharmaceuticals, David Meeker. You know, David's going to kick us off with a few opening remarks, and then we'll jump right into Q&A. David.

Thanks, Seamus, and thanks for having us. So, yeah, just one comment. Obviously, we're aware of the media reports, and we don't comment on media reports or any of the rumors out there, and so we won't be having anything else to say about that today, but we look forward to talking about the business.

You know, just as a starting point, you've described the strategic pillars for MC4R, agonism development, genetic, hypothalamic obesity, Prater-Willi. Maybe you can just kind of talk about the opportunities that you see kind of going forward and, you know, just the size of the market opportunity that you see ahead.

Yeah, I think one of the most interesting things about Rhythm has been that this is very old biology. I mean, companies, you know, or academia and industry have been working on this for decades, the MC4R pathway. And so that pathway, which governs satiety and energy expenditure, was well understood. Obviously, if you have impaired signaling, then it leads to obesity. But in many cases, a very significant part of the pathology and what leads to the patient discomfort is this hunger, which is, it's not just I feel hungry because I missed lunch, but it's just a completely abnormal preoccupation with food and need to seek food and the like. And so that part of the biology has been very well understood. I think what was not so well understood, that early understanding came from the genetic And so that's where RHYTHM pursued our initial indications. And in fact, some of those results were quite profound and gave us a lot of confidence in the biology. But what's been really interesting over the past five or six years is a growing understanding of other diseases where it wasn't so obvious that this pathway was central to those diseases. And HO is a prime example. I famously say when I started in this role back in 2020, the company had just started the HO trial, and I thought the probability that trial would be successful was very low, because you could imagine that if you injure the hypothalamus, you might lose this pathway, but the idea that you're probably losing receptors as well, and so how does an agonist work in that setting? And so the consistent, and that's been the most striking thing. I mean, we had, you know, quite profound results, but the consistency of those profound results was, you know, really remarkable. And now we're into, you know, Prader-Willi, an incredibly complex disease, many genes eliminated, but, you know, again, a growing confidence that this MC4R pathway is central to a number of the things that those patients are suffering with. So, yeah, we're excited about, you know, the potential growth and growth opportunities.

You know, last week, you announced the amendment to the LG Chem agreement, and, you know, As an older analyst in the space, I kind of go back to the, you know, the bold move that Cephalon actually made way back when, when they bought back a substantial percentage of their royalty. And, you know, to me, this feels very similar in a lot of ways. Can you just talk about the structure of that agreement? And, you know, what you saw as the sort of benefits of doing this now in particular?

Sure. Yeah, I mean, that partnership deal with LG Chem, I mean, they've really been incredibly wonderful, constructive partners in this. When we did the deal originally, it was early on in our understanding of the HO opportunity, I think, over the past year and certainly since approval in the U.S., our confidence in that opportunity has continued to grow significantly. And so what this buy-down and the royalty really reflects is a lot of confidence in the future there. And I think if we perform as expected, then the economics around this deal can be supported only on the basis of HO. The other part of that deal, which as I said in my comments, despite our best efforts to align the two companies, and that was done by not having a royalty only on Viv and Melagon. Obviously, LG Chem might have been, and they were, concerned that if we were separated in that way, there might be a disincentive for Rhythm to promote their product, that Viva Melagon, over a Rhythm fully-owned product, and that was understandable. So the royalties always applied across the whole portfolio, and that was what allowed all of us to get comfortable. There was one wrinkle to that, which was for each new indication that we developed with Viva Melagon, the royalty rate went up by a point. And so, and it would max out at 7%. And, you know, as we got more confidence in bivomellagon and, you know, found that that molecule as a backbone, either as a monotherapy or, you know, potentially a combination therapy, you know, we didn't want that disincentive. It didn't make sense. I think it wasn't in the best interest of both parties. So this really did both of those things. It speaks to our confidence in the future, number one, but it also cleans up the agreement. So now any decisions we make around our portfolio will be driven solely by science, what we think is the best applicable molecule for a potential indication and the like. We've said, and I think this is likely, that for the big opportunities, HO and Prader-Willi in this case, we're likely to develop both the daily oral and rhythm 718 weekly formulation because those are big opportunities. We want, you know, patients to have the option for two. For some of the smaller ones, it won't make sense to develop both, and you can imagine we'd pick one or the other to go forward. And, you know...

In terms of just the payments themselves, my understanding is that this was on the basis of consensus estimates as they stand today, and that would sort of speak to some degree validation of where the consensus is today, but also the opportunity to see upside. Can you just talk a little bit about how that structure reflects what was a part of the agreement?

Yeah, I think you summarized it well. Obviously, consensus numbers, as long as, quote unquote, we felt comfortable with them, they were out there. I think for both parties, it was an easy way to align around how to assess value. So again, that was a good path forward. But implicit in that is, yeah, we had to feel good about those numbers. And I think, obviously, we did the deal, and we do. So, and then the potential, you know, the upside here, my view of rare diseases, again, as many of you have heard me say many times, they tend not to inflect for a variety of reasons. And you should not think about rare diseases as, you know, peak, you know, zero to peak in five years kind of thing, and then you plateau. Rare diseases almost invariably tend to be opportunities that just grow. For years, I think there's many examples, some of which I was part of, where they grow for decades, and part of that is you continue to penetrate more deeply into your original epi, and not uncommonly, your original epi is light, and so more patients are found, and for those of you know the Genzyme story, back to Gaucher, I think Gaucher is a good indication or a good example of a disease where the epi was very modest out of the gate back in the early 1990s, and after decades, So, yeah, I think those are both things that drive value here.

And, you know, a lot of times we hear, you know, in biotech, don't touch debt, that kind of a thing. You guys definitely made a decision to pursue. The debt facility here. Can you talk a little bit about that and how you're thinking about the sort of relative cost of equity versus what you can accomplish with this debt facility?

Yeah, I think we're very... Dilution-sensitive, shareholder-friendly, hopefully, in that sense. There's points in your development as a company where debt makes no sense, and I think now that we have confidence in our, you know, this growing commercial opportunity, our ability to become a profitable company and the like, debt did make a lot of sense. We're really happy, as you heard Hunter describe, with the terms that we got. You know, we have access to $750 million. We only need to draw down $250 million. And so it gives us the kind of flexibility that doesn't always exist in some other approaches or instruments. So, yeah, I think this was, you know, just the right solution for us at this moment. Great.

So let's talk about AHO and the launch. You know, 700 acquired, you know, patient start forms since March 19th. You talk about no slowdown in the pace into the fourth quarter. Maybe you can just kind of characterize the progression of the launch. But also, are there opportunities for us to get updates in terms of the size of the market opportunity? Or how are you approaching it? You had a very detailed presentation about a year ago at this time to help us understand that market opportunity. When might we have further updates?

Yeah, so maybe I'll step back and try to frame a little bit how we think about it and see if that's helpful. So just as we did with BBS about a year ago in a pre-launch period, we had an investor meeting. We presented our 2,000-plus number of HO patients, which the field, and that was mostly our medical science liaison, MSLs, who had been out in the field. There were about 10, 15 people who were working this problem. And so in their interactions with investigators, sites, and the like, they felt that they had reasonable confidence in this 2,000-plus number. And I remind you again that that was a mix of suspected and firmly diagnosed. And why that mix is important in this rare disease is that, although it's not a difficult diagnosis to make if you know what you're looking for, I mean, you have a history of an event, most often surgery for a tumor or the like, so that's a very clear finding. You have a dramatic change as a rule following that event. Now, they have many, often multiple endocrine insufficiencies which develop, but this change, They rapidly gain weight. They're suddenly, you know, much more hungry. They're more lethargic. I mean, all of those things can be dated to the point of the event, so it's very easily recognized. The problem was this is not an abnormality that's well recognized historically in the endocrinology community, amazingly, even though we firmly believe, and I think the response to setmelanotide confirms, it is another hormonal deficiency. I mean, the cause of this is you are deficient in alpha-melanocyte It's stimulating hormone. So long story short is the majority are still in the suspected category. The growing number of patients need to come in and get a diagnosis, and so that's really, you know, what's a bit gating here in terms of the overall launch. So how do we think the launch is going overall? What we're looking for in a launch is, and the metrics we're trying to give you is, A, is it working, and is it working meaning are patients coming in? Are they getting scripts? Are the scripts being pulled through the system, are paying repairs, reimbursing, and, you know, two quarters in, yeah, we're thrilled, to be honest, in terms of where we are and the steady nature of it. And I know there's been a lot of dissection of those numbers, and I just caution everybody. I mean, these are two data points in a rare disease, so you can draw the line, but, you know, be careful. But I think it does, we have a lot of confidence, and hopefully it gives, you know, people watching a lot of confidence that this thing is working. And as you mentioned, we're into the fourth quarter now, and it's continuing to go at a steady pace here. So we feel very good. Then your last question was just on the overall epi and when you get an update. That number we gave you last fall pre-launch has grown significantly since then. I mean, our understanding of potential patients, we don't update that number once we get into launch because it's a softer number than the scripts. We think the scripts are a harder, more secure measure of this. That 2,000 number is built out of conversations with individual physicians who say, I have X number of patients, and I think I might have Y. So better than just doing sort of random epi work, but still with some inherent softness. And the last part of your question is, would we think about updating our overall epi? And the answer, yeah, at the appropriate time when you have that confidence. I mean, we came out of the gate on HO saying we thought there was 5,000 to 10,000 as we did more work, and we were in the field, and we got a much—and a lot of that early work is informed globally. You start doing work in different countries, and you see, you know, okay, these are starting to support each other. You can triangulate, quadrangulate to get to, you know, similar kind of numbers. So that's why, quote, unquote, we feel very good, strong about the 10,000 number. Could it be bigger? It could be bigger. Back to my comment earlier about rare diseases and what you don't know at the beginning. But you learn that over time. So at some point, potentially. Right.

So you brought up the international opportunity. I think what's interesting is, you know, even for analysts who have been doing this for a long time, like myself, the challenge is... You know, really trying to figure out what is that market opportunity? What does the uptake look like? I think you've demonstrated very clearly as a company that you can execute in international markets, as we've seen with the BBS launch and with Access in particular. What do you see for AHO in your existing markets? And then what would you say is the, you know, incremental opportunity? A lot of folks kind of say, wow, Japan, so hard. But I think in rare disease, you have very different experience.

Yeah, I think, as you're saying, as an outside observer, it's hard to value international. I can say as an inside observer, it's hard to value international. I mean, it's just, you know, we know these markets are tough. You don't always know, and they're very dynamic. I mean, things are changing continually. As you know, you look at Europe right now, it's a really challenging moment. Countries that historically you counted on to have a certain time frame are on slightly different time frames. I'll use the UK and France, for example, I think. So those are just uncertainties that you deal with. But as a company, the way we think about international is it's almost a pay-as-you-go, right? We're investing as we get confidence we can unlock that individual market, that country specifically. So Germany will go first in HO for somewhat Predictable reasons, but a big issue in Germany was we had to get an exception through what they call their GBA. They don't reimburse lifestyle medications. Obesity medications are considered lifestyle medications. So we needed an exception, and we got those for each of our prior ones. We expect to get that for HO, and so you work your way through that, but you have to go through the steps. And then you get to some of the other countries where, you know, it's a little less certain, but... We're building the business with the idea that, you know, these are global health problems. We want to serve them globally, and we want to go into each of these markets in a way which is consistent with our ability to do it as a country. So we're pretty, very much deep into Europe, as an example. We're very lightly into Latin America. There's additional challenges in Latin America. We literally have, you know, sort of, you know, one employee in Argentina who, as a single employee, is opening up Argentina. Not a lot to talk about there, but he's more than paid for himself. And, you know, this is how you begin to put down, you know, footprints and, you know, create the market over time. Japan, very different. And what surprised us about Japan was, you know, when we did the epi work and realized that the, you know, the incident population, prevalent population over there was, in fact, on a population basis larger than the U.S. and higher incidence of craniofringioma for reasons maybe that aren't so clear, to be honest. But those numbers seem to be good. And so and then we've, you know, we made the decision to invest in. And internationally, success is, as a rare disease company, again, it's much better to go to direct if you can. Your ability to do it is a function of the people, not surprisingly. If you have the right people on the ground who have the experience, you can be successful. I think we had that in Europe. Yano Overseas International has tremendous experience across countries. And in Japan, we took exactly the same. So we have 50-plus people now on the ground, and we're prepared to launch with the same kind of focus and effort that we're doing in the U.S., for example.

And just maybe to help folks understand how launches actually proceed in Japan, you know, there's this sort of two-week safety dynamic that kind of plays through for about a year. So when should we expect, you know, revenue to really start kind of kicking in from Japan?

Yeah, there'll be a shift. So what we said, and again, because I don't have a better word for it, modest, and I don't know, to be honest, what modest means, but I do know that for the next 12 months, meaning from the date of approval or date we launched, 12 months from then, you get out from under the requirement that patients can only get a two-week prescription for their drug. And it's not that then their doctor has to call the script into a pharmacy. It's that they physically have to come back to the site of where they got their script. So if you're working, if you're in school, if you're whatever, I mean, those are just, that is a drag. It's a very purposeful drag on the part of the system so that a new product launch doesn't get ahead of itself, doesn't suddenly, you know, find out you've got unusual safety problems or something. So it's designed by the system to do that. I think it works pretty well. So think modest. But it ends 12 months from launch. So it's, you know, a patient who started next October, they may have to do it for two weeks and then they'll be free to get their full. So it's just, it's physically a calendar year from the time.

New opportunities, Predor-Willi, whether it's for, you know, clearly for the pipeline assets more than anything at this point. Can you talk about the opportunity for whether it be Settin-Lanatide, Bivim-Aligon, 718 in Predor-Willi? And, you know, what were the learnings from Endo from your perspective?

Yeah, the data, six-month data, Dr. Miller's site of the University of Florida. I mean, what we hope people took away from that, what we took away from that is, you know, the changes in BMI, for example, were very modest in a world where we live in GLP-1s and everybody are conditioned to that kind of change and, you know, the Olympics of weight loss, if you will. For that population, nothing really gives you weight loss. So the fact that we were seeing consistent loss of weight, BMI decreases in those patients was important. And equally important was the fact that of the measures we talked about, DEXA scans with the fat and the lean. And DEXA scans, in this physiology, the MC4R pathway is really interesting. If you think about GLP-1s creating an aversion to food, I think about that more as almost a starvation state. If you stop eating, you will lose weight if you're disciplined about that, but you will lose both fat and lean. This drug just tells you you're full. You don't stop eating. It's restoring a more normal physiologic. So you almost invariably lose more fat than lean. If you're a teenage boy going through puberty, you can gain weight. So anyway, so DEXA scans in this world, and this are incredibly important. So the data, you know, we showed you, you know, BMI, DEXA scans were favorable, and then the two measures, HQCT and this anxiety distress score, they all moved, and they moved in a directionally consistent way. Now there's noise in that data set. So if you look at it and you say it's six months, it's open label, there's no control group, all fair. But I think we were really encouraged by the fact that, you know, the results were consistent, and in this population, you don't get that randomly.

In terms of what additional learnings we could gain from the ongoing study, you added a couple of additional sites, and this is going to be drawn out to 52 weeks. What do you hope to learn at 52 weeks?

Yeah, consistency. Just one clarification. So we did file to add additional sites, but they were all enrolled at Dr. Miller's site. So the 18 patients, one of whom discontinued down very early, so 17. But those patients, again, we'll put this out at a medical meeting hopefully early in the spring. And what you should be looking for and what we're hoping to see there is consistency in these results, that we see consistency across the different measures that we're looking at, some appreciation, minimally stabilization. I mean, again, all of that would say in a population which is destined to gain weight, to get worse, to feel worse, if we can stop that and improve it. I think we have a path to a good drug here.

And why, I mean, a couple of the things that we've heard is just this dynamic of daily oral versus weekly. My automatic reaction was, well, geez, for this very complicated patient population, weekly's got to be better. And then the feedback was like the dead opposite. So you can just help us understand a little bit of that.

Well, that was Dr. Miller, who's, you know, the wonderful thing about working with Dr. Miller, for those who know her, And I mean, she is one of the preeminent global experts in the area of Prader-Willi, and she does feel very strongly, and she made that clear on the endo call, the call we had at endo in June. These patients need routine, and a big part of their disease is obsessive-compulsive disease. And so the routine of doing something every day, which is why she favored the daily over the weekly, and I'll just make one comment about that, you know, obsessive-compulsive part of the disease, for example. Part of what makes this a tough disease to study is even though you may address the underlying problem, we give them restore a satiety signal. They don't have the same hunger and drive to eat. With obsessive compulsive disease, if you're hardwired to get a snack at a certain time of day, you want your snack. So even if you remove the underlying pathologic, biologic drive, you still want your snack. Families are used to using food to manage the behaviors, the other behaviors unrelated potentially to this abnormality and signaling and the like. So they all create noise in a world where you're trying to measure food intake and weight and BMI and the like.

Got it. As we kind of think about Catalyst for 2027, you know, the next leg of opportunities, you have two pipeline programs advancing, you know, how should we think about, you know, 2027 Catalyst, but then, you know, the opportunity to really see Prader-Willi and AHO emerge with the pipeline, and where does that take the overall rhythm story in terms of the durability of the opportunity?

Yeah. So we're a readout light relatively in 2027. We're heavy on initiations. You should look for, as we talked about, the 12-month data coming out in medical meeting early in the spring, hopefully one of the earlier meetings. So that will be a readout. But mostly, you'll be looking for initiation. Of course, we're looking forward to starting the HO trial imminently with Vivimeligon, starting a Prader-Willi trial mid-year, early Q3. I mean, that would be my hope. Don't take that as guidance, but that's what we're driving for. We'll talk to them. And updating our combination strategy. We haven't talked about that, but I spoke about that on the earnings call, where we are very focused on not just figuring out where MC4 agonism plays a central role and how we can improve those specific indications, but we know there's ways that you can amplify the effect and do better. And so we look forward to exploring that and hopefully being able to talk about that in 2027.

Great. Well, we had plenty more to cover, but, you know, really exciting times for Rhythm and, you know, for patients with kind of MC4R pathway disorders that are, you know, clearly growing as we continue to follow the execution that the team has kind of brought forward and made a lot of investors happy so far.

Great. Well, thank you, Seamus. Appreciate the opportunity.

Thanks so much, David.

Perfect. Appreciate it.