Okay. Great. Let's carry on the conversation. Thanks for sticking with us at Stifel Healthcare Conference. My name is Dae Gon Ha, one of the biotech analysts here. For the next half hour, we're going to be hosting a fireside chat with Rhythm Pharmaceuticals and Dr. David Meeker, Chair, President, and CEO.
So David, thanks for sharing your 30 minutes with us. As I always do, I figured we would start with a broad overview of Rhythm, which is probably redundant, but nevertheless, let's get in. Go ahead and get started.
Great. Well, thanks, Dae Gon. Yeah, Rhythm Pharmaceuticals is a biopharmaceutical company focused on developing therapies for the melanocortin-4 pathway, the pathway in the brain that governs or tells us, A, that we're full, the satiety signal, and it also, when you have food on board, the body tells the body that you can increase the energy expenditure. So if you have impaired signaling through this pathway, those patients tend to be endlessly hungry.
They eat a full meal, but they don't get the signal that they're full, so they continue eating, and then perversely, the body doesn't think there's food on board, and so energy expenditure remains low, and the consequence is often severe obesity as a consequence of that. Our first approved product was in 2020, but powerful proof of concept for two genes, but quite rare in terms of, and we didn't actually put a sales force on the ground at that time recognizing how rare it was. But we did price the drug, and it created a lot of interest in the pathway.
Our next approval in 2022 was for Bardet-Biedl syndrome, a rare genetic syndrome, and that we're now launching globally. And we can talk about that, but that's had a steady cadence since our original launch, and we're quite happy with that. And then the reason I think people got really excited about Rhythm was something that was unexpected internally, certainly for me, was its impact on patients with acquired hypothalamic injury.
Hypothalamic obesity, which is where patients have injury to the hypothalamus most commonly or most commonly recognized because of these benign pediatric tumors, and the tumor itself or the surgery injured the hypothalamus. And the fact that patients have responded so consistently to this drug, and we can talk about the Phase 2 data, suggests that that has to be the biology because our treatments are specific for this.
And maybe the last thing, just as intro, the biology is, again, in a very simple way, what's missing when this pathway is impaired is you have a decrease in alpha-melanocyte-stimulating hormone, and our drug, setmelanotide, is an analog of that hormone. So again, at a very basic level, we're hormone replacement in an endocrinology world where that's what they do.
So let's start with the epi of HO. I think most recently that has perked up in our conversations. Your estimates, based on some literature analysis, have arrived at 5,000-10,000. Craniopharyngiomas, astrocytomas, hamartomas are some of the more major tumor types, but you also group sort of the other in the sort of smaller subgroup. At this point, what's the latest take or latest estimate? I mean, is it really 5,000-10,000 you put out there, or are you just being conservative as patients will most likely come to the fore once a drug is approved?
Yeah, so we're learning. Again, not prepared to update our numbers today, but maybe I can give you a qualitative sense of how we think about that. So that epidemiology is built off very strong numbers around these tumors. I mean, you have tumor registries. I mean, you can know that number.
The variable in those equations, or that equation specifically, is the percentage of patients who develop hypothalamic obesity as a consequence. And that range can be from 20%- 80%, depending on the series and the like. And so the consensus that 50% is the number is quite good, but I'm saying that that's the variable that's inherent in that epidemiologic calculation. I think the 5,000- 10,000 to your point is conservative.
The part that we don't know, and it's this other, and today it arguably is a case report world, but I think it's largely a case report world because it's not well recognized, and so I'll give you an example, and you've heard this before, but very unusual, but it makes the point. One physician came up and said, "I have a patient who had a gunshot wound to the head and survived, but after the gunshot wound had classic HO, and the MRI showed involvement of the hypothalamus," so that's traumatic.
I had another physician tell me she had a patient post-car accident, also the MRI showed injury to the hypothalamus and developed a classic HO kind of picture, so is that a case report world, or are there more patients with head injury and the like? Patients get radiation for reasons other than just the treatment of these tumors, and I think the thing about these other worlds, which we're interested in learning more about, is that I do think that's a world that's not thinking about HO, and it may be relatively unrecognized.
So people gain weight, but they don't attribute their gain in weight or the change in feeling to the injury per se because that link hasn't been strongly made, at least in a large part, so that's where we are, but I do think, to answer your question, that we very specifically weren't looking to be aggressive about that number, and it may well be conservative.
Okay. Are you comfortable putting a little bit bigger of a benchmark in terms of are we talking 2x higher when you think about conservatism, 3x higher? Because we've heard some ridiculous numbers that came out of a doc meeting.
Yeah. So I think that's your word, ridiculous, but no. What happens, again, once you have a treatment for something, particularly in a rare disease space, the reason epi is so poor in rare diseases as a rule is that there's very few people who are paying attention. And not to be harsh, but the world doesn't care, right? If I don't make a diagnosis of this disease, there's no treatment, so I'm not depriving you of anything.
And these patients often have these difficult journeys, these diagnostic odysseys trying to get a diagnosis. This is a world HO and acquired HO, which is why people, I think, got more excited about the Rhythm's prospects that has a very high diagnostic rate for those patients who present classically with that tumor. But I think this other category is going to be like all these other rare diseases where it's unrecognized until you have a treatment. And part of, and we'll probably talk about our data today on congenital HO.
Once you have a treatment, it causes physicians to say, "Well, oh, wait a minute, so that looks kind of like this. I wonder if it would work there." And so that dialogue begins to happen. And that's how we got approached about congenital HO. And so now we have a couple of patients treated. It makes sense to me. And that's a world that's going to, again, add a little bit to our current epi.
Good segue. By the way, congrats on that update this morning. four new French patients, a gift that keeps giving, it seems. Just briefly remind us what you found there. How does it compare to the Phase 2 11 pediatric patients that you enrolled? I know two of these patients that you announced this morning were congenital, like you mentioned, so quite different from acquired. But from a magnitude standpoint, treatment benefit-wise, what have you seen across these four patients?
Yeah, I'll go back a week or two weeks, whatever, to ObesityWeek, which you followed closely. Our Phase 2 data, which was 18 patients, one of those 18 didn't take the drug, so we basically had 17. But of the 17 patients, literally every patient who took the drug responded. And we've worked hard. I've worked hard to try to get people focused on the consistency of the response. We live in this arms race around percent weight decrease.
And this world is apples and oranges relative to common general obesity, where the arms race around percent decrease. Now, we've done well on our percent decrease, and those 25% at a year was of those patients in our long-term extension coming out of the Phase 2. But one of the gaps was most of those patients, 13 out of the 18, were pediatric patients. So one of the questions we got were, well, maybe this is more of a pediatric response.
The adults won't respond so well, but the peds, and you've got to treat close to when you have your injury. So the French data, which were eight patients, the first patients who were started in this French early access program, open label, real-world data, actually, they were on average 31 years old, so some were significantly older than that. And they were 12 years out on average from when they had their injury.
And they responded uniformly. And at one month, they lost 5.8%. At three months, 12.8%. And at six months, the five of the eight who made it to six months so far had lost 21%. So again, in the arms race, it sounds pretty good, but that's not the point. The point is that everybody who's taken the drug, if they have this problem, basically responds, which just tells you that the biology of this problem is this pathway. This pathway is being injured. There must be a deficiency in this hormone, and we're replacing a hormone, and they're responding.
So the data today was two more kids, which is consistent, who have acquired HO, and we had three-month data out, and the data is consistent there. What was new data, and again, this is rare diseases, two patients, right? You don't often get up to stand and sort of beat a drum around two patients, but I think what's interesting about the two patients is that, A, a couple of things. The French program, which this is. French have this early access paid early access program, which they obviously adjudicate themselves.
That was delivered based on the Phase 2, 17 patient Phase 2 data, and the program allowed for treatment of patients with congenital, not just acquired, so they already had made the link that this is maybe a common biology and that these patients might respond, so those patients went on, and again, at this early time point, three months, we're in 5% plus, and actually, they were dose escalated pretty carefully there.
So they're still on probably a sub or not an optimal dose, but it's encouraging, and it's encouraging enough that we are actively amending our current trial, Phase 3 trial, no change to our current and timing or readout, et cetera, but we'll have a separate cohort of congenital HO who will be treated in exactly the same way as everybody else in the trial, they'll just be analyzed separately, and that's about 40 patients.
Right. That 39 number, the 39-patient, 34-week study just piqued my interest a little bit. 34-week treatment duration is slightly shorter than the Phase 3, which is 52 weeks in the maintenance portion, and then 39, given the limited amount of data that you have on the congenital side, I was kind of curious if you can talk a little bit more about the powering. How did you arrive at that 39 number, and is this sufficient when it comes to a slightly shorter trial duration?
Yeah. So we're at 90% powered, which is a 12% difference based on that calculation, and if you remember our first trial, the main trial, that's our main Phase 3 trial, we had gone into the FDA requesting a 60-patient trial. We ended up with 120, so we were well overpowered at 60 patients. We're 99% powered to show a 10% difference at 120. That 120 request was just the FDA wanting a bigger safety database, so that's how we got there, so no, and we're expecting a similar effect. That's how we powered the study.
The hypothesis was these patients have hypothalamic injury. They will have a similar response, so let's power it accordingly. So that's the 39 patients. The shorter, we know in this data that we have now coming out of TOS and the early data here at the ESPE, the European Pediatric Society meeting, suggests you don't need a year. Three to six months is plenty of time to get conviction around this. This is not a registrational study.
Part of that was we weren't looking to have a major regulatory engagement in the sense that I think if we had gone in asking for a registration study, likely they would have come back and said, "Look, just set up a separate protocol." And just from an efficiency administrative standpoint, that would have taken us a lot more time. This provides an opportunity to take advantage of current sites, current infrastructure. There's a lot of advantages to doing this slightly shorter but well-powered effort. I think we're going to learn, yes or no.
So to be clear, you haven't necessarily ran this by the FDA, this sub-study proposal?
The amendment's in where you wait for feedback.
Yeah. Okay. Gotcha. The epi on this segment of the patient population, you mentioned on the press release about 1,000 plus. This being a congenital, just kind of curious, you've been having this VUS assessment that you've been funding, right, to try and uncover patients who might have genetic obesity. Is this congenital HO going to be included in that, or is it already included in that? How should we think about maybe working to expedite uncovering these patients?
Yeah. So it's a very well-recognized, these congenital hypothalamic obesity, but there's a group of congenital abnormalities which involve this part of the brain. They have different names. They're not so easy. Septo-optic dysplasia being one of them. Multiple pituitary hormone deficiency, pituitary stalk interruption. My point being is that it just reflects the early stage of medicine here where these are entities that are being grouped together based on physicians who have a group of patients, and they describe what they see.
And then increasingly, I think people would agree that there's a lot of overlap among these. And the key features are, by definition, it's this part of the brain, often, very often, by definition, pituitary involvement. And I think this realization that if the hypothalamus is involved, then maybe the obesity that some of these patients have is due to that hypothalamic involvement. Now, historically, as pre-GLP-1s, pre all this interest in obesity, obesity, A, wasn't thought of as a disease, B, thought as a lifestyle choice and the like.
So if you think about earlier literature here, that patient might have had obesity, but they weren't necessarily capturing that obesity as a manifestation of the disease. So the biggest variable in that epi is pretty good epi around the frequency of these congenital syndromes, but the frequency with which patients have the hypothalamic involvement that drives their obesity, that's the unknown. So we've done the best we can very early in this whole process. So the 1,000 plus, I think it's a good starting point.
Is that included in the newborn screening of any kind?
No, no. So sorry, I left out that part. So the genetics, there's actually been a fair amount of work on the genetics. And the number of patients with a gene that's felt to be driving associated with it is in the single-digit low teens. So this is not a genetically diagnosed. This will be a clinically diagnosed phenomenon.
Subsequent to the genetic diagnosis, presumably.
But my point is that to the extent that genetics are driving this, and it might not be, I mean, there's other ways, other reasons you can have developmental abnormalities. Something happens in utero. It may not be a pure genetically driven, maybe an epigenetic phenomenon or like. So no, I don't envision that this is something that is going to fall in that category of be on a panel and you'll have to have genetic.
This is going to be like acquired HO, right? That is a pure clinical diagnosis, no genetics. It's injury. This is a failure of the hypothalamus to develop. So it's another way of ending up with hypothalamic insufficiency. But it's not that sort of pure precision genetic. I'm missing a gene, and therefore my signaling through the pathway is impaired.
Gotcha. So the Phase 3 and now with the sub-study, you mentioned 10% for the main study and then the 12% difference. Just to be clear, is that difference to the baseline or to the placebo arm?
It's placebo adjusted.
Placebo adjusted. So how are you thinking about?
Also, again, the history, certainly, for acquired. Maybe we have less information about the congenital group. They do not. A, diet and exercise does not work. Now, other drugs historically have not worked. The newer versions of the GLPs, maybe there's some activity in a small percentage. But as a rule, so for example, for our Phase 3, we're not anticipating any placebo effect. In fact, if anything, I would expect the placebo group to gain weight, not lose weight during the study.
Okay. Okay. You just read my mind. That was going to be my question. On the patient enrollment to the Phase 3, can you also just briefly remind us how much are or have been on GLP-1s before? How many are currently receiving GLP-1s? And what is the protocol mandate in terms of kind of adjusting their dose, if you will?
So what we've said, which is the case, approximately 25% of the patients entering the trial have been on a GLP or are currently on a GLP-1. Of the number that are currently on a GLP-1 in the trial, it's 10% of the people in the trial. We do not stratify, meaning we don't because we don't think it makes a difference. To be on a GLP, you could not be actively losing weight over the three months prior to entering the trial.
So if you'd been put on a GLP-1, you're losing weight, you would not be eligible. So they're not in the trial in that category. You have to be stable, and you cannot adjust the dose. So for example, if you were on, and this includes patients who are on GLP-1s for their diabetes. So if you were on GLP-1 for your diabetes and your physician wanted to increase the dose, you cannot do that in the trial.
Going back to the French real-world adult data from ObesityWeek, you mentioned five patients out to six-month data. The fifth patient drew my interest a little bit in the sense that their magnitude or his or her magnitude was not as robust as the other four. And I remember there was a substantial amount of hormonal therapy as well as GLP-1 therapy that still participated in the trial. Do we know anything about any baseline characteristics or concomitant medications that has led to a little bit of that disparity?
I do not know it. So this is real-world data. It's not Rhythm data. So we don't have all of the details. What we know is you referenced is four patients had been on a GLP. One patient stopped the GLP at the time they started setmelanotide. Three remained on that GLP-1. I don't know if that patient specifically was on a GLP-1. So I can't answer that part of the equation.
But again, I go back to the arms race on percent. It's tricky here. I mean, these were adults, right? So this doesn't play. But I'll just give you an example, the challenge with the percent. In our Phase 2 trial, one of the most powerful responders in the first 16 weeks, I think lost 30+% , right? It was a six-year-old. Now, his baseline weight, he lost a lot of weight, but not more weight in an absolute amount. It's just that he wasn't that big. So he ended up losing a larger percentage of his weight in that time.
So again, I just really trying to discourage people from looking at it, trying to read through too much from something like that. What is absolutely striking about that French data is, again, everybody had a meaningful, and again, these are patients who are not resigned. And the way the French system works is to get on this early access program, you have to go through a committee of experts.
And they started carefully and slowly, I would say. So these were the "more challenging patients," more severe patients who were first in the gate. So I think that's all I can say on that one patient. B ut I'm not looking at that patient and saying they did worse than the one who had the 20%.
Right. The uniformity was striking. So quickly touching on the timing, first half 2025, a little bit of misunderstanding as to why it's first half, not a Q1 or Q2. So I know there are some moving pieces to the two portions of the study, right, dose titration and the data readout. Can you just remind us why you're sticking with the first half and what those moving pieces are?
Yeah. So we've actually given a lot of information. So the last patient first visit, which is when you can start the clock, literally February 1st, right? And it's a 60-week trial. And so you can do the math on that. And it gets you out to this PDUFA sort of world. And there are some variables about how quickly you can close out the trial and when exactly that last patient visit is because it's not on the 60th day or the last day of the 60th week.
So anyway, long story short, those are the variables. I think the only thing we'd say now, no, it's not going to be June 30th. We're going to do everything we can to, this is so incredibly important to Rhythm, to close it out and get it submitted in a timely way. But yeah, so we've just stayed with first half. It's not going to be January. That helps people.
Yeah. Gotcha. By the way, if there is any question from the audience, feel free to chime in. Let's quickly pivot to Bardet-Biedl. HO clearly has become the dominating force when it comes to Rhythm, but Bardet-Biedl has been a sort of the tortoise and the hare kind of a situation where it continues to build, build, build. What's your latest assessment of the Bardet-Biedl opportunity, the next growth driver? What can you kind of do in terms of maximizing the growth opportunity in Bardet-Biedl?
Yeah. I think hopefully the world is getting more conviction around Bardet-Biedl internally. We obviously are. The way we talk about that, we don't "guide" to specifics, but I think we have given people a pretty specific way of thinking about this. There's 5,000 patients in the U.S. What's the probability we can get 1,000 patients on treatment, 20% penetrate? I think that's extremely high.
The piece that we've worked hard again at helping people think about is that this is just a classic rare disease, and rare diseases, these ultra-rare, they do not peak, and the reason they don't tend to peak is because you're always working the undiagnosed pool, and that undiagnosed pool tends to be the majority of the patients. It's true in Bardet-Biedl. Each quarter, you have to do the work, which is you find new patients, help them through the reimbursement process and the like.
And so the slow and steady mantra, which we've been highlighting, is very realistic. And that's what you're seeing. And we've had amazingly consistent steady growth, which is very much what we hope to see. We're thrilled where we are now. You approach it globally. That's another thing. This isn't a U.S. opportunity. This is a global opportunity. As new countries come on, and they tend to come on in the same slow and steady way, amazingly, but that adds on.
So back to the opportunity, if you think it's reasonable, we could get 1,000 patients on treatment, 300,000 gross or whatever. I mean, that's a $300 million U.S. opportunity. You've got Europe on top of that. Europe's been 25%-30% of our revenue so far. Is that the way it'll stay? I'm sure it'll vary, but maybe not a bad way of thinking about it. It's not so hard to get where you're looking at BBS and saying it's a $300-$500 million opportunity. It's not going to peak.
Many people know my history of Genzyme. I mean, those early enzyme replacement therapies, they don't peak. Competition came in. They started to give up share, but the opportunities continue to grow. I do think that's a Bardet-Biedl world. In many ways, you can look at BBS as the anchor. You could build a profitable company around BBS.
If we weren't doing R&D and all these other opportunities and the like, I mean, I would say we have a good shot at getting profitable in the near term. Yeah, so that's it. HO, of course, is some multiple of that. It's just a completely different dynamic.
Right. And then European rollout, what's been sort of your track record? Well, I guess not track record, but what have you been seeing from their experience vis-à-vis the U.S. side?
Yeah, and it's been slow and steady, but for many different reasons, so, for example, Germany is much more U.S.-like. We think about Europe correctly as having more centers of excellence, more concentrations of rare disease populations. That's true. It's true in U.S. Germany tends to be a little more U.S. It's more decentralized. You do have some centers of excellence, but not the same way you do in France and the U.K., for example.
So it's more decentralized. It has very much a U.S. dynamic, slow and steady as we build out, and we're working with the teams there working to build these additional centers of excellence. France, we're still working through early access programs, which have to go through committees, so that's slow and steady, and you get out of that when you have a fully negotiated price. We're still working on that.
One of our, I think, reasons we've been successful is we've been patient in these negotiations. We're not just rushing to take whatever. I mean, it's important to get your initial pricing established in a good way. We've done that. France is. We're still doing that. UK is just coming on. Again, in the UK, the NHS now, we all know. European, sorry, the UK economy is struggling. The NHS is struggling.
You have to be treated through these centers. Each country, for different reasons, has its own inherent drag, I'll call it, on the system, which is, to me, the rare disease world. The ability to be successful in that world is you just work the problem. You're patient. Patient means you push, but you're patient. That's what we've been doing. I think what you're seeing in performance reflects that, just steady, consistent. We're solving these problems and making progress.
Just to clarify, NIH or NHS?
Oh, sorry. NHS.
NHS. Okay.
I got NIH on my brain.
So let's briefly touch on your pipeline expansion candidates, right? You now call 54640 bivamelagon, which is a little bit of a tongue twister, and 718. What's your long-term strategy with these two candidates? And clearly, you're evaluating HO for both. Any sense of when we should be expecting those data readouts vis-à-vis the main Phase 3 data readout?
Yeah, a little evolution there. So the strategy is our goal is to develop them both. And we're agnostic. If one doesn't work, that's fine. Obviously, we'll go forward with the other. We're quite optimistic both are going to work based on what we know from preclinical Phase 1 data. So HO, we went into HO because HO was a gift. HO is so sensitive. Bardet-Biedl is a complicated disease.
And sometimes reading signals in complicated diseases is hard. But HO, the response is so consistent and the like that it's a beautiful model to develop a drug in. So if it doesn't work in HO, we're done. I mean, it'll be very clear. We're optimistic it's going to work. So if it works, we'll take both of them into a Phase 3 HO. Our goal will be to get them both approved for our current indications.
So, Bardet-Biedl and the POMC-LEPR group. Beyond that, that's a fair question, right? For all new indications, would you necessarily take both in? By that time, we'll have learned a lot about sort of how the world sees the two options, how they performed. Maybe for some reason we don't see today, one might be better than another in a certain situation or in general. So all of that will influence that future decision-making.
And I think the second part of your question was in terms of the timing of the readout. So as we said on our earnings call, first week of November, our goal is to have the oral, the bivamelagon, fully enrolled in the first quarter. And then it's a 14-week trial. Beyond that, which will put us sort of mid-year plus for the top line. The RM-718, we delayed. Our original plan was to just do a four-week Part C in that.
Feedback from investigators was, look, that's not enrollable because patients aren't going to be willing to come in and do all the they have to be hospitalized, get pharmacokinetics. It's not easy. And then just stop the drug after four weeks. They want to know they can continue the drug. So you're not going to be able to enroll that trial. Fine.
So what we need to do to get the ability to treat for longer than four weeks was to finish the next round of tox studies, which are the six- and nine-month studies for rodents and primates. So that's what we're doing now. You submit an amendment. So our goal for that is to start enrollment in 718 in the first quarter, which means, of course, you push out into the second half of next year for that readout.
Got it. And then just briefly touching on finances, your cash balance and runway projections.
Yeah. So we finished $293 million, so about $300 million in cash at the end of quarter three. What we said about that is that takes us well into 2026. And there's a little give and take, right? We have new programs coming on. We have some of our existing programs which are tailing off. So R&D spend doesn't necessarily radically change there. So we're feeling good about where we are from a financing standpoint.
All right. Well, with that, David, thanks very much.
Thank you, Dae Gon.