All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Health Care Conference. I'm Mike Goldsmith, one of the biotech analysts here. It's my pleasure to introduce David Meeker, President and Chief Executive Officer of Rhythm Pharmaceuticals. Before we get started, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, David, thanks for sharing your time with us today. Maybe I'll just hand it over to you briefly to make some introductory comments for people that might not be familiar with your story.
Sure. Yeah. No, thanks for hosting us. Exciting time for Rhythm. We've been at this for a while. Over the past number of years, our conviction around the importance of the melanocortin-4 pathway, which is the pathway that governs our satiety signal. We eat a meal, and gut hormone signals a fat cell, releases leptin, goes to the hypothalamus, and signals down to the melanocortin-4 pathway to say, "You're full." Not only are you full, you can increase your energy expenditure. Patients who have a defect in that suffer from an inability to feel full. They're constantly eating, constantly hungry. Perversely, because their energy expenditure is kept low, they gain weight, and they gain a lot of weight. Rhythm's strategy from the beginning has been to really unravel this, starting with some of the classic known genetic defects that affect this pathway.
Those were our first two approved indications for POMC biallelics and leptin receptor biallelics, and really dramatic responses. Turns out those specific populations are relatively small. We didn't actually put a sales force on the ground in the beginning there, but really powerful proof of concepts. The next indication, which was for Bardet-Biedl syndrome, approved in June of 2022. It's a syndrome. There are multiple signs that you may have this entity. In terms of getting to a diagnosis, that facilitated that. The size of that population was meaningfully larger. We talk about 4,000 to 5,000 patients in the U.S., similar numbers in Europe. Our confidence in those numbers has grown over time. One of the hallmarks of a rare disease, sometimes I think about them as really a desert. You might have epi numbers that say they should be out there, but you just can't find them.
That usually tells you something. Conversely, if you're finding them, that's a pretty good marker that, if anything, your epi may be low, not high. Over time, those opportunities also, they tend not to plateau. I came out of Johns Hopkins, as many people know. A number of those opportunities, just decades later, more than a decade, you know they continue to add patients and continue to grow at a modest rate. They don't peak. BBS was really important, first approval, and you could build a company around that. What people really started getting excited about Rhythm around was this acquired hypothalamic obesity, which is a disease where most often patients who have developed often a benign tumor, it doesn't have to be benign, but a benign tumor in the area of the brain around the pituitary and the hypothalamus, it gets resected. The hypothalamus gets injured.
If they hit the hypothalamus, this part of the hypothalamus where this pathway sits, they come out and they explode off their growth tracts. I mean, they're rapidly growing weight. The problem was clear. It wasn't clear that an MC4 agonist could work because you're injuring the part of the brain and you're losing some of the receptors, so maybe the ability to respond. What's really been striking over the past two to three years of doing the development work in that indication is it's remarkable. It's remarkable not just because they lose a quite meaningful amount of weight or BMI decrease, but the consistency of response. I mean, literally, if you take the drug, most patients, almost all patients, have some level of response. We're opening that up. We can talk more about that. That's a really important driver.
I think there's a lot of other things we can do with this pathway. We've talked about other genetics. We're currently running a phase 2 on Prader-Willi. It's early. It's a very challenging disease. We can talk about that. There's a lot to do here. We think about this area as a product in a pipeline as much as anything.
Great. Thanks for that introduction. Maybe we could just start with IMCIVREE. You touched on this a little bit, but your currently approved indications and kind of how to think about the growth drivers today and what that looks like going forward.
Yeah. So what we've talked about for Bardet-Biedl, and we talked about it, we don't give revenue guidance. If there's 4,000 to 5,000 patients in the U.S. for Bardet-Biedl, what's the probability we can get 1,000 patients on drug? It seems high at $300,000 net. I mean, that sort of gets you to a $300 million opportunity. You do better than that. I'm talking U.S. only, you know, $300 million, $500 million opportunities. I think, as I said, our confidence in BBS as a foundation has really grown. You've got that as a solid piece to build on. HO, we've talked about 5,000 to 10,000 patients. More recently, as we've done more work, we've done some claims analysis. We have individuals in the field now who are beginning to profile the disease, talk to thought leaders and treaters in the field.
We're increasingly confident that that, you know, are probably at the top end of that range in terms of the overall opportunity here. We're excited about Japan, where the prevalence numbers on a population basis seem to be somewhat higher. We're talking about 5,000 to 8,000 patients in Japan, continuing to do more work. That's going to be a big part of the growth driving on top of our BBS opportunity. We have our PDUFA date set for the end of this year in the U.S., so we'll be ready to launch. We filed simultaneously in Europe. We look forward to hopefully getting approval mid-next year, sometime Q3 mid-ish.
Great. You talked about your increasing confidence just in the sort of market opportunity here in the U.S. for HO. Maybe talk a little bit about what drove that sort of thinking. Is it possible that maybe 10 could be conservative, maybe?
Yeah. I mean, people, a lot of people, they're doing work. Everybody's doing work on this. For me, it's so good to be higher. Absolutely. Like I said, this has the feel that there's probably more patients out there. I think, but we're not going there now. I don't think we need to go there now. I think, let's solidify around these numbers. I said, 5 to 10, we're scooting toward the 10 side of that equation now, which I think is perfectly appropriate. As we learn more, maybe we'll update it. One of the things that's been apparent as the team has been out in the field is pediatric endos, not surprisingly, are pretty on this. That's not surprising in that they're seeing kids who may not be so far away from when they had their injuries, their tumor, and their surgery.
It's easier for them to connect the dots and the like. Whereas if you're an adult endo and you see somebody who had a history of a tumor and resection 20-plus years ago, they've got some pituitary insufficiency, so you're following, and they happen to be obese, you may not connect the dots. This is a disease where, like many things, until you have a treatment, there's also no urgency to make a diagnosis. If you don't diagnose it, so what? I think people tend to react to obesity in general still, amazingly, as one disease. A lot of these patients will have seen GLP-1s. I think we have a pretty good sense about the limitations of GLP-1s here if you don't correct the underlying biology, which is this MC4 pathway defect.
My long story short is, yeah, I think there's a lot of potential here, but we feel really good about the 10,000 number.
Yeah. Makes sense. Maybe could you talk a little bit about Japan? You mentioned that as a potential important opportunity for you and maybe some of the dynamics in that market versus what you see in the U.S.
Yeah. For reasons we don't maybe fully understand, there seems to be a higher prevalence of tumors, these benign tumors, which would lead to the higher diagnosis of HO. It's really not dissimilar, meaning there's a small, active, knowledgeable expert community there that we're working with. A lot of support from the Immigrant Society and the like. The PMDA, the Japanese Regulatory Authorities, for the past couple of years, maybe more than that, have been opening up in the sense that they don't want Japan access to medications to be significantly delayed, which has been historically the case. You have to run special trials and do additional work that you wouldn't have to do. They've really been incredibly helpful to us. As you know, we went to them late.
We already had our phase 3 underway, and we went with a proposal that said, "Look, can we bring in an additional 12 patients here as part of that trial? And would that be sufficient for approval?" They said, "Yes." That, to me, was great. That was a real strong indication that they are really motivated to work with you. Like I said, we're not the only company with that experience. Japan has a lot of positive attributes now.
If we just move back to the U.S. opportunity and maybe just highlight some of the unmet need or how these patients are treated today or what are their options?
Yeah. Their options are limited. You know, they're a, not surprisingly, a sick population. When I say sick, it's probably the sickest population in my career that I've worked on. One measure of that is their medication list is one to two pages long. I mean, just the number between all of the different hormonal replacements, and they have a seizure disorder, and they have other things going on in terms of mood, depression. It's just, it's a really, really tough population. Despite that, what they're suffering with, with acquired hypothalamic obesity, is a major part of what they have to deal with. There are other hormonal deficiencies. You know, if you're hypothyroid, you can replace your thyroid and live a pretty normal life. This acquired hypothalamic obesity part of their presentation is really dominating their quality of life, the family's quality of life.
You know, we did well, and very well on the quality of life scores. They did well on the hyperphagia scores. This really comes through when you read the exit interviews and just know what life was like before and what life is like now. Yeah, it's pretty remarkable how important, you know, this is in their current situation.
Yeah, very high unmet need. You started to touch on some of the data you saw. Maybe you can expand on that a little bit. You shared results from the phase 3 TRANSCEND study. Maybe highlight some of the key takeaways and data points there.
Yeah. I mean, that was the largest trial that's ever been run certainly in this disease, two-to-one randomization. So about 80 treated, 40 on placebo. Also, the largest placebo-controlled group we had. A couple of things stood out. One is we got a very good response in the treated group, 16%. That was imputing data from patients who discontinued during the trial for a variety of reasons. We had less than about a 10% dropout rate overall, which was small compared to, and pretty remarkable considering we had a placebo group. It was about half and half between treated and placebo. If you did drop out, you had your values imputed. By the way, that whole approach works as you're informing the data you're imputing based on the trajectory of the placebo group. In a way, it's the absolute most conservative way of looking at that data.
Long story short is, we had about a 16% positive or 16% decrease in BMI in the treated group, 16.5%. Really importantly, because this is always a question in obesity trials, you can have very significant placebo effects and decreases in the placebo groups. That does not happen in this disease. There is no placebo effect. Those patients gained 3.3%. It wasn't huge, but meaningful increases in weight from where they were. Our placebo-adjusted effect was 19.8%. Really strong numbers in terms of overall BMI decrease. The other piece, which I highlighted earlier, which I think was really striking, was the three age groups, 6 to 12, 12 to 18, and 18 and above had identical results. They all had placebo-adjusted rates of 19% to 20%. It wasn't being driven by one population.
One of the early questions we had about acquired hypothalamic obesity was, gee, you're out 20 years from your index event. Maybe you're not going to respond as well as a kid who's just had it two years ago or is fresh off their injury. That's not the case. They responded exactly the same. I think the oldest person in our trial was 66, and they responded. These patients, from an epidemiology standpoint, tend to live a normal life, relatively normal. The 80-plus, so the 20-year survival is like 80+%, again, depending on when you're born, and 50%, 34%, 30%, 40%. It's important to be able to treat them across that full age range. I think that the trial supported that. The last piece I'll just highlight back to the GLP-1 is we did allow patients on GLP-1s to come in the trial.
They couldn't be actively losing weight on the trial. We had about 30 patients, half who had been previously on a GLP-1 but were not on it when they started, and half who had previously been on but continued during the trial. Those who had previously been on it stopped. They had about a similar response as the others. Those who concurrently were on a GLP-1 lost 25%. The trial wasn't stratified. It wasn't designed to make conclusions about GLP-1, but you could look at that data and say, here's a group of patients who weren't responding to a GLP-1. Once you replaced their hormonal deficit, corrected the underlying biology, in theory, made them more normal, normal physiology, then their ability, and I would argue, to respond to any anti-obesity medicine might be restored.
To the extent that you need additional weight loss, maybe you're going to get more of an effect. There are a lot of pieces of the trial, which I think were incredibly helpful. We have growth curves on all 31 of those patients, showing the effect of when they started their GLP-1s. The majority of them were on either semaglutide or tirzepatide. It wasn't like they didn't get the most recent, newest generation drugs. You can see when they started, and the pattern is pretty clear. For the most part, you put anybody on a GLP-1, they'll lose some weight. In this disease, if they're working against this defective signaling, abnormal underlying biology, they tend to regain. They tend to regain again after 6 to 12 months. That was very much supported by the pattern and the growth curves that we have for those patients in this trial.
Yeah. Some very promising results there. As you mentioned earlier, you've already filed with the FDA and gotten acceptance with the PDUFA date later this year in December. Maybe you could just talk about interactions with the FDA and how that's gone, just given all the sort of changes in the leadership you've seen this year.
Yeah. I mean, reassuringly, from where we sit, our review division seems to be relatively intact. In terms of people leaving, that's so apparent. All of our interactions and the process of filing, we had our end of phase 2 meeting, which was the first in-person meeting I've had with the FDA in about five years. All of that was positive. I'd just characterize it as normal. We're pleased to get a PDUFA date on schedule. That was exactly when we expected to get it. I know, you know, Commissioner McCarry yesterday reinforced again. I mean, they're highly motivated to meet their PDUFA dates and, you know, have quote-unquote "a record number of approvals" this year. Hopefully, we'll be part of that.
Yeah. Sounds good. You're also planning an investor event in a couple of weeks to kind of maybe shed a little bit more light on how you're thinking about the opportunity and launch. Maybe just talk a little bit about what things we should expect there.
Yeah. I mean, we did one when we, you know, several months in advance of getting Bardet-Biedl syndrome approval. The goal will be to share a very North American focus. We'll have a couple of experts. One is pretty well known to the community. One may be a little less known but follows a very large population of acquired hypothalamic obesity patients. I think we'll have two nice perspectives there, which will be educational in terms of what they think about the data and how they see this world evolving. We have our teams, as most companies are at this point. We're a build-out of our sales force as well underway, and we've got a good number of people who are in the field now interacting with endos and profiling and the like. We'll share a lot of those learnings.
That's, you know, I think more or less what you'd expect here. I don't expect us to revisit the epi. I know there's always a lot of interest there, but I think we're in a good place in the epi, so we'll probably sit tight on that.
Can you talk a little bit about your current sort of infrastructure and how you leverage that, and how much of a lift is this to sort of loop in HO?
Yeah. It's, I mean, it's always a lift in the sense of a launch. I'll just make a general comment. I mean, it's much harder to develop a drug that works than it is to build a sales force. I mean, you know, the heavy lifting, quote-unquote, is done. The teams that are out there, we've done a couple of things. We've directed our MSL, you know, Medical Affairs Group, very much around this HO in the recent past and upcoming year term. We had a group of individuals we called ADM, Area District Managers, whose prior job was to really support our genetic testing and clinical trial enrollment. Now M&A is fully enrolled and the like. They've been redirected to disease awareness and working to understand endos and the like. Some of those individuals will then convert over to becoming salespeople once we get closer to launch.
We're closer to building out the total number. You work it on multiple fronts.
Yep.
We're on the way.
Great. You're also sort of in discussion with Europe and filing there. Maybe just sort of give us any updates.
Yeah. We did a simultaneous filing literally. We got in a good time. As I said, expect, you know, maybe a Q3. I don't know if we've got it. I'm probably guiding there. Hopefully, that's what happens. Too early for feedback, but they've been very receptive overall to all of our programs, I would say. I'm not expecting major issues in Europe, but we'll see.
Yeah, it makes sense. Maybe I can just go back to Japan. You spoke about the opportunity there, but you're going to have some data on those 12 patients coming up, I think, early next year, if I remember. How do we think about that data? Are there any reasons to think that those patients may be responding differently? Is there any impact of baseline characteristics or things like that?
No reason to expect it. I think that was part of the PMDA agreeing, is that obviously, at 12 patients, we're not powered to prove anything based on the Japanese cohort as a standalone. From a biology standpoint, there's really not a reason to believe this is different. I mean, the way they present is similar. It's the same. I would expect the response to be similar.
Got it. Maybe we can shift gears a little bit to your next-generation MC4Rs. You've got two. Maybe at a high level, just walk us through those two programs and what's different about them.
Yeah. This is critical to the long-term success of Rhythm. One, just from an IP standpoint, those two programs, each of them will take our IP out to 2040 plus. It gives us a good long runway to continue to work all the opportunity we think is associated with this pathway. One's an oral, and that's the bivamelagon. We just completed the phase 2. Reassuringly, in this 14-week trial, the results were very similar to what we saw at a similar time point in our phase 2 and our phase 3 studies. That was highly confirming. The other thing that was reassuring and incredibly helpful was that we saw a clear dose response. The 200 mg, there were some responders in that group, but it was clearly less than the 400 and 600 mg. I think we're in range. I don't think we need to do more dose work.
We will run a phase 3 with the same general approach that we've used for our setmelanotide development, which is we're not testing a dose per se. We're testing a dose range. For setmelanotide, it was 1 to 3 mg. Start at 1. Dose escalate. Most patients go to 3. Here, we'll start at 200. Dose escalate to 600 as tolerated. We'll see. I think most patients will be in the 400 to 600 mg dose range. I think we learned a lot about what we need to do to go ahead and set up a phase 3. The other program's a weekly injectable. Historically, when people asked before we had any data between the two, which do you think is more likely to be successful, the answer was always, look, the small molecule has more unknowns, so maybe that's higher risk.
The weekly is a 7-amino acid cyclic peptide, and the setmelanotide is an 8-amino acid cyclic peptide. Preclinical data was highly similar, almost milligram per milligram. Based on all those factors, I would have considered RM-718 to be a lower risk program. We'll see. Now we have positive data on bivamelagon. I still think RM-718 is a high probability of success. Our strategy overall was not, would you prefer a weekly or a daily oral? The answer is we don't care as a company. Our goal as a company is to just say, look, we want to provide a full portfolio of options for the patient and physician. I think those two do it. The other part, which is, it's important. I mean, it hasn't been a major limitation for setmelanotide, but the MC1 agonism, setmelanotide is a little less specific, which causes hyperpigmentation.
Both of those next generations were designed to have less. It looks like, and our confidence in this statement is growing, that the bivamelagon had really minimal. I think there was a very clear signal that, yes, we saw a little bit, but it was minimal. You know, patients all rolled over in open-label extension. To the best of my knowledge, we really haven't had any more updated events from what we originally purported. I think there may be a slight signal, you know, darkening of nevi where there's a concentration of melanocytes. In terms of the general increased pigmentation that was concerning to patients, it doesn't seem to have that. RM-718 is even more specific for MC4 or MC1. I'm counting on and expecting that to be even less of an issue.
We do get 6% of our patient population discontinuing, and there may be even a higher percentage where that's not their primary reason for discontinuing, but maybe it's in the mix. You know, they're just not so happy with, you know, X, Y, or Z, but also the pigmentation isn't helping. I think that'll be a meaningful, you know, added feature here. Of course, the tolerability is better.
Yeah. If I could just ask a follow-up on the hyperpigmentation, and maybe you could just describe how it presents with setmelanotide and then maybe, you know, contrast that to what you saw with bivamelagon?
Yeah. IMCIVREE (setmelanotide), as I said, it's less selective. You're hitting the MC1 receptor more uniformly, so it's a uniform increase in pigmentation. The way our bodies work is between the eumelanin and the pheomelanin. Eumelanin is darker, so the darker you are, the darker you get. Many patients hardly notice it. Some patients like it, and some patients, it's quite concerning for them. It's uniform. What we saw with bivamelagon, as I said, was it in a couple of patients where I'm pretty convinced the signal is real. I haven't seen any pictures, to be honest. That wasn't part of it. What resonates as real is, as I said, in these areas where maybe you have increased melanocytes and potential for increased melanin release.
These nevi, sun-exposed areas, back of the hands, and neck. There are also some reports that make no sense to me, like the right thigh and non-sun-exposed area, the right side of the tongue. We had one placebo patient who reported increased pigmentation. I think, how does that happen? We had a hypervigilant patient and investigator group because they were looking for it. They were instructed to look for it. As I say often, if you look at your hand one day and then say, tell me the next day if it's darker or not, that can be kind of a hard call. I think, anyway, just back to what I originally said, I'm quite confident we've got a significantly decreased signal here, and it should be quite a different experience for the patient.
Yeah. Makes sense. Earlier, you talked about the bivamelagon sort of phase 3 trial design and kind of what you're considering there. I guess maybe talk about, you know, when you can start that and what are the next steps to actually getting that started.
Yeah. We're preparing a briefing document now. We'll hopefully get our end of phase 2 meeting before the end of the year, and then start. We've got to get our new formulations done, so it'll be hopefully a first half start next year. A bit of a newsflash here. I've talked previously about my wish list, which included maybe doing a trial with an external control, in other words, using the control group from our phase 3 study, which would mean every patient in our bivamelagon trial could be on drug. As we've dug into that, the team had some good pushback on my wish list. The challenge is that if we do that, then we really need to run the trial in a virtually identical way because that's your control group, and you can't be making changes in your treated group.
We've run some things, different questionnaires, which we want to incorporate, thinking about market access in Europe and some things that might be useful. I think what we're likely to net out here when our final decision is made is we probably will run a double-blind randomized controlled trial. The wish list, again, will be a much smaller size. I think we'll make the case. The FDA is pretty bought in, very bought into, I'd say, the biology and the mechanism here. I hope we get a receptive ear to smaller numbers, but we'll see. That's a work in progress.
Yeah. Yeah. There is a lot of opportunity for your next-gen MC4Rs. Maybe we can shift gears and talk a little bit about Prader-Willi. You've got a phase 2 study ongoing. Maybe talk about the design there and what you learned from your prior experience in Prader-Willi.
Yeah. Prader-Willi is a tough disease, as we all know. What do we know? We have no news here today. What I've said is I think there's about a 50/50 chance. The biology is really clear in the sense that two of the genes in chromosome 15 that are affected here are MAGEL2 and this NDN or 115. Both of those have impact on melanocortin-4 signaling. We know from our phase 2 DAYBREAK study where we studied patients, one of the groups were patients who had variants in the MAGEL2 gene. For those patients who had confirmed loss of function, they had a good response to setmelanotide. We know the NDN mouse model is hypersensitive to setmelanotide. The biology around MAGEL2 specifically is very clear. 90%+ of patients have involvement of those two genes and the 20+ genes that are affected in Prader-Willi. I'm sure about the biology.
I'm sure to the extent you can be, we can make the biology better. The challenge with Prader-Willi, of course, are the behaviors and the noise. It's one thing if you can correct the biology. The next is can you show it clinically? One of the things that everybody has to deal with is the obsessive-compulsive disorder part of this. What really resonates for me is I think about this is, if you correct the underlying biology, but you're hardwired based on your obsessive-compulsive part of your disease to have a snack at 10:00 A.M., you want your snack. You're going to eat it. It has nothing to do, eat food, it has nothing to do with whether you have a drive to eat or the like. That's the world that all the companies trying to develop are working in. It creates a lot of noise.
Soleno, to their credit, got through and almost heroically. Even their trial design had a lot of challenges with COVID came and disrupted things. That's the challenge of clinical development in Prader-Willi. Long story short, we designed a trial in 2018, 2019, which was designed based on what we knew at that time, short crossover periods and the like, looking for quick changes in hyperphagia, which clearly is not appropriate for Prader-Willi. Our maximum dose was 2.5. Our strategy here is to go to 5 mg, titrate all the patients up to 5 mg as tolerated to as best we can take off the table the possibility of, gee, if we'd gone a little higher, maybe we would have seen something. I don't think there's a lot of room, to be honest.
For most patients above 3, I think 3 probably gets us most of the efficacy if there's, but we want to remove that as a possibility. The other thing is, for whatever reason, they may just take longer to respond and back to these behaviors. Six months is a little minimum for these patients. The other thing we're allowing is, we're allowing patients to be on as long as they're stable on whatever meds they're on, which would include the long-acting thiazide oxide, Licart. We'll see.
Yeah, you plan to give an update by the end of the year. Do you have how many patients? Okay. Goals.
Oh, sorry.
Yeah. Goals. When you eventually share the data, maybe how many patients, how long will they all be followed up post six months? What does that look like? What are you looking to see to sort of say, "Okay, move this forward"?
Yeah. The goal here, the endpoint is weight, weight loss. We're not, I know, several companies are pursuing hyperphagia based on the Slano experience. We should get weight loss if it's working. The bar for the weight loss, we think, based on FDA's published guidance for weight loss drugs, is 5%. I don't think we haven't had conversations with the FDA about this yet, but that makes sense to me. I would be surprised if they didn't agree with that. That's the bar. What we're looking for is confidence, reasonable level of confidence that we could run a 52-week trial and get people to 5% or more weight loss. Our goal in this phase 2, open label, we don't have a control group. The advantage of working with a single site and a really experienced, knowledgeable investigator is that hopefully she can help us understand the data through the noise.
She really knows her patients. If it works in person, okay, that may be clear. If it doesn't work in somebody, why not? Maybe there are circumstances in the family, at home, other things that may allow us to interpret the data. We'll present it the same way we have all of our studies or most of our studies, which is here's the individual patient responses. You can see, and hopefully, we'll have a story for what's going on around that. The qualifier, the goal is to get 10 to 20 patients. I'd like to have some patients who are on thiazide oxide and some who are not. The hedge always is you work with a single site, and recruitment is not always reliable. She goes on vacation, she gets sick, her study coordinator doesn't show up. These are things. It's just life. That's still our goal, to say something about it.
Okay. Great. Looks like we're just about out of time. Why don't we end it there? Thanks so much, David. Appreciate your time.
Thank you.