Good morning and welcome to day three, the final day of the Barclays Global Healthcare Conference. My name is Carter Gould, covering U.S. biopharma. I am pleased to welcome Rhythm Pharmaceuticals to the stage. Joining me is David Meeker, Chair, CEO, and President of the company. David, welcome.
Thank you, Carter.
Maybe to get started, it might be helpful if you just provide a brief overview of the company and some opening comments, and then we'll jump into Q&A.
Sure. So Rhythm Pharmaceuticals is a company focused on developing treatments for patients who are suffering from genetic syndromes which have a genetic background and/or acquired forms of hypothalamic dysfunction, otherwise known as hypothalamic obesity. And we have a treatment which is approved for four different indications, POMC, leptin receptor, PCSK1, and Bardet-Biedl syndrome. And so those are all genetically driven causes of obesity. And our drug IMCIVREE is a replacement therapy, essentially, for precision medicine, replacement therapy for a hormone, alpha-melanocyte-stimulating hormone, which is part of this melanocortin-4 pathway. So all of these genetic defects result in impaired signaling through this MC4 pathway. And as I said, patients who suffer from that have decreased amounts of this alpha-melanocyte-stimulating hormone. And our drug, brand name IMCIVREE, is an analog of that. So we've been commercial.
What's driving our commercial revenues at the current time is Bardet-Biedl syndrome, and we'll dig into that a little more. But that's a, I think, a very solid, meaningful, ultra-rare disease opportunity but has all the elements of the kind of rare disease opportunity you can build a company around. And then what's gotten the world excited, I think, in terms of really tuning into Rhythm is the fact that there's another entity which is called acquired hypothalamic obesity, which occurs in patients who have, most commonly a tumor, a benign tumor of the brain, which arises between the pituitary and the hypothalamus. And through just direct damage, either the tumor or surgery to treat the tumor results in impaired signaling through this pathway, and we're in phase 3 trials for that.
Okay, great. Why don't we start off by jumping into sort of the near-term commercial dynamics? When we think about Bardet-Biedl, just sort of the size of the opportunity and maybe, you know, you've had a pretty, you know, solid ramp, you know, sort of swamped. How do you sort of bridge the gap from where you are today to where you think ultimately you can get in terms of penetration and then opportunity?
Yeah. I have my background is, many people know. I spent 20-plus years at Genzyme and saw a number of different rare diseases. What was striking about Bardet-Biedl syndrome is, it again, it's a genetically driven cause. These patients suffer from early onset obesity, obviously genetic starts at birth, and severe hunger. And what they're suffering from, when I say severe hunger, this hyperphagia, is literally the absence of a satiety signal. So they eat a meal, and they're not getting the signal that their stomach's full, so they just keep eating. So that opportunity, it's, we think in the U.S. there's about 4-5 thousand patients. It, as a syndrome, it has multiple different manifestations. And so those are clues to the diagnosis, so it makes it a little easier to find and identify these patients. That said, it's a classic ultra-rare disease.
It started out there was almost no experts, very little awareness about the disease, no testing. So Rhythm makes available a genetic panel, which allows these patients to be at least clues. It's not a pure genetic diagnosis. It's actually a clinical diagnosis, but genetics can inform it. So you have to do all the work that you do in any classic ultra-rare disease, even though we think of obesity as being common. This part of obesity is not common, and it's not so visible. So 4-5 thousand patients in the U.S. I think the trajectory and the long-term opportunity here. I we, we talk about, you know, what's the probability if there's 1,000 you know, 4-5 thousand patients, you can get 1,000 patients on treatment. We've had over 600 scripts written today.
it's a significantly lower number who are actually on treatment as you work through. A number of those patients go on free drug. You can't work them through reimbursement, or we've had some discontinuations and the like, obviously. But the probability you can get to 1,000 patients, the thing is extremely high.
Okay.
You know, our net, you know, if you think about a $360,000 per year U.S. price, you know, with net and various ins and outs, you know, maybe anywhere around $300,000, that's a $300 million opportunity. The other thing, last thing I'll say on this is the, from the beginning, we believe strongly in a global approach. We've, from day one, we do our trials globally. We've had a European, international team based in Europe, on the ground, building it in an opportunistic way. As we get market access, we've built out that particular country. And increasingly, that's become a more meaningful contributor, and it's now contributing about 20%-25% of our revenues.
Any reason to think that those ex-U.S. regions are going to be as supportive? Maybe not necessarily in terms of the output price, but in terms of access as we see in the U.S.?
Yeah. You know, over my career, I've found, you know, there's a—these are single-payer healthcare systems. There's a real sense of, you know, solidarity, you know, the strong desire of those systems to make sure that patients who need treatment can get the right treatment. So, they're not easy markets. They become increasingly more difficult over time, as we know every healthcare system has, but particularly in Europe. But we have been very successful. We're, you know, approved and selling now in Germany for POMC. We just got, you know, in Spain and Italy market access set up for both the first genetic and Bardet-Biedl syndrome. So yeah, it's—it's doable. Anything but it's doable.
Okay. So as we think about then expanding beyond Bardet-Biedl into the HO opportunity and the other all those sort of genetic variants, maybe kind of lay out that landscape for folks.
Yeah. The first next step was, again, completely focused on the genetics of this melanocortin-4 pathway. And we ran a basket study, about three years ago and identified four different genes, the heterozygote form of two of the ones that we're currently approved for, as well as 2 other genes. And those, where we had a very clear signal, those four genes are now in phase 3 trials. It's a and it's basically a umbrella trial. All four trials are exactly the same, but each gene is individually powered, and we'll read it out, when each gene completes. So those will be coming. We look to have at least two of those, fully enrolled by the end of this year, and then it's a year-long trial. So that's the main.
And we ran a phase 2 trial, which we just read out at the end of December, the open-label portion of it. Again, an even bigger look, looking at we started looking at 30 genes that might have where there was pretty good data to suggest that they were related to the pathway. We ended up paring it down, and there's probably five or six genes in that group that are of interest. And so we have a randomized, withdrawal-blinded portion that's going to read out sometime in the second half of this year. But that's the way we're approaching it. We're basically saying any gene genetic defect that impairs signaling where you get a decrease in alpha-melanocyte-stimulating hormone, then there's a role for this drug, as a replacement therapy.
And then, of course, the surprise, you know, for all of us was that this, you know, hypothalamic obesity where you're damaging it, physically damaging the hypothalamus, you know, it nothing works in that end. Literally nothing works. It's not that, you know, any other, you know, anti-obesity medication can't help the patient lose some weight. But in terms of really correcting, fundamentally correcting the disease, nothing has worked. And so what was quite striking in our 18-patient phase 2 is that we had quite dramatic decrease in overall body mass index. But even more impressive I thought was the consistency of the results. Literally everybody who took the drug lost 10% or more, or they were on track to lose 10% or more at 16 weeks. We had two patients who discontinued because of adverse events.
All right. So maybe I guess there's the overlying question around this, and you touched on it to a bit, is in a world in which we have relatively cheap access to GLP-1s, how comfortable are you that GLP-1s will not be the answer in all those genetic variations and in the HO opportunity? Is that something that you're going to have to prove out, or the field's going to kind of settle that for you, and patients will have unmet need and will come looking for your drug or your trials?
Yeah. Yeah. I mean, as we all know, I mean, the GLP-1s are amazing drugs, and they've truly transformed a very challenging healthcare problem. And we'll continue to read out, and we'll have many more, you know, versions of the GLP-1s. I think, you know, and also Lilly and Novo have done an amazing job just helping the world think about obesity as a disease, as opposed to just a choice, lifestyle choice. And so, that part has helped everybody. Rising Tide lifts all boats, number one. Number two, yes, it's a disease, but it's not one disease. It's many diseases. And where we've really tried to help people think about, you know, like many things, cancer 20 years ago, right? It's not cancer. It's, you know, what type of cancer, and then try to get the right medication for your cancer.
So that's the world I think we're entering into. You know, Rhythm has a very specific role for this small segment of the population that's suffering with early onset obesity and this severe hyperphagia. Your question was, you know, will GLP-1s have a role? And this is back to we gain weight for different reasons. So I think virtually everybody put on a GLP-1 would lose some weight. And that's certainly true in the patients that we treat. It doesn't correct the pathways are different. So it doesn't correct the fundamental underlying problem is you may lose some weight, but you haven't fixed the satiety signal problem. And I think in the hypothalamic obesity case, that's the extreme example. And so, GLP-1s, earlier generations have been tried and absolutely failed. I think it's too early to conclude on next generations, which are clearly better drugs.
But mechanistically, it doesn't look like that's the answer.
Okay. Let's go back to the phase 2. You shared some data late last year. Excuse me. Can you talk through about what additional data we might see from that study or additional cuts as we then think about the next steps for the HO program?
Yeah. We read out, as you indicated last fall, the 12-month data on that group. We had 14 patients going to the long-term admission. 12 patients had the full 12 months, and they had a mean BMI decrease of 25%. But we've really tried to, at least I have and our team, de-emphasize a little bit the extreme preoccupation, this arms race around BMI percent decrease. It's not the end game. And endlessly losing weight isn't it? It's getting you back to a healthy state. And so what's, you know, hypothalamic obesity is interesting because it's not genetic. It didn't start at birth. It started at a point of injury. And so you can have a patient, often a child, who was an otherwise normal child, you know, young. And they could be, you know, the 25th percentile weight, a skinny child.
They get their tumor, develop this problem, they shoot up, they become obese, they have this severe hyperphagia, and the like. On drug, if you could correct that, it's not unreasonable to expect that some of those patients can get back to their pre-state normal. In fact, in our phase 2 grouping, you know, the child, the 6-year-old who lost the most weight at 16 weeks, he's now his BMI is increasing, but he's below the 50th percentile. So he's totally normal. In terms of what will come out, I mean, I think, you know, we'll look. I'm not sure whether it'll be this fall, you know, at longer-term follow-up. We're obviously continuing to follow those.
What we're very focused on is our phase 3 trial, which, you know, we can talk a little bit more about, and then our next two, our next-generation products, the weekly and the daily, which are both all three of those trials are being run in HO.
Let's talk about the phase 3. In terms of what the agency wants to see, alignment globally across different regulators? Maybe you can expand there first.
Yeah. You know, it's been, you know, having come out of a rare disease world, you know, the nature of rare diseases is they're rare. And so, you know, you have to make compromises in your clinical trials. They tend to be highly heterogeneous because you can't select a pure population. You have to mix patients. You just take whoever you can find. In our trials, we have to enroll adults and peds together. That's not always optimal, particularly when you're looking at BMIs as the primary endpoint. So these are just fundamental challenges that I think, to be honest, the agency wasn't so sympathetic to. So we're running a classic obesity trial, which is way overpowered. We're 99% powered to show a 10% difference between placebo, 2-to-1 randomization. And unequivocally, they wanted a full 12 months on dose.
So even your dose escalation part was incremental to the 12 months. So we're running a classic study. That's their threshold for obesity meds. They want to see not just that you can lose a little weight, but that it's sustainable. So all fair, but challenging. And it's been challenging for the community. Europe is totally aligned with that. I find EMEA a little more user-friendly, to be honest with you, than the FDA at this point, around these kinds of questions. But everybody's aligned on that. And so that should be an approval trial if it reads out positively, which we're quite optimistic about.
Okay. I think one of the nuances of the design that we are probably see a little bit less in some of the other obesity studies, that maybe you're a little bit more higher profile, is sort of that run-in period. Maybe talk about the importance of that in terms of the study design here as well.
the dose escalation?
Yeah.
Yeah. I think what we learned, you know, and not surprisingly, the patients have differences in their tolerability. All of these medications, I think, which may I think we all GLP-1s, our drug, work centrally. They're, they may have some peripheral effects, but they're basically working centrally. And when you begin to alter signaling, in our case, you've got somebody who's lived without the experience having a satiety signal, and you suddenly, you know, hit that receptor and give them a side satiety signal, that is a different feeling for a lot of these people. And how do they interpret it? A lot of it comes back as nausea. So what we've not surprisingly learned is, start low, go slow. So we allow one month, you know, two months maximum.
But, you know, one month is sort of our goal to get people from the starting low dose titrated up. And when you do that, the side effect profile, you know, those complaints are very, you know, they're first one to two weeks, and then they resolve. You tolerize to the drug.
Okay. So if we think about the persistence you're seeing right now in Bardet-Biedl, and then maybe overlay that with some of the other kind of lifecycle management or next-generation approaches, and how do you see that playing out?
In terms of how we're thinking strategically in Rhythm and building this?
Yes.
Yeah. So, setmelanotide, our IMCIVREE, you know, approved drug is a very clear first-generation drug. It hits an MC1 receptor, which causes an increase in skin pigmentation. It's been a non-issue for the vast majority of patients, but for a smaller percentage of patients, it is an issue. It has no adverse health effect other than increased pigmentation, but it's not a virtue. So, our next-generation products don't have that. And also the whole tolerability. We're currently a daily injectable, and our next-generation products are a weekly injectable, in one case, or a daily oral. And so that's our goal. We'll develop both of those.
The wonderful thing, if you will, about the hypothalamic obesity model is, unlike when we started with our drug and we didn't, you know, the models we were working in, I would say were not quite so easy. This is a very sensitive model. And so from a clinical development standpoint, it should give us a readout in a relatively quick and reliable way. If either of those doesn't work in HO, we're done, because I would say a little hope it would work in the and something else. And then I'm also very hopeful that, even in a relatively small trial, that we can get a pretty good sense for what the dose range should be. With that, then we would obviously move into phase three for HO and, in parallel, begin do more of the genetic work.
Okay. So as we think about the current phase 3 plan and then those sort of efforts, could we see how do you then think about sort of staggering those launches or potentially maybe, you know, holding back on a market because it might have an oral that's a year or two years away? How are you kind of balancing those sort of?
Yeah. No, that's a good question. I, you know, my whole philosophy over time is you just follow the science, right? It tells you where to go. So, if everything went perfectly, which it won't because that's not life, but, you know, the end goal in a perfect world is both will be approved, for all indications, and we'd be indifferent. I mean, it's really, the goal is to give patients, physicians a choice, for what meets their needs, and then, you know, both get their clinical outcome either way.
Okay. As we think about the next-generation approaches, you know, talk about the—I mean, the acquisition there of the assets, and kind of why you think this is the specific asset that's the best one and kind of that process that went by, you know, you went into the decision.
Yeah. We did we did two things, you know. We had just backed up a bit. We had our first generation weekly, if you will, which was our setmelanotide drug in a formulation, a weekly formulation. We'd started in the clinical trials with that. But behind the scenes, we've been, you know, working on a next generation that did not have the hyperpigmentation and had, you know, some other potential virtues here. And so that has done great. And so we're entering into phase one trials. You know, we're imminent, you know, in terms of getting it started. And that'll have, you know, the standard single and multiple ascending dose. And then our part C of that trial will be HO patients. The daily oral you spoke, you mentioned, which is what we acquired from LG Chem, a Korean company.
They've been working on this for several years. We've been following them closely, obviously, in the space and had been in dialogue with them for quite a while. We've reached a point where the two companies thought, you know, this was a natural and that, you know, we were the right company to help take this forward. What we got excited about there was it's not easy. Historically, this target has worked on by pharmaceutical companies for many years, unsuccessfully, to be able to get something that got you the benefit in terms of obesity reduction and hunger reduction without the cardiovascular side effect. I think they did it, you know. Their data package was quite compelling. They've been through phase 1 clinical trials.
What they saw in clinical trials, again, was highly supportive of a, you know, tolerable drug, with a very clear biological signal in patients, healthy volunteers with obesity. So we'll see. We're on the verge of starting a small 28-patient, four-arm, phase 2 trial, which will have a placebo group as well. And so if you look ahead on Rhythm in terms of what's coming, in terms of milestones, our phase 3 will read out in the first half of 2025. I would expect both of the weekly and the daily oral HO portions of trials to read out in the first half of 2025. And so again, that's setting up as a pretty important period for them.
When we think about that asset from LG Chem, I assume that would take the IP then way out to 2040. One of the you know, pushbacks from the company today has been sort of the limited IP. But.
Yeah. Thanks, Carter. It's a critical aspect of this whole thing because it now both of those, our internally developed and the oral from LG Chem, give us IP out for both of those to 2040 plus, depending on patent term extensions. And the plus will tell you how far into 2040. But it gives us a very long runway. And why are we doubling down? Because we think that the size of this opportunities, you begin to work through the different ways you can impair this pathway, is quite significant.
Okay. When we think about those additional indications beyond HO, you know, with those being sort of studied in EMANATE,
DAYBREAK.
DAYBREAK, excuse me. It just—I think you said timelines. First half of 2025 there?
Yeah. Well, so the HO portion of this, that's all first half 2025. The EMANATE, our goal is which is the phase three, we just spoke about.
Yep.
The goal there is to have at least two of the cohorts fully enrolled, by the end of 2024, which will mean that that'll be a 2026 readout.
Okay.
Then the DAYBREAK of phase 2. I hope that we can, by the end of 2024, give some guidance as to how we would think about developing one or more genes coming out of that effort.
Okay. And going back to the weekly and the oral, in terms of wrapping in the ex-US opportunity maybe at an earlier stage, how are you thinking about that with these sort of early efforts?
Yeah. So ex-US, again, we'll be global. Now, we just expanded our definition of global in Japan, which we talked about on the last earnings call. Japan, we did early work. There's no real significant genetically impaired population in the Japanese population. But HO is quite prevalent. And actually, the absolute numbers and therefore the prevalence is much higher in Japan. The numbers are about the same as the U.S. population. And so we're quite excited about that. We had a highly constructive interaction with the PMDA, the Japanese regulatory authorities. And so they were quite motivated, as we were, obviously, to try to get the Japanese patients into our current phase 3. And so 12 patients will be added, which will allow us to our current phase 3 trial, no impact to the timeline for U.S. and EU.
But that will allow us to file for Japan, you know, slightly behind the Japan as in time the US and EU.
Okay. So I guess stepping back, thinking about sort of obviously, these investments you're going to make, your current cash position, you are also, you know, generating revenues. How do you think about that runway and impact the profitability here?
Yep. So about, you know, $370 million plus, coming out of the end of the year, 2024 or 2023, sorry. We had previously guided that we had cash into the first half of 2026. When we did the deal with LG Chem, we obviously spent some money to acquire that asset. We're now guiding into the second half of 2025. So we'll have, you know, multiple ways we can or several ways we can think about financing the company. We definitely will need to finance again before we get profitability. We're not guiding profitability. It's highly dependent on two obvious pieces, which is revenue, which has been slow and steady. And that's going to continue. And so increasingly, you know, that will diminish, narrow our cash needs as that continues to progress and will. And then on the spend side, it, you know, it's highly dependent on our trials.
what we said about that is that we're probably peaking relatively in terms of our absolute spend because as some of this new work comes in around the next-generation products, the phase 3 trials that we're running now will go down. So that balance, so again, not guiding, but, you know, you can see a future where, you know, this company can absolutely be profitable.
Okay. Well, we'll leave it there, David. Thanks very much for joining us today.
All right. Thank you.