Good day, everyone. Thank you for joining the 23rd Annual Needham Healthcare Conference. My name is Joey Stringer, and I'm one of the biotech analysts at Needham & Company, and it's my pleasure to introduce our next presenting company, Rhythm Pharmaceuticals. Joining us today from Rhythm is CFO Hunter Smith. For those of you joining on the webcast, if you wanna ask a question, please do so at any time. You can submit a question using the chat box at the bottom of your screen. With that, we'll get started. Hunter, thank you so much for joining us today.
Joey, thank you as well, and thanks to you and your colleagues at Needham for including us in your conference. It's great to be with you.
We'll start off, Hunter, if you could provide everyone with a brief high-level overview of Rhythm.
Sure. So Rhythm Pharmaceuticals is a global commercial-stage biopharmaceutical company, and we are committed to developing transformational medicines for patients living with rare neuroendocrine diseases. We have a lead compound in IMCIVREE, also known as setmelanotide, which is a precision medicine designed to treat hyperphagia, an insatiable pathological hunger characterized by abnormal food-seeking behaviors, and early or rapid onset severe obesity caused by impairment of a pathway in the hypothalamus called the melanocortin 4, or MC4R, pathway. IMCIVREE is FDA approved to treat obesity caused by Bardet-Biedl syndrome and a few additional ultra-rare genetic indications. For 2023, we reported more than $75 million in global net sales, with the majority of sales, about 76%, coming from the United States. We are available and approved in 14 countries outside the United States.
BBS, which is our lead indication, is a solid rare disease market, solid opportunity. Then, as most folks that are participating know, we are also pursuing a new indication called hypothalamic obesity, which is a meaningful, you know, paradigm-shifting value driver for the company. We have completed enrollment on 120-patient phase III study, which is being done under breakthrough designation from the FDA. And we are on track to report top-line data from that study in the first half of 2025. In all these indications, in all these MC4R pathway diseases, as well as additional genetic MC4R pathway deficiencies that we're studying, there's a common root cause and a common clinical characteristic.
The clinical characteristic is the severe obesity and accompanying hyperphagia, which is a pathological hunger that leads to abnormal food-seeking behaviors, causes families to lock up refrigerators, kitchen cabinets, forgo socializing, family activities, and more. Causes significant disruptions in sleep patterns and in school activities. The cause of this, in all cases, is an impaired MC4R pathway, where the receptor itself doesn't work properly because of a deficiency in the production of alpha-MSH, or alpha melanocyte-stimulating hormone. Setmelanotide mimics alpha-MSH and restores pathway function, effectively acting as hormone replacement therapy. It's an exciting therapy because it's very targeted for the deficiency these patients face, where they have been refractory to all other therapies that have existed, as well as conventional weight loss approaches, such as diet and exercise. You know, that's, that's the story.
We're getting close to 250 people, and as we said, we are commercially reimbursed in about 14 countries today.
Yeah, and, Hunter, how would you handicap the IMCIVREE launch in BBS to date? Is it tracking with internal expectations?
Yes. So we're, we're really pleased with how the launch has gone to date. So, as I've said, we're available in 14 countries. About 76% of Q4 revenue came from the United States, so you can see that the ex U.S. component is becoming a meaningful contributor. Last quarter, we reported $24.2 million in quarterly revenue, with over 100 new prescriptions written and about over 70 approvals for reimbursement. So that means we've had over 645 prescriptions for BBS written and approximately 400 approvals since our launch. That, that, to us, demonstrates a couple of different things. First and foremost, that these patients are out there, and that the community is starting to build the capacity to diagnose them beyond the initially diagnosed patients.
Second of all, that they are benefiting from therapy and staying on therapy, which is demonstrated by the continued growth in patients on therapy.
What about the key launch metrics for IMCIVREE? How do those look to date?
So, you know, like I said, we've tended to report a new patient script number. I'm sorry, did you say outside of the United States or just-
Just in general, Hunter.
Oh, in general. Yeah, yeah, so we've focused-
Yeah, for IMCIVREE.
We've given more color inside the U.S. because-
Sure
... it's more traditional to do that. We've focused on, again, the sort of over 645 prescriptions, of which 100 were written in the first quarter. Those are new prescriptions only. We don't... You know, we're only given the new numbers, and renewals have generally been working in a normal fashion.
Yeah.
Over 400 of those have been approved for reimbursement. We do have a substantial free drug program for patients that are Medicare beneficiaries. A lot of patients with Bardet-Biedl syndrome are on, are reimbursed, or sort of insured by Medicare, largely because of the disability component, and then select situations where the patients have exhausted all avenues for reimbursement. Those are the key metrics. Outside of the U.S., we said in early November of last year that we had surpassed 100 reimbursed patients on therapy outside the U.S., of which about half were POMC/LEPR patients, and the other half were BBS patients.
In terms of pricing for IMCIVREE, can you just walk us through the price, kind of WAC net pricing and some... It is a weight-based dosing, but some details around that.
So it's actually not a weight-based dosing. I mean, it's essentially the recommended clinical dose is three milligrams for everybody, except sort of the under 12 category.
Right.
We encourage people to titrate more gradually, particularly with younger patients. Start low and go slow-
Right
... because that helps them manage the nausea and vomiting, which is, you know, a common AE, but also tends to be transient and resolve. So as a result, the patients, once they get through that initial period, they then tend to be more persistent. We've had relatively few discontinuations due to nausea, vomiting. So the price for per milligram is around $3,400, which if you're at three milligram, you know, if you're at a perfectly compliant three milligram dose, would be about $375,000 a year. That's a slight increase in our WAC from previous, where we've increased it by about 4%, since the prior WAC.
Got it. And, going into a little bit more detail on the TRx data, Hunter, you mentioned the 645 TRx-
Yep
... for BBS in the U.S., since launch. Just given the backdrop of your estimates for the prevalence of around 4,000-5,000 patients in the U.S. with BBS, you also have the 600+ patients in the CRIBS Registry.
Sure.
So I guess my question is around, you'd also provided some TRx data, around 350 patients that you had identified prior to or around launch. Is there a percentage of, say, that 4,000-5,000, that you've identified that you've gotten into as the launch has progressed? And where do you stand there?
Look, so it's a great question. People, people are obviously trying to triangulate, you know, around a market penetration, and-
Yeah
... I think the first thing we would say is that the 4,000-5,000 is an estimate.
Yeah.
It's an estimate that has evolved in terms of... It's grown since we launched because we've found that, you know, you know, our own work and our comparisons with other countries has indicated that we think the prevalence should have been higher than the 2,500-3,000 or the 1,500-2,500 that we started with.
Mm-hmm.
So, let's say that is an estimate, 4,000-5,000. We have this registry called the CRIBS Registry, which has about 600 patients in the U.S. And it's a very high-quality registry. The patients, you know, participate in an annual questionnaire through the Marshfield Clinic in Wisconsin. While we support the Marshfield team in analyzing these data, we don't have any specific information about which individuals are in the registry.
Right.
So, for example, if we're identifying patients or if patients are signing up for Rhythm InTune, which means we can talk to them directly, you know, that we don't know if they have an overlap with the CRIBS Registry or not, right? So we did start with about 350 patients identified. That's a dynamic number. It continues to grow. It's obviously grown beyond the 645 prescription level.
Yep.
But what we're pleased with is that our both our direct and our non-personal promotion efforts continue to sort of feed the top of the funnel in terms of patients that we are finding, are coming to diagnosis and have the potential to come to IMCIVREE therapy.
Okay, that's very helpful. And a little bit deeper into the TRx metrics, last quarter, you had greater than 100 U.S. TRx written. That was in the fourth quarter, of course. But that was a little bit down from greater than 120 in the third quarter of last year, and that was down from greater than 125 in the second quarter. So, this is a little bit in contrast to some of the previous quarters earlier in the launch when you had a steady incremental add in the TRx. So I guess my question is, how should we think about the TRx add on a quarterly basis going forward and maybe at steady state? Would you expect it to kind of bounce around in that 100-125 range?
So I think the short answer is that we don't really know. We expect it to be lumpy. We expect it to be uncertain. You know, we do anticipate that there will be physicians who will have a group of diagnosed patients when we encountered them, then they may or may not put those patients onto therapy, and they may have, they may have a gap between the next time that they diagnose a patient. So we don't believe there's any trend to be observed per se. We're pleased that our like, our direct, our direct efforts, the efforts that our territory managers are making, and our non-personal efforts that we're using are successful in continuing to find patients, and hopefully, because the number of writers, both first-time writers, both breadth and depth have continued to grow for us.
Mm-hmm.
So our hope is that as long as we continue increasing breadth and depth of prescribing, the system continues to work.... but the lumpiness is gonna derive from that pattern of diagnosis. It's not like a large indication where you say, "There are X number of psoriasis patients out there in the mild-moderate category that-
Yeah
... you know, have not yet gone on a biologic, and therefore, ..., we're gonna target that group of patients. We're gonna penetrate X number of them per week." It's not like that because the diagnosis rate is much less certain.
Do you anticipate any inflection points in TRx going forward?
No, generally, we don't inspect it. We, you know, our view, based on a very experienced rare disease team, is that rare disease launches don't inflect, and that the growth tends to be more, arithmetic and slow and steady as a result. And our goal is to just find, bring these patients to therapy, and as long as they're benefiting, to keep them on therapy, as long as they continue to benefit from it. We believe this is a very, very strong, rare disease opportunity, and we should continue to penetrate it over time.
How should investors think about the IMCIVREE sales trajectory in BBS, in Europe? You mentioned it's growing percentage of the total sales.
Yep.
Compared to the U.S. sales, how should we think about the trajectory of this, quarter-over-quarter?
So it's a great question. And again, we're. We haven't given guidance, neither for a global revenue number nor for the share that, you know, the U.S. and ex-U.S. will occupy. But we're very, very excited about the ex-U.S. opportunity, and Germany is the linchpin of that opportunity because it's the largest market in Europe. It's the first market in which we've been fully reimbursed. And it's definitely in line with, if not better than our expectations. There are approximately 250 patients living with BBS already identified, out of approximately 800 patients diagnosed with BBS in Germany. We have a very, very strong patient.
Mm
... services vendor that we've partnered with to do this launch. We're able to offer an auto-injector in Germany, which we are not in other jurisdictions, which, you know, helps with administration. We've had very strong patient adherence, and we've had prescriptions written at over 15 different treatment centers, all within large and well-structured and resourced university hospitals, so very excited about Germany. In France, we have paid early access for BBS, as we negotiate with French authorities on pricing. So we're in the midst of that negotiation now. The early access is a pretty laborious process. It's committee-driven.
Yeah.
The committee meets once a month. It's challenging, but it works. And then we've secured reimbursement in Italy and Spain. Those are important markets. We're very happy to have them, but there will be the, you know, national reimbursement then follows provincial reimbursement, which is then followed by hospital budgets and things like that. So they're much more-
I see
... complex at the local level than, Germany and France, whereas once you've secured national reimbursement, you're effectively, you know, dealing directly with... Your, your-
Yeah
... access portion is relatively secure.
Hunter, you mentioned Germany and France, in particular Germany. Those are both gonna be key for the European opportunity in BBS. Germany is already a contributor to revenues, but how should we think about revenue contribution in 2024 from these countries?
For the most part, Germany will be the major contributor in 2024, and the other countries will be nascent, but growing. Then I think we expect greater diversification by country in 2025 and beyond.
Okay, great. Very helpful. Continuing on the IMCIVREE theme here, I wanna get into persistence and compliance rates. You've given regular updates on those on your quarterly conference calls, but how are those tracking?
So, compliance, in our case, has been consistent. You know, speaking largely to the U.S. and Germany, compliance has been consistent with other daily injectable therapies, maybe on the high end of those, because the needle size is very small, and we generally believe that patients know when they're not being compliant because of the hyperphagia component. So we're quite pleased with how compliance gone. And you've asked about persistence, and you know, which is inherently a question about what causes patients to discontinue therapy.
Right. Mm.
You know, discontinuations have increased, and we expect them to continue to increase. We've always estimated that we think they will end in the 20%-30% range on an ongoing basis. And what are the different drivers of discontinuation? We have this really good program called Rhythm InTune, which, you know, once patients opt into that, you know, our patient services, our patient education managers, or PEMs, can then deal directly with them, and you know, this is a very experienced team that has a high quality of work in terms of, you know, keeping the patients administering therapies effectively and helping them deal with the AEs and things of that nature.
Yeah.
Anyway, you know, we think that, we'll continue to edge higher for a couple of different reasons. One is, you know, AEs are just a fact of life with any drug, and certainly a profile of this therapy. Hyperpigmentation is the one that causes the greatest number of discontinuations. But there are others, including, as you go along in therapy, you see more idiosyncratic types of AEs that you haven't necessarily seen, that are not necessarily SAEs, but cause discontinuation. So you have some elements of that... and then secondly, obviously, as you're further along in therapy, you have patients who you just lose to follow-up or things like that. You do have patients who, you know, where they, you know, are discontinuing because they don't feel they're getting efficacy anymore.
We had non-responders in our clinical trial. We would expect non-responders in the real world. So it's all of those factors that would lead us to that sort of 20%-30% range over the long run. And we do also view these discons as an opportunity. We do have discontinued patients who are starting to come back to therapy.
Oh, interesting.
We believe that's, that speaks... You know, small numbers-
Yeah
... but believe that speaks to the fact that hyperphagia, it's not solely about the weight.
Right.
The hyperphagia is what really disrupts their lives in so many ways, and comes back the quickest, and therefore, we think that our therapy is the best equipped to deal with that.
In terms of the labeling, there's some language in the label for IMCIVREE around 5% weight loss, BMI stopping rule. How do you anticipate... Well, first, maybe provide some context for why that rule is in the label, and then secondly, we're coming up on maybe that, a year timeframe where patients, and payers, and physicians, it could potentially be an issue. How do you handicap that in terms of what impact it'll have on patients, potentially coming off drug?
Yeah, so it's a great question. And, you know, the agency's view is that for any chronic therapy, there has to be some form of guidance for non-response.
Right.
And so in our case, it was this 5%-a-year rule. And we have not seen payers. We have not seen any significant issues with payers not renewing access to IMCIVREE because of the 5% stopping rule. As of December 31st, we had 110 REOs with only 10 denials, three of which were eventually-
Yeah
... approved on appeal by the time we, you know, got to our Q4 call. And we said we expect approval for the remaining seven through appeal. One of that group, only four didn't meet the 5% weight loss target, and two of those were resolved on appeal, and one more of those patients we expect to get approved because he was a trial patient who just had a change in insurance.
Hmm.
So they weren't looking sort of at his original baseline weight, but rather baseline weight from when he or she became insured in the new provider. So we think it's overall, the REO's story's been a very successful story to date.
Yeah, that's fantastic. Now, potential label expansion in BBS, you're evaluating the drug in for two to six year-olds. What are the timelines for submission there, and what impact do you think this will have on the launch trajectory if you do get that label expansion to the younger BBS patients?
So, just for background, we're approved in patients 6 years and older for obesity due to BBS, BBS, and POMC, and LEPR. We reported out top-line data from our phase III 52-week open label study with 12 patients between the ages of two and six. They showed that setmelanotide achieved a primary endpoint with 3.04 mean reduction in BMI-Z score, of which, you know, 0.25 is clinically meaningful, so this is a really, really good outcome. An 18.4% mean reduction in BMI, and again, this is BMI for two to six year-olds, so that's a very significant number.
Yeah.
and we submitted a Type 2 variation to the EMA already, seeking regulatory approval. and we expect completing our supplemental NDA in the first half of this year. So we could see EMA authorization later this year, and potentially FDA approval early next. Look, there are patients younger than six, and we find that a lot of our POMC and LEPR patients that we identify are of that age because they present so profoundly, as having such profound challenges. You know, but we don't necessarily. It's more about the significance of treating the disease early. The
Right
... you know, the symbol is maybe more impactful than the inflection in any patient numbers on drug at this stage.
Great. Now switching to hypothalamic obesity.
Yeah.
You have a phase III program ongoing. Can you briefly describe the unmet need in HO, and what are the prevalence numbers?
Sure. So acquired hypothalamic obesity is a very serious disease, with severe implications for patients and families, and no effective treatment options to date. It occurs following damage to the hypothalamic region of the brain, which includes the MC4 pathway, which is responsible for controlling hunger and weight regulation. And it frequently follows the growth or surgical removal of craniopharyngioma, astrocytoma, or other rare, pediatric brain tumors. And patients experience rapid weight gain, a reduction in energy expenditure, an increase in hunger, and that leads to severe obesity within six to 12 months following resection. And we estimate that there are 5,000-10,000 patients living with HO in the U.S., with an estimated- with an incidence of 500 new patients each year. In Europe, we estimate that's 3,500-10,000 patients living with-
Hmm
... acquired hypothalamic obesity in Germany, France, Spain, Italy, the Netherlands, and the UK. These patients are identified and actively engaged in the healthcare system. So, you know, and we think the best evidence was that the really quick enrollment of our phase III 120-patient trial, which was enrolled in less than a year.
... mentioned the phase III data, you've guided that it's coming in the first half of 2025. Can you briefly touch on the phase III trial design and the key endpoints?
Sure. So we enrolled 131 patients, age four years or older. All were randomized 2-to-1 to setmelanotide therapy or placebo for a total of 60 weeks. That's eight weeks of titration followed by, you know, up to eight weeks of titration, followed by 52 weeks of at-dose therapy or placebo, and the primary endpoint is a percentage reduction in BMI compared to placebo. And we're 99% powered to show placebo-adjusted difference of 10%.
The phase II data looked quite impressive in HO. So, how similar is the phase III design relative to what the phase II trial looked like? And what gives you confidence that the good data you saw in phase II, you can translate it to a positive phase III readout?
So the phase II trial had very little similarity in terms of trial design to what we're doing in phase III. It was open label, primary endpoint was responder analysis for 5% BMI reduction. But it gave us great confidence in the potential of setmelanotide to treat these patients. So at 16 weeks, we saw 16 of 18 patients achieve 5% or better BMI reduction, and 14 to 18%, 14 of 18 achieved better than 10%. Mean BMI reduction at 16 weeks across all 18 patients was 14.5%.
Now, they then transitioned to an open label long-term extension study, and in October, we presented 12-month data, and of those 14 patients, 12 had reached 52 weeks of therapy, and they achieved a mean BMI reduction of 25.5%, and three of the 11 pediatric patients actually achieved normal body weight at one year, as defined by the NIH and WHO, which put them between the 5th and 85th percentile.
Going into a little bit more detail on the HO opportunity and the HO market, what percentage of HO patients have used some type of pharmacotherapy? I believe at a recent R&D day, I think your December R&D day, one of the physicians had given this number around 60% of HO patients had used some type of therapy. Does that kind of line up with what... how you view the up, the, those patients? And then maybe as a follow-up, what percentage of HO patients are able to manage their condition without intervention?
So, you know, we think it's a pretty uncertain number, and it's generally observed-
Yeah
... anecdotally, and, you know, it is certainly a dynamic number because there are obviously new general obesity agents being approved and also being approved for patients that are younger than, you know, younger and younger, as opposed to just 18 and above. So, you know, I don't think we know a ton there. We hear what people in the market hear about anecdotal evidence.
Yeah
... you know, and you know, as to sort of efficacy of the current generation, the new GLP's, you know, one of our KOLs has used a phrase, a description that we've thought was applicable, which is, you know, they may work in about 20% of patients and potentially achieve about a 10% response rate in those patients that, you know-
Yeah
... and, you know, at that R&D day, Jennifer Miller, who was our guest there, spoke about, you know, specific cases of lack of efficacy, but also, you know, a waning of GLP's after the sort of acute, you know-
Right
... any potential acute early response, and a very challenging side effect profile. These patients already have a lot going on, and so adding, you know, a very challenging side effect profile is tough for them to maintain.
Okay. You had some recent updates about the market opportunity in Japan for HO. Can you outline your thoughts on that, and what's the development plan to access this opportunity?
Sure. We were really excited about how our interactions with the Japanese regulatory authorities have gone.
Yeah.
And finding out the significance of HO as an unmet need among the Japanese population was something that, you know, made us really believe even more in the setmelanotide opportunity. So the prevalence on a population-adjusted basis in Japan is about 2x more than the U.S., so we think there are about 5,000-8,000 patients in Japan. So, so, you know, we don't have an explanation for that, but it's, you know, it's a very meaningful opportunity. And we do think that it has the potential to make it the second-largest market for setmelanotide in HO globally. And, you know, the team that was involved in dealing with the PMDA had a really, really positive experience.
I mean, they typically would require a, you know, a Japanese patient PK study in advance of any investigational testing. But they agreed on a plan in our case that we would enroll 12 Japanese patients as a supplemental cohort to our existing phase III study, and collect PK data on those 12 patients as we go through, and there would be no requirement to perform an independent study in Japanese subjects. And then this additional cohort and the time for them to be added and complete the study doesn't affect, you know, our timeline for out, for the pivotal, for the U.S. and Europe. So we'll keep that moving on track... but really, really excited about the chance to add Japan, add Japanese patients and give them access to setmelanotide.
Yeah, and as we think about a potential launch for IMCIVREE and HO, could you describe the similarities and differences between what you've seen in BBS, how that would look in HO? Would the trajectories be similar?
We don't know, of course.
Yeah.
But the fundamental difference between the two unmet needs is that the HO patients are significantly aware that they have a disease that was driven by either the tumor that they had or the surgery that removed the tumor. Therefore, the degree of diagnosis is higher. Secondly, many of them have panhypopituitarism, so they are on existing treatment with pediatric or adult endocrinologists today, even though they are not being given anything in most cases to treat their obesity and/or hyperphagia.
Great. That's a very helpful overview of HO. Few minutes left, I wanna transition into some earlier stage pipeline programs. You have a phase III EMANATE trial ongoing, four independent sub-studies. Briefly touch on the rationale for this program. What are the endpoints, and how long do you think it'll take to enroll each of these?
Sure. So the EMANATE study is... In, in the EMANATE study, we are doing four independent sub-studies, evaluating setmelanotide in genetically caused MC4R pathway diseases. Each of these genetic diseases is tied to POMC and LEPR, either directly or indirectly. So there are heterozygous forms of POMC deficiency, heterozygous forms of LEPR deficiency, and then, you know, obesity caused by dysfunction in either the SH2B1 gene or the NCOA1, which used to be called SRC1 and recently had a name change. So those are the four cohorts, and, you know, our epidemiological work suggests that approximately 53,000 patients have the potential to benefit from this therapy or be part of these indications.
Mm-hmm.
With one master protocol for a randomized double-blind, placebo-controlled study, that's evaluating one year of setmelanotide therapy in these four different cohorts. And each of these cohorts can read out independently, and we hope we can potentially file them independently.
Yeah.
So, we hope to complete enrollment in two or more of these cohorts or sub-studies by the second half of this year. And again, it's a one-year study.
Great. You have a second-gen compound, RM-718-
Yep
... just entered phase I. What are the potential advantages of this, say, next gen IMCIVREE?
The first is that it is designed to be MC1R sparing, and therefore avoid the hyperpigmentation that is an off-target effect of setmelanotide that is a source of patient discontinuation. The second is that it is a weekly injectable, and therefore has the potential to reduce the injection burden of daily injection therapy. And the third, that it is wholly owned by Rhythm.
Yeah
... with a patent life, up to a composition of matter protection out to 2041.
Is there any reason to believe that 718 could have better efficacy than IMCIVREE, or is it more on the tolerability, dosing convenience, that you think you have the advantage there?
You know, I think, we'll see.
Yeah.
And it will depend on clinical results. Setmelanotide had such strong results in HO that we're not sure that that can be significantly improved upon. Whether we will have-
Yeah
... better results with patients that are more heterogeneous in terms of their response to setmelanotide is TBD, but the overall drug profile is superior.
Okay. Earlier this year, you had added another asset to your pipeline. It was the oral MC4 agonist that you bought from LG Chem. Just curious, what was the rationale behind this decision? What, what are the potential advantages of, of this asset?
So, same potential advantages as RM-718, MC1R sparing, and therefore avoids hyperpigmentation, long composition of matter protection. And then the difference being obviously that this is orally administered, and therefore, has the potential to appeal to the patients that are more interested in daily oral versus weekly injectable.
The last two from us, Hunter. Current cash position, and what are your cash runway expectations, and what assumptions are built into this guidance?
Sure. So we ended the year with $276 million of cash and cash equivalents on the balance sheet, and then we did the transaction with LG Chem, which we announced in January, and that committed us to about $100 million of incremental spend in 2024 and 2025, of which about $80 million was the cash consideration that we owe LG for the asset, and about $20 million was the incremental clinical development spend above and beyond that which we already had planned. That combination took our cash out guidance to the second half of 2025. A week ago Monday, we announced the signing of a $150 million convertible preferred issuance with a couple of investors, and those new proceeds take us well into 2026.
Last question, and a common one we get from investors, does Rhythm have a clear path to profitability, and what does this look like?
That's a great question, and I think what we would say is that, certainly any good business is predicated on finding a way to generate, you know, cash profitable returns for its shareholders, and we are no exception. So we have our ongoing revenue growth. We're at about $100 million runway rate based on where we exited Q4. Obviously, we have great folks like you and others to estimate how fast that revenue is gonna grow, and importantly, what level of revenue growth is gonna come when HO is approved. We expect relatively slower growth in OpEx, so our guidance for this year is $260 million in cash OpEx, which is about 18% growth year-over-year. That includes the incremental contribution of the LG spend, but doesn't include the cash consideration that we paid.
That's more of a non-operating item. But we are in the midst of two phase III trials, which are gonna peak this year, and that will then, you know, give us the opportunity to see R&D maybe not grow so fast in the future. So we expect to see continued year-over-year, quarter-over-quarter improvement in operating leverage. It's not gonna be perfectly linear. But that will enable folks like you that are, you know, really, really targeted in on these things to figure out when we're gonna start, you know, start being profitable.
Well, Hunter, we're out of time for this session. Thank you so much for participating. It was a great discussion.
Thank you, Joey. Really appreciate the opportunity.
Thanks, everyone, for joining us on the webcast. Have a good day, and a good rest of your conference.