Rhythm Pharma (RYTM) Earnings Call Transcript

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Date

Thursday, Feb. 26, 2026 at 8 a.m. ET

Call participants

• Chairman, Chief Executive Officer, and President — David P. Meeker
• Executive Vice President, Head of North America — Jennifer Lee
• Chief Financial Officer — Hunter C. Smith
• Executive Vice President, Head of International — Yann Mazabraud

Takeaways

• Product revenue -- $57.3 million for the quarter, representing a 12% quarter-over-quarter increase and approximately 37% growth from Q4 2024.
• Annual revenue -- $194.8 million, an increase of approximately 50% from the prior year.
• Geographic revenue split -- U.S. contributed $39.0 million (68%), ex-U.S. $18.3 million (32%) in the quarter.
• Inventory dynamics -- There was a $1.3 million negative inventory swing due to U.S. specialty pharmacy shipments exceeding patient dispensing by 1,700 vials (compared to 3,000 the previous quarter); inventory days on hand rose to approximately 20, above the 10-15 day normalized range.
• Cost of goods sold (COGS) -- At 8.5% of product revenue, COGS was lower this quarter due to increased finished goods inventory, with a general expectation of 10%-12% COGS going forward.
• R&D expenses -- $42.0 million for the quarter, with a $4.0 million sequential decrease due to lower costs in ongoing trials.
• SG&A expenses -- $57.5 million for the quarter, increasing 10% quarter over quarter primarily from costs related to the anticipated acquired hypothalamic obesity (HO) launch and expanded U.S. field force.
• Cash position -- $389.0 million in cash, cash equivalents, and short-term investments at year-end.
• Patient growth -- The number of patients on reimbursed therapy globally increased by approximately 10% sequentially, driving quarterly revenue growth.
• Bivomelanotide phase II data -- Forty-week mean BMI decreases were 10.8% for the 400 mg cohort and 14.3% for the 600 mg cohort, including noncompliant patients.
• Regulatory and clinical milestones -- Upcoming FDA PDUFA date for acquired HO is March 20, with EMA review and CHMP opinion expected in Q2 and top-line data from the Japanese phase III HO cohort planned for March.
• 2026 expense guidance -- Non-GAAP operating expenses are forecasted at $385.0 million–$415.0 million, with drivers being investments in next-generation MC4 agonists, HO commercial launch, and Japanese operations buildout.
• IMCIVREE global reach -- Now available in more than 25 countries; international team expanded to over 100 employees across 13 countries, with eight new countries added during the year.
• HO patient opportunity -- Company estimates 10,000 acquired HO patients in the U.S. and 5,000–8,000 in Japan, with targeted engagements at 40 priority medical centers for AHO clusters in the U.S.
• FDA guidance on phase III bivomelanotide -- FDA requires a twelve-month double-blind randomized controlled trial with a sample size similar to the 142-patient CEP-1 trial for registration.

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Risks

• Chief Financial Officer Smith said, "growth in days on hand represents a potential pull-forward of revenue from the quarter of actual patient demand and can, with all other things being equal, have a dampening effect on the first quarter of the year," highlighting the likelihood of lower U.S. sales in the subsequent quarter due to inventory buildup.
• General and administrative expenses increased by $19.4 million in Q4 2025 compared to Q4 2024, driven by headcount and launch costs, potentially impacting near-term profitability.
• FDA indicated a full twelve-month double-blind trial with higher patient numbers is required for bivomelanotide, increasing regulatory and operational requirements before registration is achieved.

Summary

Rhythm Pharmaceuticals (NASDAQ:RYTM) delivered double-digit sequential and annual revenue growth and expanded ex-U.S. access for IMCIVREE, while laying groundwork for multiple upcoming regulatory milestones, including the anticipated U.S. approval for acquired hypothalamic obesity. Management issued 2026 guidance reflecting significantly increased investment in new and next-generation MC4 agonists, supporting future launches in expanded geographic and indication markets. The FDA's requirement for a larger, lengthier pivotal trial for bivomelanotide shifts the expected timeline and investment needs for that program's advancement.

• In the Japanese market, Rhythm Pharmaceuticals has established a full local affiliate and anticipates launch within twelve months of receiving regulatory and market access approvals after releasing top-line phase III data in March.
• The company plans to file supplemental NDAs for each individual genetic indication (not combined), which may extend the regulatory pathway for MC4R-pathway diseases.
• Product revenue growth in Q4 was driven by ex-U.S. expansion and recovery from France pricing adjustments, while U.S. revenue also increased due to higher product dispensed to patients.
• Management stated, "we were able to enroll [the POMC heterozygous cohort] fully," while other subgroups, particularly leptin receptor heterozygous patients, remain under-enrolled due to rarity, which could impact the interpretation and power of forthcoming sub-study data.
• For Prader-Willi syndrome, management specifically set a ≥5% BMI reduction as the minimum threshold for clinical success and will choose between advancing setmelanotide or next-generation RM718 based on comparative readiness for pivotal studies.

Industry glossary

• PDUFA: Prescription Drug User Fee Act, referring to the FDA target date for action on a new drug application.
• BBS: Bardet-Biedl Syndrome, a rare genetic disorder causing early-onset obesity and other symptoms.
• MC4/MC4R: Melanocortin-4 Receptor, a critical pathway influencing body weight and appetite regulation.
• HO/AHO: Hypothalamic Obesity/Acquired Hypothalamic Obesity, a condition defined by severe weight gain due to hypothalamic injury.
• Setmelanotide: An MC4R agonist therapy developed by Rhythm Pharmaceuticals for rare genetic obesity disorders.
• Bivomelanotide: Next-generation MC4R agonist currently in Rhythm Pharmaceuticals' clinical pipeline.
• POMC: Pro-opiomelanocortin, a gene implicated in certain rare genetic obesity syndromes.
• CEP-1 trial: Pivotal clinical study with 142 patients referenced for sample size guidance.
• CHMP: Committee for Medicinal Products for Human Use, the scientific review committee of the European Medicines Agency.
• GLP-1: Glucagon-like peptide-1 receptor agonists, a class of medications commonly used for treating obesity and diabetes.
• PWS: Prader-Willi Syndrome, a genetic disorder with significant impacts on hunger and weight regulation.
• SG&A: Selling, General, and Administrative expenses.
• AP1 reimbursed early access program: A temporary French reimbursement initiative allowing pre-approval patient access to IMCIVREE.
• sNDA: Supplemental New Drug Application, a regulatory filing for additional indications or populations for an already approved therapy.
• HQ-CP: Hyperphagia Questionnaire for Clinical Practice, a tool mentioned for measuring hunger in obesity trials.

Full Conference Call Transcript

This morning, we issued our press release that provides the fourth quarter 2025 and full year 2025 financial results and a business update, and that press release is also available on our website. Our agenda is listed on slide two. For those of you participating on the conference call, our slides can be accessed by going to the Investors section of our website: ir.rhythmtx.com. On the call today are David P. Meeker, Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter C. Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International, is on the line joining us from Europe. With that, I will turn the call over to David P. Meeker, who will begin on slide five. Thank you, Dave. Good morning, and thank you all for joining. We preannounced our revenue for the fourth quarter, highlighting the continued strong

David P. Meeker: performance by our commercial teams. The BBS opportunity continues to grow at a steady rate both in the United States and ex U.S. markets. Jennifer's North American team, fully hired and in place at the start of the fourth quarter, continues to take full advantage of the PDUFA extension to prepare for our expected launch. I will share these new data that show persistent BMI and consistent safety and tolerability over the next few slides. Last July, we announced positive top-line results at fourteen weeks with patients in the four hundred and six hundred milligram arms achieving a mean BMI reduction of 7.7% and 9.3%, respectively. Similar BMI reductions as achieved by setmelanotide at the same time point.

Our goal will be to present the data, including the full fifty-two week data, at a medical meeting midyear. We were able to share the nine-month data, which included a minimum of six months on drug for the original placebo patients. Slide six is to remind you of the original bivomelanotide phase two design. Patients were randomized to either placebo or one of three dosing cohorts for a period of fourteen weeks. At the end of fourteen weeks, the study remained blinded and all patients were then re-dose escalated to preserve the blind from two hundred milligrams to the target dose of six hundred milligrams for the balance of the open-label extension period.

Slide seven shows the disposition of the twenty-eight patients. As a reminder, one patient discontinued after the first visit due to rectal bleeding, judged unrelated to study drug. Since then, one patient has stopped taking the drug but remains in the trial as a retained dropout. In summary, six of twenty-eight patients remain active in the trial including the retained dropout patients. So 25 out of 28 remain retained dropout. One 64-year-old male who had lost 14.5% at fourteen weeks in the six hundred milligram cohort chose not to continue into the open-label period when they converted to active drug.

Slide eight shows the placebo patients whose baseline BMI was calculated from their fourteen-week clinic visit when they converted to active drug. With the exception of the 12-year-old female who we believe is not compliant, all patients showed a response to drug after fourteen weeks, which included the up-titration period, with further deepening at twenty-six weeks, and a week forty visit, and of note, one patient did not have her forty-week visit, but she remains in the trial. The next four slides show individual patient data at forty weeks.

Similarly, for the original two hundred milligram cohort on slide nine, all patients, with the exception of the retained dropout patient who is actively gaining weight and the patient who we believe is not compliant, have had a response at twenty-eight weeks and further deepening at forty weeks. The modest response on two hundred milligrams alone at fourteen weeks does suggest that this dose is probably subtherapeutic for many patients. Slides ten and eleven show the data for the original four hundred and six hundred milligram cohorts.

With the exception of the two patients who were not fully compliant, one each in the original four hundred and six hundred milligram cohorts, all patients had a good response to drug, with eleven of fourteen patients decreasing by 10% or more. The mean BMI decrease for the four hundred milligram cohort at forty weeks, including the noncompliant patient, was 10.8%. The mean BMI decrease for the six hundred milligram cohort, including the noncompliance patient who gained 7.5% and the patient who dropped out at fourteen weeks, was 14.3%. Of note, the setmelanotide phase three data at the forty-week time point in patients not on a concomitant GLP-1 from our phase three study were 15%.

With regard to safety, the drug is better tolerated when taken with a small amount of food. The side effect profile continues to mimic what we see with setmelanotide. The nausea and vomiting tends to occur early and then patients tolerize. The episodes of diarrhea tend to be a little more sporadic, are mild in severity, and no patients have discontinued because of diarrhea. In this trial, the compliance issues have been predominantly in the younger teenagers who we believe struggle with the size of the pills. As we have indicated, we will have an easier-to-swallow single-pill formulation going forward for each of two hundred, four hundred, and six hundred milligram doses.

And we will have a chewable tablet for younger patients. Next steps for this program will include bioequivalence studies comparing the new and old formulations, a drug-drug interaction study, and a hepatic impairment study. We expect to have the majority of this work completed and drug supplied for phase three studies by the end of the year, with a goal of initiating the phase three HO study by year end 2026. As many of you know, we were hoping, given the prior setmelanotide data and the placebo cohort data, that we could negotiate a six-month double-blind period and a smaller number of subjects given the effect of the drug.

I would characterize our FDA meeting as highly constructive on multiple fronts. They were firm that with a new chemical entity, a full twelve-month double-blind randomized control trial would be required as well as a larger number of patients to build up the safety database. Our plan will be to run this trial largely in countries where setmelanotide will not be available for acquired HO in the near future, which should facilitate enrollment. We expect that number to be closer to the full 142 patients studied in our CEP-1 trial. We are awaiting the final minutes from that meeting, but that confirmed that BIVO is ready to move to Phase III.

There was no discussion of setmelanotide in the upcoming PDUFA date, but the FDA is communicating with us on the expected timeline, and we have received the first feedback on the label. I am not going to make further comments today on that feedback as it is preliminary and pending the final submission of data on all 142 patients which will be incorporated into the label. As shown on slide 13, we have multiple upcoming milestones with PDUFA for HO, top-line data from our Japanese cohort, and the M and A readout all coming in March. For M and A, we are working to get the top-line data with the goal of releasing that data by March.

We have taken no further data cuts and have no further patient updates to provide on this call. The PWS trial continues on track to get to the full six-month data by midyear. At our December release, we indicated that one patient had discontinued with all remaining 17 patients continuing on treatment. Since then, we have had no further dropouts and we are on track to have initial three-month data by midyear. The 718 weekly formulation continues to enroll in a trial. With that, I will turn the call over to Jennifer.

Jennifer Lee: Thank you, David. Starting with BBS, we had another steady quarter of growth in prescriptions as our teams continue to focus on educating health care providers to expedite patient diagnosis, and working with payers to secure approval for reimbursement. As it is the only approved therapy that targets the root cause of rare MC4 pathway diseases like BBS, importantly, patients are benefiting from Emsivri therapy. We continue to be inspired by patient success stories. For example, one adult male patient with BBS who is a resident of an assisted living facility had such severe hyperphagia and preoccupation with food that he could not participate in group activities.

After six months on Emsivri therapy, he not only lost 40 pounds, but his hyperphagia had quieted down meaningfully, and now he is able to socialize with others and participate in group activities. As we have discussed previously, we expanded our Salesforce from 16 to 42, all highly experienced launching new therapies in rare diseases. Our teams are continuing to prepare for the acquired hypothalamic obesity launch pending regulatory approval and our March 20 PDUFA goal date. With the extra time ahead of launch, our engagement efforts have continued. Acquired HO is a distinct post-injury neuroendocrine disease characterized by impairment of the MC4 pathway, leading to hyperphagia and accelerated and sustained weight gain.

Acquired HO represents a significant opportunity for Rhythm to expand the reach of Emsivri and the benefit it brings to patients, with an estimated prevalence of 10,000 in the United States. Claims data helped us identify health care providers who we believe are caring for patients with acquired HO. Our HCP engagement has been focused on disease awareness to help drive suspected cases to formalized diagnoses of acquired HO. We already have engaged with HCPs who care for more than two patients diagnosed with or suspected to have acquired HO. Let me outline an example of the ongoing knowledge dialogue around patients suspected to have HO. Our team engaged with an endocrinologist who treats several patients.

Following treatment of a brain tumor with sustained hypothalamic injury, this patient experienced severe weight gain. During a meeting with a field team member who outlined that injury in the hypothalamus could cause impairment of the MC4R pathway as well as the hormonal dysfunctions associated with the procedure, the physician noted that one patient in particular stood out. This patient subsequently underwent gastric bypass surgery and later GLP-1 therapy, with minimal benefit. Now with a clear understanding of the clinical diagnosis of acquired hypothalamic obesity and appropriate screening criteria, this physician indicated to bring them back for evaluation and diagnosis. He suspects additional patients may have acquired HO and he will seek confirmation. Moving on to the next slide.

We have also learned more about the concentration of AHO patients through our territory managers' disease education efforts. In addition to the ongoing engagement of our MSL, or Medical Science Liaison team, our team engaged with an endocrinologist who treats several patients and have identified approximately 40 priority medical centers throughout the nation based on their significant AHO patient clusters. Approximately one third of the potential AHO patients who we have identified via claims data are managed within these centers. The majority of these have pituitary or hypothalamic disorders managed by multidisciplinary teams.

While there are similarities within these organizations, there is variability in terms of who manages AHO, relating to which specialty is brought in to manage the tumor and treatment, versus the obesity treater. In one center, the endocrinologist involved in the treatment of the hormonal functions would also take on the responsibility to treat the weight gain. In another center, these patients' hormonal dysfunctions would be managed by the endocrinologist, but they would be sent to the community PCP or obesity specialist to be treated for their weight gain. Understanding these differences allows us to better pinpoint who would potentially be the diagnoser of AHO and future potential prescriber of Emsivri if approved for AHO.

Our team continued their HCP engagement and identification of patients who would benefit from Emsivri once approved. Now onto my last slide. Beyond HCP engagement, we also continue to engage with payers to secure access for patients as soon as possible following approval. Our education and engagement around BBS established a robust, safe pathway for securing access for AHO as payers have come to recognize the differentiation of MC4R pathway diseases and the value that Emsivri offers patients. Our expectation is for policy updates for acquired hypothalamic obesity, care coverage following approval to occur within three to nine months. We are excited by the progress we have made and are ready for launch pending approval in acquired hypothalamic obesity.

Now let me turn it over to Yann.

Yann Mazabraud: Thank you, Jennifer. I will begin on slide 19. IMCIVREE is now available in more than 25 countries outside the United States, with the ongoing BBS and POMC/PCSK1/LepR sales, and the reimbursed early access programs for acquired hypothalamic obesity in France and Italy. We had a strong year in 2025 as our international team has grown to more than 100 employees across 13 countries, including eight countries newly added during the year. Our growth in 2025 was driven by sales in countries with established access and new countries coming online. Our team engages with key experts across Europe to advance education and the understanding of rare MC4R pathway diseases.

In 2025, 64 abstracts or oral presentations at 12 international and national scientific congresses. Next slide. Here, I highlight one recent publication entitled Early Onset of Obesity Model: Impact of Early Onset Obesity on Comorbidity Risk and Life Expectancy, which was very recently published in Obesity Facts. This peer-reviewed early onset obesity disease model, both originals and anchors, were accepted for The European Journal of Obesity. This model, which we developed in collaboration with leading European experts, integrates data from more than 140 publications to quantify how the age of onset, the severity, and the duration of obesity negatively affect the risk of comorbidities, the health outcomes, and the life expectancy.

This reinforces that early onset obesity is a serious, progressive disease and stresses the urgent need for early intervention. We are addressing the underlying cause earlier as a potential to reduce long-term disease burden and create meaningful benefit for patients, families, and health care systems. Next slide. Slide 21. Now moving to acquired hypothalamic obesity. We are planning for multiple opportunities in Europe and Japan. Japan represents a meaningful long-term opportunity for our MC4 agonist franchise, with a higher per capita prevalence of acquired HO than the United States and Europe and an estimated population of five thousand to eight thousand patients.

Earlier this month, our team had a very positive in-person meeting with the Japanese PMDA, and as David said, we anticipate top-line data from the phase three cohort of Japanese patients in March. In Europe, our EMA submission for HO is under review. We anticipate a CHMP opinion in Q2 and the EU marketing authorization in 2026. We continue to make significant progress. The steady growth in our reimbursed early access programs for HO in France and Italy is a very positive indicator of our success in Europe and helped establish foundational relationships with expert physicians and local authorities.

The French regulatory authorities renewed this month the authorization for the IMCIVREE AP1 reimbursed early access program, which clearly illustrates the benefit patients are receiving as part of this program and the high unmet need. Pending marketing authorization from the EMA in 2026, we will begin to establish reimbursement for acquired HO in Europe on a country-by-country basis as we have done before for POMC, PCSK1/LepR, and BBS. With that, I will turn over to Hunter.

Hunter C. Smith: Thank you, Yann. 2025 proved to be a strong year with solid growth in global sales of Emsivri and multiple value-driving milestones achieved across our portfolio of MC4R agonists. We entered 2026 well capitalized with more promising potential catalysts ahead. I will begin on slide 23 and walk you through our results for the fourth quarter, as well as the full-year revenue. Both of which we preannounced in January. Revenues from sales of Emsivri were $57.3 million for the fourth quarter of 2025, representing a quarter-over-quarter increase of 12%. For the full year, revenue was $194.8 million, an increase of approximately 50% from 2024.

On a sequential quarterly basis, revenue growth was driven by an increase of approximately 10% in the number of patients on reimbursed therapy globally. In the fourth quarter of 2025, $39.0 million, or 68% of product revenue, was generated in the United States, and $18.3 million, or 32% of product revenue, was generated outside the United States. On slide 24 is the walk from the $51.3 million in global sales in Q3 to the $57.3 million in Q4. In the fourth quarter, the volume of vials shipped to our specialty pharmacy in the United States was approximately 1,700 greater than the vials dispensed to patients. This compares to an excess of vials shipped over dispensed of 3,000 in Q3 2025.

The net effect produced a negative $1.3 million inventory swing from Q3 to Q4. For the second consecutive quarter, inventory days on hand at the specialty pharmacy increased to approximately twenty days versus a normalized level of around ten to fifteen days. As is common across our industry, this type of growth in days on hand represents a potential pull-forward of revenue from the quarter of actual patient demand and can, with all other things being equal, have a dampening effect on the first quarter of the year. U.S. revenue grew by $2.1 million quarter over quarter due to increases in product dispensed to patients.

Ex-U.S. revenues increased $5.2 million, or 40%, versus the third quarter, and as was the case with year-end 2024, the sequential increase was largely due to the negative impact on the third quarter of a one-time $3.2 million charge related to the final agreement with France on the reimbursed price for Emsivri for the treatment of BBS. On slide 25 is the financial snapshot of year-over-year performance as well as the fourth quarter 2025 results compared to 2024. Net product revenues in Q4 2025 increased by $15.4 million, or 37%, over Q4 2024. Gross-to-net for U.S. sales was approximately 84.6%, generally in line with the gross-to-net percentage from previous quarters.

Cost of goods sold this quarter was 8.5% of product revenue and was mostly attributable to cost of materials and our royalty payment on setmelanotide due to Ipsen, with variation due to how our inventory balances change. We generally expect cost of goods sold to be between 10%–12%. COGS as a percentage of product revenue was down slightly this quarter based on an increase in finished goods inventory. Research and development expenses were $42.0 million for Q4 compared to $41.2 million in the same quarter last year. Sequentially, R&D expenses decreased by approximately $4.0 million compared to the third quarter.

Costs in the fourth quarter from our phase three HO trial with setmelanotide and our phase II trial with bivomelanotide decreased from the third quarter. SG&A expenses were $57.5 million for Q4 2025 as compared to $38.1 million in Q4 last year. Sequentially, SG&A expenses increased by $5.1 million, or approximately 10%, compared to the third quarter, due to increased headcount costs and professional fee expenses associated with the anticipated launch in acquired hypothalamic obesity, including the transfer of the field force described previously.

More than half of that decrease was due to the transition of our area development managers in the United States to sales reps or territory managers, moving their salaries and stock compensation to SG&A effective October 1, and the corresponding capitalization of labor and overhead costs. For Q4 2025, weighted average common shares outstanding were approximately 67.0 million. We ended 2025 with approximately $389.0 million in cash, cash equivalents and short-term investments. Cash used in operations was approximately $25.0 million in the quarter and $116.0 million for the full year.

Our GAAP EPS for the fourth quarter was a net loss per basic and diluted share of $0.73, which includes $0.02 per share from $1.3 million of accrued dividends on convertible preferred stock. On slide 26, a few additional items of note. Our GAAP operating expenses for 2025 totaled $362.3 million. That included $66.8 million in stock-based compensation. Non-GAAP operating expenses for the year were $295.5 million. This came in at the lower end of the range that we guided for at this time last year. Our common share count is 68,285,039 shares as of February 24. This number includes 729,164 shares of common stock, which were converted from preferred shares since the end of the third quarter.

Recall, we raised $150.0 million in gross cash proceeds through the issuance of convertible preferred shares in April 2024. Following this partial conversion, there are 202,395,831 potential common shares that could be converted from the remaining preferred shares. The recent conversions represented almost 25% of the initial preferred shares, hence reducing our liability of dividends payable to preferred shareholders. Lastly, on slide 27, we are offering annual guidance on non-GAAP operating expenses for 2026. For 2026, we anticipate approximately $385.0 million to $415.0 million in non-GAAP operating expenses, which includes non-GAAP R&D expenses of $197.0 million to $213.0 million and non-GAAP SG&A expenses of approximately $188.0 million to $202.0 million.

The overall increase in non-GAAP operating expenses for 2026 of approximately $104.5 million at the midpoint is the result of the success of our clinical, regulatory, and commercial programs in 2025 and represents future investments driving long-term growth and increasing shareholder value. There are three primary drivers of the growth in anticipated 2026 spending. First, approximately 30% of the year-over-year increase will come from increased spending on formulation development, manufacturing, and clinical supply of our next-generation MC4 agonists, bivomelanotide and RM718, as we continue to move both compounds through proof-of-concept studies and hopefully registrational studies in the coming years. Second, approximately 25% of the increase will be on U.S. commercial operations in support of the HO launch.

Third, approximately 15% of the increase will be to build out Rhythm's operations in Japan in anticipation of a potential approval in HO. Overall, this forecasted year-over-year growth in operating expenses is the product of the last few years’ clinical, regulatory, and commercial success and represents a meaningful opportunity to invest in Rhythm's long-term potential to serve patients with MC4R pathway diseases. With that, I will hand the call back over to David.

David P. Meeker: Thank you, Hunter. And, Tanya, we can open it up for questions. Thank you.

Operator: Our first question will be coming from Derek Christian Archila of Wells Fargo. Your line is open, Derek.

Derek Christian Archila: David, just first on vibomelanotide Phase III. Your comments suggest that this will largely look like setmelanotide phase three. So in terms of sample size and duration, but are there any changes to enrollment criteria that you would, you know, think of or other features of the trial that you can comment on?

Hunter C. Smith: No.

David P. Meeker: I mean, those are the principal things that we were looking to get feedback on. I think, to your point, the trial will largely mimic our phase three. We continue to look at our patient re phase three. We continue to look at our patient re

Derek Christian Archila: Got it. And then maybe just a follow-up. On

David P. Meeker: So that is an area which, as a company, we might modify, but we did not get specific feedback from the FDA. Yeah. It is a good question. We continue to look at our patient re phase three. We continue to look at our patient re

Derek Christian Archila: the guidelines potentially for HO that could be implemented or, you know, kind of evolve over time? I guess specifically for postsurgical patients, where it seems like physicians want to, you know, intervene early prior to that significant weight gain. Just any comments on how that might evolve over time and what you are hearing? Thanks.

David P. Meeker: You know, we have had reported outcome measures, some other things we can do to get better results. Some of these patient-reported outcome tools have not been validated, and that is very much a developmental issue because you do not know everything and you want to have things as or the minimal number of things that might confound your interpretation of the results. In the real world, which is your question, and we have had this feedback from multiple thought leaders and the like. I mean, earlier is better. If you know the patient has HO, why would you make them wait six months? You would not do that for their thyroid hormone replacement, for example.

So I do not think there will be that kind of guidance in the label. We will see where guidelines, quote unquote, come out. Those will emerge over time, but I think the consensus would be, as soon as you, the treating physician, are comfortable, you want to intervene. In terms of providing that update for the 17 patients who remain on drug. I think patients tend not to remain on drug if they do not feel like they are benefiting, so we would take that as encouraging. I do not have an additional cut of the data. So, as I said, I do not have further updates there.

The one piece of updated data I gave you today was that 17 of 18 patients remain on treatment, I think, for a challenging disease. These are the kinds of things where, you know, we shared that data in December with the caveat, you know, this is an uncontrolled trial, and of course, we will collect hunger. I mean, the hyperphagia scores, HQ-CP, how you are performing, but we will have that data and of course we will share.

Operator: Our next question will be coming from the line of Tazeen Ahmad of Bank of America. Tazeen, your line is open.

Tazeen Ahmad: Okay. Thanks, guys, and good morning. Can you give us an update on where you are with the PWS study? When is the next data update from that? And what response are you looking for? Are you looking for more weight loss? Are you looking for better hunger control? Or just can you give us a sense of that? Thank you.

David P. Meeker: Yeah. Thanks, Tazeen. So as I said in my comments, we are still on track for midyear. In terms of what we are looking for, again, we have been very clear and continue to learn. This is a more challenging disease in the sense that there is a lot of other things going on. They have multiple genes affected, not just those potentially impacting the MC4R pathway that are at play in this disease and can confound results. But I think our goal remains the same. We would be looking to clear 5% on the BMI change. We will see how we do there. And of course, we will collect hunger.

I mean, the hyperphagia scores, HQ-CP, how you are performing, but we will have that data and of course we will share.

Operator: And our next question will be coming from the line of Michael Ulz of Morgan Stanley. Your line is open.

Michael Ulz: Good morning. Thanks for taking the question and congratulations on all the progress as well. Maybe just one question on Emsivri. Trends. You mentioned the potential for dampening of sales in 1Q. Given some pull forward in 4Q, maybe you can give a little bit of color on how to think about the growth? Is it just the slowing of growth? Or should we think more flattish?

Hunter C. Smith: Well, I am not going to give you a comment on where external estimates are. We did see negative growth Q4 to Q1 in 2024 into 2025. The buildup of inventory this year in absolute terms is less than it was last year. So we will see how that shakes out. But it is just that dynamic in and of itself that inventory represents a pull-forward of sales from one quarter into the next. From Q4 out of Q1 into Q4. I think the only other thing is we have the typical experience that faces us every Q1 where there are a lot of plan renewals and plan changes for individual patients.

So some patients rotate onto our bridge program, and then those get resolved and they rotate off.

Operator: Your next question comes from the line of Whitney Ijem of CJS. Your line is open, Whitney.

Whitney Ijem: Hey, good morning, guys. Just wanted to follow up on M and A. You guys have talked about the POMC, PCSK1, and SH2B1 sub-studies as being higher probability. Can you just talk to us a little bit, remind us, is that just driven by the enrollment and the powering of those sub-studies, or are there genetic biological considerations there as well?

David P. Meeker: Yeah. Let me summarize what I have said previously, but it is important to remind. The way we have handicapped this is, yes, we think that the POMC hets are the most likely to be positive, and that is based on the fact that we did have an assay going into the trial that allowed us to determine which of the variants were most likely to be pathogenic, meaning that they had true loss of function. There is a range of variants there, of course. So the assay has its limitations. But the bottom line is we felt that in that cohort we were enrolling predominantly patients who would have true loss of function.

So that was our best, and we were able to enroll that cohort fully. The leptin receptor, we also had insight into which patients might have true loss of function, but turns out the leptin receptor het group is extremely rare. That cohort was very significantly under-enrolled and variants of unknown significance disproportionately tend to be benign, so we were not so optimistic there. And the reason we remain somewhat hopeful on SH2B1 is that there are two groups there. One is those who have the missense mutations associated with SH2B1, then you are back in this, you know, how many of those are boosts and how many are benign versus pathogenic.

The other is 16p11 deletion, so by definition, deletion would have loss of function. And so, again, we think there is a high risk that one may not be positive. So long story short, that is how we handicapped it. Again, we are working to get that data out by the end of the year. The other thing I have said is, you know, we have been careful and modest in terms of our projections here and what we think might happen. I think whatever we get, we are going to learn a lot from these studies and minimally they will form the basis for the next round of studies with our next-generation molecules, which we would do anyway.

So I am going to report out. We will try to give you some insight into how we think about the future there.

Operator: And our next question will be coming from the line of Corinne Johnson of Goldman Sachs. Your line is open, Corinne.

Corinne Johnson: Got it. That is helpful. And just one quick follow-up. Should we still be thinking about kind of the 5% weight loss as the kind of bar for success either based on powering or just how you are thinking about it?

David P. Meeker: Yeah. I mean, 5% is the guidelines. That is why we, you know, that is certainly the threshold here. I think in some of our other indications, you get into a, is the study positive, and then b, do we think it is clinically meaningful and would be a meaningful offering to patients with that specific genetic defect. In Prader-Willi, of course, where we think that it is a really tough disease, I mean, that is the minimal threshold. And I think, you know, the world expects more today from a weight loss drug, but, yeah, technically, it is five percent plus.

I think, you know, what we would look at is the sophistication of running trials outside in these other countries.

Operator: And our next question will be coming from the line of Philip M. Nadeau of TD Cowen. Your line is open, Phil.

Philip M. Nadeau: Good morning. Congrats on progress, and thanks for taking our questions. Two from us. So first, in the bivomelanotide Phase III trial, what dose will you be exploring? It seems like you think two hundred milligrams is underdosed. Six hundred did look a little bit more potent, but the patient numbers were small. So we are curious what dose and paradigm you will use. And then second, on hypothalamic obesity, I think the last number of identified patients that you gave to us was 2,000. Sounds like as your sales reps are out there shaking the trees and doing medical education, you are finding more and more patients. So any update to that number?

David P. Meeker: Sorry. So for the dosing, sorry. So the dosing will be dose escalate from two hundred up to six hundred. Six hundred will be the target dose. I think when you look at the data the same way you did, I think there is a difference between four hundred and six hundred milligrams. I think we are still on the response part of the curve there. The other thing which has been pretty encouraging, and I have a little insight there, is what happens over time. We have a number of patients out for the full year, and many of the patients continue to just gradually deepen over time.

I will remind you back to a patient from our phase two study, the most fairly affected individual in that trial, a 24-year-old man who had a starting BMI of fifty plus, and over a period of four years, he just continued to gradually decrease his BMI down to a normal BMI of twenty-four. And I think what we are seeing here is not inconsistent with that as a gradual deepening over time. And so the short answer to your question is yes, the target dose will be six hundred. There will be patients who maybe do fine on four hundred, just as there are patients who do okay on two milligrams as opposed to three with setmelanotide.

But I think we are incredibly encouraged here, and I think this data gives us high confidence that this pathway is central to HO. With regard to patients, we are continuing to find more patients. So yes, that number has gone up. We are learning a lot about how many carry a diagnosis of HO and how many patients are quote unquote suspected category. We highlighted and updated in September, and we have stayed away from giving you monthly or quarterly updates on those patient numbers because I am not sure how helpful that is. But you are absolutely correct, and Jennifer highlighted in her comments, the team has been doing a lot of work.

We feel really good about the progress we are making. 10,000 is high, and it is higher than it was last September, for example.

Operator: Thank you. Our next question will be coming from the line of Jon Wolleben of Citizens. Your line is open, Jon.

Jon Wolleben: Hey, thanks for taking the question. Just one on Japan. Hunter, you mentioned the investment you guys will be making there. I am just wondering how we should think about the opportunity in Japan and the trajectory of a potential adoption.

David P. Meeker: Yeah. Yann, you want to take that?

Yann Mazabraud: Yes. So potential first, we estimate a prevalence between five thousand and eight thousand patients. It is a well-documented prevalence. We are currently building out our team. We have set up an affiliate. We have a full management team in place, and we already have a field medical team on the ground. And from a timeline point of view, David mentioned the data in March. And, following that, you can count on twelve months of regulatory and market access and pricing aspects, which means that we should have a launch in the next twelve months from now. Thank you.

Operator: And our next question will be coming from the line of Thomas Smith of Leerink Partners. Your line is open, Thomas.

Thomas Smith: Hey, guys. Good morning. Thanks for taking the questions. Just on the AHO expansion, appreciate the color on the regulatory interactions, sounds like you are entering labeling negotiations, which is great. As we think through some of the color you are giving here around reimbursement and payer coverage and activating sites of patients, can you just elaborate a little bit on how you are thinking about the launch cadence relative to BBS?

Jennifer Lee: Yeah. So from the perspective of HO versus BBS, one, I think there are similarities and some differences. I think from a similarity perspective, payer coverage, you know, although we have stronger coverage, there is still a lot of opportunity as we have outlined just in terms of what they are going through. So there is still opportunity there. I think the other piece is from the perspective of a timeline in terms of getting these patients to an actual diagnosis of acquired hypothalamic obesity versus causes that may not be the root cause.

In terms of the MC4 pathway diseases versus general obesity, it is still going to take some time just in terms of going through the process of having specific P&T meetings so that we get a specific policy for the expansion of the indication in place. And we are similarly, in the meantime, going to be working through the process as we get the Rxs in payer by payer. So there are some similarities. I think some of the differences are that our teams are targeted at the right physician to educate, to get these patients to a diagnosis. We feel a lot more confident about that.

I think in comparison to BBS, even though we were guided by the data and following where the patients are, it just made sense that in terms of HO, the precision and confidence just in terms of the data we have to really pinpoint it down to those sort of crumbs to lead us to the right physicians is stronger. We are actually being led to these medical centers that have these pituitary centers and capabilities.

So we know where they go once they have the brain tumor, where they are treated, and they stay in that situation for a period of time so that as they start to encounter the symptoms of AHO, we have the ability to really target those incident patients to get to a diagnosis that is not missed. So that is a bit different than what it was like for BBS, which once again gives us a bit more confidence just in terms of being able to identify them earlier in their journey.

Operator: Our next question will be coming from the line of Seamus Christopher Fernandez of Guggenheim Securities. Your line is open, Seamus.

Evan Wang: Hi, guys. Thanks for the question. This is Evan Wang on for Seamus Fernandez. Just two from us. First, with some that saw some narrowed timelines for Part D. Curious if there is any potential strategies to accelerate timelines there. Potentially, like, phase two/three just given other indications or approaches for, I guess, mostly, I guess, c four r development. Other indications or approaches for, I guess, mostly, I guess, obesity-related treatment. Thanks. Is that what you are on that last part of the question, other indications that we are thinking about, other approaches to treat obesity. Curious if you are exploring or planning to explore other areas of the feedback and data sets around BIVA and setmelanotide.

And then second, curious if you are exploring or planning to explore other areas of MC4R development.

David P. Meeker: Okay. So for 718, is there a strategy to accelerate? I mean, we take, I think, a pretty aggressive view in general. Regulators do not always agree with our approach, and so we end up sometimes in more conservative or conventional approaches. But I think 718, as I said earlier, is likely to be highly similar to bivomelanotide. We will go with this initial experience in this open-label study and move right to a phase three. I do not know if there is an opportunity to accelerate things further there. With regard to other indications, we have talked about the different kinds of areas that we are interested. So one is genetics.

M and A being the first attempt beyond our initial approvals in POMC and LEPR. We have the DAYBREAK study. So we will be coming back to specific genes. We will do that development work, as we have said, with next-generation molecules, probably not in both molecules and every one of those genetic indications, but we will come back to you with an updated plan there. The other thing is the pressure on the next gen in HO is we want to get it out as soon as possible. It is a little different from an initial indication opportunity where those patients have no other treatment. And setmelanotide will be approved and out there. So patients will have an option.

So, again, we will move as quickly as we can, but it is not quite the same criticality as it might be if there was no treatment available at all. And with regard to, you know, other approaches to obesity, I mean, yes, we are open to that. We have early programs where we are thinking about different ways we might complement MC4R. That is all early. We are not at a point where we are prepared to talk about that yet, but we are fully committed to optimizing therapy for these patients with MC4R deficiencies and that would include potentially additional approaches.

Operator: And our next question will be coming from the line of Joseph Stringer of Needham and Company. Your line is open, Joseph.

Eddie (for Joseph Stringer): Good morning. This is Eddie on for Joey. I appreciate you taking our questions. Just to follow up on MC4R and the M and A sub-studies, can you remind us again, if you intend to submit these as, like, combined sNDA? Or sort of mutation-specific approvals and then how this might change these next gen therapies as you kind of move through the trials in later years.

David P. Meeker: Yeah. Let me take that last piece first. So no, when we are trying to create an apples-to-apples comparison, we took the patients in our 040 phase three setmelanotide trial. If you remember, there was, in the treated group, about 15 patients who were on a GLP-1. That group did have a better result. If you remember, they got in the trial by not having responded to a GLP-1. Once they got setmelanotide, they had a very good response. And if you were just to look at that cohort, their actual percent decrease was greater than the group that did not get a GLP-1.

The trial is not designed to prove that might be a better outcome, but what we have concluded biologically is yes, once you correct the underlying defect in setmelanotide and restore the hormonal deficiency, then your ability to respond to another anti-obesity medicine might be restored. So, you know, then GLP-1 in that setting, once you have corrected the hormone deficiency, might make sense. Anyway, your question about M and A, in terms of regulatory filing strategy, no. These will be filed individually. Even if all four were positive, we would file four separate sNDAs. They would be, like I said, a one-at-a-time evaluation.

And then, in the future, I mean, is there an opportunity for a mechanistic approval that would not require a full phase III for every genetic indication? Not an unreasonable question. Possible. I would say we are definitely not there today. For the future. We gain weight for different reasons and so if you are a patient who has got incremental weight because they love ice cream and they eat ice cream all the time, that is a different biology than patients with a defined MC4R pathway defect.

Operator: And our next question will be coming from the line of Paul Andrew Matteis of Stifel. Your line is open, Paul.

Matthew (for Paul Andrew Matteis): Hi. This is Matthew on for Paul. Thanks so much for taking our question. I guess I had one on acquired HO. So for the FDA review, we appreciate the pivotal phase three was already large, but will you be able to supplement your data package with the Japanese cohort? If I heard that right, can you describe how that might be the case? Thank you. That is super helpful.

David P. Meeker: Yeah, Matthew. It is a good clarification. The answer is yes. We are on that path and we will get that data in and yes, they are prepared to deal with the fact that, yes, it is a potential approval on March 20. When the FDA gave us the PDUFA extension back in November, they were very aware of the exact timing of the last patient-in visits. And so they had done the recognizing that there was a very short period of time between when we would have data from that last patient, a Japanese patient, partly, and being able to get the data in on the full 142 patients, which is what they wanted.

Operator: And our next question will be coming from the line of Samantha Semenkow of Citi. Your line is open, Samantha.

Samantha Semenkow: Hi, good morning. Thanks very much for taking the question. Just maybe one clarification on the Phase three. You mentioned that you were going to primarily enroll outside in countries where setmelanotide is not available. How does that work necessarily for enrollment in the U.S.? And then just on Prader-Willi, can you just talk about your latest thinking on a potential phase III trial? Would you plan to take both setmelanotide and 718 forward? Or is it more likely that you choose one of these drugs to advance? Thanks very much.

David P. Meeker: Okay. So with regard to the phase three for HO, yeah, we will run it predominantly outside. I would not exclude having a U.S. site, but you never say never. We already have U.S. data coming out of our phase two study. We do not need to have a site in the U.S. The U.S., for multiple reasons, becomes a little more complicated. I am not using the U.S., but, you know, you never say never. I am not at all worried about quality. You pay attention to that. We will be careful, of course, but I think quality control is not the issue. With regard to Prader-Willi, setmelanotide versus 718, I defer final decisions on that.

This is something, as we have highlighted before, the advantage of going forward with setmelanotide is we have got data in setmelanotide already. We could file a supplemental NDA and so we could in a sense roll into that phase three. The advantage of going with 718, for example, is that it is a next gen, we are going to do a next gen study sooner or later and that is the endgame.

And if the 718 program is at a point where the gap between when we might start with setmelanotide and when we could start with 718 is not so great, then I think we would take that time delay, if you will, and just go right to 718 and avoid having to run two studies there. But that decision is yet to be made. We will see how all of this plays forward.

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