All right. Good afternoon, everyone. Thanks for joining us for our next fireside. My name's Derek Archila. I'm one of the biotech analysts here at Wells Fargo. I'm very excited to have Rhythm Pharmaceuticals and David Meeker, Chairman, President, and CEO, with us here.
Thank you, Derek. Glad to be here.
Excellent. Well, maybe to start off, there's been lots of things going on at Rhythm, ongoing launch in hypothalamic obesity, earlier this year, Prader-Willi data. Maybe just give us the state of the business, and then we'll take it from there.
Yeah. It's a great moment for Rhythm, to be honest, as you highlighted some of the headlines there that have come out. We're into our second quarter of launch on the HO side of the business. Maybe just to back up to frame all of this, where Rhythm is today, we think about three pillars. We have our genetic pillar, which was the basis of the biology here, where we had our first indications, POMC deficiency and the BBS opportunity. BBS, meaningful, growing steadily.
HO, an anatomic disruption of the melanocortin-4 receptor pathway, recent approval, first quarter of launch, as I said, that we're into now. Much bigger opportunity, 10,000 patients, and I'm excited about how we've gotten out of the gates there, and we can talk more about that. The third pillar is Prader-Willi, and that's just an enormous unmet need.
It has a lot of favorable characteristics from a rare disease standpoint in terms of a disease that is approachable, meaning, virtually all those patients will be diagnosed at about birth or shortly thereafter. There is a community that they can, if they are given a diagnosis, the family, patient can enter into, get a lot of information.
There are experts that are available and centers of excellence and the like. Payers recognize that it is a devastating disease. Survival, 30 years approximately. It is an underappreciated, I think, devastating disease, but the system recognizes it, and that is an opportunity we are going to go after hard. Yeah, it is a really good moment for Rhythm. A lot going on.
Excellent. Well, maybe let us start with the obesity relaunch in HO. You put out some really encouraging start form information and kind of early traction. Maybe walk us through what you are kind of seeing early in launch and what gets you encouraged here.
Yeah. I think the advantages of HO as an indication are one, just remind people, this is acquired hypothalamic obesity. It occurs predominantly in patients who have had a benign tumor in the region of their pituitary and their hypothalamus that can be resected.
In the process of treatment, whether that is the surgery or radiation, injury to the hypothalamus can injure this pathway, the melanocortin-4 receptor pathway, and they just have a classic presentation where, from the moment of injury, they have accelerated weight gain, they have this hyperphagia, this increased hunger that they have to live with, and debilitating fatigue, which is often unrecognized as a part of that overall manifestation.
Now, because of the injury to that area of the brain, they invariably injure the pituitary as well, and so they will have a number, one or more, and 80%, 90% of the patients will have one or more hormonal deficiencies, which means almost invariably, they are seen by an endocrinologist. We see this as a classic rare disease, ultra-rare, 10,000 patients in the U.S., but it is concentrated in a specialist, and that makes it entirely approachable.
Just to give you an example of how that causes us to think differently, for BBS, we had a sales force of about 16 people recognizing that the BBS patient might be in four or five different specialties. Many of them will be sitting with their primary care. We knew there is no way you can call on all of the doctors who might be seeing a BBS patient.
You're really out there trying to just create a system that has the ability to recognize BBS, and the patients find you as much as you find them. There is some direct identification, but you're really working to just build a system.
Contrast that with HO, where you have a specialty, our goal will be to cover that specialty, and we've tiered them, as we've said, and we have 42 reps out there in the field dedicated to HO, with the goal, again, of being able to call on certainly all of the top one to two tiers, which is about half of the 10,000 endocrinologists out there. But we will get to the bigger, we're not going to ignore the other 5,000 because these patients, to a lesser degree, will be sitting in that lower tier as well.
Can you maybe characterize the early adopters that you guys have seen so far?
Yeah. I think it's interesting. Obviously, we had centers, so you have your clinical trial centers where they knew about the drug, they had experience with it. We had the conversion of the clinical trial patients, and those scripts were written.
Then we have centers, and Jennifer Lee, our Head of North America, has highlighted this on a number of calls where 40+ centers where a disproportionate number of these surgeries are done, and by definition, that's where the incident occurs. Ideally, that patient gets diagnosed shortly thereafter. What we've learned historically is many of them that weren't diagnosed, so they went out through the community. But in terms of early adopters, about 25% of our scripts have come from those centers, so not zero, but it's not 80% of those.
The other thing is of the 400+ scripts we've talked about, those have been written by about 300 prescribers, so about one script per prescriber. Again, I think what's been encouraging is that it's been very broad based. We had a question today, is there any endocrinologist who said they wouldn't prescribe? The answer is no, but there's not really a reason that in a rare disease where you've got a precision medication, and you've got a firm diagnosis, and that's the only treatment, why wouldn't you treat? Again, I don't see this as an early adopter market as much as just an awareness market.
Yeah.
I mean, awareness is a key to script writing.
Based on the numbers you provided, on average, they are writing about one script so far. I mean, how do you get more depth with some of those prescribers, and is it just the fact that they need to get more experience and see some progress with a few patients? Is it more about the patients and their visits to the clinics through the year? What actually ends up driving more depth of prescribing in those types of centers?
Yeah. I think it is really access to the clinic is the biggest thing. With any new medication, there will be a bit of the, "Let me try it on one patient, and then I will see how it goes" kind of thing. So I am sure that is out there. But no, endocrinologists in the U.S., their clinics are jammed. They do not have a lot of access, as we all know, perhaps trying to get into a specialist.
GLP-1s and obesity medicine has also jammed up endocrinology, and that is part of the challenge actually because a number of the patients who have hypothalamic obesity, the endocrinologist is treating their other hormonal deficiencies, but they have not recognized this as a hormonal deficiency. They see you have hypothyroidism and adrenal insufficiency, and you are obese, so I am going to send you to the obesity clinic for management of your obesity. I will take care of your hormones.
What our team is working on is, again, just building the awareness, going, "No, no. This is just another hormonal deficiency, and it should be managed in the endocrinology office along with their hypothyroidism.
Got it. I want to double-click on that comment or the question that you got about if there was an endo that said they would not prescribe it. Maybe reframing it is like, is there a patient that is not a good candidate for IMCIVREE?
Yeah. It's interesting. Not really. I mean, the side effect profile is pretty benign. Nausea and vomiting in the first two to three weeks, but you tolerize. We've learned a lot about dose adjustment to try to help people manage through that. The short answer is no. I mean, if you have an allergy to something in the drug, that's an incredibly rare event.
We've had a few with over 2,000 or 3,000 patients treated total probably in all of our experience. But aside from that kind of reaction, there's no contraindication to using this drug if you have a deficiency in this hormone. It'd be like hypothyroidism. Is there a contraindication to using a thyroid replacement medicine in a patient who's hypothyroid? Not really.
How important is it with the data now published but also guidelines for HO? I mean, it's the only therapy approved, but sometimes these physicians more react to the more consensus view.
Yeah, it's critical. It's critical because it does an enormous amount to help with the education of these. Part of the challenge is before there's a treatment, classically in rare diseases, you might not recognize the disease. You might not get to a diagnosis as a physician, but there's no consequence of missing it because there was nothing to do.
It'd be nice to be able to tell the patient what they have, but you haven't missed an opportunity to treat. Once there's a treatment, you have missed an opportunity to treat. So guidelines really help with that. I think particularly in this world with GLP-1s and other things, guidelines help educate that all obesity is not the same. As we've said many times, right?
Eli Lilly and Novo Nordisk have done a tremendous job helping the world think about and understand obesity itself as a disease. Where Rhythm is playing and trying to help people think about is, yes, it's a disease, but it's not one disease. It's many diseases. Like many parts of medicine, cancer and other things, you don't just have cancer. You got to figure out which kind of cancer you have, which obesity you have, do the right tests, and recognize it. So guidelines are critical.
So talk about your identification efforts. You had put out a number a while ago now, last year, of HO patients that you had already identified. You haven't updated that number, although we ask you all the time. But you haven't updated that number. I guess now that the drug is approved and launched, are you seeing that level of influx? Are you getting more inbounds? Are doctors actually finding more patients? Is that the typical rare disease reveal of new patients? Has that started, or is that still to come?
Yeah. Maybe let's retrace that history briefly here.
Yeah.
Almost a year ago, we had an early commercial day. This was pre-launch, of course, last September, and we had had our MSLs, medical science liaisons, in the field. The sales force was just hired around that time, so they had not even really been out there. What the initial interaction with different physicians in the field, the team had come away with this 2,000-ish number of which the majority of those were suspected, and they did not actually carry a diagnosis of HO, but they fit the profile.
The doctor, once they understood what HO was, they go, "Oh, yes, I may have that patient in my practice, and I will be looking." That was the 2,000 suspected number. Since then, of course, we have a full team. There is 40 incremental sales force who have been out in the field interacting. Not surprisingly, the number is, as we say, meaningfully higher than the 2,000 we gave you a year ago in terms of patients who may be out there.
Yeah.
It is always a mix of identified, hard diagnoses, and suspected. What is fundamentally different about the HO space from the BBS space is our teams may talk to a large number of physicians who have never heard of BBS, who have never seen a BBS patient and do not think they ever will.
Whereas in the HO space, it is a very different experience where I would say the vast majority of endocrinologists they have talked to, if they do not have a diagnosed patient with HO, and they may not because they had not thought about it as a disease, they have a patient or more in their practice who fits the profile. The other advantage, so that is from a field experience, very different being out there.
The second thing is, the claims data and other tools that we have to help guide the sales force to places where physician practices where we believe patients are being cared for is infinitely higher. So they are not out there making random cold calls. They are going in a very directed way....t echnical moment here. Hopefully we are okay on the sound check there.
There we go.
There's very few visits that don't get a level of engagement and probably, yes, I think I might have one patient. Again, fundamentally very different from a classic rare disease experience.
We've kind of looked at this relative to Prader-Willi, so very established patient support groups and advocacy groups. Less so with HO, but do you think that's something that will start to build now with IMCIVREE's approval?
I think it will. The Raymond A. Wood Foundation, which is the patient organization that was founded by a family who had a child with a pediatric tumor, with a, sorry, benign pituitary tumor that was resected. That child actually developed HO. But the purpose of that foundation was to support all of these patients who are going through the tumor, multiple hormonal deficiencies, and the like.
They, of course, now that HO has been diagnosed and they see that as being part of it, have really embraced it, and we've worked closely together to try to increase awareness around this. It's beginning, it's just a little bit different than the BBS Foundation, which is basically a pure BBS effort. This is a little broader umbrella in the sense that it will have patients with HO in it, and patients who don't have HO in it.
Got it. In terms of the launch, again, you gave some KPIs out there, particularly around the priority centers and whatnot. I guess, what does it take to really activate these centers? If there is a center that is not currently using, again, it sounds like they have these patients that are there, but it is really getting them to start using IMCIVREE. What is that like, and how long do you think that takes to activate just a de novo center?
Yeah. It is interesting, we think about centers in terms of multi-specialty care. So surgery is done, there is a surgeon, there is the endocrinologist, there may be other supporting team members who help with postoperative recovery and the like, nutritionists. The key in all of these places is the endocrinologist. Over time, and we have got some early efforts, we will work with surgeons, and the goal there is really surgeons do not tend to be part of the postoperative care, but the long-term follow-up care.
But getting the surgeon aware and part of the discussion, I think will increase the probability that patients going into surgery get the right information going into it, and they know what to look for. That, of course, ensures that the team as a whole is vigilant in looking for it. But back to the starting point, it is the endocrinologist. I do not think it is so much more difficult to activate one of those centers than it is to activate a community endocrinologist, other than access.
It may be easier to get into a community endocrinologist, again, depending on their caseload and how many patients they are seeing and the like, and versus a busy academic center. Now, one last nuance to this whole thing is some of these larger centers, of course, have endocrinology departments, and there will be multiple endocrinologists who are seeing patients.
So when you get in there, you may have a person who is aware, who is a champion, and the like, but it is much easier to make sure that all six endocrinologists in the practice are aware and treating if you have that champion, and you can activate one and get six who are working.
Got it. We were talking earlier about kind of steady growth, right? Steady's good. I guess the street likes accelerating things like that, or fast or whatever, a more aggressive word, but steady can go pretty far. As you were talking earlier, we kind of know what the destination is. It's just a matter of how we get there. Talk to me how we get there, but also, in your experience in working in rare disease, typically when we get there, what's penetration look like?
Yeah. First on the steady, quote-unquote, comment. I think everybody, at least in every, I guess, company or disease opportunity wants to know this rate of growth so they can create their models, which we understand. We're very early, and what we've discouraged people is drawing a line when you have two data points or something. There's variability there.
What we've been very clear about is that the experience with HO will be a steeper ramp than the BBS ramp, for all the reasons I just said, right? It's a very different dynamic, and there's more patients, and they're more accessible, and the like. There will be a steeper ramp. It's early, but I think steady likely characterizes, and so far I would say there's nothing that's inconsistent with the concept of steady growth here.
How far will that go and how much will we penetrate into that 10,000? I will argue, without having perfect knowledge here, that much of that 10,000 may be very accessible. Contrast that with BBS, where we think there's 5,000, I'm guessing that the 5,000 is not as accessible as the 10,000 in HO-
Okay
because they're harder to find, they're more spread out, they're more complicated to diagnose. I mean, there's all those factors say you may not penetrate as fully into that 5,000 as we might penetrate into the 10,000. Your general question about rare diseases and the like, what can you aspire to in terms of penetration? What's interesting about rare diseases is the more deeply you penetrate, the more likely it is that your denominator, is wrong.
Yeah.
You could be at 50% forever, but you're steadily growing because you get more and more awareness, you underestimated the epi and the like. Those are just factors that I think are very characteristic of rare diseases. I think there's nothing about this HO opportunity per se, that wouldn't say we might be in that bucket. But yeah.
Got you. And then maybe last one before we shift to Prader-Willi, but I guess any sort of friction points that you've kind of learned through the first part of the launch here, and we always talk about reimbursement and things, but it sounds like that's started to come online fairly in line with expectations. But any other things that you guys are early launch, a little bit of friction and you guys are maybe retooling and re-strategizing around, or has it been generally pretty okay so far?
Well, I think in terms of our expectation, it's generally been pretty okay. I think the biggest friction point is access to doctors and their clinics. I mean, again, they're just busy. So, creating that awareness and getting that, I think that is for sure. The payer side, it's still early. We haven't given a lot of detail around the payer side. We talked about 30 - 60 days from the time a script is written to a patient actually being able to start therapy with approvals.
We expected, and it is true, that we would have an easier time in the payers second time around. BBS, we were a new medication with a new indication. Now they know the drug, they understand, most of them, this concept of it's a hormone deficiency in patients who have this absence of a satiety signal. So that's all a big advantage.
I think we're very encouraged by the policies that are in place already. And what you want is a policy in place because that removes the need for the one single patient evaluation. You'll always have the prior authorization. But we have a not insignificant number of our current approvals that are going through right on the prior auth with no appeal and the like.
Got it. Well, maybe let's talk about Prader-Willi and IMCIVREE's opportunity there. So you guys reported out a couple data sets now, and just increasingly confidence inspiring in terms of potentially going into a phase III and being successful there. So maybe walk us through the data and what's most de-risking for a phase III trial or future phase III trial.
Yeah. So our plans for, just to remind people, for Prader-Willi are, as you noted, we had really encouraging phase II data, was this 18 patients, 17 patients remain on therapy in an open label study done with one of the true experts in the field.
And what gave us the most confidence that this drug is working and that the melanocortin-4 receptor pathway is central to the biology of Prader-Willi, it's not the only thing going on, of course, was the fact that of the four endpoints we presented at that point, two questionnaires, one the classic hyperphagia questionnaire, HQ-CT, and one an anxiety distress questionnaire, and then BMI and DEXA scans looking at the ratios of fat to lean. Basically, all of those went in the same direction. So the drug is for sure working.
Now, the second question, which is this is a really challenging disease, and what we are very respectful of, and recognize are the many companies that have tried and some who have failed, is the behaviors in this population make it hard to do clinical studies. So for example, you could treat the patients, they reduce their hyperphagia, but they may eat for reasons unrelated to their hunger. They just eat because it soothes them, it quiets their behaviors.
The parents give them food because that's how they've always managed their behaviors and the like. So those are aspects you have to be aware of as you run your study. Is there a way to design a study where that's not a problem? Not really. That's the disease. And so you need to be prepared to deal with that kind of variability in your population.
We are, meaning we are going in eyes wide open. I think that leads to powering calculations and size of trial. We are going to follow what others have done, to be honest. I think the Soleno approval was incredibly important for the whole community and that it established, and as I understand, I think the FDA is going to stand by a route to approval.
A hyperphagia study, six months in duration, and that will be our first trial out. We will collect weight data, BMI data. If it is positive, we would expect at six months to get that in the label, but it would not be in the indication statement. That would be our expectation. If we wanted weight or BMI reduction in an indication statement, we will need to run another trial for 12 months. Again, that is the kind of guidance we have gotten in our other indications.
We will evaluate whether we would do that. The last thing I will say about Prader-Willi till your next question is that given the complexity of Prader-Willi, we realize, one, it may not be straightforward, two, we may need to think about it in different ways. We will not take just one shot on goal. I think it is highly likely we will run more than one trial. Back to this question of which asset. We will pick one of the two to start with, but you can imagine that we would do another trial with the other asset, maybe asking some different questions.
Okay.
Again, if you think about how Prader-Willi fits in Rhythm's strategy right now, HO is an enormously valuable opportunity. Prader-Willi is equally or greater, and we think we have a reasonably high probability of success there. It makes total sense for us to invest in that and get it right. That means potentially having both an oral and a weekly available. It means thinking about combination drugs potentially in the future. There is a lot of things that we will keep thinking about here, but Prader-Willi is very much central to Rhythm's next chapter and our strategy going forward.
Yeah. A lot to unpack there. Maybe just first, in terms of your experience with the Division of Psychiatry. If you are going to go HQ-CT route in terms of the primary endpoint, you are kind of moving away from the comfort zone of the, what is it, the rare and metabolic division that you guys have been working with for many years. What is their receptivity to this therapy? Ultimately, it is already approved, so do you get a little bit of a benefit there, given that it has got a long history of success and safety?
Yeah. The way it will work is that you have a division that takes the lead, but you can invite other divisions. So we would invite the Division of Diabetes, Lipid Disorders, and Obesity to our meeting because they do know our drug and our mechanism and the like, so they would be very much part of the review. The lead would be with Division of Psychiatry, number one.
Okay.
Two, like I said, I think that Soleno Therapeutics experience has been very clear. The bar has been set, so I don't think we're likely to get different guidance there. We'll see, but I don't think so. No, I'm not expecting any wrinkle in that.
Understood. From your phase II experience, this was a trial done single center, at Dr. Miller, Jenny Miller's, site, and she was enrolling pretty tough patients. So I guess when you think about the enrollment criteria for phase III, what changes are you looking to potentially employ to maybe for higher quality data or, again, basically a trial that can get done? Because these patients can be very challenging.
Yeah. Arguably, there's no real contraindication to the use of an MC4R agonist, and as you said, Dr. Miller had particularly the first patients she enrolled were patients she didn't really have another good option to treat. The first two patients had very uncontrolled diabetes with hemoglobin A1C in the mid-teens. You wouldn't design a trial.
That would likely be an exclusion criteria, but I will say that that first patient gained some weight but has been stable since then, basically on drug, and their HQ-CT had a significant drop. The second patient actually had a pretty significant decrease in their weight, even though their diabetes was very uncontrolled. And part of the challenge with diabetes is as you optimize their diabetes care, you put them on insulin, that can lead to weight gain and the like in and of itself.
It's why it complicates running trials when you enroll patients like that. The reason I highlight those two patients is we will, of course, need to put in inclusion exclusion criteria that can optimize our ability to run the trial. Most importantly, it will be if we're going to do a hyperphagia trial, they need to have a certain baseline level of hyperphagia, which is the way all these trials have been run.
So 13 or higher, for example. We will, of course, do that. But I don't think necessarily we'll be overly restrictive on other complications that the patients may have, just because I'm not sure it will make that big a difference in terms of how our drug works.
And I know in the phase II, you also enroll patients who are on VYKAT XR. So I guess would you be doing the same thing in a phase III, and is that capped, in terms of just ensuring that, again, you don't have like 80% and you wash out a single or something like that?
Yeah. No final decisions yet. We're actively considering that. I think that's likely in the sense that it's an approved drug here in the U.S. Some people would want to know they can use them in combination if that's what they wanted to do.
Now, we will run a global trial, number one. Number two, patients, if they are on VYKAT XR and we allow them in the trial, they will need to be stable on VYKAT XR, meaning having been on it probably for longer than three months minimum, to make sure we don't get somebody who's newly on VYKAT XR and then developing a side effect that might confuse the running of our trial. So patients who are stable. And would you cap that? Yes. You would want that to be. It's enough VYKAT XR patients to allow people to have confidence that they can be used safely together.
Mm-hmm. Excellent. We're going to start this trial, once you make a decision whether you want to move forward with RM-718, the weekly injectable, or with bivamelagon, the oral. I guess, what are some of the gating factors that you're waiting for those two programs to actually begin the Prader-Willi?
Yeah. I think the biggest issue is just the practical issue of the CMC, the manufacturing issue. Both of them are going through scale-up. With any drug development program, of course, you start in pilot plants, small scale, you are establishing a process. Both of those are well advanced in that. With bivamelagon, we have the new formulations we brought in to make the drug more palatable, the chewable tablet we had to create, and that will allow us to go onto children under the age of 12.
For the RM-718 weekly, we will want to do that with the auto-injector, because it is a more viscous solution, and that is moving toward finalization. Those are the issues. They have different timelines, and back to some of the practical decisions about which one we lead off with will relate probably to which drug is ready to go first.
Mm-hmm. Understood. I guess when you think about RM-718 and bivamelagon, you are going to be expanding those potentially into HO, at least bivamelagon for sure. The challenge of trying to enroll those patients, like HO patients, also in the context of in the middle of a launch, right? What is your strategy around that? Also, how does that create a moat for Rhythm in HO relative to some of the emerging competition, let us say?
Sure. We will, for our bivamelagon phase III HO trial, which is next up, we will have some U.S. sites, small in number, and they, by definition, will cannibalize some patients. That is just the way drug development is. It will be a relatively small number of the total opportunity. The global trial is we will also be running and having sites in places where IMCIVREE is not available.
Again, your question was if I am a competitor coming in trying to run a same trial, it does make it more challenging. It is like for us trying to run Prader-Willi studies when there is three or four other companies running Prader-Willi studies. Yeah, it makes it harder.
Yeah. Got you. Maybe just last question. We have got the launch ongoing. We have got a lot of development and life cycle management also to secure the franchise. How do you think about overall revenue growth and profitability, but also ensuring enough investment both on the commercial and R&D side?
Yeah. We're very well capitalized, as you know, and as Hunter Smith likes to say, we're not in a position where we need to go out and raise more money potentially between now and when we might be profitable. We can look at revenue streams increasingly with more and more confidence. I think any decisions we make on financing or the need to pull in additional liquidity is to create a buffer around our current role.
I think in terms of investments, I think we're well-resourced to invest on our internal strategy. In terms of the HO launch, we pressure test this. The return on that launch is so great that, as we made clear to the teams, it's truly we should spend everything and anything we need to spend to be successful. I think the plan that we have in place reflects that. No, we're not in a difficult situation, and hopefully on a path to profitability, but willing to make the investments we need to make.
Sounds good. Well, David, we'll leave it there. Thank you so much.
Thank you, Derek.