Rhythm Pharmaceuticals, Inc. Common Stock Canaccord Genuity's 46th Annual Growth Conference

Morning, everyone again. Thanks for joining us. I'm Whitney Ijem, one of the biotech analysts here at Canaccord, and it is my pleasure to be hosting Rhythm Pharmaceuticals this morning for this fireside chat. We will be speaking with Hunter Smith, CFO. Thanks for joining us, Hunter, and we'll dive right in. If you could just start with a high-level overview of Rhythm for anybody in the audience who's not familiar, what is Rhythm today? What is the drug? What's the pipeline, and where are you hoping to go over the next 5, 10 years?

Sure. Thanks so much, Whitney, and thank you very much to Canaccord Genuity for hosting this terrific conference. We look forward to this every August, and it's a nice way to put a bow on Q2.

Yes. It's really well-timed. Rhythm Pharmaceuticals is a biotech company based in Boston, with just under 500 employees and operations in well over a dozen countries and approval and/or market access in the U.S., Europe, and we have market access in about 24 countries total and are working on Japan at present.

Our primary therapy is setmelanotide, brand name IMCIVREE. It is a melanocortin 4 receptor agonist, the first melanocortin 4 receptor agonist ever approved for treatment of rare diseases of obesity in the U.S. or anywhere. We started with ultra-orphan, biallelic forms of obesity that result from knockouts of certain genes that are associated with the production of alpha-melanocyte-stimulating hormone, which is the hormone for which our drug is an analog.

Patients without this hormone, which is produced in the hypothalamus, have very high levels of hunger, insatiable hunger, that is not satisfied by caloric intake. It's a centrally driven signal, and resulting obesity, and they are voracious as newborns, and they become obese as toddlers and continue a lifetime of obesity. We started treating them back around 2015, where we treated our first POMC patient. That patient had an over 40% reduction in BMI over the course of about 12 to 18 months. That case study was written up in the "New England Journal of Medicine," and ultimately, we treated another genetic knockout form called leptin receptor deficiency, and that led to, ultimately, our first approval. Those two disorders were so rare that we didn't launch the drug to treat them. We just made it commercially available.

Ultimately, we then achieved proof of concept in an indication with about 5,000 patients in the U.S., 5,000 patients in Europe, called Bardet-Biedl syndrome. We received approval for that in 2022 on the basis of a global phase III study that we ran, and that was the basis for launching the drug globally and has been the basis of building the company. Q1, which was the last quarter with primarily BBS and some level of POMC/LEPR revenue, we had a run rate of revenue around $60 million a quarter. There's some HO in there, and we'll talk about that in a minute, but that was where we were.

Ultimately, I think the big change for the company was the proof of concept we achieved also in 2022 for acquired hypothalamic obesity, which results from damage to the hypothalamus, either to brain tumors, primarily pituitary tumors like craniopharyngioma, or through other forms of injury to the hypothalamus, can be through blunt force trauma or radiation or things of that nature. That is a 10,000-patient opportunity in the U.S., we estimate. We released phase III data last year, which showed that patients on setmelanotide lost 18.8% of body weight as compared to placebo in a large, 130-patient global randomized study. That study was the basis for seeking approval.

It was also a basis for a New England Journal of Medicine article that was just published in July with the results of the study, the data from the study, and an editorial about the importance of the MC4R pathway for treating obesity. That's IMCIVREE. We've launched for HO in the U.S., and we're going to be launching in Europe and Japan relatively soon. We do it all ourselves. We have a pipeline of two clinical products. One is an oral MC4R agonist called bivamelagon, where we've shown proof of concept in HO, and we are trying to start a phase III in acquired HO by the end of the year. Then we have a weekly injectable product called RM-718, where we've also just shown proof of concept in HO.

Those products will not only have more convenient dosing, but they are more specific and therefore avoid one of the very specific AEs associated with the drug, which is hyperpigmentation that occurs when setmelanotide also hits the MC1 receptor. That's where we are. We have a preclinical program going on in congenital hyperinsulinism. We can talk about that later, but that's where we are for the main area, which is a portfolio of three MC4R agonists and a growing set of diseases that we treat.

Perfect. Awesome. All right. I like this idea of putting a bow on 2Q. We will stick with 2Q and talk about AHO.

Correct. What went well? Any learnings that you are implementing post this first full quarter?

Sure. Let's start. We are very, very pleased with the start of the AHO launch. It was, we think, strong across the board. All the indicators we have looked at were positive. The first was that we had over 400 start forms in the 14 weeks, 13 plus the week between approval and the beginning of the second quarter. In those 14 weeks, over 400 start forms for new patients, having a script written for IMCIVREE. Those start forms were written by over 300 physicians, so that's terrific breadth. Even if you look within the physicians who wrote more than one script, there's very little concentration. Mostly twos and threes in terms of number of scripts per physician. We have had nice progress, getting payers to reimburse the drug. That progress is well ahead of where we were with BBS at this time.

About two-thirds of the scripts that did get approved, as of quarter end, were approved on prior authorization. We already have policies in place in the U.S. covering about 25% of commercial lives and about 35% of Medicaid lives. Very pleased with where we are. We expect that process of seeking additional reimbursement approvals to continue as P&T meetings go on through the balance of the year. Overall, very strong start. I think the one learning we have is that the reps are so busy with the AHO pipeline that the longer and more complex process of helping get BBS patients to therapy is challenging for them to do both at once.

We made the decision early in the post-launch period to separate out a dedicated BBS field for us of 10 territory managers, and we have a chunk of them in place and hope to have the full team out there and in place relatively soon. That I think will allow us to continue to develop and grow the BBS opportunity, which is slower growing, but still very significant and of course a major base of our existing revenue.