Rhythm Pharmaceuticals, Inc. Aktie

Ladies and gentlemen, thank you for standing by. Welcome to Rhythm Pharmaceuticals Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to Dave Connolly, Head of Investor Relations. Please go ahead.

Thank you, Michelle. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com.

Last night, we issued a press release announcing the amendment to our bivamelagon licensing agreement. And this morning, we issued our press release that provides our Q3 2026 financial results and a business update. Both press releases are available on our website. Our agenda is listed on Slide 2.

On the call today are David Meeker, our Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International is on the line joining us from Europe.

On Slide 3, I'll remind you this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC. In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent dates. We specifically disclaim any obligation to update such statements.

With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Thanks, Dave. Good morning, and thank you for joining today. Rhythm continues to execute on multiple fronts, and we are excited to update you on our progress.

So let's start on Slide 5. We are very pleased to announce a strong third quarter, driven by an excellent start to the U.S. launch. Start forms are growing as expected with encouraging market access translating to strong revenue performance of $92 million for the quarter. Jennifer will provide more details.

We are excited about launching in Japan with the first commercial patients already on treatment. We have every expectation that Japan will become our second largest market. Yann will provide more color there. I will say more about our clinical development plans and the recently announced amendment to our LG Chem deal over the next couple of slides.

Slide 6 is a reminder of our three major strategic pillars. The first pillar is the genetic indications where we have multiple approvals, and we will be looking to expand the list of genes we are investigating. More to come on that in 2027. Second is HO, where we have a growing conviction in the magnitude of this opportunity globally, as you will hear more about today. Third is Prader-Willi syndrome, a devastating genetic disease with only one approved therapy in the U.S. and a desperate need for more treatment options.

Let me spend a minute on why PWS is so strategically important to Rhythm and why we believe we can make a meaningful difference in this disease.

I often draw the analogy to where the cystic fibrosis community was at the time the first disease-modifying treatments were being approved. Like CF, PWS patients are almost universally diagnosed at birth. The newborn is hypotonic, floppy, which leads to early genetic testing. Average survival is age 30, which speaks to the severe unmet medical need and providing care for these patients is challenging for their families, the healthcare system and society as a whole.

The PWS community is well organized with a strong patient organization, specialized clinics staffed by experienced clinicians, providing these patients with greater access to the healthcare system than many patients with HO, for example, who still don't have a diagnosis. It is a complex genetic disease with multiple genetic -- multiple genes involved, but central to the disease is impaired signaling through the MC4R pathway. The 6-month Phase II data Dr. Miller presented at ENDO in June, showing a reduction in hyperphagia scores, anxiety scores and BMI values, supports the potential role of an MC4R precision agonist in the management of this disease.

Now I will extend the CF analogy one step further. Vertex recognized with their first approval in CF that they had a unique ability to make a major difference in this disease. So they literally doubled and tripled down on trying to optimize outcomes. Our strategy will be similar. We will run our first Phase III trial with bivamelagon, but with the expectation given the size and importance of this opportunity, we would develop both of our next-generation therapies in this disease. As previously indicated, the decision to start with bivamelagon has some practical aspects, most specifically related to CMC and availability of supply. We simply have an ability to start earlier than we would with RM-718.

Furthermore, as with CF, we expect a monotherapy to work and be approved. But given the complexity of the disease, optimal outcomes will be achieved by combination therapies. We are not prepared to discuss our portfolio at this time. We will do that in 2027. But the message today is simply that we are working to develop the best possible approach to MC4R diseases based on our understanding of the biology, and that will include proprietary combination approaches.

Moving to Slide 7. We're excited to initiate our Phase III bivamelagon HO study. This is a 52-week comparably sized study to the original TRANSCEND study with BMI as the primary endpoint. We hope to begin screening patients at the first site by the end of the year and expect to dose the first patients in January. With the decision to proceed with bivamelagon in PWS, we will now engage with regulators with the goal of initiating a 6-month Phase III study in PWS with hyperphagia as measured by HQ-CT as a primary endpoint in 2027.

I want to provide a shout to the Rhythm teams who have not been idle on the development front. In preparation for the Phase -- biva Phase III studies, we needed to complete the following: a bioequivalent study with a new formulation, a food effect study, a drug-drug interaction study, and a hepatic impairment study, all of which have been completed satisfactorily in the past year, further derisking bivamelagon as a core asset as we move into Phase III trials.

Finally, a brief word about our recently announced amendment of the LG Chem deal. Our decision to amend was driven by two factors. First, our growing belief in the overall opportunity related to MC4R pathway diseases, giving us the confidence to buy down the existing royalty. And secondly, the original structure, despite our best efforts to align the 2 companies' interests, left us with an economic disincentive to fully develop bivamelagon as that would drive a disproportionate royalty burden relative to developing RM-718, for example. In the current structure, we are fully aligned and can simply, as we would want to do, follow the science and develop the best possible treatment for the indication.

I remind you that the patent protection for both biva and RM-718 extends into the 2040s, providing sustainable long term value for shareholders. Hunter will provide more details on the LG transaction.

I'll now turn the call over to Jenn.

Thank you, David. I'll begin on Slide 9. I'm pleased to report on the strong performance we're seeing in the U.S. launch of IMCIVREE for acquired hypothalamic obesity. In the third quarter, the second full quarter of launch, patient demand continues to be strong and consistent with what we experienced our first quarter of launch. We're seeing growth in a broadening base of prescribers. On the patient access side, reimbursement trends are highly encouraging, reflecting our ongoing payer engagement, leading to an increase in IMCIVREE policy adoption.

On Slide 10, I'll start with metrics related to patient demand. Since launch on March 19 and through the first 2 quarters, we have received more than 700 patient start forms for acquired HO, including start forms for 71 clinical trial patients. Consistent with the first quarter, the patient age distribution remains evenly split amongst older and younger than 21, with 20% of patient start forms from patients between 4 and 12, pointing to the urgency that comes with caring for children.

We are pleased with the distribution of time from hypothalamic injury among patients with prescriptions. Consistent with the prior quarter, approximately 15% of prescriptions have come from patients inured within the last 2 years. Hence, they were diagnosed and treated early in their disease journey. More than 1/3 of patient start forms have come in for those whose hypothalamic injury was 10 years ago or more. These early dynamics are encouraging and demonstrate meaningful demand across a broad range of patients and a long-term growth opportunity in both incident and prevalent patients.

Slide 11 outlines how we are approaching the opportunity, balancing the institutional medical centers where patients begin their journey and then following the patients through their care.

The first point of contact for patients with hypothalamic injury comes at a major medical center or large healthcare organization, where there is a concentration of new patients each year. Upon launch, we identified 43 of these priority accounts. And as we've had more engagement in the field, we continue to see a growth in the number of these identified accounts. Approximately 30% of patients remain engaged with the care teams at these larger centers, while approximately 70% of patients transition beyond their original point of care. The total number of accounts and percentage of patients within these accounts will continue to evolve throughout the launch.

With that said, our HCPs tiering provided to our sales teams are based off of where the volume of potential patients are, and our commercial approach balances physician engagement at these institutional accounts as well as the physicians across other care settings, reflecting where patients enter care and where they are receiving ongoing follow-up care. We remain focused on driving earlier diagnosis and treatment of acquired HO patients within a year of onset of their acquired hypothalamic obesity symptoms while working to ensure prevalent patients who have been living with acquired HO for several years also get to an accurate diagnosis and treatment.

On to Slide 12. We continue to see strong growth and a broadening base of prescribers. Launch to-date, we have received start forms for more than 500 prescribers, including approximately 200 first-time acquired HO prescribers during the third quarter. Of the HO prescribers to-date, approximately 25% of them have written 2 or more IMCIVREE prescriptions for acquired HO, an incremental increase from the 20% repeat prescriber metric at the end of the second quarter. This points to a positive experience with prescribing IMCIVREE, but also reflects the early stage of the launch and the opportunity that remains as many of these HCPs have more than one potential acquired HO patient under their care. Overall, 80% of prescribers are endocrinologists, evenly split between adult and pediatric endos, further supporting that acquired HO is a specialty opportunity.

Slide 13. We have made significant progress with payers during the third quarter and the early access trends and speed of approvals for reimbursement are highly encouraging. Payers are recognizing the differentiation and severity of acquired HO. Of approvals launched to-date, 75% of them have come by the prior authorization stage and over 80% of approvals have come within 60 days of receiving the start form.

We are encouraged with the strong progress in securing positive payer policies. As of the end of Q3, we have IMCIVREE policies in place for our acquired HO that affect approximately 60% of Medicaid covered lives and approximately 75% of commercial covered lives, and we expect that ongoing policies are going to be put into place throughout the end of the year. Importantly, these advances in payer coverage are resulting in positive access experiences for physicians and patients early in launch.

On to Slide 14. Lastly for me, a brief update on BBS. We continue to grow the BBS business during the third quarter through the efforts of our dedicated team of territory managers now exclusively focused on BBS. BBS remains an important contributor to Rhythm's success.

Now let me hand it over to Yann.

Sorry. Thank you, Jennifer. I will begin on Slide 16. We are very pleased to have launched IMCIVREE for acquired HO in Japan on October 14, following approval by the Ministry of Health, Labor and Welfare or MHLW, and inclusion on Japan's National Health Insurance Drug Price List.

This launch represents an important milestone for patients and families in Japan. IMCIVREE is the very first approved therapy specifically for acquired HO, a serious disease for which there were previously no approved treatment options. It is also an important milestone for Rhythm, and reflects several years of intense and focused work. We made the decision to establish a presence in Japan because we saw significant unmet medical need with an estimated patient population of 5,000 to 8,000 patients and a specialist community that was highly engaged and focused on improving the diagnosis and treatment of acquired HO.

Our first discussions with the Japanese regulatory authorities began in 2023. 12 Japanese patients participated in the TRANSCEND clinical trial and through close collaboration across our global and Japanese teams, we were able to move efficiently from clinical development through regulatory review, pricing, and now commercial launch.

The MHLW approval for IMCIVREE came less than 6 months after the approval in the United States, 5 months and 5 days to be more precise. Our commitment to pursuing approval to benefit the lives of patients living with acquired HO in Japan is a point of pride for Rhythm and very much appreciated in Japan, especially by the healthcare authorities. We are excited to provide further details today as this is a meaningful and durable long term opportunity for Rhythm.

Slide 17. A successful rare disease launch is focused on disease awareness, medical education, and scientific engagement. We believe this foundation is developing very well in Japan. In September, the Japanese Endocrine Society and an MHLW-funded research group published official guidelines for the diagnosis and treatment of acquired HO. These guidelines are important because they describe the significant burden of acquired HO, recognize that conventional approaches to obesity are generally inadequate for these patients and provide a more consistent clinical framework for disease recognition, diagnosis, and treatment.

Also, in October, the Japan Endocrine Society, the Japanese Society for Pediatric Endocrinology and the Japanese Society for Hypothalamic and Pituitary Tumors, issued a joint statement on the safe and appropriate use of setmelanotide for acquired HO.

The TRANSCEND publication in the New England Journal of Medicine, which included 4 Japanese authors, further supports awareness of both the disease and the clinical evidence among Japanese physicians. These data were presented and very well received in June, in Kyoto, at the Annual Meeting of the Japan Endocrine Society.

The approval and the launch, combined with these new treatment guidelines, support from leading medical societies, and growing clinical experience in Japan, provide a substantially stronger foundation for identifying and treating patients with acquired HO.

Moving to slide 18. We began building our Japanese organization in April 2025, because we believed success in this market would require deep local capabilities and sustained engagement with physicians and patients. Today, we have more than 50 employees in Japan. This includes 16 hospital affairs leads, a position similar to the territory managers in the U.S., and 6 scientific affairs managers supporting medical education and scientific community engagement. This is a very experienced team with deep rare disease background and a strong understanding of the Japanese healthcare system.

Our targeting strategy reflects the way patients with acquired HO move through the healthcare system. We have identified and targeted 350 priority hospitals, where a significant majority of patients with brain tumors are treated, and by extension, where patients with acquired HO are.

This concentration allows us to take a disciplined, high-touch approach. Our teams are focused on increasing disease awareness and helping institutions build the processes required to initiate and maintain treatment. At the same time, we are working to ensure physicians and institutions have the knowledge and support required to identify the appropriate patients and provide a high-quality treatment experience.

Slide 19. Japan represents a large, accessible, and durable rare disease opportunity, and our significant pre-launch physician engagement and patient identification work give us a strong starting point. To-date, our field teams have engaged with 300 of the 350 priority hospitals, and through this work, we have already identified more than 1,000 patients who may be eligible for IMCIVREE.

Rhythm is forging new ground in Japan, introducing a new disease to the market. With an integrated medical and commercial model initially focused on high-volume brain tumor centers, we have built a scalable approach to expand patient identification and treatment access across Japan.

Our approach begins with intensive high-touch engagement in these priority centers, with the goal of replicating successful practices throughout Japan. While confident in the long-term opportunity, there are structural features of the Japanese market that we expect will influence the early launch trajectory. During the first year of a new drug launch, prescriptions are limited to a 2-week supply. This means patients must return to the hospital to consult with their physicians every 2 weeks to continue receiving treatment.

This requirement applies during the first year of the product's launch in Japan. We expect the restriction to be lifted in November 2027, after which eligible patients may receive prescription supply for up to 3 months. We anticipate a greater commercial contribution from Japan in the second and third years of launch. The first year will be focused on building institutional experience, supporting patient identification, and establishing accessible treatment pathways. As physicians gain experience and the prescription supply restriction is lifted, we expect the launch to accelerate in years 2 and 3 and continue building over time.

Lastly, on Slide 20, I will provide a brief update on Europe. We estimate that there are approximately 10,000 patients with acquired HO in Europe. With paid early access programs, physicians in France and Italy have treated well over 100 patients with HO, generating positive experience and real-world evidence.

Following European Commission authorization earlier this year, we have continued to advance the country-level market access processes required for launch. In Germany, the G-BA process, which is our final step prior to launch, is nearing completion. We have also submitted reimbursement dossiers in France, Italy, the United Kingdom, Spain, and the Netherlands.

Our experience commercializing IMCIVREE for BBS and other rare MC4R pathway diseases provides a strong foundation for these discussions. Payers and many national experts are already familiar with setmelanotide, the MC4R pathway, and Rhythm's rare disease approach. We continue to expect country-level launches for acquired HO in Europe during 2027, beginning with Germany, and with the timing in each of the additional markets dependent on the reimbursement process.

With the launch now underway in Japan and market access activities advancing well in Europe, we are establishing the next phase of IMCIVREE's international growth and expanding our ability to bring this therapy to patients living with acquired HO around the world.

With that, I will turn the call over to Hunter.

Thank you, Yann. Rhythm exited the third quarter in a strong financial position and encouraged by the early U.S. launch execution of acquired HO. The success of the launch is reflected in our quarterly revenue performance and underscores the quality of our business execution and increases our confidence in Rhythm's potential sustainable long-term value creation.

I'll provide more details on our quarterly performance shortly, but I'll start with the details on the bivamelagon license amendment and our financing.

On Slide 22, our amended license agreement for biva represents a significant investment in Rhythm's MC4R agonist franchise. The original license with LG Chem completed in 2024, has been a tremendous success. The data generated in the Phase II trial in acquired HO deepened our conviction in bivamelagon's value potential and reinforced our belief that it can serve as a foundational asset in our MC4R agonism franchise.

With this amendment, we are investing additional cash to increase our stake in bivamelagon, and hence our entire MC4R portfolio. We project that our cross-portfolio royalty obligations could have been 5% to 7% under the previous agreement, pending future indication approvals for bivamelagon.

We are buying down this royalty obligation to 1% flat, assuming U.S. approval for bivamelagon. In exchange for this reduced royalty, we will pay LG $350 million in installments over the next 4 years. Separately, in addition to the $205 million in development and commercial milestones due to LG Chem under the original agreement, under the amended agreement, those are now payable on MC4R portfolio sales, and LG Chem will receive an additional commercial milestone of $200 million if we achieve $3 billion in sales in a calendar year. When it comes time to pay that milestone, we would be happy to make that payment.

Fixed payments totaling $350 million to LG Chem begin with the first payment of $70 million due 15 days from closing. Three additional payments will follow: $100 million in September 2027, $100 million in September 2028, and $80 million in September 2029. While the payments will be made in the annual installments, as I've described, the present value of the aggregate amount will be recognized in the fourth quarter as research and development expenses. Please note that for your models.

Next year at this time, we anticipate 2 global pivotal trials evaluating bivamelagon, one in HO and one in PWS, will be well underway. This transaction represents a strategic investment in our core business and our growing confidence in its potential.

On Slide 23, to finance this investment and strengthen our balance sheet, we entered into a 5-year term loan facility, providing Rhythm access to as much as $750 million. We are pleased to continue and expand our partnership with HealthCare Royalty Partners, which dates back to the first half of 2022, when setmelanotide was approved for BBS, and before we read out positive data from the Phase II trial of setmelanotide in HO.

Also, we are now pleased to partner with Blackstone, a top-tier global investor, whose insights and collaboration were critical to catalyzing this transaction. We believe the terms of this loan facility are competitive. The term loan commitment totals $500 million, with an additional $250 million available by mutual option. The structure gives us access to capital without requiring us to draw the full amount, so we can match future borrowing decisions to funding requirements and continued development of the business. We will draw $250 million initially.

Borrowings carry interest at SOFR plus 4.6%. The facility has a 5-year term, no scheduled principal amortization before maturity, no equity component, and no exit fee. Funded amounts are subject to a 1% original issue discount and market standard non-call and prepayment penalty provisions.

As part of this transaction, we also amended our existing revenue interest financing agreement with HealthCare Royalty. These amendments remove certain debt-like covenants and default provisions, limit HCR's lien to backup security interests, and modify the agreement's material adverse event provisions. We are a far different company today than we were in 2022, and these changes reflect that improvement. Taken together, the amended license agreement and financing strengthen our ability to invest in biva, that support our global commercial execution, and continue to advance the broader MC4R portfolio in our pipeline. This transaction represents a bullish investment in bivamelagon and in Rhythm's future.

On Slide 24, we continue to be well-capitalized with significant financial flexibility. We finished the quarter with approximately $321 million in cash equivalents and short-term investments. This quarter closed cash on hand does not include any of the proceeds from the term loan, nor the initial payment of $70 million to be paid to LG this quarter. As we've been saying for some time, we expect this cash amount to be sufficient to fund planned operations for at least 24 months.

On Slide 25, we saw continued strength in our global commercial business during Q3. Global net product sales of IMCIVREE totaled $92.1 million, which represents 29% sequential growth over the second quarter. Patient demand remained strong during the third quarter, with the global number patients -- of reimbursed patients on therapy globally increasing by 20%. During the third quarter, $67.5 million, or 73% of product revenue, was generated in the United States. The U.S. HO launch was the primary driver of sequentially quarterly revenue growth and accounted for the significant majority of the increase in reimbursed patients.

On Slide 26, I will walk you through the components of the sequential quarter-over-quarter revenue change. Global net revenue increased from $71.3 million in the second quarter to $92.1 million in the third quarter. We saw $15.1 million in revenue growth attributable to increased product demand in the U.S. More than 90% of that growth was attributable to the strong demand from patients with acquired HO. The growing demand for IMCIVREE product shipments to Rhythm's specialty pharmacy outpaced patient dispenses by $4.5 million, resulting in a $1.3 million inventory effect on second-quarter revenue.

Inventory on hand at the specialty pharmacy increased from 20 to 21 days. U.S. gross-to-net during the quarter was 86%, in line with Q2. International revenue increased $4.4 million sequentially to $24.7 million in the third quarter. Majority increase was attributable to the absence of $3.8 million retroactive charge associated with the French contribution mechanism recognized during the second quarter. Excluding this item, the underlying international business increased quarter-over-quarter, with growth from patient demand offset by the inherent variability of shipments to named patient sales markets. Our international business remains strong, as evidenced by continued growth of almost 10% in patients on reimbursed therapy during the third quarter.

On Slide 27 is a financial snapshot of the third quarter compared to the third quarter of 2025. Cost of goods sold was 13.2% of product revenue, primarily driven by cost of materials and royalty payments. R&D expenses were $52.5 million for the third quarter compared to $46 million the same period last year. Sequentially, the increase was $9.1 million versus the second quarter. The increase was primarily driven by increased personnel costs, development costs for bivamelagon studies, and a development milestone associated with our CHI program.

SG&A expenses were $66.8 million for the third quarter. Sequentially, SG&A expenses decreased slightly by approximately 1% compared to the second quarter, largely reflecting timing around certain activities related to the U.S. and global HO launches.

Weighted-average common shares outstanding were approximately 69 million for the third quarter. GAAP EPS was a net loss per basic and diluted share of $0.61, including $0.01 per share from accrued dividends on convertible stock of $1.0 million. Cash used in operations was approximately $3 million during the quarter. We ended the third quarter with $320 million in cash equivalents, and short-term investments, as I mentioned previously.

Looking ahead to Slide 28, for the second -- final quarter of this year, we are updating our annual OpEx guidance. We now anticipate approximately $360 million to $380 million in non-GAAP operating expenses for 2026, with comprised of non-GAAP R&D of $165 million to $175 million and non-GAAP SG&A of $195 million to $205 million. SG&A guidance has changed very little. The midpoint of R&D has been reduced by $15 million due to research and formulation development activities planned to take place in late 2026, now likely occurring in early 2027.

As a reminder, non-GAAP operating expenses exclude stock-based comp and milestone payments associated with licensing agreements. Therefore, our guidance will not be affected by the recognition of the upfront payments due to LG Chem.

With that, I will turn the call back over to David.

Thank you, Hunter. So hopefully you have heard again this morning. Really excited about where we are. Confirming, I think, after 2 quarters of launch, the potential of aHO. I think we made great progress there and expect that to continue, and very much looking forward to accelerating development of our next-generation assets, and as I said in my comments, updating you about future developments in the pipeline in 2027.

So with that, we will open it up for questions.

[Operator Instructions] Our first question comes from Phil Nadeau with TD Cowen.

Congrats on a really strong quarter. Our question, I think, is the obvious one on what you are expecting for patient dynamics over the next quarter or two. It does seem like you are adding about 100 PSFs per month. Is that sustainable? Where do you think you are in patient recruitment at this point in the launch?

So thanks for the question. I think overall, I would just say that we're still early in the launch, and there's so much opportunity that remains. I was happy to see that overall, in terms of what we reported out Q2 versus Q3, that volume in terms of RXs has not slowed down, and that remains the case even early into Q4.

There's still, in terms of opportunities, I would say probably the lowest hanging fruit is physicians who have a diagnosed patient. This is the quickest to convert, especially if they already have experience treating this patient with other therapies and they realize that they need something more, just in terms of IMCIVREE treatment. We have educated a lot of physicians along the way who have identified a potential aHO patient that they suspected, and so they need to go through that validation process as that patient comes in for the next visit, and then ultimately have that discussion around IMCIVREE treatment.

We also have physicians who are used to and already have patients who are on another therapy, and this was probably because IMCIVREE wasn't available at that time, and they want to wait and see how the patient does before they think about RX-ing for IMCIVREE specifically, as well as a lot of other physicians that are still on our list that we need to educate.

So all of this is going to take time to unlock, with some opportunities quicker than others. But I feel very confident in terms of our ability to continue on with that disease as well as product education moving forward.

The next question is going to come from Derek Archila with Wells Fargo.

And congrats on the progress here. So beyond the reimbursed patients, it seems like they increased 20% quarter-over-quarter. It does seem access has improved materially with two-thirds of patients essentially getting reimbursed or paid for by 60 days. So I guess, how does that continue to trend from start form to paid patient conversion, and ultimately, how should we be thinking about that in 2027?

So from an access perspective, we are very happy. I think, once again, all of that groundwork done to educate the payers to differentiate our patient population, that just flowed through in terms of what we're seeing on the access side for aHO, and potentially for any future approvals as well. I would say that the speed in terms of the approvals from RX to actually getting payer approval has been quicker than what we saw during the BBS launch for that reason.

However, I will say that where we are, even though the percentage of covered lives is still a work in progress throughout the rest of this year as P&T meetings happen, we're already at a similar pace of approval times that we are with BBS. So I don't expect that time line in terms of approvals to dramatically increase as we increase the number of aHO-specific policies that we have in place. We've had the ability to get approvals even without a policy in place specific for aHO because of all that, once again, background work. So I would say that the pace would stay the same just in terms of RX to approvals moving forward.

Next question?

The next question comes from Tazeen Ahmad with Bank of America.

How should we be thinking about the, I guess, the slope of the launch, given all the dynamics that you've mentioned? You've been careful to say that you should -- we should expect to see steady uptake, but once it becomes easier to get insurance payments, once those turnaround times normalize to where you expect it to be, and once more physicians are educated on the drug itself, should we expect to see any acceleration from the rate that we're seeing right now?

Yes. So I think that the reality is just what it looks like just in terms of a lot of different rare diseases and the different states in terms of where those physicians are. It just takes time to go from even suspecting, and then diagnosing, and ultimately, especially in a realm where they may have been used to prescribing another drug because IMCIVREE wasn't available, making that turn in terms of their actual experience with our drug and that process changing.

The other reality is that these physicians are extremely busy. Their practices are so busy, and just in terms of that ability to go through those steps, through the busy practice of that patient coming in iteratively, will also take some time. So that's why we outline just in terms of that steady pace. But once again, confidence just in terms of what this launch will look like, as we're just very early.

Yes. And just to build a little bit on what Jennifer said, the steadiness, and I think the key part of her answer is, there's elements of a rare disease launch in this, which is patient by patient. There's individual factors which may impact how quickly an individual patient is able to get to a diagnosis, get seen by their physician, and get on treatment.

What is strikingly different and why the opportunity here is so much different than BBS is that the epi is fundamentally different, and the concentration of patients is fundamentally different. So steady as it goes, but with a very different potential, longer-term potentially.

Next question?

The next question comes from Mike Ulz with Morgan Stanley.

And congrats on the strong quarter as well. Maybe just another follow-up on the HO launch. Can you talk about the level of awareness you're seeing among the endocrinologists, sort of since the launch, you're a little bit, 2 quarters over into the launch, and just want to get a sense of where that is and how that could evolve going forward.

I will say that when we started our education, our disease education efforts, which started even before our approval, there was a strikingly large opportunity to actually educate the physicians on what acquired HO actually was. And so that still remains the case, just in terms of that ability to differentiate and outline that the weight gain in this patient population is not attributable just due to things around other hormones being administered to these patients, differences in lifestyle just because of a surgical procedure, et cetera, et cetera.

I think we have made progress for sure in terms of our efforts across our teams through different forums, in addition to the 101s, but there's a lot more physicians for us to educate to, once again, make them understand that, similar to other hormone deficiencies, the cause of HO is based off of the injury that is caused through that procedure and management of the tumor. So more opportunity to continue on, though very happy at least with the progress that we've made today.

And Mike, I would contrast this again with Prader-Willi, where it is a genetic diagnosis. There is no challenge in a sense of getting to a diagnosis in almost all patients, whereas this is a clinical diagnosis. And as Jennifer said, some of these features can be seen in other settings, other diseases, and so getting to a diagnosis is different. And that is the work that's done, and that's the rare disease effort. And so, tremendous opportunity to continue to increase awareness, as she said.

The next question is going to come from Paul Matteis with Stifel.

This is Matthew on for Paul. Thank you so much for taking our question. I guess I wanted to dig into, for the acquired HO population, what has the retention rate on drug been, and how does that compare relative to your early BBS launch?

Yes. So the retention of our HO patients, it is early in the launch. We expect that the patients that are probably the most motivated may start early on. The retention has been strong to date, and the vast majority have remained on drug. I will say that our confidence in this particular patient population is a bit different in terms of that retention piece of what we expect compared to BBS, primarily because, one, this perceived lack of efficacy is a bit different because of the strength in terms of that BMI reduction that we saw in our clinical study in this particular patient population, for example.

Other factors may include the fear or the burden of injections, and this patient population is more used to having injectable therapies due to their other hormone deficiencies. So there are differences, I would say, holistically in terms of this particular population, where we feel that their retention may be a bit different than BBS. But it's early and it's something that we're going to continue to monitor as we move forward.

Next question.

Our next question will come from Priyanka Grover with JPMorgan.

Congrats on the quarter. So one thing you mentioned in the beginning of the call is, Japan may be the second-largest market for you guys. Considering EU has an estimated 10,000 patients for acquired HO, can you provide more color on the major confidence in the Japanese market?

Yes. Yann?

Yes, for sure. So first, as you just said, the prevalence is meaningful. Two, we have in Japan a very well-organized healthcare system. Three, we have a national coverage with a good price. And those are extremely positive aspects, especially for a rare disease where patients sometimes are difficult to find. And I think that the 1,000 patients that we have already identified tells our efforts are paying and how many patients are there.

And Priyanka, the -- and Europe obviously, to Yann's point about a single country, that 10,000 in Europe is spread across countries with very different dynamics. So the accessibility of a slightly smaller epi 5,000 to 8,000, as opposed to the accessibility of the full 10,000 in Europe is just fundamentally different. So all those reasons would say, yes, Japan's a tremendous opportunity for us.

The next question is going to come from Whitney Ijem with Canaccord.

My congrats on the quarter. Another one on Japan -- and sorry if I missed this. But can you talk about where you landed on price, and I guess the trajectory, or how we should be thinking about the trajectory of price over time in Japan? Is it more similar to U.S. or Europe as we think about kind of annual price changes?

And then just the second part of that question, do you plan to provide any patient start form or any other of those types of metrics as we watch the Japanese launch?

Yes. Yann, you want to...

Yes. First of all, we are pleased with the price we achieved. One, it is consistent with the rare disease prices, and also it is consistent with what we were expecting and what we have forecasted. The price is public and it's $2,200 per vials, which is 60% to the U.S. WAC, which is also very good compared to the U.S. rare disease drugs.

And the second questions, or the related questions in terms of long-term price, it is a price which is set for the next 10 years. Of course, there are some capping processes, as you can imagine, but we are also here very comfortable with where we are with MHLW estimated peak and how this price should be maintained in the upcoming years.

Our next question will come from Samantha Semenkow with Citi.

Congratulations on the quarter, and thanks for taking the question. I have one on Prader-Willi. I am wondering if you could just talk a bit about the decision to run a 6-month hyperphagia-focused study. Will you include BMI changes in this initial study, or will that be a separate BMI-focused study? And I'm wondering what you think you need from both an FDA approval perspective, but also a payer utilization perspective in terms of hyperphagia versus BMI, or both for utilization.

Yes. Thanks, Samantha. So let me try to fill in a little bit on the Prader-Willi here. So we will run a 6-month hyperphagia study, as I said in my initial comments. That is based on, one, we see that change. It is a very important part of this disease. It fits with the mechanism of our drug. We do satiety signal patients get reduced hyperphagia, and that translates into changes in the HQ-CT, as we have seen in the 6-month data we presented, number one. Two, when Soleno, now Neurocrine, when their drug, VYKAT, was approved by the FDA, as is often the case with first approvals, they set a bit of a precedent and a template for others to follow. And I think we have heard indirectly that that probably is a reasonable assumption to make, that a 6-month hyperphagia study is acceptable and, if positive, is approvable.

So BMI changes, weight, we know from our other development efforts in the MC4R pathway diseases, those are 12 months. The regulators want to see sustainability of that BMI change over 12 months. So if that was the primary, the expectation is that would have been at 12 months. So from a very practical standpoint, this is a shorter and more direct route for approval.

Your second question was, will we collect BMI in this? Absolutely. Will BMI change in 6 months? Yes. We have seen that already in the 6 month, and so we would expect those positive results to be reflected in the label. Now, it will not be in a primary indication, but it will, like I said, we do expect that to be in the label. And from a payer standpoint, again, I think VYKAT's a good example, in rare diseases, payers tend to be very -- they stick to the label, right? They do not tend to interpret. You do not tend to get step edits for unapproved therapies and the like. And so if you get an approved drug in Prader-Willi, again, we can expect that it will be used, and they would not differentiate on whether hyperphagia was our primary endpoint or BMI, is my opinion.

The next question will come from Seamus Fernandez with Guggenheim.

So David, on the PWS side of things, it does seem like your conviction is quite a bit higher for the overall portfolio opportunity, but interested to just better understand, maybe from you and Hunter, the buy-down opportunity that you saw with the royalty, and what the drivers of your expectations are for what looks like a very robust assumption for peak sales potential. How much did PWS weigh into that or was this kind of primarily your views of the global aHO market opportunity, and sort of the switch opportunity that you see moving from setmelanotide over to the new portfolio of assets?

Yes. Thanks, Seamus. It was really, as I said in my comments, the two major drivers here were, #1, as you know, we are running the Phase III biva in HO. It will be the first next-generation product approved in HO. It does not have hyperpigmentation. It is an oral, lots of advantages. We think it will drive an incremental opportunity in the HO space, which we already think is large. And so, that just economically said, if we can lower our royalty burden overall in that context, that made sense.

But the second factor -- back to your question of strategy and how do we think about developing it. The original agreement did have a part of it which said if we develop bivamelagon in new indications, there is an incremental royalty associated with that decision. So for example, Prader-Willi, if we were to develop it in Prader-Willi, then yes, that would have carried a higher burden, and we didn't want to be constrained by that. We're starting with biva because it's available, and as I said, supply issues are driving that near-term decision. But we very much like having both next-generation assets available, particularly for our two major options, but in general, to be able to make decisions around the portfolio totally driven by the science.

So I'll turn it over to Hunter for thoughts on...

Yes. I'll just add one thing, Seamus, which is we did multiple scenarios to analyze the economics of this deal and the opportunity here, and we based our analysis on essentially the potential reduction in royalties against the risk-adjusted sell-side consensus. So we were comfortable doing the transaction on that basis. If we were to outperform that consensus, either because probability of success goes up or the top line unadjusted revenue goes up, that represents greater upside to the transaction.

We think we're shaving about 5%. You have to make a couple of assumptions on what was going to be approved, but 5% against sell-side consumptions yields to a pretty good payback relatively quickly.

Great. And if you don't mind my just a quick follow-up on that, was this initiated by Rhythm, or was this kind of a competitive buy-down situation just because we know there are other royalty players out there?

It was initiated by Rhythm.

Our next question is going to come from Basma Radwan with Leerink.

And congrats on the quarter. One question on aHO. Were you able to identify more patients with suspected aHO diagnosis than the 2,000 identified earlier in the launch? And how does Rhythm help with this process and the conversion from suspected to confirmed diagnosis? Do you guys provide help with the brain scans, like the way you did with genetic testing for kids for BBS and the monogenic indication?

Yes. So we continue to -- the more we are out there, the more physicians we educate, the more physicians are suspecting and getting patients to an aHO diagnosis. So that number has continued to rise since we released that back in September, over a year ago. So and in terms of the -- and we are using more different metrics now post-launch relating to RX volume and such, just to be more holistic in terms of patients identified and ultimately getting to an RX, and that will be the metric that we use moving forward.

In terms of our help, I would say that it's just education. It's not necessarily -- these patients do not have a genetic testing that can be supported through our URO program, but it is the combination of do they have an injury? And once again, we were really happy that our label is broader than just tumors. So do they have an injury that resulted in hypothalamic dysfunctions, which can be measured by the need for different hormonal treatments? And do they have weight gain because of this and associated with that timing? So there are just a couple of different pieces of education to make that physician put those pieces together for that particular patient to get to that diagnosis.

And it's fundamentally very different, obviously, from BBS. And I think when Jennifer's teams are out there talking to physicians who might potentially see a BBS patient, I mean, just given the epidemiology and the nature of that rare disease opportunity, the odds are each individual patient, the probability they may see a BBS patient is low. When we're talking to endocrinologists, the teams that are out there, the probability, A, is high, and B, the clinical diagnosis, the clinical phenotype that drives that diagnosis, as Jennifer just described, is highly recognizable. This isn't one where they have to stretch to try to remember or do a special test to figure out if that disease is present. These are very obvious parts of the presentation. So the diagnosis is readily made once you know what you're looking for. Next question?

The next question is going to come from Lisa Walter with RBC Capital.

Given that this is the second full quarter of the HO launch, just curious if you can share which payer group most patients are coming from, whether that be Medicare or the commercial population. And could we also expect any seasonality in the first quarter, as some patients may change insurers or care providers in the new year? Any color here would be helpful.

Sure. So just in terms of the payer background, I would say that where we are right now in terms of percentage of RXs that come from commercial and Medicaid payers is very much similar to the BBS, with the majority of those being commercial and Medicaid. I think what is interesting, and a positive, is that there are a bit more commercial payers on the HO side versus Medicaid payers. But we expect that there are going to be a lot of things that evolve over time, perhaps potentially the age mix of patients, which also may impact the payer mix and such, and it's one thing that we will continue to monitor moving forward.

From an insurance perspective, this is a dynamic that happens every single year, just in terms of for any drug out there, they may be impacted as patients are going through an insurance change. And we have experienced in the beginning of the first quarter or in the first quarter, a bit of a bump up in terms of our patients on our bridge or free drug program, as we may have to temporarily bridge them onto this free drug therapy until we're able to get reimbursement on their new insurance plan. So that's a dynamic that has happened year-over-year, and I imagine is the same for any drug as well.

Next question?

The next question's going to come from John Wolleben with Citizens.

This is Catherine on for John. I just want to follow-up on the PWS. And can you just discuss a little bit about differentiation on hyperphagia of bivamelagon versus other programs, and any learnings from earlier programs as far as what we can expect as far as the placebo rate, and what the placebo -- what is clinically meaningful as far as benefit over placebo?

Sure. Prader-Willi, again, I do not need to remind all of you, it's just an incredibly challenging disease, and there is a reason almost all therapies, with the exception of VYKAT, and there have been many multiple attempts, have failed to date. So we are very respectful of that, #1. #2, the placebo rate, there is a placebo rate for hyperphagia, absolutely, but -- and part of the reason we will be running a 6-month trial, although a shorter trial might be acceptable from a regulatory standpoint, is to make sure that we move well beyond that period of time, which might be, I would say, once you get out beyond 3-4 months, that placebo effect should absolutely have worn off.

So I think a 6-month trial, we feel confident that will show that. The magnitude of the difference, that threshold has been set, again, by the VYKAT approval. That was on the order of 5 points or less. So obviously, we have not engaged with regulators yet, and that could evolve. I expect them to more or less follow precedent there, and that would be our threshold of what we would be looking to achieve. Next question?

Our next question comes from Kalpit Patel with Wolfe Research.

For the launch, can you break down the new aHO start forms by month for the third quarter and sort of characterize how that pace has been heading into October and November? And then second, for the PWS study for the Phase III, have you finalized what the restriction or the minimum baseline HQ-CT score might be for that Phase III?

Yes. We don't break out by month. So I think the quarter in a rare disease, particularly early in launch, I think is a very high-level discrimination. What Jennifer said is going into the fourth quarter, yes, the pace seems to be very much holding up. And so we're seeing no slowdown as we go into the fourth quarter, but we won't break out by month.

Sorry, on the Prader-Willi, question was -- I thought I lost it. Was it...

Yes. What the baseline HQ-CT score might be for that Phase III?

Baseline, sorry. Yes. Yes, thanks. Yes, I mean, historically, companies have used an HQ-CT of 13. I'm not sure. We haven't engaged with regulators yet and we haven't made a final decision internally, but I would say in general, we're not going to try to create new ground here. We're going to follow established precedent in terms of trial designs that have at least structurally been performed previously, so.

The next question will come from Joseph Stringer with Needham.

This is Eddie on for Joey. Thanks for taking our question. Just another one on the start forms. Just wondering if the delta between the patient start forms and initiation of therapy of the 60 days, if that's something kind of a baseline we should expect going forward? And how has this changed since the launch has been progressing, and how might this be the same or different for other geographies? Appreciating that the launch is still pretty early in Japan and Europe.

So maybe just on those metrics are very U.S.-specific. There is a completely different dynamic in obviously Japan, you get one payer, and then Europe, country by country. But I think, Jennifer, maybe just comment on our average and how does that distribution work for the different patient groups?

Yes. So I would say that overall, just in terms of the pace of approvals, I don't expect that to dramatically increase. As I outlined, it is a pretty similar timeframe as what we are seeing also on the BBS side. So from that perspective, I feel very good that we are already at that pace. And we also have others that are continuing on just in terms of the pending, and we are still working through to get to approvals overall. So I don't expect that to change.

I do expect, and there is no reason to believe that we will not be at a similar percentage of covered lives with IMCIVREE policies as we are right now with BBS. So that piece will continue to evolve as the P&T meetings ultimately happen at various different payers and we get those in place for HO.

And mind you, these rare disease therapies almost always have a prior auth. Now we are happy to have a number of situations where they do not require a prior auth, but in general, it requires a prior auth. So there is a built-in inherent delay from the time the script gets written until patient gets on therapy. And as Jennifer said, if you end up in a multiple appeals process, then obviously you stay in the queue and that time line extends over. So your average is longer than 60 days perhaps, but what's really rewarding and promising about this is that we very quickly got to a point where we are getting relatively rapid approvals.

I would now like to turn the call back over to David Meeker, for closing remarks.

Thank you. So again, thanks all for tuning in. We continue, as I said in my opening, to make great progress and are really excited about what's going to come up in 2027. Next time we'll talk, we will be well into the first quarter there. So thanks again.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here. And it's my pleasure to introduce David Meeker, President and CEO of Rhythm Pharmaceuticals. And just as a quick reminder, the format for today is a fireside chat. But if anyone in the audience has a question, please raise your hand, and we'll try and address it in our discussion.

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. And with that, maybe I'll hand it over to David to make some introductory comments, and thanks for sharing your time with us today.

Yes. Thanks, Mike. Yes. So just to set the stage on Rhythm a bit. It's a good moment for the company, for those who are following. We like to set the company framework up, getting people to think about 3 pillars. Obviously, we're working on the melanocortin-4 pathway, our first approved drug IMCIVREE first-generation product was approved in 2020. It's now approved in a couple of genetic, Bardet-Biedl syndrome in 2022 and most recently, HO in the spring of this year.

So the 3 pillars we're focused on are a genetic pillar, and we think there's a number of genetic causes of impaired signaling through the melanocortin-4 pathway. We did the EMANATE trial and the DAYBREAK trials, which were not positive, but -- they provide us a lot of information and I think gave us a sense of how we're going to tackle that pillar next, which is taking the genes of most -- of greatest interest and focusing on trying to determine the variants that have true loss of function because with that understanding, then you can run those trials with a much higher probability of success. I think we're pretty confident that the biology, of course, is going to work there.

The middle pillar is hypothalamic obesity, 10,000 patients, significant opportunity. I'm sure we'll talk a little bit more about that. Launch is underway. And then the third pillar is Prader-Willi. And this is -- we released some preliminary data out of a study, open-label study by Dr. Miller using setmelanotide. We've told the world, which we will, we'll update everybody on which assets specifically we'll take into Phase III and then try to give people some sense of time line before the end of the year. Prader-Willi is, as I said, third pillar, and it's a really -- it's a significant opportunity. I think we're quite convinced that the biology is real and works there, and we plan to invest accordingly. And so that will be a major effort for Rhythm going forward from -- in 2027.

Great. Thanks for that introduction, David, and maybe we'll start with the middle pillar, which is HO and maybe just give us a brief background there maybe on the disease, the unmet need and how IMCIVREE helps these patients.

Yes. So HO is interesting. I'll contrast it with Bardet-Biedl syndrome, our first approval in 2022, which is as I said, about 5,000 patients and really a classic ultra-rare disease. It's a genetic disease. It's a syndrome. These patients have classic ultra-rare disease challenges trying to get to a diagnosis, very few experts. There was only one center of excellence in the U.S. when we launched. We've now helped the development of about 5 other centers.

But that's a world where you continue to find patients and you'll continue to find patients for the next decade, 2 decades. I mean it will just -- we expect that opportunity to grow and grow steadily, but a modest pace, and it's driven very much by -- it just takes time for these patients to come to awareness. And part of the challenge is there's not a concentrated way to tackle that disease. They are often cared for by primary care physicians. There's no dedicated specialist who's taking care of them, although they may see any number of specialists to get to a diagnosis. There's not a concentrated point which -- where they're being taken care of uniformly. HO in contrast, which is this entity most commonly due to occurring when patients who have a tumor in that area of the brain, hypothalamus and pituitary in that region, they get resected.

These are benign tumors. But in the process of that treatment, resection and/or radiation, the hypothalamus, that part of the hypothalamus gets damaged where this pathway sits. And so they lose the signaling, they have a loss of alpha-melanocyte-stimulating hormone, which is the key signaling hormone in this pathway. And they literally come off the surgical table hungry and are gaining a pound or 2 a week. I mean that's a classic presentation post surgery. There's a very clear before and after to these patients. And so Up until now, patients going into surgery, about 80%, 85% of them will have one or more hormonal deficiency, hypothyroid, adrenal insufficiency, et cetera. And they are educated on that when they go into surgery.

I mean the surgical team will tell them, you may develop hypothyroidism, but we can treat that. We can replace your thyroid medicine. It's okay. As a rule, they are not told that hypothalamic obesity is a possibility, and that occurs in about 50% of the patients. Part of the reason they're historically not told is, A, the surgical team may not be so cognizant of it. Secondly, even if they are, it's one of those situations where they tell the patient about a potential complication and the patient and their family go, okay, so what do we do if that happens?

Well, we don't really have a treatment. And so you've created a level of anxiety in the patient and their family without being able to give them some reassurance that you have a way of dealing with that. So that's the world that we've entered into, really a devastating complication. And the beauty of this treatment is in HO, it's really a pure -- the drug itself taught us what was the cause of that disease. It was a little bit -- I think there are a number of hypotheses, not so clear going into our trials, but the response to a precision medicine, this melanocortin-4 receptor agonist literally a hormonal replacement taught the world that, that is the underlying biology for this. And so that's where we are.

So the team out of the gate, what's been surprising as we get a little bit surprising to me, maybe it shouldn't be based on what I just told you is the level of awareness even among endocrinologists is, I would say, modest. It's not like they're taught about this during fellowship training and the like. It's a relatively new disease back to being defined as much by the medication -- the medication has really given definition to that and define it as a distinct entity, number one. Number two, many endocrinologists don't like treating obesity. Obesity treatments become very much writing scripts for GLP-1s.

And so they'll manage other endocrine problems, but I don't do obesity and they'll send the patient to an obesity clinic or some other part of the organization. And so this part of their disease may well be outsourced, if you will, to another part of the system and the like. And so we're entering this where we've got to create awareness. We've got to help create more experts. And like I said, I think there's a prevalent population here, which is out there and not just not carrying a diagnosis. Those are the classic rare disease challenges. On the upside, this is a classic specialty opportunity.

Unlike Bardet-Biedl, which is dispersed and being cared for maybe by very -- multiple different specialists and/or primary care physicians, these patients will reliably pass through and/or be primarily cared for by an endocrinologist. So as a company, we approach this in a very different way, which is we can cover all endocrinologists. So we had a sales force of about 16 people for Bardet-Biedl because that was not the strategy. We've hired 42 dedicated salespeople for HO because the goal will be to knock on certainly all of the top-tier endocrinologists, which is about half of that 10,000 number as a start. So a lot of advantages, some residual challenges. And of course, we're positive about our first quarter.

Yes. Yes. So maybe we can talk about the early launch trends. You shared some promising start forms. So maybe talk about that.

Yes. So at the first quarter, we had about -- not about, we have about 400-plus start forms that were written by 300 physicians. And so A, people ask, is that -- how is that relative to expectations? Going into a launch, these things are really hard to calibrate, but that was a really positive signal. I think it told us that there was a high level of interest. People were willing to write scripts. The 300 docs who wrote those 400 scripts also tells us that it wasn't a small number of docs who were believers in the rest of the world, not that they wrote a disproportionate number. But we have, I think, very broad-based uptake. Since the first quarter, we had the New England Journal of Medicine article published.

I think that's the kind of addition to the whole picture that makes a big difference. It's not that often that endocrinology articles get published in the New England Journal of Medicine, so they get a disproportionate amount of attention. And so again, I think all of the signals we've had before is that we're very positive about the uptake here, but also very appreciative of the fact that we are early and we have a lot of work to do on the education side, particularly, like I said, that the endocrinologists and for sure, in the community endocrinology set.

Can you just talk about the early physician feedback? And since education is part of your strategy, maybe walk us through how that works? Is it pretty easy to -- for physicians to understand and then, oh, I have patients, and it's a pretty easy -- it's just a matter of getting to the numbers? Or how is that looking?

Yes. Easy is a word. It's not the right word, but no, it's fair. So the conversations, this is easy to describe, right? The classic presentation, which is you have an incident event, you had your surgery, you had trauma or there's an incident event and before and after something changed, rapidly gaining weight, you have these associated pituitary insufficiency problems. So when you talk to an endocrinologist and you say, do you have patients with HO, they may or may not say, I have some who are diagnosed.

But invariably, they will say, but I have some patients who fit that clinical phenotype. I just haven't given my diagnosis. I need to get them back in and have that conversation with them and the like. So when we gave you a number last fall of about 2,000 patients who we had -- the field teams had identified through their interactions with physicians in the field, the majority of that 2,000 number were in the suspected category, not patients who carried a diagnosis of HO. And so that's what's happened. And like I said, we're in the process of some of those patients coming in. The second issue here is maybe not surprisingly, getting into the endocrinologist office is not straightforward.

And so I think the general reaction has been, I will bring this up with them when I see them next at their next scheduled appointment. So they're not out there actively calling these patients in, just is what it is. I think their practices are pretty tight. So that's been, I think, the second major challenge here is creating that sense of urgency and the ability to have patients pulled back in, but...

And maybe you can talk about just payer adoption, any payer pushback? There was talk before the launch of maybe step edits. What's kind of the latest there?

Yes. So no step edits. We didn't -- have not had step edits with Bardet-Biedl syndrome. And we haven't had here -- in a rare disease world, I think the payer world tends to adhere very closely to the label. So -- and of course, that was not part of our trial number one. Number two, we did have, for example, the GLP world would be a common question about will you be step edited through a GLP? And as I said, they adhere to the label one. But two, about 25% of the patients in our 140-patient Phase III trial were on a GLP, either historically on a GLP, about half of that number or continuing on a GLP during the trial. We had most of their curves before the trial and then what happened.

And what you could see very clearly was if you give most people a GLP, they will have some weight loss. I mean it's just -- that mechanism creates an aversion, people at least -- you will lose some weight. What turns out is if you have a deficit in this pathway, you may lose some weight and plateau well above where you want to be. You may lose some weight for a while and then start to regain. And that was very much the pattern of all the patients with a history of GLP use. And then when they went on setmelanotide and IMCIVREE in that case, they had a very consistent, if not even greater response to the drug as everybody else in the trial. So we have that data to support it. As I said, payers tend to follow the label, so no step edits.

Makes sense. And you mentioned maybe 10,000 -- or your estimate is 10,000 patients in the U.S. and you, prior to the launch, had about sort of 2,000 identified or suspected. I guess how quickly can you sort of increase that 2,000 number? What are the hurdles? You mentioned some already, but what's the key hurdle?

Yes. I mean that's outlined the most significant hurdles there. The 2,000 number has increased significantly since last September. We're a year later, not surprisingly. We won't update that number. Again, it's a softer number. It's a number -- we gave you that similar kind of number at the start of the BBS launch. We gave it to you for HO, the world. Now we're into the launch, the start forms, revenues become a much better metric and that softer number, we probably won't update. But -- what's interesting and is today's world, not surprisingly with all the tools that you have, claims analysis, the ability to follow patients on their trajectory through the health care system by tokenizing them.

And you can go -- we have a much better sense as to what we might expect when we go into a physician's office, like who they -- how many patients they might be caring for. We don't know who the patients are. But -- so it supercharges that conversation literally. And we found the feedback from the field has been that when they go in, the conversations they're having are matching their expectations in terms of what they thought that physician might have and the like. And so those are huge advantages when you're trying to launch.

You mentioned start forms. And over time, revenues are going to be a good way to sort of think about how the launch is progressing. But I guess 2 questions there. Will you continue to share start forms? And do you think you might provide some revenue guidance at some point in the future?

So we will definitely continue to share start forms for the foreseeable future. I think what we did with BBS is once revenues became a more reliable metric, they capture sort of all parts of the dynamic. We stopped giving start forms. So we won't do that indefinitely, but we will for the -- certainly the near term. Of course, the revenues will continue to keep up there. Sorry, what was the second part of the question?

Guidance.

Guidance, yes, that's no, it's hard to do in these. And historically, we haven't done it. What we've tried to do is help people understand rare disease launches -- we've used the word lumpy in the past. I mean it's just a function of you're dealing with smaller populations. There's a variety of different reasons why things may go up and down in a quarter. And so we've just tried to get people to not be completely quarter-on-quarter focused, but look at the trajectory over time.

And I'll go back and say it again, I think this is an opportunity we expect to grow steadily. We do not expect it to peak, and we'll continue to penetrate into that 10,000. These kind of rare disease opportunities, BBS and probably HO back to it doesn't peak, you don't fully penetrate. So we'll see where we go.

Yes. Makes sense. You're also planning to launch in Japan by the end of this year. I think Europe first half of next year. So maybe just talk about those market opportunities, how they're different from the U.S. And in terms of the strategies, are the strategies different in those geographies?

Yes. Let's start with Japan. I think -- and [ Yann ] will provide a deeper dive at the November earnings call and the overall Japan picture. But high level, Japan, we've said there's about 5,000 to 8,000 patients there as compared to 10,000 patients in the U.S. So on a population basis, it's a more prevalent disease in Japan. I don't totally know why, maybe a higher incidence of craniopharyngiomas in that population, number one. Number two, pretty well organized in the sense of reasonable level of awareness, experts, centers where these surgeries are done. So it's very much think about it as a U.S. kind of -- that would be the comparison here. And the -- we're going to go direct.

So we have 50 people on the ground in Japan, and they've been on -- the sales force has been hired prelaunch as was the case in the U.S. And so they've had time to be out in the field and interacting with the clinicians and getting a sense of that market. So we'll update the status of Japan, but approval in August, we'll work through getting our pricing and be ready to launch by the end of the year. The European launch will go country by country in a pretty standard way. Germany should be the first out of the gates early in the first quarter, and then we'll see how we do. We had the market access dossiers basically filed within a week of approval last year. So we were well positioned here, but the process takes time.

Can you maybe talk about just pricing, how to think about it in those 2 geographies relative to the U.S.?

Yes. So Japan pricing, we'll see how we do. We described it as being somewhere -- we expect it to be between the U.S. and Europe pricing. They do reference other countries, including the U.S., of course. So yes, we'll see how we do, but we expect to do no worse than Europe and hopefully somewhat better. The European pricing structure, the nature of that system is each time you come back with a new indication for the same drug, you revisit the pricing discussions and you take a haircut in general with the belief that you're now serving a larger population and therefore, you don't need as much per patient. Our -- that's just -- that's the rule. Our expectation and hope is that we're going in with HO with -- has a very strong data set. And so our goal, obviously, but maybe not unreasonable expectation is that, that haircut will not be significant.

Makes sense. Maybe we can shift gears now to some of your next-generation programs. You have 2 MC4R agonists. So maybe just remind us some of the key advantages of those next-generation programs.

Yes. I mean, so there's 2 obvious ones. So one is convenience and oral -- daily oral or weekly injectable. The second is the hyperpigmentation. So I think we've got good evidence. These are much more specific for the MC4 receptor. They don't hit the MC1 receptor. And just to put that in some context, about 5% to 6% of patients who start the drug discontinue because of hyperpigmentation. So 95% don't, meaning it's not like the biggest problem. But not everybody likes it. Some do, but not everybody likes it even if they stay on drug.

And secondly, we don't have a good sense for this. I certainly don't, but I know they are out there. There are patients who are on the sideline who are worried about the increase in pigmentation, getting darker. And that's the reason why they're not starting the drug. And so I think having options out there that don't have hyperpigmentation, there's no physiologic benefit to that. I think will be a significant advantage here. And then, yes, better, more convenient drugs are always welcome.

Yes. Makes sense. You talked a little bit about the safety side. What about the efficacy side for both those programs in HO? And what have you learned so far?

Yes. I mean, remarkably -- and HO was such a gift in so many different ways. It's such a sensitive disease model that it was the perfect to test these new drugs, in the sense that we could run a relatively small trial and know whether it worked. And our view going in was if we don't see anything in HO, we're stopping because, I mean, that tells you we don't have a good MC4R agonist. So -- and that was one. And then two, both of them worked as we've shown.

And remarkably, the pattern and the rate of weight loss has been remarkably consistent. So it's back to -- yes, I mean, in a heterogeneous disease, they're all losing sort of 10%-ish kind of weight at 3 months, 12, 14 weeks. So all very encouraging. We weren't looking to do better. I think one of the things about setmelanotide and the doses we're using, I think for the most part, we've pretty much extracted maximal efficacy. I don't think it's a world where you can be more potent and get more activity. Now Prader-Willi, we're using slightly higher doses. And so that's a disease where -- and like if we need higher doses, we can go to higher doses with setmelanotide. But I think there's not a lot of room on the efficacy side to do better.

Yes. Can you talk about next steps for those programs in HO? I think for bivamelagon, you plan to start a Phase III by the end of this year. So maybe just talk a little bit about time lines, your current thinking on design of that study as well.

Yes. So HO, we will start the adult portion of that trial. The goal is by the end of the year. The pediatric will start first quarter-ish next year. The separation there is that we need an oral dissolvable tablet for the pediatric. And so that part of our development program is on its way coming. From a design standpoint, the -- we ran a -- BMI has been our weight has been our endpoint for basically all of our studies. In this case, we will likely run a combined -- we are going to run a co-primary endpoint of hyperphagia and BMI for the adults and the pediatrics will just be the BMI part of our challenge with getting hyperphagia into the indication statement in a way that might be helpful here in the United States is that the tool itself wasn't -- we didn't have a single tool that could be used across all of our age groups.

And if you remember, we did our Phase III trial in HO, we had a child as young as 4 and an adult as old as 66. So that's a full range, and we are trying to find an endpoint that ran across that. So by breaking these into a 12 and above and below in terms of this endpoint, I think it will allow us, A, to use a consistent hyperphagia measurement and have that as hopefully part of the indication statement and then basically a best of both worlds strategy.

And for 718, do you plan to take that forward also in HO and what maybe time lines around that?

Yes. So for both HO and Prader-Willi, very significant opportunities for us. We would anticipate likely developing both agents in both diseases. It's a timing question. Now for the genetic pillar, if you will, we would not anticipate developing both agents in each gene that we might try. So you can see how we might mix and match a bit there. But let's take Prader-Willi, for example, almost for sure, we will do more than one trial. We will likely do both of those agents. And it's just a question of which one we start with. In the case of HO, we've already made the decision. We're going forward with bivamelagon. There's no there's not the same urgency to get going with 718. So I don't know if that will be a 2027 activity to bring 718 into HO, but I can imagine that, that will come into HO and be part of our development strategy going forward.

And maybe we can switch a little bit to just Prader-Willi now. You shared some initial data for setmelanotide. Maybe just talk about what you learned there and maybe how it compares to available treatments.

Yes. There's only one approved treatment as we know, VYKAT, and that was a huge advance for the field. One is it has clear activity. It's a drug that has some side effects. It's not appropriate for every patient with Prader-Willi. But it established a regulatory framework in which you can get the drug developed. So what we've said and what I've talked about historically is when we first started the program, we were very focused on weight change in BMI because, A, we thought we can do that, still think we can do that. If we got weight loss, then almost by definition, we would have a reduction in the hyperphagia.

That's how the drug works. So that was our approach. In the intervening time, Soleno gets approved based on the hyperphagia study. And we believe we haven't had our meeting with the FDA yet, but our proposal will be we will absolutely look to run a 6-month hyperphagia study as opposed to a 12-month weight reduction study. So that will be our strategy going in. I think -- you asked what we learned from our Dr. Miller study. What was most instructive about [ HE ] was 18 patients, highly heterogeneous, some patients more challenging than others. But of the 4 different metrics that we looked at, so we had BMI, we had DEXA scans looking at fat and lean, and we had the 2 scores, one HQ-CT, the hyperphagia score and the other was this anxiety distress symptom score.

Not perfectly, but in general, they all moved in the same direction, some more significantly than others. Those patients who are on VYKAT might have had lower hyperphagia scores to start with. That's how that drug works. But even if they were on VYKAT, their lower score tended to drop and move down. And we know symptomatically from what Dr. Miller tells us that the trial is done, patients could stop. They all want to stay on drug. So there's a desire to stay on drug, and they seem to be happy on drug. So I think that's the thing we're taking away. Now the challenge going into Phase III is, of course, you can't write a label that says patients are happier. We need to measure that and make sure that we're capturing the endpoints that translate to a meaningful label.

Yes. In HO, you mentioned earlier, you saw very consistent efficacy across all 3 programs with improved hyperpigmentation. With Prader-Willi, right, obviously, you just have setmelanotide data so far. Do you expect the same to be true the next gen will kind of...

I think so. I mean -- so we're going to go right into a Phase III. I don't -- and part of the reason for that is I do think this is an MC4 agonist question. So setmelanotide told us that MC4 agonist should work in Prader-Willi. The HO efforts with bivamelagon and 718 told us that both of those are good MC4 agonists. So I don't think the leap of faith is much there, to be honest.

Makes sense. And when do you plan to sort of give an update on the final determination of when you take these 2 drugs into Phase III or one versus the other?

Yes. So before the end of the year.

Okay. Got it.

The exact vehicle, we haven't exactly locked down, but before the end.

No, makes sense. And maybe just in the last few minutes now, we can go through a couple of survey questions. We've been asking all our biotech companies sort of in these key themes. So the first one is just innovation coming out of China, your views on that? And has it sort of changed your sort of views on your programs in terms of like competitive positioning or anything like that?

So for Rhythm, not specifically. I think every company, particularly as you create value, there may be other companies that come in, and there's some other companies that have early programs in our space. But whether they come from China or elsewhere, that doesn't so much change ours. The rare disease dynamic may be a little different than some of these more common targets where you can have 5 plus or minus companies working on exactly the same target. So I'm not sure -- like I said, we don't see China as the same threat that another program might in that sense.

Makes sense. The second question is just the AI question. How are you using it? How might you use it in the future? And what kind of impact is it having now and in the future?

Yes. I mean I think we're all watching this on a daily basis. And -- so the way we look at this is that AI is increasingly being embedded in many of the tools, commoditized in that sense. We don't need to be cutting edge. We just want to be using things that make sense to make our business more efficient for sure. On the clinical development side, where there's some really interesting advances back to being more efficient and accelerating, I think we are learning.

Again, not looking necessarily to be on the cutting edge, but don't want to be left behind, very cognizant of some of the sensitivities around how you manage your data, where you put your data and the like. And what's happened in the past few weeks just about the increasing concern about AI and the like, just says, yes, you go into all of this with your eyes wide open. The third part we don't plan, which is using AI to discover new drugs, like where there's companies that are set up and built around that as a business model, that's not us. So we'll watch that with interest.

Yes. Makes sense. And then just maybe last question here. I guess, which policy variable, whether it's FDA, Medicare negotiation, MFN tariffs or global pricing matters most to you guys?

I think for us, the short answer on MFN is, A, we're not one of the companies that's negotiated a deal. Two, we sell in 26 countries outside the U.S. So we don't have an active decision to make, are we going to launch or not launch or launch. I think the area that we are certainly most interested in is how the FDA evolves here. Again, we've got new leadership in place coming. We're like everybody else following that closely. There's just so much opportunity there if it's done well. And of course, an FDA that doesn't function is really a problem for this industry.

Okay. Great. Looks like we're out of time or just about. So why don't we end it there? David, thanks so much for your time today.

Thank you, Mike.

Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Dave Connolly, Investor Relations at Rhythm Pharmaceuticals. Please go ahead.

Thank you, Didi. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com.

This morning, we issued our press release that provides our Q2 2026 financial results and a business update, and that press release is available on our website. We also released data for RM-718's Phase II trial in acquired hypothalamic obesity.

Our agenda today is listed on Slide 2. On the call are David Meeker, our Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International is on the line joining us from Europe.

On Slide 3, I'll remind you this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC.

In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent dates. We specifically disclaim any obligation to update such statements.

With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Good morning, and thank you for joining us. We have a lot to share today, headlined by a strong start to the U.S. launch of IMCIVREE for acquired hypothalamic obesity, reinforcing our conviction that HO represents a meaningful long-term opportunity for Rhythm.

Progress during the quarter wasn't limited to our commercial business. In June, we presented positive 6-month data in Prader-Willi at ENDO showing setmelanotide achieved clinically meaningful BMI and BMI-Z score reductions, reductions in fat mass and preservation of lean mass and improvements in hyperphagia and anxiety measures.

These data confirm the mechanistic rationale that MC4R agonism plays a key role in the pathology of PWS and demonstrated the positive impact IMCIVREE can have in this difficult-to-treat patient population. We look forward to updating you on the path forward for PWS in the next few months.

Which brings us to our pipeline. We believe our next-generation MC4R agonists have the potential to bring meaningful new treatment options to patients living with rare neuroendocrine diseases. And today, we announced encouraging results to demonstrate RM-718, our weekly MC4R agonist has the potential to deliver clinically meaningful BMI reductions in patients with acquired hypothalamic obesity with efficacy comparable to what we've demonstrated with setmelanotide and bivamelagon and importantly, a favorable tolerability profile with no reports of generalized hyperpigmentation.

But first, let me comment on the IMCIVREE launch in HO. This is a unique severe rare disease marked by accelerated and sustained weight gain caused by a brain tumor and/or its treatment or other brain injury to the hypothalamus that impairs the MC4R pathway.

Acquired HO is clearly distinct from general obesity and remains underdiagnosed and underrecognized. With an estimated 10,000 patients in the U.S., a similar number in Europe and between 5,000 and 8,000 patients in Japan, this represents a significant global opportunity.

In July, results from the Phase III HO TRANSCEND trial were published in the New England Journal of Medicine by lead author, Dr. Jennifer Miller; and senior author, Dr. Christian Roth, 2 of the world's leading experts in HO.

In addition, as shown on Slide 6, the New England Journal of Medicine published an accompanying editorial with its science behind the study feature authored by Professor Sadaf Farooqi, one of the world's leading experts in the MC4R pathway diseases. Articles like this in the New England Journal of Medicine 10 years after the POMC deficiency New England Journal of Medicine article that put Rhythm on the map, raised visibility of a historically underrecognized disease among clinicians, researchers and payers and further establishes setmelanotide as a clinically meaningful advancement for patients.

The awareness that there is an effective therapy for a rare disease increases the urgency on all parts of the health care system. Getting to a diagnosis matters when there's a precision medicine available.

The New England Journal of Medicine article follows on the heels of the FDA approval on March 19 of this year. Throughout 2025 and 2026, our teams have been in the field focused on disease awareness and patient identification, engaging endocrinologists to deepen understanding of acquired HO and the connection between hypothalamic injury and the disruption of the MC4R pathway.

Our HO launch builds on this engagement and a successful commercial effort in BBS, an opportunity that continues to grow. Rhythm now has a mature rare disease commercial platform built on 4 years of commercial success and established relationships across physicians, payers and patient communities.

We're off to a promising start with this next phase of growth with strong demand from patients and families, a broad and growing prescriber base and a positive reception from payers, we are encouraged with the first 14 weeks of the U.S. launch.

Since approval on March 19, we have received more than 400 start forms from approximately 300 prescribers. Jennifer will provide additional color on the U.S. launch. Yann will detail the next steps toward an anticipated approval and launch in Japan this year and country-level launches in Europe next year.

We are mindful that it is early days. However, the first launch quarter performance reinforces our conviction that HO represents a long-term durable and sustainable opportunity for Rhythm.

Now I want to briefly review preliminary data from the open-label Phase II Part C trial of RM-718, our weekly MC4R agonist in acquired HO. RM-718 is 1 of the 2 next-generation MC4R agonists that have the potential to improve on the hyperpigmentation and convenience of setmelanotide.

The weight loss efficacy for each of these 3 assets has been remarkably consistent. We believe these preliminary results are encouraging and meaningfully derisk 718 as a development candidate going forward.

Beginning on Slide 8, we show the patient disposition and patient demographics. Eleven patients were enrolled and 8 patients remain on active therapy. Seven patients have reached 16 weeks, and that is the data we are sharing here. Two patients discontinued because of AEs during the first 4 weeks of treatment. One patient stopped because of injection site reactions and a second patient discontinued secondary to ongoing nausea, which cannot be controlled even with dose reductions.

A third patient completed the 16-week trial period and later withdrew long-term extension for personal reasons. Two additional patients have yet to reach the 16-week time point. Patients in the trial were 12 years of age or older with a mean BMI of 40.1. Per protocol, doses were escalated to 40 mgs as tolerated. The mean BMI change of 11.6% for the 7 patients who have reached week 16 is shown on Slide 9.

As you can see on Slide 10, these results compare favorably with setmelanotide and bivamelagon results at a similar time point in patients with acquired HO. In a pooled analysis of patients with HO in the Phase II and Phase III setmelanotide trials, the week 16 BMI reduction was 10.1%.

For bivamelagon at 600-milligram dose, mean BMI reduction for 7 patients at week 14 was 10.1% and Slide 11 shows a continued -- 10.1%, sorry. And Slide 11 shows a continued deepening of the effect in 4 patients with 28 weeks or more of treatment.

As shown on Slide 12, RM-718 was generally well tolerated with the most common adverse events being injection site reactions and nausea. Importantly, we have observed no generalized hyperpigmentation with either bivamelagon or 718, which you would expect to see with MC1R agonism.

Overall, these results validate our conviction that 718 has the potential to be a viable treatment option for rare MC4R pathway diseases. Both 718 and bivamelagon have been shown to affect BMI reductions comparable to setmelanotide in patients with acquired HO and both have greater specificity for the MC4 receptor without generalized hyperpigmentation.

Importantly, the patent protection for both 718 and biva goes past 2040. We believe today's data further derisks our ability to build a durable franchise of MC4R agonists.

Enrollment of PWS patients in Part D of this open-label trial will complete by the end of the year with a goal of enrolling 10 to 15 patients. As I mentioned, we are moving closer to a decision on a potential path forward for PWS with setmelanotide, bivamelagon or 718, all viable options.

As a reminder, we are aiming to initiate the Phase III trial of bivamelagon in RH over the end of this year, which is listed among the upcoming milestones on Slide 13. The first patients enrolled will be patients 12 and older as we finalize CMC work for the oral dissolvable tablets in the first quarter of next year.

With that, I'll turn the call over to Jennifer and then Yann to provide more color on our strong commercial progress during the quarter.

Thank you, David. I'll begin on Slide 15. I'm pleased to provide an update on the U.S. launch of IMCIVREE for acquired hypothalamic obesity. This was the first full quarter of launch plus 1 additional week following FDA approval on March 19.

While we remain very early in the launch, we have seen strong demand, broad and expanding prescriber engagement and activation and positive early payer experience supporting access. Overall, the early indicators are encouraging and reinforce our conviction in the long-term opportunity for acquired hypothalamic obesity.

On Slide 16, I'll start with the patient level metrics. In the 14 weeks between FDA approval on March 19 and June 30, we received more than 400 start forms for acquired hypothalamic obesity. This includes 66 start forms for converted trial patients accounting for almost all the U.S. trial patients.

The age distribution for these patients is evenly split between patients 21 and younger and those 22 and older with 21% of prescriptions for patients ages 4 to 11, 18% for patients 12 to 17 and 12% for patients 18 to 21.

Care for acquired HO patients tends to be more coordinated in the pediatric setting, and this contributes towards higher rates of recognition and diagnosis. As a result, pediatric patients make up a larger share of our early IMCIVREE patients. We expect this to evolve over time and to have a higher contribution for adults in the future.

Among these early prescriptions, we see a broad mix of both incident and prevalent patients. Based off an internal analysis of a portion of prescriptions received, approximately 15% of patients suffer the injury resulting in their acquired HO within the last 2 years.

The majority of start forms are from prevalent patients living with HO for more than 2 years, with approximately 50% of patients having their injury occur more than 10 years ago. These early dynamics are encouraging and demonstrate meaningful demand across a broad range of patients.

On Slide 17, our provider level metrics for the acquired HO launch. We are seeing broad activation and engagement of health care providers. Between approval and the end of the second quarter, we have approximately 300 unique prescribers for acquired HO.

Approximately 20% of these physicians have prescribed IMCIVREE for more than 1 patient with acquired HO. In line with our view that this is primarily a specialty opportunity, the majority of prescribers are endocrinologists with adult and pediatric endocrinologists accounting for 43% and 37% of prescribers, respectively.

We are encouraged by the early activation levels of our priority accounts and top prescriber targets. We've made solid progress in penetrating our priority accounts with 65% activated by the end of June and almost 25% of prescriptions coming from these accounts.

On to Slide 18 and our progress with payers. The early payer experience has been positive and supportive of access, a reflection that payers recognize the severity of acquired HO and similar to BBS, understand the distinction from general obesity and the benefit of IMCIVREE.

While we still work to gain access for prescriptions received since approval, we are encouraged by the number of initial approvals that came in at the prior authorization stage during this first quarter of launch, many through payers without a specific acquired HO policy for IMCIVREE yet in place.

By the end of Q2, we secured positive policies for HO covering approximately 25% of Medicaid covered lives and 35% of commercial covered lives. In line with our expectations, we expect additional policies to become established within the 3 to 9 months post approval or by the end of this year.

The strength and consistency across these early launch metrics give us confidence this opportunity will continue to build over time, reinforcing our long-term conviction in the acquired HO opportunity and our belief that IMCIVREE can become the standard of care for these patients.

Moving to Slide 19. While we are encouraged by their progress in the HO launch, we also feel there remains opportunity for growth in BBS. We recently supported the publication of a new evidence-based consensus-driven diagnostic algorithm designed to help physicians identify and diagnose patients with BBS earlier in their disease journey.

In a population that has historically been very difficult to diagnose, we believe this is an important step towards enabling more BBS patients to get to a timely diagnosis and appropriate care.

Lastly, on Slide 20, we are also evolving our North America commercial organization to ensure acquired HO and BBS each receive dedicated focus to maximize our ability to help patients. With the acquired HO launch now underway, we have made a transition to focus our 42 territory managers exclusively on HO.

We modified our field team structure, so we now have a new territory manager group dedicated to BBS with plans to grow this to 10 TMs. This reflects our long-term commitment to patients living with BBS. These changes allow us to pursue both opportunities with dedicated teams, ensuring focused execution in acquired HO while continuing to build upon the strong foundation we have established in BBS.

Now let me hand it over to Yann.

Thank you, Jennifer. Our strong international commercial performance continued during the second quarter as the number of patients on IMCIVREE continues to grow, either through national reimbursements or named patient sales. And we have also made significant progress in Europe and Japan towards our goal of bringing IMCIVREE to patients with acquired hypothalamic obesity.

Slide 22. We are entering the final stages in the regulatory process towards approval and launch in Japan. We anticipate IMCIVREE approval for acquired HO and launch in Japan by year-end 2026.

Following the PMDA review, we anticipate marketing authorization from the Japan Ministry of Health, Labor and Welfare or MHLW. Once we receive marketing authorization, we would begin pricing discussion with Japan National Health Insurance Authority, and this process can take 2 to 3 months.

With this time line, we would anticipate commercial launch in Japan in the fourth quarter.

With approximately 5,000 to 8,000 patients living with acquired hypothalamic obesity in Japan, which is a higher per capita prevalence than the United States or Europe, Japan represents a meaningful opportunity. Our team in Japan is in place, actively engaging with the community of experts, patients and caregivers.

Similar to the approach Jennifer's team took in the U.S., we are engaging with the treatment community to identify potential patients ahead of launch. We will share more details about Japan on our next quarterly conference call.

Next slide, turning to commercialization of IMCIVREE for acquired HO in Europe. In May, the European Commission granted marketing authorization for IMCIVREE for the treatment of obesity and control of hunger in patients 4 years of age and older with acquired hypothalamic obesity due to hypothalamic injury or impairment.

We have a very experienced team in place working through country-level processes to secure market access and reimbursement, which we have successfully done in the past years for [ OCVPAR ], BBS and the pediatric label expansion.

In Germany, we anticipate launching in the first half of 2027. We are encouraged by the initial engagement in the process to secure an exemption from the German Federal Committee or G-BA Annex II exclusion list. The G-BA Annex II exclusion list prohibits reimbursement for lifestyle drugs such as drugs indicated for smoking cessation and general obesity.

We are confident in our ability to secure an exemption, enabling a reimbursement for acquired HO as we have done it before for all our previous indications.

We are making progress towards market access elsewhere in Europe. We have submitted the dossiers to begin pricing discussions in France, in the U.K., in Italy, in Spain and in the Netherlands with launches in each country anticipated in 2027 following Germany.

With an estimated prevalence of approximately 10,000 patients in Europe, it is a meaningful opportunity. And our early access programs in France and in Italy have enabled many of the leading physicians to gain experience with setmelanotide and see the benefit in patients living with HO.

In May, we presented approximately a dozen posters at the European Congress of Endocrinology and at the European Congress on Obesity. Next month, at the 2026 European Society for Pediatric Endocrinology Meeting, we have had 3 abstracts accepted for oral presentations and 3 accepted for poster presentations.

And there are 2 additional non-Rhythm-sponsored presentations that will highlight findings in patients living with BBS from Germany and the U.K. We have approximately 75 abstracts, both originals and encores submitted and presented and are slated for presentation this year in European and Japanese medical congresses, giving us an unparalleled level of engagement with the international experts and health care providers.

With that, I will turn it over to Hunter.

Thank you, Yann. I will begin on Slide 25. We exited the second quarter in a solid financial position and are encouraged by our strong initial launch execution in acquired HO in the U.S.

At the same time, we continue to make meaningful progress with BBS in the U.S. and internationally, underscoring the strength of our business and the opportunity we see for continued growth. We had a strong second quarter of 2026.

Global net product sales of IMCIVREE totaled $71.3 million, which represents 19% sequential growth over Q1. During the second quarter, $51 million or 72% of product revenue was generated in the United States.

Globally, we saw continued growth in patients on reimbursed therapy with an increase of greater than 20% over the prior quarter, primarily driven by the acquired HO launch and continued growth in BBS in the U.S. as well as ex-U.S. growth in BBS and our HO early access programs.

On Slide 26, I'll walk you through the quarter-over-quarter revenue change with revenue increasing from $60.1 million in Q1 '26 to $71.3 million in Q2. We saw an $11.3 million in revenue growth attributable to increased product demand in the U.S.

A bit more than half of this increase came from the strong start in the U.S. launch for acquired HO, where a percentage of our early scripts converted to starts at the prior auth stage, as Jennifer had mentioned previously.

BBS had a strong quarter as well with higher demand growth and strong compliance compared to what we have experienced in other recent quarters. GTN improved somewhat in the quarter to 86%, providing an additional support to Q2 revenue.

With the anticipated increase in demand for IMCIVREE following FDA approval for acquired HO, product shipments to IMCIVREE specialty -- I'm sorry, to Rhythm Specialty Pharmacy exceeded patient dispenses by approximately 2.9 million, providing a modest benefit to revenue in the quarter. Inventory on [ Hampton Specialty Pharmacy ] increased slightly to 20 days as of June 30.

International revenue decreased from $23.2 million to $20.3 million in Q2. Even though we saw a steady increase in the number of patients on reimbursed therapy, the decrease in revenue was mainly attributable to a $3.8 million retrospective charge associated with the French contribution M mechanism, which levies a charge on pharmaceutical companies when reimbursed drug sales industry-wide exceeds specified statutory thresholds.

$2.3 million of this $3.8 million charge was related to 2025 revenue. Excluding this impact, our international business remains strong as evidenced by the continued growth in patients on therapy during the quarter.

On Slide 27 is a financial snapshot of the second quarter of '26 results compared to the second quarter of 2025. Cost of goods sold this quarter was 12.5% of product revenue, within our normal range, and primarily driven by cost of materials and royalty payments on setmelanotide in conjunction -- I'm sorry, in connection with higher net product revenue during the quarter.

As a percentage of product revenue, COGS varies quarter-to-quarter based on changes in inventory balances and manufacturing activity, and this quarter increased slightly because of that.

R&D expenses were $43.4 million for the second quarter of 2026 compared to $42.3 million in the same period last year. Sequentially, R&D expenses increased $1.7 million compared to the first quarter of 2026.

This sequential quarter-over-quarter increase was due to increased spending on bivamelagon clinical trials and preclinical work associated with our congenital hyperinsulinism program. These were partially offset by lower headcount-related costs.

The year-over-year increase is primarily attributable to an increase in headcount-related costs, increased costs related to genetic testing and preclinical work and the increase partially offset by reduced costs associated with RM-718 development and clinical supply.

SG&A expenses were $67.4 million for the second quarter of 2026 compared to $45.9 million in the prior period. Sequentially, SG&A expenses increased by $3.8 million or approximately 6% compared to the first quarter of 2026. The increase was primarily driven by higher personnel-related costs to support our expanding commercial operations.

Weighted average common shares outstanding were 68.6 million for Q2 2026. GAAP EPS for the second quarter of 2026 was a net loss per basic and diluted share of $0.73, including $0.02 per share from accrued dividends on convertible preferred stock of $1.1 million.

Cash used in operations was approximately $9 million during the quarter. We ended the second quarter with approximately $331 million in cash, cash equivalents and short-term investments, which we continue to expect will be sufficient to fund planned operations for at least 24 months.

Lastly for me, on Slide 28, there is further detail on our operating expenses for the second quarter and our full year operating expense guidance. For the second quarter, operating expenses of approximately $110.9 million included $26.1 million of stock-based compensation.

Looking ahead to the second half of this year, we are updating our annual OpEx guidance. We now anticipate approximately $363 million to $397 million in non-GAAP operating expenses for 2026 comprised of non-GAAP R&D expenses of $175 million to $195 million and non-GAAP SG&A expenses of $188 million to $202 million.

SG&A guidance remains unchanged, while the midpoint of our R&D expense guidance has been reduced by $20 million as the timing of certain CMC activities related to RM-718 and bivamelagon has shifted from late 2026 to early 2027. We do not expect these changes to affect overall time lines for ongoing or planned clinical development work with either asset.

And with that, I'll turn the call back over to David.

Thank you, Hunter, and we'll open it up now for Q&A.

[Operator Instructions] And our first question comes from Tazeen Ahmad of Bank of America.

Congrats on a good quarter. It's early, but can I ask what type of expectations you have around discontinuation rates? Presumably, you're not seeing any, but if you are, can you just give us any color on why those might be happening on a go-forward basis? What do you think over time, discontinuation rate from setmelanotide could be for the HO indication?

Thanks, Tazeen. So it is really early in the launch to articulate color really in terms of the discount rate expected. I would say one thing, though, in the past, we have outlined that the global discount rate for the BBS patients was around 30%.

And holistically, there are differences just in terms of what our data has shown in the BBS patient population versus the HO population in terms of the strength of efficacy that may make that discount rate lower in this particular population.

There is also different factors of the HO population that we're experiencing in terms of the ease of injections and such that may also overall make the ongoing discount rate for this patient population a bit less than the BBS patient population.

And that was also seen in the clinical studies, like when you compare the BBS clinical studies versus the HO clinical study and compare the discount rates there. So it's one thing that we're definitely going to be monitoring. There's a huge focus on as an internal organization, and we'll continue to monitor that moving forward.

And our next question comes from Phil Nadeau of TD Cowen.

Congratulations on the strong progress. A question on the HO launch. It seems to be going really well. Based on our math, if you back out the clinical trial patients, you're doing about 110 patient start forms per month.

We're curious to get your thoughts on whether you think that's sustainable for the next couple of quarters. Is there any sign of an early launch bolus? Or do you expect a more even trajectory to patient starts?

So overall, in terms of the start forms experienced in the first quarter plus the 1 week since approval, we're really happy in terms of what we're seeing with the Rxs coming in. As you mentioned, there's onetime event in terms of the clinical trial patients. And if you take that out, I would say that in any launch, there may be some patients who were really anxiously waiting in terms of getting that on to therapy upon approval.

With that said, I think all of the launch metrics that we have been really monitor -- strengthen our belief holistically in terms of this long-term opportunity for sustained ongoing growth in the HO opportunity. As I outlined, the Rxs are really coming from a good breadth of prescribers versus being localized in terms of just a few writing the vast majority of these Rxs.

We're also seeing a lot of different things around the patients and the background from an age perspective, disease severity, incident versus prevalent patients, which really point to the breadth in terms of patients within the HO indication that are really interested in getting on to this therapy.

And even with the Rxs that we have received, there's still physicians who have additional patients under their care that they have not yet Rx. So overall, a lot of opportunity still remains.

I would say that with that said, there are some considerations in terms of the speed of the uptake, which I've said in the past as well. These are really very, very busy endo offices. They have long wait times for their patients.

That can also impact our ability to get in, in terms of having the ongoing discussion. But our teams are very persistent from that perspective, but that can take some time just in terms of being able to continue the dialogue with these HCPs.

The other piece is that all these patients are not yet diagnosed. So it takes some time after we're in there to educate the physician for that patient to come in and be educated and further evaluated by the HCP before they can have that IMCIVREE discussion.

And it's a new drug on the market. So some of the physicians, even with more than one patient, they want to experience IMCIVREE before prescribing to all of their patients at once.

So once again, there's so much opportunity that remains. We feel very confident in terms of the ongoing trajectory, but there are some considerations as well.

And Phil, as you know, we don't guide for the future here, but everything that Jennifer just outlined, I think, speaks strongly to the fact that although there may have been a little bit of pent-up urgency, there was no bolus in this thing. We feel really good about all these metrics and how they speak to the future, so.

And our next question comes from Derek Archila of Wells Fargo.

Congrats on the updates and the progress here. I know you highlighted greater than 400 start forms against, I think, a 2,000 number for identified HO patients. So implying about 20% penetration into that pool in 14 weeks. So I guess, should we be thinking that number of identified patients is materially larger now?

Yes. Thanks, Derek. We provided that number back in September, and we have not updated that number. We have been ongoing in terms of since that time, educating additional physicians within our target list, and we still have a ways to go in terms of penetrating the full list. So that number in terms of both that suspected or diagnosed AHO patient population is continuing to grow.

And our next question comes from Paul Matteis of Stifel.

Congrats on the quarter. I was wondering if you could comment on what you're seeing as it relates to either concomitant use with GLP-1s or whether there's physicians or many physicians are kind of looking to try a GLP-1 before IMCIVREE.

And then I know it's really early on the payer side, but are you seeing any payers put in a GLP-1 step edit? For accessing HO?

Sure. Let me start with the last one. We are pleased just in terms of the progress that are being made around the HO-specific policies. Of the ones that we have in place, there is no step edit requirement in terms of needing to try a GLP before IMCIVREE which is also something that we're pleased overall with. It's pretty much aligned with our label in terms of background patients.

Relating to GLP use in the AHO patients, of the ones that have been prescribed IMCIVREE, we are experiencing that this patient population was one that was seeking treatment. So about 50% of our IMCIVREE-prescribed AHO patients had prior or current experience on GLP.

But currently, there's about 25% of the patients that are currently still on a GLP. And when I outlined that, it's not known in terms of if it's for diabetes versus for the obesity indication. But about 25% of the patient population is on GLP.

I would say that, that is also in a time where IMCIVREE wasn't available. There wasn't a specific treatment to treat their underlying condition. So as we move forward, it will be available for these patients.

And that means through the metrics that I just outlined, 50% of these patients were never on a GLP, but still interested in getting on to IMCIVREE after understanding that there was a treatment available for their specific conditions, so.

Yes. And Paul, just to add a little bit. As you remember from the clinical trial, we had also about 25% of the patients, 30 out of the 120 in the original cohort who either had a prior experience or were actively on GLPs in the trial.

And they came in, met all the criteria for entry and then had a virtually identical response to IMCIVREE as the others. So I think, as Jennifer said, it's really, I think, quite instructive, the extent to which a high percent of these patients have been on GLPs or continue on GLPs, she said, speaking to the unmet need here, but they're not -- it's not addressing the unmet need here.

They're coming over to IMCIVREE. So I think that overall experience has been really reinforcing that a precision medicine here is the right way to go for this patient population.

And our next question comes from Dennis Ding of Jefferies.

I have a broader question for David. So there's been some investor questions around biotech M&A that came out of the AstraZeneca and Bristol merger speculation. So I'm curious, given Rhythm is obviously a leader in the rare disease space and David, you're on the board of several biotech companies.

I'm curious, how would you characterize pharma M&A appetite recently? Obviously, without going to specific discussions, but, like, do you have any general comments on what pharma is excited about, but also at the same time, if they think premiums may be getting harder to justify given the broader move in the [ XCI ]?

And then as a quick follow-up, the territory manager split 42 for HO and 10 for BBS, did that get implemented already? Or when will that happen? And do you actually expect an acceleration in HO adds in the second half?

Yes. So thanks, Den. I think let me take that briefly on the biotech M&A, and this is completely unrelated to Rhythm. As you've heard here, we feel really good about where we are and Rhythm's ability to grow the company and platform and the product, expanding pipeline here.

So we're watching like everybody else, I am. I think that was a bit of a surprise coming over the weekend. And we'll see how if anything happens there and how it might shake up.

But I think the larger landscape here, pharma with many, many acquisitions over the first half of the year just speaks to the way our health care ecosystem works. We've got a strong and robust early biotech community that's creating value, and we have a pharmaceutical community and some midsized caps who are looking everywhere to expand their pipeline.

So I expect it to continue. I don't see this having a big dampening effect if it were to go forward, but it's clearly a noteworthy event here. So with that, I'll turn it over to [indiscernible].

Relating to the question around the TM split. So this was already implemented. So we already have split the teams into 2. I would say that, like, one of the guiding factors around this decision-making point was we really feel strongly that there's an opportunity in both BBS and HO.

I would say the vast majority of the time spent of the 42 territory managers when it was combined under their care was already focused on HO. So we just wanted to make sure that we had the right amount of focus also in terms of unlocking the BBS opportunity and being able to get those patients to a diagnosis and treatment as well, so.

And our next question comes from Mike Ulz of Morgan Stanley.

Congratulations on the strong quarter, 718 data as well. Maybe just a question on 718 now that you have your early HO data there, and it seems to be trending in line with your other assets. Maybe you can talk about early thoughts on read-through to the PWS data and remind us when that data is coming.

Yes. Thanks, Mike. So yes, we're really pleased with the 718 data. I think to remind everybody, all of you have asked me multiple times between these different assets, which one do we think was most likely to be successful.

This was before we had the biva data, and was handicapped this as 718 probably had the higher chance of being successful. And we had the very good data on bivamelagon. So that was great.

But I think this data validates the original hypothesis, which is 718 was built off of setmelanotide and lots of similarities there with a major difference being one, the weekly formulation, but second and importantly, the greater specificity for MC4R. So we really don't have the hyperpigmentation.

And I'll just -- when you run these clinical trials and you ask them to report, there's been this -- was the case with bivamelagon. There was a few patients in both of these trials where localized "increased" pigmentation under intense scrutiny. We tried to get closer on the bivamelagon side.

I don't have as quite as much detail on the 718. But to me, I don't hear anything in these reports that suggest to be honest, that this is necessarily drug-related or if it is, it just highlights the fact that in maybe around a nevus or something in melanocytic nevus you might get a little more darkening. But again, it's all been data is super supportive of the fact that these 2 drugs don't have anywhere near the same level of pigmentation change.

Readthrough to PWS, yes, it's very early. Again, as we said, we'll update -- sorry, we'll complete enrollment by the end of the year. We'll look for an opportunity to update. We've been asked before, will we wait for the results of that -- those [indiscernible] data to make a final decision on which asset will go forward?

The answer is no, meaning that, that decision-making is being driven much more around, to be honest, some of the CMC issues and timing of availability of these different formulations and drug supply, right?

If we do everything with one asset, that will put a little more pressure on its supply than if we spread it around. So -- and there's a number of things we'll take into consideration over the next few months, which will get us in a position to make that decision. But we're not waiting in terms of our planning and protocols are being drafted, and we're working to be in a position once we have that information to make that decision, we'll be ready to go.

And our next question comes from Seamus Fernandez of Guggenheim Securities.

So just 2 on my end. Hoping you guys could provide us a little bit more color on developments in Japan and how we're likely to see a rollout of AHO emerge in Japan and the pace at which that could play through just a very different market and would be interesting to get a better understanding of how you see that market evolving as it comes forward.

And then just a second question, David, I think there's still a little bit of confusion on this daily versus weekly discussion as it relates to PWS. Just trying to get a better understanding of where you're likely to come out on that?

And if there are critical decisions that need to be made along those lines? Or do you feel like there's an opportunity that's robust enough in PWS to actually warrant advancing both bivamelagon and 718 to offer choice to that patient population?

Yes. Let me just quickly on Japan, and then I'll let Yann make a comment. So we -- as Yann indicated, we'll update -- we'll do a deeper dive on the Japan opportunity on our next earnings call. He laid out the time line in terms of what the process we're going through in terms of regulatory review and then we get into pricing negotiations, all of which we expect to put us in a position to launch by the end of the year.

But Yann, I don't know if there's any additional color you want to add to your comments?

No. So maybe 2, 3 things. Thank you for the question. So first, as you heard, we plan to launch before the end of the year. Two, the prevalence is meaningful. Three, in terms of efficiency in Japan, we can leverage claims data or hospital data like in the U.S.

We have a strong team in place for many months and the field medical affair teams in place for now 6 months. And we also have, which is very important in Japan, the support of the scientific committee, the support of leading experts.

And as you may remember, we had a few sites for the HO Phase III in Japan, which did help a lot, both in terms of drug understanding, adoption, and also interaction with the regulators. And maybe last thing with the regulators and the payers, I've been myself in Japan a few weeks ago.

I've met with some senior executive of the MHLW and what was really clear is that they value a lot the speed with which Rhythm has tackled the problem, which is an important one for them and the drug lag, drug loss issue, which is, as you know, a meaningful one for Japan. So we are very optimistic in terms of what we can achieve there.

Great. And then with regard to the daily, weekly question, I realize this all got triggered, I think, by Dr. Miller's comments on our June conference call, where she was strongly in favor of a daily for PWS patients who like their routine.

So obviously, we'll take that into consideration as we make final decisions. I'm not sure in the Prader-Willi community given how complicated this disease is that we'll get one single opinion, and we'll obviously get some opinions from some other experts as well. So yes, that will be considered. It's not the overwhelming factor that will cause us to pick one over the other.

And then the last part of your question is, could we envision developing both in Prader-Willi? Absolutely. I think for both HO and Prader-Willi, very significant opportunities, maybe even a comparable magnitude depending on how you cut them. Yes, we want patients to have that choice. So you can very much imagine that we would get it done, but maybe not in parallel. So I leave it there.

And our next question comes from Jon Wolleben of Citizens.

A couple for me. I might have missed this, Jen, but I think last update you said time to paid drug was about 60 to 90 days. And I was wondering if there's an update there. And then can you remind us how many priority accounts you guys have? And with 25% of prescriptions coming from those as of now, do you expect that to accelerate in the near term? Or will that take a little bit more time?

Sorry, Jen. So the first question was just around the time to approval, 60 to 90 days. What's your sense about where it is now?

Yes, we are expecting the feedback from the...

Sorry, Yann, actually, apologies. That was for Jennifer.

Okay. Sorry, 60, 90 days. I thought it was surprising...

No, no, it's good. I was looking to be updated on the Japan schedule here, but no, that was good.

So from the time to approval standpoint, I would say that holistically, on average, we expect that time to approval to continue to get better. I would say that overall, when we take a look at BBS, where the payers had very little understanding of diseases impacting the MC4 pathway, a little understanding in terms of the differentiation from general obesity, there was a lot of education that we've had to do on the payer side to really educate them on this piece and on IMCIVREE.

And that helped a lot even pre-approval as we move forward with the pre-approval discussions with the payers. And that is leading to approvals that are quicker than what we experienced, at least in those early approvals to date than what we experienced with BBS.

With that said, we have a lot more pending that we're still working towards. And we're also working to make sure that we get HO-specific policies in place with the payers as we move forward into the year as well. So that was the question in terms of time approval.

The priority accounts, so these are the accounts that, for the most part, are where patients with brain tumors go for holistic management of their tumors pre-surgery and management as well as post-surgery and management in terms of any type of hypothalamic dysfunction.

So there's around 43 across the nation that our teams have identified and working towards. And it's where likely the incident, but also the near-term, like, prevalent type of patient population remains for a couple of years after the surgery or procedure to maintain appropriate care. From there, they go on to other sites outside of these centers for treatment.

So overall, these are very centralized just in terms of patient populations. And the 25% is aligned with what we have seen in claims as to identified patients that may be HO because within these accounts, we have identified or estimated about 33% of the HO patients are within these centers. So we are going after both physicians within these centers as well as outside, and we're going to continue to make sure that the patients are diagnosed and put on to therapy moving forward.

[Operator Instructions] Our next question comes from Whitney Ijem of Canaccord.

Congrats on the quarter. Sorry if I missed this, but you talked about 80% of prescribers being endocrinologists. What are the other 20%? And are those doctors that you're proactively targeting? Or are they just kind of coming to you because they have the patients?

So the backgrounds of the other 20% are primarily primary care as well as pediatricians. In terms of our target list, we provide the teams also physicians who may have a patient that have backgrounds in terms of potential obesity management holistically, which may include like primary care physicians that are ABOM-certified, for example.

So the background in terms of the physicians are endocrinologists primarily, but also supplemented with these physicians that have interest in obesity medicine overall.

And our next question comes from Samantha Semenkow of Citi.

I just have a follow-up on one that was just asked about the about 75 prescripts that are outside of your priority targets. Can you speak to the type of physicians that are writing scripts and how we should think about the growth among that segment going forward?

So outside the priority accounts, the backgrounds are very similar just in terms of the focus in terms of endocrinologists as well as physicians with backgrounds in terms of obesity medicine that have -- we've been tagged as potentially having HO patients for follow-up for our teams.

We go where the patients lead us to in terms of the targets that we have. So there's patients within the priority accounts, there's patients outside the priority accounts. There's the access issue.

So when our teams have a list and they can have an end in terms of being able to engage with the physician, that is where they will go in terms of having the discussion. But we've outlined just in terms of the priority accounts being a key focus because it would enable patients to not leave without an appropriate diagnosis of HO and would prevent sort of the broader bleed into the community centers moving forward.

So we have an ability to really change the paradigm just in terms of how these patient populations are treated, but we go where we can have a discussion with physicians who have the patient.

And if you think about how our health care system works for any complex medical problem, you're perhaps more likely to be seen at an academic center of excellence. So you're there, you get your problem managed. And as Jennifer said, these are the chronic management of these patients.

They have a lifelong need for pituitary hormone replacement and they will have a lifelong need for management of their hypothalamic obesity, then they go back to a local endocrinologist, obviously, closer to home, somebody they may know better. So [indiscernible], we'll try to reach all of those patients. But yes, there's a natural flow here.

And our next question comes from Lisa Walter of RBC Capital Markets.

Congrats on the quarter. Maybe just another one on RM-718. Given the early but positive results shared today, just curious what are the next steps? Could you perhaps run a basket study across HO and Bardet-Biedl, maybe some of the other indications to accelerate the path to approval and perhaps gain a label eventually similar to IMCIVREE? Any color here would be helpful.

Yes. Thanks, Lisa. Yes, so one, the development path will be at this point, indication by indication. We've had feedback earlier on, and we'll perhaps go back at some point. I don't think we're there yet that the regulators, FDA specifically, was not ready to entertain something like an MC4R pathway label, which might argue you have the ability to treat anybody where you can document there's a pathway label. So given that, we'll be going indication by indication, one.

Two, our plan will be for all of our currently approved indications, so the POMC leptin receptor biallelic, the BBS population, we will get 1 of our 2 next-generation molecules into those populations and get that and get the indication. We may not develop both molecules in all of those indications. They're smaller. But as I said in my earlier response, for the large indications, HO and Prader-Willi specifically, we very much may entertain developing both of the molecules.

Our next question comes from Priyanka Grover of JPMorgan.

Congrats on the quarter. So we just have a question about Europe. Aside from the onetime revenue recognition charge in France, were there any other factors to think about for Europe?

In the past quarters, Europe has been a strong growth driver for Rhythm. So curious how you're thinking about Europe going forward, especially with acquired HO launch in 2027.

Yann?

Yes. Thank you for the question. So maybe a few words about the HO launch in 2027. First, we are encouraged by what we have seen in France and Italy in terms of diagnosis and willingness to treat.

As you know, we have named patient sales in place for more than 1 year in those 2 countries. So we have observed the conviction, the growing conviction among the treating community. Another very positive aspect is that we will leverage most, if not all, the same centers of excellence and prescribers that we already have for PPL and BBS, but we also have new medical specialties to explore, as Jennifer also mentioned, in the U.S.

So we feel good. We also know very well the payers because we have spoken with them for many years, and this is the same teams across Europe, and they know the drug very well, and they know the drug benefits very well. So with all that and other aspects, we feel good.

And our next question comes from Thomas Smith of Leerink Partners.

Let me add my congrats on the strong quarter and the nice 718 data here. Just on 718, wondering if you could expand a little bit on the comments regarding the dose escalation in the study. How many of these initial HO patients are getting up to the target dose? And then just on the tolerability profile, could you provide a little bit more color on the injection site reactions and how those compare to the IMCIVREE experience?

Sure. So the vast majority got to the 40 milligrams. As I indicated, we had one patient who actually didn't get much above 10 or 20 mgs. They might have reached 20 mgs weekly. But were having nausea.

And we saw this in our earlier development program with setmelanotide, where there was a small percentage of patients who just were extraordinarily sensitive in terms of their GI side effects. And I think that's part of the background of this disease. So -- but aside from that, everybody basically got to the 40 mgs.

The injection site reactions, it's reactions/the way the drug works. This is a weekly formulation, the formulation itself is somewhat viscous and the mechanism essentially you inject and you get a nodule in the subcutaneous tissue under the skin and then the drug disperses from there.

So that's how it's delivered. The nodule is present. And I think in the case of the patient who wasn't thrilled with the injections, part of it was didn't like the nodules per se. And the other thing is we also -- we're delivering this drug without the auto-injector. And so it has to be pushed in by hand.

And the auto-injector, we know for a fact will make a significant difference, I think, in terms of the ease and also probably the patient experience. So -- but that's what -- for the most part, is being referenced when they reported the injection site reactions. It's the formation of this nodule, which is just part of how the drug is delivered.

And our next question comes from Joseph Stringer of Needham & Company.

A question on the early-stage pipeline. You have a CHI program in preclinical development. Can you provide any updates there? And more broadly, any updated thoughts on pipeline expansion beyond the MC4R assets?

Yes. Thanks. So CHI, we've been working on for a while here, as you know, and we look forward to updating you. As I've said before, and I'll say it again, we're actually making good progress there.

We're -- we look forward to an update. We're not prepared to give one today, but we are making good progress. And as Hunter highlighted, we're beginning to increase our spend there. So we're moving deeper into the developmental program. So we'll talk more about that. We're excited about that program. I think we have a unique approach to addressing that disease, but more to come there.

I think in terms of other approaches here, we'll continue to think about the biology around the MC4R pathway signaling through the receptor and the like. Like every company, we entertain other approaches to these diseases, and we're doing some of that.

We're not at a point now where we're in a position to talk about that, but we'll look at that. And then externally, we got this question, would you consider going outside? And I think our answer continues to be, we feel really good about the opportunities in front of us, the pipeline and the product strategy we've been pursuing, and there's many indications, including our whole genetic pillar, if you will, which we will absolutely come back to and work our way through there.

And as we look at some things, biomarkers, for example, we're continuing to try to understand how we can better understand and refine the patient population most likely to respond in terms of that genetic population. So that's going to be our focus.

That said, we'll remain opportunistic. We're obviously in a stronger position in terms of our balance sheet and our position as a company. So we'd be not adverse to doing something that made sense, but we're not specifically looking to do something, so.

And our last question comes from Ram Selvaraju of H.C. Wainwright.

Just with respect to Prader-Willi syndrome, given the extended history so far with at least one approved drug in that condition and greater familiarity overall with that target indication, can you share with us any additional information at this time regarding market segmentation analysis and what you anticipate to be the key patient population within the Prader-Willi syndrome community that you might focus on for your products?

Yes. Thanks. I think -- so one, as we've indicated on our prior calls, our initial developmental indication as other companies in the space have done following the Soleno approval would be for hyperphagia, makes total sense. There's a very clear, I think, template for how that trial can, should be done.

Our mechanism, as we said, we started with a very clear focus on both hunger/hyperphagia and BMI weight change because our drug signaling through this receptor gives you a satiety signal, increases energy expenditure. And we always believe that we've got a weight change, BMI decrease, we would, of course, get -- achieve that end by, in some way, decreasing caloric intake, decreasing the hunger/hyperphagia.

So long story short is we'll continue to pursue that paradigm. I think in terms of market segmentation, no, I think it's way too early. I think this is an extremely complex disease. You all know it as well as we do or maybe better some of you.

It's remarkably heterogeneous, but they share a lot of common features. Currently, approved therapies have some limitations. We know that. I don't think there's likely to be one drug solution to Prader-Willi.

So obviously, we've included patients who are on VYKAT in our current trial that Dr. Miller is running. So combination therapy is another strategy that I'm sure the community looking at and we'll be thinking about as we get -- go through our developmental plans and the like.

But no, I think our goal is to serve the Prader-Willi population writ large, recognizing that the clinical trials might need to be more targeted to run that successful trial.

This concludes our question-and-answer session. I'd like to turn it back to David Meeker for closing remarks.

Great. Well, thanks, everybody, for tuning in August. As you've heard, incredibly excited, I'll say, about our start here. I mean, we've been working on HO for a number of years and now to be at a point where we're actually getting the drug to patients, and we're seeing a community that's embracing it and responding well to their initial experience is, like I said, it's very exciting for us.

Lots more to come. And hopefully, we've outlined some of that. We'll have more discussions going forward, but we look forward to our next update at the Q3 call. Thanks all.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, everyone, and thank you for standing by. Welcome to Rhythm Pharmaceuticals Results from Phase II Prader-Willi Syndrome trial. [Operator Instructions] Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to David Connolly with Investor Relations at Rhythm Pharmaceuticals. Please proceed.

Thank you, [Carmen]. I'm Dave Connolly here at Rhythm Pharmaceuticals. This morning, we issued a press release announcing positive interim data from our Phase II trial of setmelanotide in patients with Prader-Willi syndrome. That press release is available on our website. Also, our slides for this call can be accessed and controlled by going to the Investors section of our website at ir.rhythmtx.com. On the call today are David Meeker, our Chairman, Chief Executive Officer and President of Rhythm Pharmaceuticals; and Dr. Jennifer Miller, Pediatric Endocrinologist at the University of Florida.

On Slide 3, I'll remind you that this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC. In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update such statements. With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Thank you, Dave. Good morning, everybody, and thank you for joining on a Saturday. We're thrilled to have Dr. Miller joining us this morning despite a 1:00 a.m. arrival last night. Dr. Miller will present the 6-month data results from our open-label study of setmelanotide in patients with PWS at an American College of Endocrinology poster session at 12:45 Chicago Time today.

The headline is that we saw a consistent response to setmelanotide across four key measures. BMI and BMI-Z scores decreased with a corresponding decrease in fat mass while preserving lean mass, and we saw a consistent decrease in both their hyperphagia scores and their anxiety. These results reinforce the rationale and our conviction to advance MC4R agonism to Phase III in PWS. This morning, we will present the data that will be in the poster along with some additional color.

Before we do that, I want to remind you of Rhythm's three key pillars on Slide 6, underlying our strategy of fully developing therapies for diseases defined by impaired signaling through the MC4R pathway. We will continue to work on genetic causes. We are pleased with the start of our launch into acquired HO. And as you will hear today, we believe we can make a significant difference in the lives of patients living with PWS. The epidemiology of PWS is reasonably well understood, and we did our own analysis following the methodology outlined on Slide 7.

We estimate a prevalent population of 12,500 to 16,000 in each of the U.S. and Europe with 80% to 90% of patients having MC4R pathway impairment for a target population range of 8,500 to 12,750. In the appendix, there are a few slides that walk you through our bottoms-up methodology with citations. Now let's move to the data highlights on Slide 8. We are, as promised, showing you four metrics, which in their totality, we believe capture the full picture of the benefit of treatment with setmelanotide.

This is a complex disease, characterized not only by the hyperphagia and associated obesity in patients who are not severely calorie restricted, but also challenging behaviors, including rigidity, obsessive compulsive disorder, a tendency to emotional breakdowns and in some patients, more violent behaviors. In addition to BMI in adults and BMI-Z in children, we record changes in their hyperphagia questionnaire for clinical trials, the HQ-CT score, the currently accepted hyperphagia score.

The HQ-CT is a 9-item caregiver assessment with each item being scored on a 0 to 4-point scale with a possible maximum score of 36. The higher the score, the more severe the hyperphagia. In the FDA review of VYKAT, the agency's anchor-based evaluation of the study data found that a plausible range of clinically meaningful change thresholds in HQ-CT total score is between 4 and 7.5 points. The Prader-Willi Syndrome anxiousness and distress Behaviors Questionnaire, or PADQ, is also a caregiver-reported assessment with 14 items scored on a scale of 0 to 4 and a maximum potential score of 56. The higher the score, the more severe the patient's anxiety and level of distress. An 11 point or more reduction in score is considered clinically meaningful.

As shown on Slide 8, the mean BMI decrease at 6 months across all 17 patients was 3.06%. Adult patients had a mean BMI decrease of 3.11% and the 7 pediatric patients some of whom experienced significant growth during the 6-month period had a BMI-Z score decrease of minus 0.35. The mean decrease in fat mass was 4.19% for the 16 patients with scans while preserving lean mass. And notably, 8 of 10 patients with moderate to severe hyperphagia, defined as a HQ-CT score of greater than equal to 13 had a 7-point or greater decrease in score.

As a reminder, as shown on Slide 9, this is an open-label study of setmelanotide dosed up to a maximum of 5 milligrams as tolerated for a period of 6 months in patients aged greater than equal to 6 with PWS. Originally, this was a 6-month study, but we had amended the duration to be 1 year plus an open-label extension. The 6-month interim look at the data was prespecified. Slide 10 shows the patient demographics in disposition. A total of 18 patients were enrolled. Patient #4, as we indicated on our December call, discontinued the trial early for personal family reasons.

All remaining 17 patients have stayed in the study, and that is the data we are presenting today. There were 11 adult patients and 7 patients less than 18. 7 patients had diabetes, 2 patients had extremely poorly controlled diabetes and 3 patients were treated with insulin, which can contribute to weight gain. 14 of 17 patients were treated with growth hormone, which has positive effects on body composition. The patients were living with severe obesity with a mean BMI of 39 overall and 41.1 in the adult patients. The mean BMI-Z score in patients less than 18 was 4.15. The average HQ-CT score was 12.83.

As noted, a total of 10 patients had a baseline score greater than 13, a level that correlates with moderate to severe hyperphagia and that has been used in prior hyperphagia trials to define patient eligibility. The mean PADQ score was 29.9, a total of 9 patients were on VYKAT. Slide 11 shows the BMI plot for all 17 patients. 14 of 17 patients showed a decrease in their BMI over the course of the 6 months. The next 2 slides look at the BMI and BMI-Z score changes in adult and pediatric patients, respectively, with their corresponding DEXA scan results at 6 months below each patient.

The dark blue bars represent the percent change in fat mass and the light purple bars show the percent change in lean mass. Beginning with the adults on Slide 12, you can see that 10 adult patients had a mean BMI percent decrease of 3.11%. Of note, all patients had a decrease in BMI over the 6 months with the exception of patient 1, who, as you remember from the December presentation had severe uncontrolled diabetes among other medical problems. Her weight has remained stable to down after her initial increase.

If you look at the DEXA scan results shown below each patient, the 9 adult patients with an available DEXA scan had an approximate mean change in percent fat mass of minus 7.4%, with relative preservation of lean mass and in the majority of cases, the decrease in fat mass percent exceeded the percent decrease in BMI. The next slide shows the change in BMI-Z scores for pediatric patients. Importantly, most of these patients were on growth hormone. Mean BMI-Z score change was a minus 0.35 with reduction of greater than 0.2 being viewed as clinically meaningful. 6 of 7 patients had a BMI-Z score decrease of approximately 0.2 or greater.

DEXA scan results must be interpreted differently in pediatric patients as they would be expected to add both fat and lean mass as they grow. Girls will add more fat mass than boys. Patient 5 did not have a measurable response to treatment, although his BMI has fluctuated significantly during the trial. The other patients showed a variable response on DEXA with both fat and lean mass decreasing in some and increasing in others consistent with their growth.

Moving to the next 2 slides, we see the same BMI and BMI-Z bars at the top for each patient with the corresponding HQ-CT and PADQ scores for each patient on the two panels below. On Slide 14, we see the adult patients. HQ-CT scores decreased meaningfully in all 8 patients with elevated baseline values. Two patients had baseline scores of 0 with no opportunity to improve. And 6 out of 6 patients with scores greater than 7 and therefore, an opportunity to show a 7-point or more change all had a change of 7 or greater.

The PADQ score results showed a similar pattern with all but 2 patients who had low baseline scores showing a decrease in their score and of the 8 patients with a baseline score of 11 or greater and therefore, the potential to show an 11-point or greater change, 6 out of 8 patients did show that change.

Moving to Slide 15, we show the results for the pediatric patients. HQ-CT scores decreased in 5 out of 6 patients with baseline elevated scores, and they decreased by more than 7 points in 3 of 5 patients with baseline values greater than 7. Patient 5 did not show as noted, a clear clinical response on any of the 4 clinical assessments. And again, the PADQ results showed a similar pattern with 6 of 7 patients showing a decrease in their scores from baseline and 4 of 7 patients a greater than 11-point decrease.

Patient #8 missed by 1 point on both the HQ-CT and PADQ measures from reaching the 7- and 11-point thresholds, respectively. On Slide 16, we show the safety results. The drug was well tolerated with most patients being on 4 or 4.5 milligrams. Injection site reactions and hyperpigmentation were most commonly seen. I would now like to move to Dr. Miller and ask her a few questions before we go to more general Q&A. Dr. Miller, thanks for joining us today.

Thank you for inviting me.

I want to acknowledge all the work you do for the Prader-Willi community. You have participated in most of the clinical trials which have been run in this population. And as we at Rhythm have come to appreciate, these are very challenging trials to conduct.

Thank you Dave.

My first question is just in general, what do you see as the most meaningful results to date in this study?

So I think the most meaningful results to date are the fact that everything is moving in the same direction. There is consistency across all of these measures between weight, BMI, DEXA results as well as HQ-CT scores and PADQ scores. So that's very positive to me.

Most patients seem to have a relatively consistent response to treatment across the different outcome measures with the exception of patients 1 and 5. And I know we discussed these patients on the December call, but can you remind us a little bit of sort of who they are and what was challenging about these patients?

Yes. So patient 1 has uncontrolled diabetes, very poorly controlled diabetes with an A1c that's ranged between 14% and 15% during the course of this time. She's noncompliant with diabetes medications. I insisted that mom be the one to give her the setmelanotide for the trial. I'm not sure of the consistency there either. But I mean, she and her mom both report that even though her weight has not decreased as they hoped that she seems happier. She's moving more. She's actually going out of the house and has a job now, which she wasn't doing prior to the trial.

So they are actually quite thrilled with the results, even though she has not had an improvement in weight or BMI or DEXA scan. And again, I don't know if that's compliance or something else. And then patient 5 had a very difficult social situation, a lot of traveling, moving, -- he was in high school, where people were giving him food, no one was supervising. And so it was just a tough time during the course of this time because there was so much social upheaval within his life.

And so -- but again, parents are very pleased. Both of these patients remain on drug and remain on the trial because both parents perceive a benefit. It may not be the benefit that you and I wanted to see and the benefit in terms of BMI and weight and HQ-CT score, but it is a benefit. And there -- both patients are consistently seeming happier, having less meltdowns, easier to deal with. And when they do have meltdowns, they are certainly shorter lived.

And I remember the patient #1 gained their weight immediately, pretty quickly coming into the trial by month 3. And since then.

She's been stable. Since then she's been stable. She's gone down gentamicin, but for the most part, she's been stable. She was never stable before. I've known her whole life. So this is the first time we've seen stability in weight gain. And so I do actually think that's a win.

Right. And it looks like she did have a decrease in her HQ-CT [ C20 ] baseline. So and then if you said patient 5, perhaps representative of just some of the challenges...

Yes. Absolutely.

Can you talk a little bit about factors which may cause visit-to-visit fluctuations despite a general trend towards improvement?

I mean I think there's a lot of factors that can cause visit-to-visit fluctuations. I mean, travel, of course, being a big one. We were having these people come every month. They're coming from all over the country for this trial. So travel is stressful and people tend to eat not normally when they're traveling. There's a lot of constipation within this population that worsens with travel, a lot of edema, particularly peripheral edema or lymphedema, which worsens with prolonged travel.

So I think all of those factors contributed to weight fluctuations, how bad their edema was, whether they had used the bathroom regularly, that kind of stuff. And then I also think that things like school situation, school holidays and new teachers and things like that, of course, play a big role in variations from visit to visit. And unfortunately, we've had several families during the course of this trial that the parents have gotten profoundly ill, and that also has affected this because if the primary caregiver is not available to really be the one making sure that everything is happening the way that it should, you can get some variability in results.

So how would you characterize the patient population as compared to the broader Prader-Willi population, knowing that some of the more challenging patients are referred to you, and I know we've gotten this from a number of people who follow Rhythm.

Yes. I mean these were the worst of the worst patients for me. They were patients -- sorry, as I said, in December that did not qualify for any other treatment that we had tried everything else on. And I felt like I was at the end of what I could do. And so that made this a particularly challenging population to deal with being that they were so severe, their BMIs were so severe, the behaviors were so severe.

And so I do think they are representative of a subset of some people with Prader-Willi syndrome. I don't think they're entirely representative of my whole patient population by far, but they definitely are representative of a big subset of people with Prader-Willi dealing with obesity, uncontrolled diabetes, hyperphagia, that kind of stuff.

They speak to the huge unmet need.

They do speak to the huge unmet need.

Can you talk a little bit about what you would expect to see in a placebo group with regard to changes in [ HQ-CT ] scores and the fact that they're been in a trial, what impact do you think that has?

I honestly don't think it has any. I mean at the beginning, for sure, I know that there is a very strong placebo effect in Prader-Willi. We've documented that in multiple trials. However, this far out, that placebo effect is gone. And so the fact that these results have remained consistent over at least 6 months and for some of these patients now 12 months is really encouraging to me.

I think placebo is going to show nothing. I mean I think by 6 months in, you should see no changes, if not increasing -- well, you should see increasing in weight and BMI, increasing in body fat as is typical for the natural history of the syndrome. and behaviors in hyperphagia should not change.

Great. Last question. Now that we are 6 or more months into the trial, what is the general impression of the patient and their family with regard to the changes they've seen on treatment?

Everyone is really thrilled, very thrilled. As I said, all 17 patients have remained in the trial, which is remarkable considering how much we were asking of them during the trial. They are happier in terms of -- most of them, especially about the weight control and hyperphagia changes that they're seeing. But the other big piece of this is that the kids and adults are actually becoming more physically active, like they're choosing to become more physically active, and that's huge.

They're purposely going out and doing stuff. Some of the adults have gotten jobs, which they weren't doing before. Parents report that in situations where their kid would normally have a meltdown because things didn't go their way, they're able to sort of reason their way through it and not have meltdown. And it's been quite remarkable. The behavior changes and the positive mental health changes that we've seen have been consistent across everybody. Some of these individuals have even been able to come off of their -- some of their -- not all of them, but some of their atypical antipsychotic meds or come down on those medications, which is huge as well because people with Prader-Willi, as many people know, are just polypharmacy at the extreme. So it's nice to see that we have some mechanism to improve quality of life in this population.

Great. Thank you. I mean it highlights again that no one measure captures the benefit here in terms of...

Okay. So just to wrap up. So thank you, Dr. Miller, for that. And in summary, I'll start by acknowledging this trial has limitations. It's a small open-label data set. However, as you've heard, we're pretty excited about the results to date. All 4 measures in the majority of patients improved, which is strongly validating in terms of overall clinical benefit.

The magnitude of the mean BMI change in adults was modest, but let's put that in some context. The best data to date historically in Prader-Willi, as we discussed on the December call, has been the Beloranib data. As shown on Slide 18, you can see the weight decrease at 6 months of 4% to 5% in the low and high dose groups, respectively. The HQ-CT results showed a 6- to 7-point decrease on average.

Importantly, the placebo patients gained, as Dr. Miller highlighted would be expected given the natural history, gained 4% in weight. The HQ-CT results in the placebo patients showed an initial change consistent with the placebo effect, which had returned to baseline at 6 months, suggesting that any placebo effect was gone by that time point. Despite the absence of a control group, our results compare favorably with the results shown in that trial.

When you factor in that the Beloranib study was only in patients greater than equal to 12 with a minimal HQ-CT score of 13 or greater and excluded patients with uncontrolled diabetes, for example, including those requiring insulin and that only 40% to 45% of the patients were on growth hormone, that trial may have selected for a population more likely to see weight change and improvement in HQ-CT.

So in summary, what do we know? We know that the MC4R biology is part of the disease. The improvements in BMI and BMI-Z, the consistent or even more pronounced decrease in fat mass -- the consistent clinically meaningful improvement in HQ-CT, particularly in patients who had baseline scores greater than 13, accompanied by corresponding improvements in the anxiety distress scores are highly validating for a meaningful improvement in the disease. There's a reason these patients want to stay on treatment.

So these results, number three, were observed in a potentially more challenging Prader-Willi population than may have participated in some of the earlier trials. And four, finally, the data strongly support moving to a Phase III program with confidence that we can achieve statistically significant and clinically meaningful results on both hyperphagia scores and weight-related measures.

So with regard to next steps, as previously discussed, we will proceed to Phase III clinical trial with a final decision as to which therapeutic agent to be made later this year. We have received many appropriate questions on our development strategy. We started the Prader-Willi program believing the MC4R pathway is central to the hyperphagia weight gain seen in Prader-Willi. That has been confirmed.

The recent VYKAT approval for hyperphagia establishes a pathway for approval, which is more efficient, 4 to 6 months in duration than a weight loss trial of 52 weeks. We can imagine running 2 trials, one focused on hyperphagia with weight and DEXA results as key secondaries and a second focused on BMI/BMI-Z endpoints with DEXA and HQ-CT scores as key secondaries. These plans will all be finalized, further finalized after discussion with the FDA. With that, we will now open the call up for general Q&A.

[Operator Instructions] comes from Tazeen Ahmad with Bank of America.

So I wanted to ask about the evidence that you're seeing of continued improvement over time. So can you help us get a sense about what the trajectory of weight loss has been, let's say, from month 3 to month 6? And I'm asking mostly because it seems like physicians want to see something around 5% more -- 5% or more in the range of weight loss -- sorry, or BMI reduction for these patients. So that's a question for both David and Dr. Miller as well.

Yes. Thanks,. Yes. So this is not HO, and I think we all got a little bit spoiled there with HO given the dramatic and profound ongoing response in that setting. So your first part of the question was what's the general pattern? The pattern is down. So the mean at 3 months was about 1.5% decrease and the mean at 6 months was 3%. And as I think most of you know on the call, I'm not a big fan of mean values in very small data sets because a small number of outliers can skew all that. But the general pattern is very clearly down, albeit at a much more gradual overall pace. And then -- I'm sorry, what was the other part of that?

The 5%.

Oh, the 5%, yes. So the approval here, this is very clear. And I think given the Prader-Willi is not general obesity, it's not HO, the regs as we have highlighted on previous calls and answering this question is a 5% placebo adjusted. And so at 3% at 6 months and with a -- if you use a 2% to 4% increase in a placebo group, which would seem to be very reasonable, and I ask Dr. Miller to comment on that, I think the possibility that 52 weeks, we could clear a 5% placebo-adjusted change in weight is extremely high.

But I'll -- one last thing before I turn it over to Dr. Miller, rare diseases, approvals, regulatory reviews are about the totality of the evidence. You don't rise and fall on one single measure. And given the unmet medical need here and the consistency across results, again, I think we'd be very well positioned to make a strong case for the clinical benefit here. But maybe...

No, I 100% agree. And I was going to say something very similar because right now, we don't have anything that can get BMI down at all other than severe food restriction, locking people up, locking their kitchens and refrigerators, putting them in special institutions where they're on a 600-calorie diet. Those are not sustainable nor feasible solutions.

This offers a sustainable solution with a continuing decline in BMI and BMI-Z. And so I actually view this data as really positive. I also got spoiled by HO and wanted to see more than a 5% loss, but it was slower and steadier in Prader-Willi syndrome, and people are happy with that. The parents and the individuals themselves are pleased with the results.

[Operator Instructions] It comes from the line of Phil Nadeau with TD Cowen.

Congratulations. The consistency in particular, is really impressive. Dr. Miller, you made the comment that this isn't a typical Prader-Willi population. It's maybe somewhat more severe than normal. We're curious how you think the results would therefore trend in a more normal population. I guess we could see it going either way in that maybe they're easier to treat, so you see bigger BMI and hyperphagia reductions or the opposite, if there's less room for improvement, maybe there's a ceiling effect. So curious to get your thoughts on that.

Yes. I think you're right the first time. I think actually, they'll probably be a little bit easier to treat. And so you'll likely see more profound effects of the drug than you are seeing in this population. Again, these are sort of my worst and my worst. I do think these represent a very significant subset of individuals with Prader-Willi from across the country and across the world.

These individuals are not unique in any way. They're fairly unique to my patient population in that they are the worst of the worst for my patient population. But overall, these are fairly common problems that we see with Prader-Willi syndrome around the world. So -- but I do think if we include people that are a little bit more mild, the effects will be even more dramatic.

Our next question is from Derek Archila with Wells Fargo.

Congrats on the data. Just to your comments, David, as we think about the development plan for potentially maybe 2 trials or 2 different types of trials, I guess, how do you anticipate maybe different enrollment criteria? It seems like HQ-CT of greater than 13 for a 6-month trial seems very reasonable. But for a 12-month trial maybe focused on BMI, would you expand criteria beyond greater than 13 HQ-CT? Or would you have some sort of BMI baseline criteria? That would be helpful to know.

Yes. I'll let Dr. Miller chime in here. But initially, yes, so to run the HQ-CT without as a primary endpoint, by definition, you do -- we do what everybody else has done, which is restricted to patients who have a certain level of baseline severity. I think if you remember from the VYKAT, they even stratified for level of severity above the 13. So -- and those -- the higher you are, the worse you are, the greater the opportunity to improve if you have a drug that's actually working there.

I think it's an interesting question on the weight trial. And to be honest, we haven't gotten any feedback from the FDA. And in these kind of diseases, I'm quoting you what's sort of generally required for weight loss trials and what we've been asked for some of our other indications. But we'll see if we need to do a full 52-week trial. I would go in again and just make the case that, that may or may not be what is in the best interest of patient population. But if we do, and that's the primary, then yes, you might want to open it up and not restrict it only to patients with an HQ-CT greater than 13 because there's clearly patients who have an unmet need will have lower scores than that. So...

I agree. I agree. And patients that are on VYKAT are going to obviously have lower HQ-CT scores coming in, but many of them still are suffering from obesity and metabolic consequences of obesity and behavior stuff. So I think this drug represents a really nice adjunct therapy to that. And so David and I have had some discussions at length about whether or not HQ-CT should be the primary endpoint for weight, BMI, DEXA scan. And so hence, the discussion of possibly doing 2 different trials to see to sort of pull out all that information from this population.

Our next question comes from Seamus Fernandez with Guggenheim Securities.

So just wanted to get a sense of if you have a robust sense of the compliance in this trial. It seems like if there were compliance challenges, once weekly could have a meaningful incremental benefit and probably be quite a bit easier to track from a compliance perspective in the actual clinical study. So just hoping to get a better sense of your tracking of the compliance in this patient population given some of the variability.

So overall compliance was excellent. People with Prader-Willi have a lot of compulsive tendencies, and they like to take medicines. And so having a daily injection was not a big deal for most of them. And they also -- many of them, as David mentioned, are on growth hormone. So they were used to already having a daily injection. It didn't bother them. The 2 that we suspected more noncompliance in #1 and #5, again, both were in difficult family situations.

And patient #1 was on a once-weekly GLP-1 at one point in time, it didn't do much of anything for her mostly because she didn't take it because she didn't remember once a week to take it. And so once a week tends to be challenging for this population more than you would think, especially more than the general population because they like to do things routinely. And so having the routine of doing something daily actually works for most of them.

Our next question is from Corinne Johnson with Goldman Sachs.

Congrats on the data. I guess one question for me, Dr. Miller. You mentioned that these patients are seeing improvements in behavior. I guess what do you attribute those behavior changes to? Do you think it's a direct mechanism of the MC4R agonism? Or is it a result of the broader reduction in food noise?

It's a very good question, and I don't know the answer. We did also see it in the HO population as well and the genetic obesity population. People reported similar things. So it wasn't really surprising other than it was surprising to watch it happen. People -- again, the people that were in this trial were very, very severe, first few months of the trial, throwing things screaming, yelling and watching that improve was stunning.

And some of the parents really are just beyond thrilled with the changes in this. And they said, I didn't like my child for a while and now I like them again. They're easier to deal with. And so I don't know the answer. It's the long and the short of it, but it -- it was kind of consistent across all the setmelanotide trials we've done. And so it leads me to believe it's something about the drug itself or the agonism of the melanocortin-4 receptor that does this, but I did find it really exciting and nice to see happen.

Yes. Maybe to that point, just you said you and I have talked about this. I mean the HO population, this increased desire to do things, be active, call it energy, whatever, didn't seem to tightly correlate with weight. It wasn't that they've been and are feeling better.

Right, exactly. And we saw behavior changes there, too, in a very positive manner as well. So yes.

Okay. Next question?

And it comes from Mike Ulz with Morgan Stanley.

This is Rohit on for Mike. Just based on these results, can you talk about the bar for results at 1 year? Is it still greater than a 5% reduction? And have you had any additional discussions with the regulators?

Yes. So just to be clear, we haven't had any discussions with the regulators. What I've repeated and I feel pretty confident because, again, those are the regs that if 5% placebo adjusted is the bar in terms of decreasing BMI or decreasing weight. So -- but I do, and I'll say it again, this is the kind of setting where it's a totality of the evidence that regulators will look at. And so it's very important, and that's why we've highlighted on today's results, what makes us very excited about this setting is how consistent the results were.

It wasn't that we got a little bit of movement on BMI and not much else happened. No, we had directional improvement across all 4 measures. And I think as Dr. Miller highlighted, that's pretty meaningful and the behavior assessments are a big part of that. So yes, I think the bar, that's the bar for 52 weeks.

And the next question is from Samantha Semankov with Citi.

This is Ben on for Sam. Just curious, are you seeing any early patterns in age or HQ-CT or PADQ that might differentiate the patients that responded stronger in the study?

Yes. I mean I'll go first, and Dr. Miller can tell me if this sounds right. I think for both of those, they tended to move relatively quickly, the HQ-CT score and the PADQ. Now to the point that you see placebo effects early on in Prader-Willi, that initial movement, you wouldn't know was that a placebo effect or not. What gives us confidence is that, that initial move has really persisted. I mean it hasn't even drifted back essentially in all the patients. I mean it's held at that initial drop.

And that, again, is very consistent with what we've seen in the other populations we've treated. Bardet-Biedl syndrome for 16 weeks, we saw the drop in the hunger scores and then it just maintained and HO similarly. And so it wasn't that these scores don't tend to go down over the course of a year. They tend to get the effect and then that effect persists. But...

I think that's correct. That sounds correct. I would say I do think the effects on increasing movement in physical activity on purpose that they're choosing to do more physical activity happens at about 3 to 6 months. We start to see more of that. So I'm very curious to follow these results out to a year because that should result in more meaningful changes in BMI as well.

Our next question is from John Wolleben with Citizens.

Just one for Dr. Miller. I'm wondering which one of these measures do patients and or parents care most about?

Honestly, behavior. I think that's a big one. Of course, weight and BMI are very important to them as well. They love seeing the results of the DEXA, like when we get DEXA, they're very excited to go and see those. So I mean, there's a lot of things. I think these families, all of them have been through a lot with hyperphagia and various hyperphagia-related analysis measures.

And so I think that one is not quite as important to them as the changes in anxiety, behaviors, temper tantrums and body composition. But again, I think the biggest thing for everybody is quality of life. I think quality of life dramatically improves, and that's remarkable.

Yes. And John, I just want to highlight again, I think as Dr. Miller said, that's clearly what patients may value. We haven't had questions yet to date or so far on the call about the DEXA scans. But that's the other piece of this, which I think we -- I found really compelling here is that body composition is improving and the percent decrease in the fat mass, which was really consistent. And some of the variables Dr. Miller highlighted that may impact the measurement of a weight in BMI, like edema, water shifts and the like, constipation. I mean those are transient measures, but they impact how you measure those. The DEXA scan is a more reliable assessment of what's changing. And again, directionally and meaningfully, that fat mass was going down with, which is what we've seen in our other trials with setmelanotide, relative preservation of the mass. So, Next question.

Our next question comes from the line of Paul Matteis with Stifel.

Congrats on the data update. One question on the next steps on the trial side. David, are you thinking that you might try to pursue a randomized withdrawal study given that, that was a path for Soleno and just given the history of those studies having a higher POS? And then one quick question for Dr. Miller. When you think about this mechanism, does it make sense that weight loss would continue to build and be linear from month 6 to 12? Or would you think that most of the benefits would have already accrued on BMI by month 6?

So would we do a randomized withdrawal? I think the -- Dr. Miller is shaking her head. I think if you remember, as I understand it, again, just reading with public in terms of the VYKAT trial, that ran into the COVID situation. And so there are some unique aspects of that whole setting, and they end up negotiating a randomized withdrawal with the FDA. But no, I think we just run a straight-up trial, and I think this data would support the fact that we'd be able to see a meaningful difference there. And maybe Dr. Miller, just on from month 6 to 12.

Yes. So I think it's -- we've had what 5 patients complete 12 months now, and the trend has continued in terms of weight loss over that time. So I expect it to continue to build and to continue to improve.

Just to be clear on that, we haven't released the 5 patients.

Sorry.

But the -- in that 5 are the patients # 1 and 5. So -- but the other 3, to your point, have continued to trend down in patients 1 and 5, their situations are stable. So, next question.

The next question comes from Joseph Stringer with Needham & Company.

Apologies if I missed this, but how many of the 17 patients at 6 months titrated up to the 5 mg level? And on average, how long was that titration period? And then for Dr. Miller, assuming for now that the go-forward option in Phase III is the setmelanotide once-daily injection. Can you compare and contrast this with oral VYKAT in terms of balancing benefit and convenience in a real-world setting?

Maybe just on the dosing here and Dr. Miller can chime in. I think a significant percent of the patients did get up to 5. I think where, as I understand it from Dr. Miller, the talking to the families, they sort of settled out in the 4 to 4.5 milligram range at the point where they feel better, but I don't know.

That's correct. I'd say the great majority on 4 to 4.5, 5 didn't seem to do much above 4 or 4.5. So in the spirit of less is better, we went down on the dosing because it was -- if all things being equal, I'd prefer to give a lower dose to have less risk for side effects. The question about the once-a-week setmelanotide versus VYKAT is very difficult for me to answer because I don't know the answer. Again, I know that people with Prader-Willi do well with routine.

So compliance with VYKAT tends to be excellent in the clinical population with a real-world situation because it's a once-a-day pills that they take and they like to put things in their mouth, but that works. But we haven't really -- I haven't really had a lot of experience with once-weekly either growth hormone or even the GLP-1s, which we do not use very commonly in Prader-Willi. Simply because the once-weekly growth hormone is not FDA approved for Prader-Willi syndrome. And so we don't very often get insurance approval, so we use daily. So I just don't have a lot of experience with once-weekly injections to know the level of compliance at this point in time.

Great. Next question.

Yes. It comes from the line of Lisa Walter with RBC.

Congrats on the data. Maybe one for Dr. Miller. In your experience, for a patient not on treatment, what is the average BMI gain likely to be in adults over 52 weeks? And do HQ-CT scores also change over time as well? And -- maybe just one for David. On your Phase III plans for Prader-Willi, are you going to move forward with setmelanotide or RM-718? Any color here would be helpful.

I'll take first. Yes. So in general, adults with Prader-Willi tend to gain around 3% BMI per year. That's pretty average. There's some variability there. It can be more, it can be less depending on environment. Of course, if they're in a group home where everything is restricted, obviously, that's not the situation. But in free living adults with Prader-Willi, there is a consistent gain in BMI through each year. And so that's what I would expect to see. What was the second part of the question?

So I'm just curious, actually, and I haven't talked about it specifically. As the Prader-Willi patients get older and become more challenging just physically to manage, that in a home setting, does their weight tend to go up more quickly?

Absolutely, it does. And also, they become more sedentary, their parents are getting older. They're tired, the families are tired of doing this. And so there's not as much pushback about the food and about the exercise and that kind of stuff. And so things just tend to spiral in a very negative way in general. Yes.

Which makes the results we saw in the adults even more...

Even more -- exactly.

Okay. And Lisa, I think your last question was just on which drug are we going to use? And I apologize for still kicking this out because we can obviously use setmelanotide, approved drug, and we've got this data now. And as I said many times, all things being equal, we'd love to do it with the next generation. You've heard some thoughts from Dr. Miller on the pros and cons of a weekly versus a daily. Bivamelagon is obviously a daily oral. So those are all considerations. So we'll make a decision by the end of the year or later this year and put a date on it, but all three things are still under consideration.

Our next question comes from Raghuram Selvaraju with H.C. Wainwright.

I guess these are both really for Dr. Miller. When you think about the possibility of combining a drug like setmelanotide or like 718 with any existing component of the PWS armamentarium? What kind of factors are likely to most affect your decision-making process there? Is it likely to be primarily the safety and tolerability profile or the additive or possibly synergistic efficacy that you might achieve there?

And then also, maybe could you comment on the specific PWS patient subpopulation for whom, for whatever reason, primarily related to safety, perhaps a drug like VYKAT XR might be contraindicated and how likely those patients might be to be candidates for therapy with a drug like setmelanotide or 718?

Those are exactly the patients that I want on setmelanotide are the ones that have medical contraindications to going on VYKAT for the reasons of type 2 diabetes, severe obesity with edema already existing so that the risk profile of VYKAT would be exacerbated. I think the answer to your first question is actually both of those things. I think one of the things that I look at as me is the additive effect of multiple drugs. I like that idea.

And mechanistically, it makes sense with VYKAT and setmelanotide that there would be a synergistic effect of those drugs. And then -- but I also, of course, look at safety and tolerability. One of the things that I think is the most challenging for most peds endos who take care or even adult endos who take care of people with Prader-Willi is that the polypharmacy with psych drugs is humongous. And many, many, many, many, many adults are on atypical antipsychotics, which, of course, worsen the metabolic profile and the weight gain and the risk for type 2 diabetes.

And so having something like setmelanotide in the armamentarium that you could potentially lessen those risks is huge. And like I said, we saw one person come off of their atypical antipsychotic completely during this trial during the 6 months. And we've seen several reduce their doses quite significantly. So that alone, I think, is huge for me because those medicines are kind of the bane of my existence in terms of being an endocrinologist, but are necessary in terms of controlling symptoms for patients with Prader-Willi.

So I think that -- again, I think that both factors would come into play, both safety and efficacy, but also the potential additive effects of more than one drug. And then lastly is the effects of maybe ameliorating the consequences of a drug that's necessary for a different reason.

And our last question comes from the line of Leland Gershell with Oppenheimer.

Great to see these positive data. I wanted to ask a question on dosing. I think, Dave, you had mentioned that these patients have gotten up to, I think, 4 to 4.5. And I think the -- up to the maximum potential was 5 per day. I wanted to ask Dr. Miller, do you think that there would be room for greater efficacy benefit with a more selective MC4R? I guess if we look at the table on 16 of the AEs, are we hitting adverse events that are preventing patients from getting dosed further? Do you think there might be room for greater efficacy in PWS with a more ideal melanocortin?

Yes. Thanks, Leland. Maybe I'll lead off here and then let Dr. Miller comment. So setmelanotide is a highly specific MC4R, it hits MC1, but it has very good potency at the MC4R receptor. It's about tenfold more potent than the endogenous ligand alpha melanocyte stimulating hormone. And so we've been pretty convinced that it's not clear there's a lot of room to do better in terms of pure MC4R agonism.

And so back to why did we go up to 5, and we've done most of our work, as you all know, between 1 and 3 milligrams is the dosing regimen that's the approved regimen. We have safety clearance and tested as high as 7 mgs in patients with -- or normal volunteers with no problem. So going to 5, the goal there was to eliminate any possibility that we had left some efficacy on the table by not going high enough. And I think this trial has gone a long way to giving us some reassurance that we're in the right range. And the last thing I'll just say on the safety, what again is very reassuring is they seem to tolerate it well. So there weren't any unique safety issues going to the higher dose, but...

Yes. And like I said, I -- when people went down from the 5 down to 4 or 4.5, it was mostly just because they didn't perceive any additional benefit from being on 5 versus 4 or 4.5. And so they -- I've taught all patients that we don't want to put more stuff in your kids body than you have to do. So we -- if they didn't perceive any efficacy over a couple of months on 5 milligrams, then we would bring their dose back down to 4.5 to see how they did. And then if they still said, I think we were about the same on 4, we would bring it down to 4...

And this concludes our Q&A session. And I will turn the call back to David Meeker for closing comments.

Yes. So thanks again to everybody for tuning in. Hopefully, you're as excited as we are. Again, it's a tough population, but really encouraged by this initial data set and look forward to updating you on future progress on the program. Thanks all.

Thank you. And this concludes our conference. Thank you for participating, and you may now disconnect.

All right. Good afternoon, everyone. Thanks for joining us at the Goldman Sachs Global Healthcare Conference. Thrilled to be joined on stage today with David Meeker, the CEO of Rhythm. And we are thrilled to be hosting you ahead of -- I'm going to get this one out of the way early on, ahead of the ENDO conference this week where you're going to be sharing data for Prader-Willi. We would love to talk to you about it about what are you going to be able to say?

Thanks, Corinne. Excited to be here, right? We're really looking forward to Saturday. We have our 6-month data from the open-label study, and patient study run by Dr. Miller of the University of Florida. We presented some very early results last December. We'll now be presenting the full 17-patient data set at 6 months with this group. And our goal will be to -- our goal, we are presenting 4 different data points for each patient. We have almost a complete set on the DEXA.

But basically, every patient, you'll have their weight change, the BMI or BMI-Z for the kids, the DEXA scan results, which gives you the fat and the lean changes; and then 2 patient-reported outcomes, one, HQ-CT of course. And the second is a PADQ questionnaire, which measures anxiety and distress. And so those will be, we'll give you, like I said, the data for each patient and people will have the full picture with that.

We're not in a position to talk more about it at this conference, needless to say, because we're so close to Saturday, and there's no real good way to answer even hypothetical questions. So we're going to defer on those.

All right, and gentle plug that you can join us for dinner post that meeting on Saturday night, and if you'd like to do that, reach out to your salesperson. Okay. With that, let's talk about the HO launch because that's also super topical these days. And maybe just given kind of the audience, we could talk first about just HO was approved in March or IMCIVREE was approved for HO in March. And it was the third approved indication for the drug. But for those not familiar, can you just remind us about the data that supported that approval? And what made it on label relative to your expectations and clinical results?

Yes. So also excited to get that approval in March, which was a 3-month delay on our PDUFA date. I think caught up a little bit in some of the changes in Washington. But the label that we got was a good label. We had been -- we were trying, as we do each time to get a hunger into the indication statement. We were again unsuccessful. And I think the biggest reason is when the FDA, as they've explained it, to get something in the indication statement, you really need hunger to one, be in your primary endpoint. It was, in this case, a key secondary, but also we study in that trial, as people remember, kids as young as 4 years of age and individuals as old as 66. And so having one patient reported outcome measure for that full range, you don't -- you have different measures. And so we ended up having subsets of populations and they don't tend to give you an indication based on subsets.

So for that reason, hunger didn't get into the indication statement, but it is in the label. So -- and that's really only an issue, and I'll get back to the launch here in a minute, but that's only really an issue for our conversations with Medicare specifically. Medicare by statute does not cover weight loss drugs. And so anything in the indication statement, which would help differentiate us from a more general obesity -- anti-obesity medication.

We've talked to CMS and they're very receptive and they understand what we are trying to do and they understand our drug is different, but that they felt bound by statute. So from a label standpoint, we got pretty much everything we want, no real restrictions on the label. It's not defined by the requirement for imaging, for example, and the like. It's acquired hypothalamic obesity. So we feel really good about where we ended up coming out of the regulatory process. And then we talked about it on our first quarter earnings call, the initial 6 weeks of launch. I don't know if we want to dive into that now. I'm happy to offer comments or turn it back to you for some more questions.

Yes, let's get there. But first, I just want to talk about the market opportunity? Because I think when you started introducing this, it was very much 5,000 to 10,000 and as we've gotten closer to the launch and then since launch, I think you guys have solidified around that 10,000 number. So maybe you could talk about what kind of gave -- what are the kind of puts and takes that give you confidence in that 10,000 number. And what have you learned now that you're on market in terms of kind of understanding the market opportunity there?

Yes. So I'll back up and speak a little bit generally about how we get to rare disease epidemiology numbers, and I'll use BBS as an example. When we came out with BBS, it was sort of, I think, 2500 [indiscernible] that number and I maybe even be misquoting there, but it was a little lower than where we are now. And a couple of things informed our increase to 4,000 to 5,000, which is a number -- prevalent number that we feel really good about for the U.S. only. And so one is we were doing more genetic screening. So that informed us based on what we felt was the prevalence of the background genetics there actually got us to a significantly larger number. Two, the prevalence of the disease in Europe and the U.S., we felt was highly similar, so much better understanding of the prevalence of the disease in France, for example.

So we could take the French number and then correct on a population basis for the U.S. So that gave us a second data point. And then third, which is, I think, really important and part of the answer to the HO is I think, when people do rare disease epidemiology, almost invariably, it's rare and not a lot of work has been done. So it tends to be poor in the published literature and the like. And I think you tend to fall in 1 of 2 buckets. And one is either you're trying to inflate your numbers a bit to make a business case. But when you get out in the field, it's really hard to find those patients. Or alternatively, you're sort of working straight up from whatever poor epidemiology you have, and then that epidemiology tends to be larger than what you estimate, not smaller just because inherently, these early estimates tend to underestimate it.

I think we're in the second bucket there. So when we went out with our 5,000 to 10,000 estimate, that was very much predicated on sort of the literature kind of review and the like. We then did claims analysis, not just in the U.S. but outside the U.S. So we had claims analysis in Germany. We had claims analysis in Japan. We can talk about that. But on cross populations, all of that was very reinforcing that the numbers on the higher side, 10,000 as opposed to 5,000. And then just very important is once we had people in the field, they were finding patients. They were getting strong feedback that the patients were there and the gestalt of that these numbers estimate there's a 10,000-ish prevalent population.

And in terms of like where these patients are treated, can you remind us like where are these patients? Who are the target physicians? And how have you guys tiered your commercial strategy relative to the target physician population?

Yes. So one, we just knew based on the problem here which is majority of individuals having a tumor, benign tumor that gets resected, and the complications of that surgery are 80% plus of them have pituitary insufficiency. So by definition, that group tends to be taken care of by endocrinology. Even if they're not their primary, they will see an endo every 6 to 12 months as a rule kind of thing. So we expected them to be in the endocrinologists offices. And then when we did claims analysis and this is where you've got a very hard starting point, which is the injury, most often the tumor and the surgery and the like.

So you can identify that population very reliably. You can figure out what percentage or who are the patients who have pituitary insufficiency and then you begin to you get into obesity coding and the like, which is a little less reliable because that doesn't necessarily tell you that, that obesity is due to HO, but you're really starting to narrow the funnel there. So based on that, Jennifer and her North American team, tiered physicians based on -- and were appropriately focused on those who had more than 2 patients basically. So that was our 5,000-ish patients, and we've built a sales force with a goal of targeting that 5,000 out of the 10,000-plus endos overall. So that's...

So then as you've gotten out into the market, you're talking to these physicians, what have you learned in terms of physician feedback about their enthusiasm for the drug, the patients that they're willing to put on it and how they're thinking about adoption?

Yes. High, and as I said, very reinforcingly many investors and the analysts and the like, do their own work. And I think everybody is pretty much getting the same feedback and what we're hearing in the office is a huge amount of interest, surprising to me anyway, lack of awareness in many settings. And if you think about acquired HO, it's not one of those things that many or most endocrinologists were trained on during fellowship. It's a clear disease, but haven't been given a name. And what will drive that awareness, as is often the case, is the availability of the therapy.

So before there was a treatment, if you think about an individual with a craniopharyngioma now getting ready to go to surgery, they will be told that, a, not a single patient coming out of surgery will be -- if they have hypothyroidism, it will not be missed. 100% of those patients will have their hypothyroid status diagnosed. And secondly, almost all of them will have been educated about that possibility going into surgery. A very low percentage of patients today are educated about the possibility of developing acquired HO.

So why is that there's no therapy? So you're creating -- this is one view what we hear and the like is you're creating anxiety within the family for a problem that there's nothing to do about. You may have this problem, wow, it sounds horrible, but yes, there's not much we can do. Now there's something to do. So I think all of those things will greatly accelerate. So back to your question, what we're hearing going in is a huge amount of interest, bulk of the -- majority of the patients are probably in the suspected category, not confirmed diagnosis. They need to come in and get it. Getting into doctors' offices are sometimes hard to get into previously, and those are busy. But now our field team is getting in there much more reliably.

Okay. So then with all of that in the background, you disclosed 150 patient start forms in early May. That was about 6 weeks into the launch. Can you help us bridge from the patient start forms into revenue as well as like what can you share qualitatively about the trajectory of patient starts since the last update?

Yes. I mean as you know, and we've gotten feedback on this, there's aspects of this opportunity, which are very specialty like and that's a huge advantage for an ultra-rare disease, and this is at 10,000, that's still ultrarare by any definition. But the specialty like aspect of this is a, if they're not diagnosed, they have a presentation/phenotype, which is very diagnosable. I mean, it's not hard to recognize once you know what they're looking for, and they are concentrated in the specialty. So they are extremely approachable. Our ability to penetrate into that should be high.

On the other side of the equation, which is the -- we have many of the challenges of a classic ultra rare, which is day 1, awareness is still relatively low. A lot of work to do. Two, access to the physicians who will be writing the script, still challenging. It's not like endos have big open spaces in their clinic day where patients can just come in and get their scripts written. Three, it's an ultra-rare, so like there's no difference necessarily from anything else where it's a prior auth, you have to go through, you have to get policies in place. And so for BBS the average time out of the gate, so getting a patient from a script to approval in about 3 months.

Now average. So some patients went through much more quickly. Some took longer. And the longer ones were the multiple appeals that took you out into the farther than that. I'd say our very early start here has been very much what we expected, which is a little easier than BBS, not surprisingly. They know the drug, most of these payers and the disease itself is clearly more severe at one level than what the BBS patients are experiencing. So all of that, I think, bodes well for what we expect to have as broad coverage similar to what we have for BBS.

Okay. So I guess with that in mind, maybe be a little bit more specific. When do you anticipate having most of the coverage plans in place? And in the interim, what should we anticipate with respect to reimbursement?

Yes. So 6 to 12 months, using BBS as an example. They don't want to -- a new drug gets approved, they don't call a committee meeting, you just get reviewed whenever their formulary committees come up to do their review. So I think 6 to 12 months.

Okay. And what do you anticipate in terms of like gross to net over time once these coverage plans are in place and any other kind of free drug aspects we should keep in mind?

Yes. So we don't discount and haven't and don't anticipate doing that going forward. Our gross-to-net is driven very much off the Medicaid population, which has a mandatory discount, as you know. So that will be the same here. We don't have a good feeling for the size of the Medicaid population. It was large in BBS, a significant part of our overall population. I think there's reasons to believe it might be a little smaller.

Conversely, the Medicare population may be a little bit larger given the fact that you have a relatively normal survival, and we have almost very few, if any, over 65 Medicare-eligible patients in BBS. Maybe we will have some here.

Okay. How should we think about compliance and adherence, like maybe relative to your other launches or based on any color you can provide in HO and maybe talk specifically about that hyperpigmentation piece. Or any other things that you think are big drivers of compliance and adherence over time?

Yes. I mean this is a group where the, if anything, I think the adherence will be higher than it was with BBS, although I think it was quite good in BBS overall. The difference here is you've got a population who had a known "before state" when they were normal. Now they've experienced the abnormal and desperately want to get back to the normal state, and so they start feeling better. And so all of those things, I think, are strong contributors towards what we would anticipate would be high levels of adherence.

The hyperpigmentation in BBS, which is our major experience, about 5% to 6% of patients discontinue because of hyperpigmentation, not a huge number out of the total, of course. I think there's likely to be maybe some meaningful part of the population, which is on the sidelines. And so we look forward to the next-generation therapies is bring in on the BBS world. And BBS is a complicated disease. In HO, and talking to some of the KOLs, I mean, some of the feedback is, yes, they just don't care. I mean they're just happy to be. So I'm guessing it will be less here. It won't be 0.

Okay. What about the kind of motivation to get on drug between pediatric and adult populations and any other kind of differences between those 2 groups of people, whether it's the physician or the patients?

Yes. I don't know yet. I mean you can hypothesize reasonably that kids there may be a greater motivation. They've got their parents there, helping to get them in. On the other hand peds endo, there's fewer of them, maybe the availability, office slots may dictate that. I think if you're living with this problem and you know you have it, it's going to be pretty high, whether you're an adult. I think the group that may be more challenged is if you're out 20 years from your insult and you don't have a diagnosis, you may just not know and so.

One of the things that we see sometimes in rare disease launches is this concept of like a bolus, et cetera. I guess how do you think about whether that's something that could play out in the HO launch versus, I think, what you characterized in prior launches as slow and steady growth?

Yes. So I think I'll characterize HO as steady. We can take out the slow part -- but it's -- every launch, there will be a segment of the population that can see it coming and a bit of pent-up demand. But -- and we can't tell you that first 6 weeks experience reflected an element of that. I'm sure it did to a small extent. But the ingredients that are here and the opportunity says, no, we didn't get a big bolus and now it's going to taper off.

I mean this was a really good start. We feel good about it, but we are looking for steady growth here going forward. And the other thing we'll constantly endlessly say this, right? The rare disease launch don't beat us up in the quarters. It's -- we will be up and down around whatever the expectations may be. That's a rare disease launch. But the overall opportunity here over time is absolutely -- we're more and more bullish about that opportunity, the more we learn about it.

Okay. So recognizing you can't talk about the Prader-Willi data coming this year, but maybe we could talk about the opportunity set that you see in Prader-Willi, why was this an indication that you thought worth kind of pursuing from a development perspective? And how do you envision the role setmelanotide could play in that population?

Yes. I mean, it's like every company, and certainly the way I thought about being in this industry is you want to be addressing unmet needs. We -- I've never been a sort of me to kind of strategy in terms of -- that's not really what we do or certainly probably don't do well. So Prader-Willi, huge unmet medical need and incredibly complicated disease. The biology that got us interested as people remember, we ran that trial in the late teens and our initial read on that was -- it was negative. But when we went back and looked at it and looked at the patients on the highest dose for the longest period, the famous 8 weeks, 4 patients, 3 out of those 4 patients, some did have a response. And so it gave us some encouragement that -- and we know that MAGEL2, for example, one of the genes that is affected in a Prader-Willi patient is a gene that's part of the signaling through this MC4R pathway. We studied MAGEL2 in our DAYBREAK and in the 3 patients who we had confirmed evidence that they have true loss of function. That was encouraging. They had a reasonable response.

And so yes, so I think the biology is likely to be embedded. The challenge with Prader-Willi is it's so complex and you have multiple genes that are affected. There's a lot of other most specifically the behaviors and the most -- one of the most challenging aspects is compulsive part of it, which is I use the example, as you know, around if you're hardwired to have a snack at 10:00 a.m. And even if you're not hungry, you remove that part of the drive, I still -- that's part of my structured day, I want that snack. So there's a lot of reasons why studying the drug has been challenging here for everybody going into it. But biologically, that's why big unmet need, and I think there's a chance we can make a difference, so.

One of the questions we fielded in the past has been kind of the clinical relevance of weight losses as an endpoint versus hyperphagia. How do you think about weight loss as a primary endpoint in Prader-Willi trials and the relevance that would then translate for a commercial product?

Yes. I mean we were clear. I was clear when we went into this, that -- we have a drug which has the ability to impact weight. And we -- and that's a -- no drug is approved for that. And clearly, a big part of their unmet medical need. And so that, for sure, would be part of a development program going forward. But I think the Soleno experience and what the majority of the companies that have been working to develop a drug for have pursued, one is, hyperphagia is a big part of the challenge just for the families and the patient. How to manage that, given all their behavioral challenges. Two, is the fact that with Soleno now Neurocrine diazoxide approval, that set a precedent. And so you -- there's a paradigm out there now where you can run a hyperphagia trial that's shorter, so 4 to 6 months as opposed to weight loss trials, which are 52 weeks. So I think if we do something, we would certainly look at both approaches.

Okay. In terms of how you're sizing the commercial opportunity in Prader-Willi, how should we think about it relative to maybe like HO or other indications you currently have in development? And what have you learned with now approved products on that market in terms of the size of market enthusiasm to treat, et cetera?

Well, I'll take that. I mean, I think the experience of the diazoxide choline out of the gate was -- that was pretty remarkable, but not surprising in that this is a community that is very strong. I mean they've been together for a long time. They're very well organized. They provide tremendous support to any company that's trying to develop a drug. So they're following all programs, they're hopeful for any treatment. And so to get the approval. That was just a huge win for the community, very well known within the community, pent-up demand for sure. That was one part of the dynamic.

And the second is it's a very distinct disease so they tend to be taken care of by expert centers. They tend to have clinics that they come into. So their ability as patients, families to access the system when the new drug comes out and get a script written is much greater than HO, for example, where it doesn't have that same kind of organized community and access to the health care system in the form of clinics.

With regard to the epidemiology, the whole world -- I think the published literature is pretty good. We've done our own work just to try to understand if there's some nuances we're missing 10,000 to 20,000. I think the addressable population as a starting point, might look at it more around the 10,000 piece of it, a 10,000-person part. But it's clearly in the 10,000 to 20,000 range.

So with VYKAT on market, I guess where do you see the residual unmet need for patients in Prader-Willi and how does that map to what setmelanotide could offer? You've kind of answered some of this, but just put a finer point on that.

Yes. I mean -- so I'm absolutely convinced that drug works, and it's just a very challenging population, number one. So -- and what they showed and got approval on was the hyperphagia piece of this. I think the unmet need again is something -- it may be that you can have greater effects on hyperphagia. So it's not that they fully addressed it. One, maybe no single drug will address it. I mean that's another potential outcome. We talked about the BMI, weight-related issues are not there. They're not -- because of the side effects of diazoxide, they're not indicated or the ability to use in diabetes is more challenging, and you can't. So there's parts of the population where, as with any drug, the profile of the drug may not match up and give you access to the full population. So there remains and there will remain, I think, a huge unmet need here.

And how do you think about a potential combination use of VYKAT and how will that kind of inform potential future studies in terms of inclusion criteria, et cetera?

Meaning learning off what they did...

Well, yes, also like will you allow for combination?

That I will allow. So in the data set we have with Dr. Miller, there's about 9 patients who are -- out of the 17 who are on VYKAT. So people can look at that. It's a small data set, of course, but I don't know, going forward, we'll have to see, we'll get to talk about after.

Okay. On the next-generation program, 718, bivamelagon. I guess, first, we'll see some updated data from the biva 1-year study this weekend as well or that will be highlighted at the conference. Could you talk a little bit about that program, what you've seen and the path from here to registrational trial?

Yes. I mean it's all highly confirmatory. I mean the 1-year data is highly confirmatory. I think the mean values are driven again by -- they're basically about the same as setmelanotide and we had some patients in there, were a small number, the teenage, younger teenage kids who are still struggling a little bit, taking the drug weren't fully compliant. So drug works. I think we've got a good read to the dose. I think there's personally low risk to a Phase III trial. We will run that trial largely outside the U.S.

So depending on which countries you're in, always introduces some variables in terms of getting the trial up and going. But our goal is to get first adult patients treated by the end of the year. And our -- the pediatric formulation, I think, will be available in the first quarter. So what we would do there is the peds part of the trial would come in once that formulation. This is a chewable tablet. So we've significantly improved the size of the tablet, so with our current approach formulation. And as I said, we'll get down to the age 4 with this chewable tablet.

Okay. And how will the registrational program compare to the setmelanotide program in terms of any sort of features there?

Very similar. Again, we'll look at this whole issue of hyperphagia and between -- it will be the key secondary probably and/or, but BMI will be a primary endpoint, as always. So it will be very similar. As you go forward, I think we're going to work harder to get DEXA scans more formally on all patients. There's more and more interest in the quality of weight loss. I think the way our mechanism works, we've done really well on the quality weight loss, which is -- remember, we're not -- we're restoring more normal physiology, which again, if you're a teenage boy, you should put on lean mass. And you see teenage boys [indiscernible] putting on lean mass. And so all of that, I think, is a real positive that we'd like to help the world understand.

Okay. You are also planning to share 718 data in aHO this year. Maybe you could remind us what exactly will be shared, maybe when do you think we could kind of have that data and how it will inform next steps.

Yes. So we'll target the next quarter earnings call. There's about 10-ish patients that we'll have data on. And yes, I mean what people ask what should we look for? I mean, we're looking to see how this compares to setmelanotide and very similar to what we did for bivamelagon. We'll show you that data.

Maybe you could talk a little bit about why these drugs matter from a like broader corporate strategy perspective, why does it matter to have an oral and a weekly injectable in terms of the overall franchise?

Yes. From a patient standpoint, I mean, it's just -- I think there's clear advantages to the oral over a daily injectable and weekly is a weekly. I think from a side effect profile, the biggest difference for these drugs will be the hyperpigmentation. And as I said, I do think it's just not a good way to estimate this, but we will be very interested to see if it unlocks. And I think it will, some percentage of the population -- and of course, from a patent standpoint, this was to move and...

Okay. And as you think about kind of allocating investment dollars behind each of these programs and with multiple indications that you could kind of go into, how are you thinking about prioritizing and selecting which drug for which indication?

Probably in TBD, to be determined category, I think we can all have our opinions about which might be better. I think in general, for a big opportunity like HO, our goal will be approved both, get both approved. But there's no urgency to get both approved. I think we'll move as we are with biv and HO. We don't have to rush out and do 718, for example, in HO. We can get there, but not tomorrow kind of thing. So we would not prioritize that as the next piece. So we'll probably do some other things with HO. For the smaller opportunities like going back to some of the DAYBREAK genes and the like, we will develop one or the other. And because it's unlikely we'd run the 2 trials, it just seems like a bit excessive maybe for a small opportunity. And I don't know, we'll debate it internally why we pick one approach for one of the diseases and another for the another, but...

And with respect to Prader-Willi, can you share at this stage. How you think about 718 versus setmelanotide? Or what data do you need to have in hand before making that decision is maybe an easier question to answer.

Yes. I will refer that to Saturday.

No problem. Maybe how should we think about the funding picture from here in terms of path to profitability or any additional kind of capital needs you might have as you look at a relatively broad now portfolio across MC4R?

So as Hunter likes to say, he can shout out from the audience here. We have more than 24 months of cash, which at 1 level, I think, the analyst population would interpret as enough to get us to profitability. Obviously, it depends on what assumptions you make around revenue and the like that's part of that. That guidance does include a good amount of our developmental work and the like. So it gets back to liquidity whether we'd want to top up -- it's a reasonable question. If we did that, as Hunter would say, we won't do it with equity. There's lots of other instruments and ways to do that, debt certainly being one, given the -- where we are as a company, so.

Okay. So a lot of things to invest behind, but you have done a little bit of BD in the past. I guess what role should we think about BD playing in your forward strategy for the company on maybe like 1-, 3-, 5-year sort of time line?

Yes. So 1 year, we would remain in our current posture, which is completely opportunistic. If somebody came to us was something that they felt Rhythm could provide a unique contribution and/or one of us on the leadership team had insight into, an opportunity, then of course, we would look at that, but we're not actively looking. We have more to do internally than we can process arguably. Three to 5-year time line absolutely. I think building a more specific external facing effort, looking for things that might complement and -- it's all a function of size of the company and increases your ability to do those kind of things and do them well, I think.

As you think about that like 3- to 5-year view, how do you think about the core competencies that Rhythm has and how so it would inform what kind of assets you might be open to bringing in?

Yes. I mean we've been clear, we're not an obesity company. That's certainly not our goal here. What are we good at? I think we are good at rare. And so it's not -- and there's no -- rare doesn't have to be an endocrine rare. It doesn't -- I mean rare is rare. I think that we -- if you have a good solution to an unmet medical need, you can build an effort around it and we would do that. And we're a global organization, we're going direct, I think, which speaks again in almost every place, which speaks to the way we think about it and also the capabilities, particularly of our international team. So I think rare first, but rare is also a blurry line. So I think, depending on how strong we are, we're pretty open to different scenarios.

I think with that, we did it. It was lovely chatting with you. Much appreciate everyone who joined us here and online. Thank you, David.

Thank you, Corinne. Very much appreciate it.

I'm Tazeen Ahmad. I'm one of the senior biotech analysts here at the bank. It's my pleasure to have our next presenting company, Rhythm Pharmaceuticals. Sitting up here on stage with me is David Meeker, who is, of course, President and CEO. Welcome.

Thank you.

So for the few people who may not know about the platform of the company, David, maybe you can give us a quick overview, and then we can go into some specifics.

Sure. So Rhythm is a company that was really founded around the melanocortin-4 pathway biology. The drug that's approved for multiple indications is an analogue of the natural hormone that signals through this melanocortin-4 receptor. And what that biology does is very simply is when we eat a meal, our gut hormone signal to the pancreas and to the adipocyte, the adipocyte releases leptin and it goes to the brain, signals down through this part of the hypothalamus, this POMC neuron, which then causes a hormone alpha-melanocyte-stimulating hormone to be released.

And when that interacts with the receptor, it tells the body you're full and there's food on board. So you can increase your metabolic rate. So if you have impaired signaling through that pathway, you might eat a meal or you eat a meal. The body doesn't get the signal, you're full, so you keep eating. And then perversely, the body thinks you're starving, it's not getting the signals food on board, and so it keeps the metabolic rate low.

So these patients suffer with disproportionate levels of weight gain, and there's multiple different causes of how you get to impairment, some of which are genetic for which we have some approved indication. Some of them are injury directly, and that's our most recent approval, and we'll talk more about that today, acquired hypothalamic obesity. So those are the 2 main categories that we're working on. And as I said, our drug is an analogue of this natural hormone that's in patient or missing.

Okay. So IMCIVREE, we're all looking at for the HO launch now, but it's been on the market for a bit. You previously had smaller indications approved. So maybe let's start off with those. Give us a sense of where you are, where you think you are in penetrating those markets.

Yes. The first approvals, which were in 2020, and as many companies do, particularly in rare diseases, you follow the biology. And so the best example of impaired signaling was patients who had a genetic impairment in this POMC neuron, so biallelic POMC neuron deficiency, if you will. And that population, that one and another one with the leptin receptor, we thought they might be on the order of 2,500 patients epidemiologically. The challenge of that disease is there's no -- aside from this extreme, early-onset obesity, there weren't really any clear signs that, that obesity might be due to a genetic cause as opposed to general obesity.

And of course, we live in an epidemic of obesity. So they don't -- they're lost in the forest truly. I mean, these patients. So they can only really be found with genetic screening. We've done genetic screening. We offer a genetic screening test for free. But we realized early on that this was in reality, a very, very small indication or 2 indications. And so we didn't put a sales force when we -- in the field when we got the drug approved. We made it commercially available. We priced the drug. There was a lot of advantages to having a little bit of that lead time, but it wasn't a true business opportunity that was to stand a company.

Our next indication, which was Bardet-Biedl syndrome, larger indication. We think there's about 5,000 patients in the U.S. that have that disease, but it's syndromic. And the advantage of being syndromic, from an identification standpoint, is that there's multiple disease manifestations that signal to the health care provider who is trying to figure out what's going on that there may be an underlying genetic disease here. And that population follows exactly the classic diagnostic odyssey that many patients with a rare disease do.

They see multiple specialists until they finally find one who connects the dots and says, "Oh, you have Bardet-Biedl syndrome and sends a genetic test. So that drug -- that indication we got approved in 2022. And from the beginning, we believed, and I think the results to date have supported that is we could build a profitable company around Bardet-Biedl alone. You wouldn't be spending a lot of money on R&D. But if you were really just focused on that, it could support a company.

And from the beginning with these genetic indications, and this partly from the world I came from, I believe strongly, all diseases, certainly genetic diseases, they're global. And despite being a smaller U.S. biocentric or biotech company, you want to think globally, and we did from the beginning. And so we have worked to make the drug available outside the U.S. We sell in about 25 countries now for these indications on these 3 genetic indications. So, that laid the foundation for where we are today.

And then a little bit of serendipity, which also I think is interesting in terms of how these things evolve. KOLs, thought leaders, one of them who have been doing a lot of thinking about this area came to us and said, you should really try this in this entity called acquired hypothalamic obesity. And famously admit to -- when I took the CEO role in 2020, that trial is just getting underway. And as I looked at the different places we could save money, I thought, well, let's stop that trial because if you injure the hypothalamus, and I'll just give you the quick background for that, why it's humorous in retrospect, these are patients who -- most commonly, they have a tumor that develops in the region of the pituitary gland and the hypothalamus.

So tumors that grow up in that area, benign tumors, they can be resected. And when resected, patients can go on and live a relatively normal lifespan. But the surgery, the radiation, sometimes the tumor itself injures the pituitary. And so 80% plus of these patients will come out of surgery with pituitary insufficiency, meaning they need a thyroid replacement, adrenal hormone replacement, vasopressin insufficiency. It can be a long list of hormonal insufficiency related to that pituitary and some hypothalamic damage. But if you get enough hypothalamic damage, you injure this pathway, the melanocortin-4 pathway, which sits there.

And so about half of the patients with this underlying tumor come out of surgery and rapidly gain weight. It's like overnight, they have lost the signal that they're full. And so they explosively gain weight. And what we found when we started the trial is that it's incredibly simple. We're replacing that hormone when replaced. And the most striking thing about the clinical trial results was not that we got X percent weight loss, and we got very good weight loss, 19%-ish placebo-adjusted weight loss, but the consistency, it was like virtually every patient who took the drug had a meaningful response.

And so that told us we were really fixing something. So my early thought process, which was, well, you're injuring the hypothalamus, I get it, you might injure the pathway, but won't you be losing the receptors as well. And there's a little bit of a mystery there, but no. The answer is either, one, there's enough retained receptor activity in the hypothalamus and/or in the and is probably significant, there are these melanocortin-4 receptors in other parts of the brain, including the brain stem and autonomic nervous system interacting with that, that's probably contributing to the beneficial effect we see. So long story short is that's where we just got our PDUFA data in March 20. We're now 6 weeks into launch and pretty excited about where we're going.

Okay. Thank you for that update. So if we wanted to compare and contrast the launch trajectory of these smaller indications versus HO. Can you just talk to some differences there, expected differences?

Yes. So the dynamics of a Bardet-Biedl syndrome, which I think about as a classic ultra-rare example, these patients tend not to be concentrated in a specific specialist. They're syndromic. So they have -- many of these kids by age 18 are legally blind. So they'll see an ophthalmologist. Many of them have renal insufficiency, so they'll see a nephrologist. They have cognitive defects, so they'll see a neurologist. And so they see a variety of different specialists. So the sales force that we put out was 16 people to cover all of the U.S. and obviously, not with the goal of calling on everybody and calling on all these specialists.

And the other challenge is these patients may see multiple specialists. Once they get their diagnosis, they tend to go back to their primary care point, which might be a specialist, but also equally likely might be their primary care, family physician, internal medicine. So there's no way that with the Bardet-Biedl launch, you're going to knock on the doors of doctors who you think might have a patient with that disease. So you try to create a world with greater awareness so that the patient in that community has the ability -- equal ability to find you as much as we find them. And so that's how it builds.

And that world in a launch market opportunity tends to grow. We said in the beginning, slow and steady. My team never liked the slow part. So we called it steady. But the point is it's a gradual launch, but it doesn't peak. It just keeps growing. And I'll go back to my Genzyme days. And if you look at the early Genzyme enzyme replacement therapies, 30 years later, multiple -- if you aggregate the companies that are working on Gaucher or Fabry or whatever, those are still $1 billion-plus opportunities that just -- and it's just -- and they're still finding the patients. I mean that is just the nature of these kind of rare diseases.

And so we think about the BBS opportunity as a steady growth, whatever trajectory you have, we're on a -- I think it's starting to evolve into a relatively steady picture here. That will go for a long time. And I don't know if the 5,000 patient number in the U.S. is the right number or not. I mean we'll see what happens over time. But it's not like how many years to peak. It's just like however many years you have, you'll have that opportunity. HO in contrast, we think there's about 10,000 patients in the U.S., similar numbers in Europe, for example. We can talk about Japan separately because that's an interesting story.

But 10,000 patients, so, twice from a number standpoint, BBS, but it has unique features, which are these patients because the vast majority, 80% plus, have pituitary insufficiency, they're taken care of by endocrinologists. So they are concentrated in a specialty, which means they have all the advantages of a specialty opportunity. And this is what the larger companies like. They love specialty. And the reason being is because you have a problem that is concentrated in a targeted audience. And so when you approach that kind of opportunity commercially, our goal was here, no, we want to cover the endocrinologists.

And of course, in today's world, you can do claims work and there's -- the system gives you a much greater ability to understand where these patients may be, how many they may be and which doctors may have them, which has allowed us to take the endocrinology world and tier them and say, okay, who are the top and by top, meaning physicians who are likely to have 2 or 5 or more patients. And those will be prioritized and then you tier down to physicians who may only have one.

But with that direction, so we put 42 reps -- sales reps in the field and with the goal of we're going to cover the endocrinologists as opposed to they find us. No, no, we're very actively going to go out there, try to educate that community, but also interact with it and build that relationship. So a very different opportunity, larger numbers, but also different dynamic. So as what we've said is that the expected ramp of HO is going to be meaningfully steeper than it is for BBS, but it also has some of the same ingredients of a classic ultra-rare disease, which is it's a high-priced drug.

It will be a prior authorization. We're going to have to go through this medical acceptance process, get policies in place. Patients coming into their doctor, it would be one of these things, well, why don't -- if there's a bad problem and you got a drug approved, why won't they all get a script tomorrow? The answer is you don't call this into the pharmacy. So these patients before you start a drug like this, it's going to be lifelong, expensive, has some side effects. Patients is going to come in and have a conversation with their doctor. And so one of the gating factors will be how quickly they can get in and get their appointment schedule like. So that's the dynamic.

Okay. On your last earnings call, you reported early metrics of the launch. Specifically, you talked about the 100 -- greater than 150 Patient Start Forms written. So can you talk to us about what that means relative to being on the market for just a few weeks? How should we be interpreting demand based on that number?

Yes. Those of you who have heard us talk about this, again, it's virtually impossible to truly predict what's going to happen in a rare disease launch for a variety of reasons, some of which I've listed here. The only real metric we have in Rhythm is at the same point in time for Bardet-Biedl syndrome, we had about 50 Start Forms, scripts equivalents. Here, we have greater than 150. So that ratio doesn't surprise me at all. Incredibly pleased with how we got started. I would have been happy with 2x. It's like you just don't know out of the gate.

But -- so yes, we're really pleased with where we are. But I think it's also very supportive of how we expected this opportunity to continue to evolve. And another question, which you either asked or I'll just volunteered is, is there -- was there a bolus? Was there pent-up demand? And there's always in a disease that's a severe disease where you've been in development for a number of years, there's some level of awareness, maybe a lot and patients who are following this and obviously waiting for the approval. So there's that kind of urgency out of the gate. But the numbers we gave you, which were greater than 150 scripts, Start Forms and written by 110 different physicians, which meant that most of those doctors wrote one script.

There was a few, obviously, who wrote more than one script. But it wasn't as though we had a small number of doctors who are driving that initial performance here. This is really, I think, reflective of the fact that across the community and patients are coming in, and it's exactly as I would have expected, which is doctors will get their first patient in, they'll write a script, and then the second patient, whenever to the extent they have a second patient, their next -- their visit comes up, they'll write a script. But I don't think it's a dynamic of -- I'm going to try a script and see how that patient does.

I think it's going to be very -- I think patients -- physicians are comfortable with the drug. It's been out there since approved drug since 2020. The data is extremely strong in terms of how patients have benefited. Today's world, the community, I mean, they're sharing experiences and pictures and some are quite striking. I mean there's patients who have gotten their lives restored and back to their pre-existing weight, meaning before they had their injury. So I think there's that kind of excitement in the community, but I think the steady part of this growth is a reflection of how quickly patients get in to see their doctor.

Just remind us what the list price is, the announced list price?

Sure. So give me round numbers, if you mind. So a year at fully compliant at full dose is about $380,000 gross to net under councils and they were about $330,000.

Okay. So one question I've gotten leading into the launch is this is obviously priced as a rare disease drug, $330,000 per patient per year, let's say. And if the goal is to help patients lose weight, then why wouldn't a GLP be sufficient in this particular population given the fact that it's priced at a fraction?

Yes, it's a critical question. And we've had -- when we got our first approval in 2020, the whole GLP-1 world was just emerging. And in the beginning, I wouldn't call it tough. It was understandably there were a lot of questions because the GLP-1 results were so amazing. I mean, they're incredible drugs. And a little bit of a view, they're a hammer and everything is a nail. It's like if you just need weight loss, you'll do this.

What we've come to appreciate across indications, which is -- remember, when I say across indications, all of these different diseases share the same problem. They have impaired signaling through the pathway. And GLP-1s do not consistently fix the problem. And in fact, in our Phase III trial, we allowed patients who were on a GLP-1 and many of them had tried a GLP-1 previously. In fact, we had about 16 patients who are on a GLP-1 in our Phase III hypothalamic obesity trial.

Now they couldn't be actively losing weight, but these are patients who had tried -- almost all of them had either gotten semaglutide or tirzepatide at one point, and multiple of them have had multiple different GLP-1s over time because, again, they had nothing else to try there. When they went on the trial, once you correct the deficiency in this pathway, then the fact that they were on the GLP-1, that group actually did as well or even better, a small number, this trial wasn't designed to test it.

But looking at that data, and we have very good historical data, we can see what happened on their GLP-1s, which is when they got on GLP-1, you could see some of them just plateaus, some lost a little weight, but they all tended to regain over time or just not continue losing. And then when they got on the setmelanotide, they had a pretty start this 20% in that group actually 27% placebo-adjusted weight loss. So I think the take-home back to your question of why wouldn't you just use a GLP-1 is -- GLP-1s, the patient -- our problem is essentially hormonal deficiency.

So if you are not signaling through this pathway, you're not making alpha-melanocyte-stimulating hormone. -- and that's what our drug is analogue. You have to restore the more normal physiology. Now we gain weight for different reasons. If you need more weight loss, if you're eating because you're depressed, if you're eating because you love ice cream, then a second anti-obesity medication on top of because you corrected that problem might be appropriate. But it won't be a replacement for this.

Okay. And what about the hyperphagia portion?

One of the challenges for the world we've lived in, and we and many others have struggled with this because the general obesity world talks about food noise and the like and that being quieted. I think that's a different thing. I know it's a different thing. This is the -- whatever the patient is experiencing in our world is that fact of not getting a full, just not being full. And so you just feel like you're pursuing it.

One of the most striking benefits and now that we're out in the world, for example, in Bardet-Biedl syndrome, it is the quieting -- the hyperphagia removing that drive to eat that has dramatically improved their quality of life in the sense that a child with Bardet-Biedl syndrome who couldn't even be in the kitchen and have a conversation with their parents while they're preparing dinner without just constantly talking about food, can now sit in the kitchen. A child who can go to school and not be stealing other kids' lunches or I mean there's just endless stories about how that preoccupation with food has interfered with their ability to have a normal life, interfered with the family siblings ability.

You can't socialize because they can't go out with the child who's suffering from this and go to a party where there's food available. So yes, the hyperphagia is a really important part of it. The language around hunger hyperphagia, food noise, I think, is still evolving, and it makes it a little confusing, but...

Okay. So how should we be thinking about what metrics you'll continue to give us at least in the early quarters of the launch?

Yes. We'll stay -- what we tried to do is stay with this paradigm, talk about is to give people an understanding of is it working? How is it working? And in any opportunity, we did this with Bardet-Biedl syndrome. We start with the epidemiology, which if it's published literature is usually pretty poor, but it's a starting point. Claims data if you have, but we did it for HO. We got a better sense. We updated our number for HO, that's where we felt much more confident.

We started with a 5,000 to 10,000 range. We went to 10,000. Then we had our early field force interactions, mostly our existing MSL force, Medical Science Liaison out there earlier last year. That effort up through the fall in September, we had -- we then shared that we -- through direct interactions with a health care provider, we had about 2,000 patients who either had a diagnosis or were suspected of having HO and the suspected was the majority of that.

So they weren't carrying the diagnosis, the majority of those patients in the 2,000. And so that's a good number, but that's not -- again, so then you get to -- you launched and you have Start Forms. So those are a hard number. So we're not going to update the 2,000 anymore. I think that's a less reliable number compared to Start Forms. We'll stay with the Start Forms. We'll do that for probably 4 quarters or so and see how we go.

And then we'll give you more color around the payers. We didn't do this on this call. 6 weeks is just too early to have a good feel. But hopefully, by our Q2 earnings call, we'll be able to give you a good sense of at least how that's starting to play out. And then ultimately, you move to revenues, which then capture everything and tell you what to do, and we'll stop giving you a Start Form.

So maybe let's move on to a different indication that you're looking at setmelanotide for Prader-Willi. Maybe just tell everybody what PWS is and where you are in development there?

Yes. Prader-Willi, it's a genetic disease also syndromic in a sense that has multiple different manifestations. There's many genes. There's a portion of chromosome 15, which is deleted. And in that section are genes related to this melanocortin-4 pathway. So there's a mouse model. There's reasons -- pretty good reasons to believe that this melanocortin-4 pathway is an important part of the biology of Prader-Willi. It is not the whole thing. And these children in this disease, and they tend to be diagnosed pretty early and reliably is they tend to be very weak, hypotonic at birth.

So flaccid muscle is not moving much. They eat poorly, but then it evolves fairly rapidly to this racious hyperphagic where they're eating all the time, they're gaining weight, but accompanied by some really challenging behaviors and other aspects, obsessive-compulsive diseases. The behaviors can lead to violence. And as they get older and bigger, it actually can be quite dangerous for even parents to be in a home with a child with Prader-Willi when they get hungry and frustrated and then they're strong enough that when they act out, they actually can hurt other family members.

So they often end up as they move into adulthood to being -- having to be treated or managed in homes and the like. And so devastating disease, no drugs approved. VYKAT, Soleno's drug was the first drug ever approved about a year ago, I get exactly when that was. But -- so that was a huge breakthrough because nothing and even there was a bit of a challenging clinical development program. So -- but big first step. So that's the program. Rhythm, we ran an early trial in Prader-Willi back in 2018 or so and a very complicated trial design, basically it was the wrong trial design. It was too short. The dose was too low and complicated design.

And we concluded correctly, we had no effect. However, if you went back and look at the patients who are on the highest dose for the longest period of time, 8 weeks in that trial, they actually had 3 out of the 4 patients seem to have a modest response. So okay, maybe it wasn't completely negative. And then we went back and we're running an open-label study with Dr. Miller, University of Florida. She's one of the leading investigators has been part of many, many trials, including Soleno's trials. And so she enrolled 18 patients. We released data on 8 patients in December.

One of the patients stopped after a few weeks related to family-related issues, but 17 patients have stayed in the trial. And so we'll provide updated data, 6-month data now on the 17 at our -- hopefully, at the upcoming ENDO Meeting, pending acceptance of our abstract. And what we've told people, what we'll present our goal is these are small data sets. I find you don't mean that data. It's not very helpful. But we'll give you individual data sets for all 17. So -- and we'll give you multiple measures for each patient. So we'll give you the BMI. We'll hopefully give you DEXA scans, which is looking at fat and lean mass.

And this pathway, correcting it has done very well on fat and lean. And if you think about restoring normal physiology, it makes sense. So to the extent GLP-1s, one of the concern is lean muscle mass loss, which is what happens sort of when you get in more of a starvation state with more normal physiology, losing more fat, but preserving lean or preserving the ability to put on lean would make sense. So we're seeing that in some other indications. We'll see what we see in Prader-Willi, but hopefully, that will be supportive.

And we'll also look at HQ-CT. So our goal for development in Phase III, and I think we're quite convinced that we have the activity we need to see based on even what we presented in December. We'll move into a Phase III development program, the details of which to be determined and shared as we learn more. But we will seek indications, both for BMI for the weight loss, but also for hyperphagia. How we get there? Do you run 2 trials? Can you get there with both endpoints in one trial? Again, we'll look for regulatory feedback.

Okay. So what would be the next step after you see this data set for Prader-Willi?

Yes. So then the other thing is some of you know, we have a strong life cycle management. So we have a weekly injectable, which is in Phase II for Hypothalamic Obesity and is also enrolling some Prader-Willi patients. And we have a next-generation daily single oral pill, which has already shown very good data in a Phase II HO study, and that will be going into Phase III for HO. So our goal will be to run the Prader-Willi study with one of those two to be determined.

Okay. Perfect. I did want to ask you about the current side-effect profile of setmelanotide. One of the observations that happens to all patients is hyperpigmentation. So this is a daily injectable. It's for rare disease. And so patients will make a risk-reward decision as to whether or not they want to be on the drug. Can you talk about how much of an impact that hyperpigmentation has on whatever portion of the patient population that chooses not to engage in therapy?

Yes, it's a point. I mean, so just to date, in our approved indication, about 5% to 6% of the patients stop because of hyperpigmentation. So in that sense, it's a small fraction of our treated population. That said, it's an on-target effect. And so 100% of the patients will have a darkening. Now some they like it, some they don't. I think for the Bardet-Biedl, probably a little more of an issue, HO, as Dr. Miller has said, what their experience in HO is so great, they don't care as much, so it will probably be less of a problem.

Now it is not a positive, meaning -- and so our next-generation therapies were very specifically designed not to hit that MC1 target, which causes the darkening. So our expectation is, and we've got evidence already for both, but we'll continue to flesh this out, that neither one of those will have hyperpigmentation. So we think the next generations will solve that.

To the extent it's 5% to 6% who might stay on the drug, that's great. To the extent that we open it up, particularly to certain populations that are more concerned about that, who have patients who are sitting on the sideline. They're not even signing up for initially. And I think that may be also more meaningful than we think.

Okay. And as you think about life cycle management, you mentioned the weekly and you mentioned the oral. How do you imagine them potentially both coexisting?

Yes. So from a company standpoint, we'll be indifferent. Really, the goal from the beginning was to offer choice. So over my career, I've been struck you can predict what you want. But at the end of the day, yes, patients sometimes surprise you. So we'll be indifferent. We'll try to create a pricing structure where that's not a driver. It's just patient choice.

Okay. And it's your belief that those will not have the hyperpigmentation side effects.

Yes. I think, like I said, from a preclinical data, I think, strong. I think our early clinical data very supportive. So I do think we've achieved our goal. We'll -- we've got pretty good evidence on biva. It's a little farther ahead of development than 718. 718 preclinically is even more specific, meaning less likely than biva. So I'm pretty confident there, but let's -- we'll confirm.

Okay. With that, we are out of time. So thank you, David, for spending the last 30 minutes with me, and thanks, everyone, for joining.

Ladies and gentlemen, thank you for standing by, and welcome to the Rhythm Pharmaceuticals First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference over to Dave Connolly.

Thank you, Michelle. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com.

This morning, we issued our press release that provides first quarter 2026 financial results and a business update, and that press release is available on our website. Our agenda is listed on Slide 2.

On the call today are David Meeker, Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International, who is on the line joining us from Europe.

On Slide 3, I'll remind you that this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC.

In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent dates.

We specifically disclaim any obligation to update such statements.

With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Thank you, Dave. Good morning and thank you for joining. So we had another good quarter. Now before we dive into some of the more recent events, I do want to highlight the ongoing progress in our base business, predominantly BBS.

Revenues for the quarter were $60 million. As we would expect with an ultra-rare disease, awareness of the disease continues to grow, leading to more patients diagnosed or potential candidates for therapy. We have learned much through this initial launch, and we continue to adapt and optimize use of available data to connect with the right health care providers who may have a BBS patient.

There is still more long-term opportunity to unlock with BBS. With the FDA approval of IMCIVREE for acquired HO on our PDUFA date and European marketing authorization, which came early, we have expanded our focus. As with the BBS launch, our plan will be to share a few of the early launch metrics with the goal of giving you a sense of how it is working, with the usual caveat that it is extremely early. That said, we are pleased with the strong start, with more than 150 start forms to date and a good reception at the payer level. Jennifer will provide more details.

Slide 6 is to remind you again of the significant opportunity in HO, with an estimated prevalence of 10,000 patients in the U.S. and Europe and 5,000 to 8,000 patients in Japan. And with a much more concentrated call point than BBS, this is a meaningfully larger opportunity.

Japan is positioned to be the second-largest opportunity for HO behind the U.S. As we have shared, we have been extremely appreciative of the highly collaborative, encouraging nature of our interactions with the Japanese regulatory authority, the PMDA. All Japanese patients have completed the 12-month trial, eight patients on treatment and four on placebo. One patient discontinued early secondary to hyperpigmentation.

Slide 7 shows the BMI change as compared to the values for the full 142 patients. As you can see from the results, the results were similar to the full cohort. The placebo-adjusted differences were slightly less, mostly due in part, at least, to the fact that the placebo group did not gain weight in the same way their Western counterparts did.

Although the numbers are small, this may reflect cultural differences with a more obesity-prone environment in the West. The team has moved rapidly to complete the filing, putting us in the position of an anticipated approval before the end of the year. The Japanese team is fully in place, and Yann will talk more about the opportunity and the organizational build.

Finally, as we have previously shared, we look forward to a number of milestones this year. Pending late-breaking abstract acceptance, our goal is to share Dr. Miller's 6-month data in PWS at the endo meeting in June. Similar to what was presented in December, we would expect to share BMI data, HQCT data and DEXA scan data for those patients who have completed the scans.

We anticipate sharing 718 data midyear, and we are targeting the Q2 earnings call, at which time we would share the Part C results in HO and potentially the available data in PWS. CMC work and biva bioequivalent studies for the new formulation are underway, with the goal of being in a position to start the Phase III trial with bivamelagon in HO by the end of 2026.

I will now turn the call over to Jennifer.

Thank you, David. I'm going to be starting today on Slide 10. It is an exciting time for Rhythm with the acquired HO approval, and our U.S. commercial launch is off to a strong start. The early reception has been positive. Physicians are prescribing IMCIVREE for patients with acquired HO, payers, especially those with experience through BBS, have begun approving reimbursement, and we have patients with acquired HO who have started therapy.

IMCIVREE was first approved in 2020 for POMC and LEPR, and we launched in 2022 for Bardet-Biedl syndrome. BBS is an ultra-rare disease with an estimated prevalence of 5,000 in the U.S. Disease awareness and diagnosis rates were low at the time of launch. Over the last three years, we helped build an active community of engaged physicians who support the earlier identification and treatment of patients. And we have worked to expand reimbursement of IMCIVREE.

In doing so, we delivered steady, consistent growth over the last three years. It wasn't always easy, but we've learned from the challenges along the way and laid a solid foundation for future launches, including our recent one in acquired hypothalamic obesity.

For BBS, in the first quarter of 2026, we had steady growth in prescriptions.

Similar to Q1 last year, we had patients that transitioned to new insurance plans, leading to a temporary increase in patients provided free drug through our bridge program. As of mid-April, we had transitioned most of these patients back to reimbursed therapy, and we are seeing steady growth in commercial patients.

Now moving to the acquired HO opportunity, which we estimate is approximately twice the size of BBS at 10,000 patients. We've grown our commercial organization to extend our reach in this larger opportunity, going from 16 sales reps for BBS to a total of 42 sales reps deployed across the country. We have similarly scaled our patient services team as well. The FDA approval on March 19 and the broad label, which goes beyond tumor and tumor treatment-related HO to include other injuries that may lead to acquired HO, has opened the doors for our team to engage with more physicians.

Our team's continued engagement with HCPs around the causes of acquired HO, the role of the MC4R pathway and the compelling efficacy data and product profile of IMCIVREE. This has resulted in the identification of more acquired HO patients. And we've seen steady progress of patients. This has resulted in the identification of more acquired HO patients, and we've seen steady progress of patients moving to diagnosis from suspected as physicians gain a better understanding of this unique disease and its causes. Next slide.

The initial response from patients and the physician community reflects the high unmet need for treatment for acquired HO. We have received more than 150 start forms in the six weeks since approval. Of these start forms, approximately 40 are for clinical trial patients. During the first six weeks of launch, there have been approximately 110 unique prescribers for acquired HO, of which about 80% are new prescribers of IMCIVREE. To date, the large majority of prescribers have written one script for an acquired HO patient.

In these early days of launch, approximately 80% of prescribers are endos, along with some pediatricians and primary care physicians. We're seeing encouraging receptivity among payers, too. Having approval in place enables us to get back in front of payers to continue education around acquired HO and IMCIVREE for this new indication. Our prior education that led to IMCIVREE coverage for BBS has facilitated our discussions with payers and supported their understanding of acquired HO as an MC4R pathway disease.

We are pleased to see initial approvals for reimbursement for acquired HO prescriptions during this early phase of launch, but we continue to expect it will take approximately three to nine months from approval for HO-specific IMCIVREE policies to be established. The early launch indicators are highly encouraging, reinforcing our confidence in the long-term potential of IMCIVREE in hypothalamic obesity. We look forward to updating you on our progress.

With that, let me hand it over to Yann.

Thank you, Jennifer. I will begin on Slide 13. We are very excited about the HO opportunity in the international region as we achieved significant milestones and our path towards bringing IMCIVREE to more patients.

Just last week, the European Commission granted marketing authorization for IMCIVREE for the treatment of obesity and control of hunger in patients four years old and older with acquired hypothalamic obesity due to hypothalamic injury or impairment.

Our dialogue with European regulators was very constructive and efficient, resulting in the EMEA's positive CHMP opinion coming sooner than we originally expected with marketing authorization following just one month later despite this process typically taking two months.

This is a tremendous achievement and the result of years of work and collaboration between Rhythm and our investigators, the European HO experts and the regulatory authorities, all of whom focused on bringing the first-ever therapy specifically approved for patients with HO.

With an estimated prevalence of approximately 10,000 patients in Europe, this is a meaningful opportunity, and we have a very experienced market access team that will lead us through country-level negotiations with launches anticipated to begin in 2027.

Similar to the process we previously followed for our approved indications of POMC/LEPR and BBS, we have begun efforts to seek an exemption from the German Federal Joint Committee, the G-BA, from its exclusion list that prohibits reimbursement for lifestyle drugs, such as drugs indicated for smoking cessation and general obesity. The CHMP opinion enabled us to begin this process, which can take six to nine months, putting us on track for a launch in Germany in 2027.

In addition, the key local reimbursement dossier are finalized and we will begin negotiations in France, Italy, Spain and other countries. For the U.K., we leverage our EU submission through the International Recognition Procedures, IRP, to seek authorization from the Medicines and Healthcare Products Regulatory Agency, or MHRA. This was already submitted last week based on the positive CHMP opinion.

Of course, there is already much enthusiasm in Europe as we have seen with the reimbursed early access programs for HO in France and Italy, which accounts for a meaningful portion of patients on reimbursed therapy in the international region. These early access programs have enabled many of the leading physicians in France and Italy to begin patients on setmelanotide, gain experience with the drug and see the benefit in patients.

The French AP1 program, in particular, has generated real-world efficacy results for publication, adding to the body of evidence supporting setmelanotide therapy for HO. Next week, at the European Congress of Endocrinology in Prague, French physicians will present real-world data from more than 60 patients with HO on setmelanotide in the early access program, including a cohort on therapy for up to 12 months. Next slide.

We are also rapidly advancing towards achieving anticipated marketing authorization and commercialization in Japan. With an estimated 5,000 to 8,000 patients with acquired hypothalamic obesity in Japan, where the prevalence and incidence rates are higher on a per capita basis than Europe and the U.S., the unmet need for an effective therapy is quite pronounced.

There has been strong KOL support since we first disclosed our Phase II data in HO and our commitment to quickly bringing IMCIVREE to Japanese patients in need has enabled positive and open dialogue with Japanese regulators. We now have almost 50 employees in Japan, and we've begun executing on our pre-launch tactics focused on disease awareness, including face-to-face interactions, webinars and symposia and patient identification. These activities provide us with a strong understanding of the disease landscape and position us well to begin pricing negotiations upon approval.

Just last month in Japan, I joined the team for a series of meeting with KOLs and Japanese government officials. In addition to the excitement for the potential impact setmelanotide will have on these patients, these KOLs and officials told us they were very appreciative of the speed and urgency with which we entered Japan. Of particular note, our team has moved fast, potentially securing approval in Japan less than a year from the U.S. approval when many companies wait years or partner with someone else to pursue approval.

As we announced today, the PMDA has accepted and is reviewing our NDA filing for IMCIVREE for acquired hypothalamic obesity. Japanese regulators do not publish or announce a time line for approval as it is done in the U.S. and Europe, but we anticipate approval and launch by the end of 2026.

Slide 15. Lastly, Q1 2026 was another strong quarter for the international region. We saw double-digit percent growth in patients on reimbursed therapy throughout the region, which includes more than 25 countries where IMCIVREE is available through national reimbursement or patient sales. BBS was a primary driver of growth from Q4 2025 to Q1 2026 with the early access programs in France and Italy for HO contribute meaningfully.

Since IMCIVREE was first authorized in Europe for POMC and LEPR in 2021, we have built a very strong foundation with positive and collaborative relationships in place with many experts and market access officials. This experience will serve us well with HO.

With that, I will turn it over to Hunter.

Thank you, Yann. I begin on Slide 17. Rhythm is well capitalized and off to a strong start of what promises to be a transformational 2026. The initial phase of the U.S. launch and acquired HO is quite encouraging, and we're excited about the significant ongoing progress in the international region as well.

We had a solid first quarter of 2026 with $60.1 million in global net revenues from sales of IMCIVREE, which represents 5% sequential growth over Q4 2025. During the first quarter, 61% of revenue was generated in the United States with the remainder generated outside the U.S., reflecting continued strong performance across those geographies. Globally, we saw continued growth in patients on reimbursed therapy with an 8% increase over the prior quarter, driven primarily by BBS.

On Slide 18, I'll walk through the revenue quarter-over-quarter as revenue increased from $57 million in Q4 2025 to $60 million in Q1 2026. First, the U.S. while the number of patients on reimbursed therapy in the United States increased from the end of Q1 to the -- end of Q4 to the end of Q1, the specialty pharmacy inventory increase of approximately $1.8 million in Q4 had the effect of pulling sales forward, which affected U.S. revenue during the quarter.

Separately, during Q1, shipments to RSP and dispenses to patients were pretty balanced. Therefore, specialty pharmacy inventory changes during the quarter did not have a significant impact on revenue.

In addition, as we saw last year during the first quarter, and as Jennifer mentioned, a number of patients transitioned insurance plans in the new year. And as a result, they received free drug from our bridging program for some or much of the quarter. Due to the strong collaborative efforts of our patient support teams working closely with patients, payers and HCPs, the number of patients on bridge therapy has since returned to Q4 levels.

Revenue outside the United States increased from $18.3 million to $23.2 million in Q1, reflecting a 27% sequential quarter-over-quarter increase. This growth was driven by increased sales volumes in Germany and France as well as certain named patient sales markets, particularly Saudi Arabia and Greece. As we have said previously, some of these named patient sales markets order with longer lead times, which can result in more variable quarterly revenue growth.

On Slide 19 is the financial snapshot of the first quarter of 2026 results compared to the first quarter of 2025. Gross to net for U.S. sales in Q1 was 84%, which is consistent with recent quarters. Cost of goods sold in this quarter was 11.9% of product revenue within our normal range and primarily driven by cost of materials and royalty payments on setmelanotide in connection with higher product revenue during the quarter.

As a percentage of product revenue, COGS can vary quarter-to-quarter based on changes in inventory balances and manufacturing activity. R&D expenses were $41.7 million for the first quarter of 2026 compared to $37 million in the same period last year. Sequentially, R&D expenses were flat compared to the fourth quarter of 2025.

During the quarter, an increase in headcount and related costs was offset by a decrease in clinical trial costs and costs related to chemistry, manufacturing and controls or CMC work. The year-over-year increase is primarily attributable to an increase in headcount-related costs.

SG&A expenses were $63.6 million for the first quarter of 2026 compared to $39.1 million in the prior year period. Sequentially, SG&A expenses increased by $6.1 million or approximately 11% compared to the fourth quarter of 2025. The change in SG&A expenses primarily reflected higher headcount-related costs, including stock-based compensation and marketing activities in support of the anticipated launch of IMCIVREE in acquired hypodynamic obesity.

Weighted average common shares outstanding were 68 million in Q1. Cash used in operations was approximately $44.2 million during the quarter. GAAP EPS for the first quarter of 2026 was a net loss per basic and diluted share of $0.83, including $0.02 per share from accrued dividends on convertible preferred stock of $1.1 million.

We ended the first quarter with approximately $341 million in cash, cash equivalents and short-term investments, which we continue to expect will be sufficient to fund planned operations for at least 24 months.

Lastly for me, on Slide 20, there is further detail on operating expenses for the first quarter and our full year operating expense guidance. For the first quarter, operating expenses of approximately $105.3 million included $23.1 million of stock-based compensation.

Non-GAAP operating expenses for Q1 were $82.2 million. We expect this increase on a quarterly basis throughout -- we expect this to increase on a quarterly basis throughout 2026 due to investments in CMC supporting RM-718.

The increased spending on clinical trials -- increased spending on clinical supply of bivamelagon ahead of our planned Phase III trial in hypothalamic obesity and the ongoing build-out of our team in Japan and preclinical work associated with our CHI program.

Our guidance is unchanged as we anticipate approximately $385 million to $415 million in non-GAAP operating expenses in fiscal year 2026, comprised of non-GAAP R&D of approximately $197 million to $213 million and non-GAAP SG&A expenses of approximately $188 million to $202 million.

With that, I'll turn the call back over to David.

Thanks, Hunter. So, in closing, I hope it's clear why we're excited about building the next phase of Rhythm. We see three clear pillars supporting this phase.

Work is continuing on the genetic causes of MC4R pathway impairment. That work is focused on improving our understanding of the specific genetic variants to better clarify those variants which have true loss of function. Those patients would be the focus of our next trials, which will be done with one of our next-generation therapies. That work will continue through 2026.

The second pillar, as we have focused on today is hypothalamic obesity, either due to injury or hypothalamic dysfunction due to failure of the hypothalamus to develop normally. And the third pillar is Prader-Willi syndrome, an extremely complicated disease with a huge unmet need, where we believe the MC4R pathway plays an important role.

We are aggressively pursuing our life cycle management strategy with the next-generation therapies, and we are building out our early research function focused on a small number of programs, which includes our program for CHI.

With that, we can now open the call for Q&A.

[Operator Instructions] And the first question will come from Phil Nadeau with TD Cowen.

Congrats on the HO launch. Question is on those patient start forms and patient identification. I think the last number you gave us for a number of patients identified was approximately a few thousand, but you've said you've identified more since. Any update to that number today? And of the patient start forms you've received, how many were from that patient pool versus how many were newly discovered patients since launch?

Jennifer?

Sure. So we've continued to make progress. We had a tiered list of groups that our sales reps were out targeting just in terms of disease education, and we've continued to make inroads in terms of penetrating that list. As I outlined, the 2,000 number has continued to increase even since that September date. It's not a number that we are updating moving forward as we're focusing more on metrics, including start forms.

So many of those start forms that we've received, if you take a look at them, have come from the list of physicians that we educated prior to approval. I would say that overall, the vast majority of these start forms were from physicians that our field teams had some type of engagement with prior to approval.

And the next question will come from Paul Matteis with Stifel.

Congrats on the early launch progress. Taking a step back, it feels like with a number of rare disease launches lately, the street just debates whether early success is a bolus or linear and sustainable. It looks like outside of the patients who are converting from clinical trials, you're adding around 20-ish a week. Do you feel like that's a cadence based on your visibility and conversations with physicians that could be sustainable for 2026? Or if not, how are you thinking about the kinetics?

Sure. So I would say like overall, we were very pleased just in terms of the early -- first six weeks just in terms of how we were progressing. As you mentioned, we did have 40 of those Rxs coming from trial conversions and our teams continue to work with our clinical teams just in terms of pulling those forward.

I would say that from the trial conversion piece, the remaining patients really are going to be based on the last visit that is actually set. So we continue to work through those in the next quarter and so moving forward.

In terms of additional patients beyond the trial conversion, you talked about bolus. I would say that in any launch, as expected, there's going to be physicians who are quite activated just in terms of waiting for approval. We have some that have proactively reached out to their patients upon approval to let them know about the availability of therapy.

But the vast majority of the patients or the physicians are waiting to have those conversations with their patients as they come in for their regularly scheduled visits. So that will flow through on, I would say, more of a steady pace moving forward. And we still have a lot of opportunity in terms of education as we move forward into the launch.

Did that answer to your question, Paul?

Yes.

And the next question is going to come from Derek Archila with Wells Fargo.

Congrats on the progress here. I just had a question on the 110 prescribers. I guess what's the makeup of these physicians. Are these mostly in centers of excellence? Or are these more one-offs?

So in terms of the prescribers, one, I will say that we were very happy to see that there is a nice breadth of physicians with patients that have been activated just in terms of interest to prescribe IMCIVREE for their patients. Is that something that we will continue to focus on as we move forward as there were many physicians on our targeted list with potential patients?

To date, I would say that the vast majority, similar to other rare diseases of these physicians have written one script for their patients. But I would also say that there is still opportunity that remains with some of these physicians just in terms of having additional patients within their practice. And that is aligned with sort of the flow that I outlined in terms of those patients coming in so that physician can have that ongoing dialogue regarding diagnosis as well as IMCIVREE potential.

And then relating -- sorry, relating to the concentration within the centers of excellence. In the past, we have outlined that we are focused in terms of these 42 priority accounts. However, I would say that our list follows also the patients that we have identified in the claims and the physicians who actually have these patients potentially that are HO patients. And so that breadth goes beyond these priority accounts, and we have received definite scripts that are outside of these priority accounts as well.

And the next question is going to come from Dennis Ding with Jefferies.

Congrats on the quarter. So we're trying to get a sense of underlying demand here. So for the doctors who have prescribed IMCIVREE to an AHO patient, what's primarily been the gating factor preventing them from prescribing it to their second or third patient? Is it doctors getting comfortable with the product profile and reimbursement? And it seems like the vast majority of them are new to IMCIVREE or perhaps just the timing of patient visits.

So I would say that the primary gating factors are -- could be two pieces. The primary one is the pace and the schedule just in terms of those patients coming in to have that dialogue around IMCIVREE. So that is really pre-planned just in terms of what that normal visit may look like for that patient.

I think the other factor is, as we also continued with our education with HCPs, there were some patients that may have come top of mind or had already been diagnosed. But through our education, they also had several aha moments just in terms of other patients that they suspected may also have AHO.

And going back in terms of our breadth, we were very pleased in terms of the label that we got upon approval that was squatters and just brain tumor and brain tumor management-related causes of AHO. So there's still opportunity just in terms of educating about the other potential causes of AHO and getting those patients also to a diagnosis.

Next question comes from Corinne Johnson with Goldman Sachs.

Maybe if you could just quantify a bit more the reimbursement dynamics here for these AHO patients that are getting on therapy and translate that to how we should think about maybe net price per patient as this becomes a bigger portion of contribution to revenue?

Yes. As Jennifer [indiscernible] just for the reimbursement. So a little bit of sense for the mix of payers here. And then I think Corinne's getting at the Medicaid, of course, would have a discount and the like and so.

Sure. So we are very early in the launch with just in terms of understanding what that payer mix will look like. And with that said, what we have seen is we've received scripts from basically all different payer types.

I would say that just from the access perspective moving forward, I think there was a lot of benefit just in terms of the education that we had done with the BBS and the payers who have experience with BBS, also understanding that this is very different than general obesity. So once again, very pleased in terms of the fact that we did and already do have patients who have been approved for reimbursement as early in the process. 

The caveat here is that in terms of actually having those policies in place, I reiterate that expectation continues to be approximately three to nine months from approval. So we're going to continue to monitor what that payer mix looks like as we move forward and update in future calls.

And the next question will come from Michael Ulz with Morgan Stanley.

Congrats on the launch as well. Maybe just a follow-up on the HO launch, just in terms of the greater than 150 start forms. Maybe if you can compare that to your internal expectations at the beginning of the launch?

And then secondly, just how should we think about converting those patients to revenues, just given it sounds like you're having sort of good traction with payers early on here?

So I would say that overall, just in terms of the start forms that we've received. We were really pleased with, one, the speed just in terms of working and all the work has been done with planning for those clinical trial conversions. So once again, the number that we were able to convert to actually having a commercial Rx was great just in terms of that collaborative effort to get to that point.

In terms of the other Rxs that we've received, I think that it is a strong start. Right now, we still feel like there's a lot of opportunity that remains just in terms of physicians that we've spoken with that may potentially have a patient who will have that conversation as we move forward. So, we do expect to see a steady growth throughout the year just in terms of the Rxs we received moving forward. 

From the payer dynamic piece, I would say that in terms of the approvals, if we also compare with BBS, well, one, the expectation in terms of these Rxs being denied upfront because there isn't a specific HO policy in place early just in terms of launch. That did happen. However, like with the appropriate information that was provided, we were seeing with some of these payers a quicker approval time line than we did in the initial BBS launch. So I think that was a positive dynamic that we did see.

And the next question is going to come from Seamus Fernandez with Guggenheim.

So there's going to be some updates on PWS soon. And just wanted to get a better sense of what you believe the sort of clinical value add of setmelanotide in this space or at least targeting MC4R can be in this space. Is it going to be exclusively on weight loss without much benefit on satiety? Is it both weight loss and satiety benefits that are a possibility?

Just trying to get a better sense of what you see the overall kind of PWS target product profile that you're seeking in this setting and what we're likely to learn with the six-month data versus potential update on the second quarter results conference call, which may be incremental to the presentation in that setting.

Yes. Thanks, Seamus. Yes, just to be clear, for the 718 data, that Prader-Willi data, whatever we have, and hopefully, we'll have something that we can comment on at that point, but that will be extremely early in a much smaller number of patients. So the most informative data set that's coming is Dr. Miller's data set, which we'll put out at endo.

Our expectation is really just based on the biology here, right, which is MC4R so one, as I said in my opening comments there, I mean, we're quite convinced that this MC4R pathway is an important part of the biology in Prader-Willi. It's not the only thing. Correcting this does not fix or help correct a Prader-Willi patient's disease, but it can have, we believe, a significant impact.

And that biology is a satiety signal. You decrease hunger and we think an accompanying decrease in their hyperphagia symptoms, which are the behaviors that are driven by that severe hunger and increases energy expenditure. And the net of that will be a decrease in their overall weight.

We also know, and we highlighted this on our December call when we released the early data from Dr. Miller's trial, there's other reasons these patients eat, and we talked about the obsessive compulsive disorder part of this and the like. And so those are confounding elements of a very complicated disease. But specifically with regard to what we would hope, it would be both, both a reduction in their hyperphagia symptoms and a decrease in [indiscernible].

And our next question will come from Samantha Semenkow with Citi.

Congratulations on the early HO launch. I have one on Japan. Just given the large potential market for HO in Japan, this is a bit in your prepared remarks, but could you elaborate more on some of the feedback you've received from Japanese KOLs on the impact IMCIVREE could have in this population? And then just pending the approval there later this year, how should we think about the trajectory of that launch in Japan relative to the early start we've seen thus far in the U.S. for HO?

Yes. So Yann, did you got that? So KOL reactions to...

Yes. Thank you for the question. So first of all, as I said in my remarks, I was in Japan a few weeks ago, and I have met with the many of the Japanese KOL and many of the investigators of the trial.

So first, I think everybody in Japan is really concerned about the disease because of the significant prevalence. Two, they saw firsthand the results on their patients. So they are already believers in the efficacy of the drug. The third aspect is that we have engaged with them extremely early on. So it's more than three years that we have interacted with them, and they have been part of publications and they have worked with us on a lot of data. So there is almost already a long-lasting relationship with them. So that's the third aspect.

The third aspect in terms of trajectories is still difficult to -- so first, I will not compare the U.S. and Japan, as it is a bit difficult to forecast. We have good results so far in terms of patient identification. We have identified 151 Tier 1 hospitals with the highest volume of brain tumor surgeries, and those hospitals are currently being visited by the Japanese field force. So again, I will not give a number, but we think that we have a significant amount of Japanese patients who will start the treatment in '27 following the launch.

And the next question will come from Joseph Stringer with Needham & Company.

You mentioned the 150 start forms in the first six weeks of the AHO launch, 40 or so from the clinical trial. How does this number of start forms compare to the first six weeks of the BBS launch? And is this a fair comp at this point? 

And then our second question is on the patients, the 150 patients associated with the start forms. How many of these are tumor injury-related patients, and those who have had surgery? Just curious, given the broad label, what you're seeing in terms of a diverse patient pool, perhaps outside of the more common tumor-related cause?

Yes. Thanks. So maybe I'll make a comment on the BBS, and then Jennifer can comment on the mix of the tumors versus [indiscernible]. So is BBS a good comp? I mean, it's a rare disease. I think there are some fundamental differences here, which we've highlighted just in terms of how the HO population, A, is larger, but B, also being concentrated in the endo. So there is a difference there.

So I'm not sure it's the best. That said, this is a steeper launch. I mean, the rate of start forms in the first six weeks is higher than we had in BBS. I'll make a few comments once we finish all the questions about how to put all this together. But I think what you're hearing is, yes, we're really pleased with the 150. And yes, it is a more rapid start than we had with BBS. 

And on the tumor, Jen?

Sure. And I'll echo the point that David made just in terms of the difference between the number of start forms in the first six weeks of the HO launch versus the BBS launch. The piece, though that I don't exactly remember, is the number of trial conversions on the BBS side, where that study had a much smaller number of total patients who were in the U.S. in that BBS study. But definitely, even with that said, a higher number of Rxs on this launch versus the BBS one.

In terms of the backgrounds of the patients, the vast majority of these patients are with tumor or a tumor treatment-related background. However, our indication is broader, and it covers things like stroke, TBI, or inflammation. And we have received Rxs from patients with these backgrounds as well.

And I think that to date, the physicians who are aware of acquired hypothalamic obesity, I think their thinking is more around the tumor-based background. So there's still a lot of opportunity in terms of even educating physicians holistically in terms of the various other backgrounds that may lead to acquired hypothalamic obesity moving forward as well.

And our last question is going to come from Lisa Walter with RBC Capital.

Maybe just one on Prader-Willi syndrome. I'm just curious how important you think it is for ex-U.S. approval to have both hyperphagia and weight loss on the label. I think with ViTAD, we saw that the EMA perhaps did not want to approve ViTAD, given some of the chosen endpoints. So just curious how you are thinking about Prader-Willi syndrome trial design here for success, both in the U.S. and ex-U.S.

Yes. Thanks for the question. I think one, just back to the mechanism of this drug and this pathway. It's a satiety signal. We reduce hunger. We've shown that consistently across all of our trials. We haven't, for some trial design reasons, had some challenges getting that into the U.S. label, but we have gotten it into the European label. So the European label, it is indicated for the reduction of hunger and diseases that we're studying.

So as I said before, our expectation is that we will seek a label that has both a hyperphagia reduction with the expectation that we would get that worldwide globally, certainly in the three major regions that we've talked about today, and a reduction in weight/BMI.

And I would now like to turn the call back over to David Meeker for closing remarks.

So thanks, everybody, for tuning in. I hope -- and thanks for your patience here. I realize everybody would like the specific numbers and the ability to provide guidance. And as we've said with BBS, and as we all know, launches are enormously challenging to forecast, and rare disease launches are even more difficult. So with that famous caveat that it is early, what you're hearing is, yes, we're pleased. 

We're really pleased with the start here. I think this is a strong start. We're very happy about the breadth of prescribers that Jennifer highlighted. This is not a launch where we've got two or three believers, and they're writing a bunch of scripts. This is where it's very broad.

The dynamic that question was raised. And as Jennifer highlighted, I think the good news about the dynamic is that there's been some reasonable sense of urgency. And we're at the Pediatric Endocrine Society meeting over the weekend in San Francisco. And I've been around a lot of rare disease type meetings, and rare diseases tend to get lost in these larger meetings, and that wasn't a huge meeting. 

But I have to say I was struck by the level of awareness, the number of endos, endocrinologists, pediatric endocrinologists, in this case, with awareness, a tremendous amount of excitement, and just really struggling with what they can do for their patients, and excited about at least now that there's something to do. So all of those dynamics, again, are very much in the positive category here. So we look forward to updating you. That will be on our Q2 call, but pretty excited about where we are out of the gates. Thanks, all.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Connolly, Investor Relations. Please go ahead.

Thank you, Marvin. This evening, we issued a press release announcing FDA approval of IMCIVREE for patients with acquired hypothalamic obesity. You can access the press release as well as the slides that we will be reviewing tonight by going to the Investors section on our website. Listed on Slide 3 are the speakers for tonight's call. David Meeker, Chair, President and Chief Executive Officer of Rhythm; Jennifer Lee, Executive Vice President, Head of North America; and Hunter Smith, our Chief Financial Officer; and Alicia Fiscus, our Senior Vice President, Head of Global Regulatory Affairs, are also on the line to answer questions.

Before we get started, I would like to remind everyone that the statements we make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the risk factors in our SEC filings.

In addition, any forward-looking statement made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements.

With that, I'll turn the call over to David.

Thank you, Dave, and thank you all for joining again on short notice, and it's a relatively uncivil hour of 7:00 p.m. for those of you on the East Coast. It's been an eventful week. As you saw from our press release, we are thrilled to announce that the FDA has granted approval for IMCIVREE in acquired hypothalamic obesity.

We all know how difficult it is to develop a therapy, which is safe and effective, let alone potentially transformative for an individual patient. Most development programs fail, and we shared our own challenging development story with you earlier this week. However, what I think we've done well at Rhythm is to follow the science. We know impaired signaling through the MC4R pathway leads to hyperphagia, lack of satiety, impaired energy expenditure and consequent obesity.

And we know that IMCIVREE and our next-generation molecules are good MC4R agonist. Our challenge has been to identify those patients with impaired signaling who might benefit from an MC4R agonist.

In the case of acquired HO, as many of you may remember, the biology was not obvious. By definition, these patients had injury to the hypothalamus, which in theory might compromise signaling through the pathway. But in addition to pathway injury, wouldn't it be likely one would lose the receptor as well. This disease is a classic example of where a precision medicine unlocks the biology.

The fact that we have seen a remarkably consistent response to an MC4R agonist in each of our trials, whether it is IMCIVREE or our next-generation small molecule tells us that the MC4R pathway is central to the biology. So here we are.

As highlighted on Slide 6, the indication statement is as follows: IMCIVREE is a melanocortin-4 receptor agonist indicated to reduce excess body weight and maintain reduction long term in adults and pediatric patients aged 4 years of age and older with acquired hypothalamic obesity.

We are pleased to have received a broad indication, which is not limited to only tumor-related causes of hypothalamic injury. There are no post-marketing commitments associated with this approval.

Slide 7 shows additional elements of the label, dosing, warnings and precautions and adverse events. There is nothing surprising here. Slide 8. Approval was supported by our global Phase III TRANSCEND trial, which evaluated setmelanotide in patients with acquired hypothalamic obesity. The label reflects the full 142 patient data set, which includes the initial 120 patients we read out as part of the primary analysis, the 12 patients from the Japanese cohort and 10 supplemental patients.

Treatment with setmelanotide resulted in a statistically significant placebo-adjusted difference of 18.4% in BMI reduction after 52 weeks of treatment. In addition to weight reduction, we also observed meaningful improvements in hunger. Among patients aged 12 and older, those treated with setmelanotide experienced an average 2.3 point reduction in weekly average hunger scores as compared with a 1.4 point reduction in the placebo group.

While hunger was not included in the indication statement, these data are included in the new label for IMCIVREE within the clinical results section as it is for each of our other indications. The reduction in hunger is consistent with what we understand about the underlying biology of acquired hypothalamic obesity and with what patients and caregivers describe as the most burdensome aspect of the disease.

I know we will get questions as to how this will impact our probability of getting coverage through Medicare. Jennifer and team have continued to work this issue. We have made progress differentiating ourselves from the other anti-obesity medications through the different compendia used by the payers. We will make further progress as we now come with this new indication. We are not starting from 0.

Slide 9. Today's approval further validates the central role of MC4R pathway impairment across both genetic and acquired forms of rare obesity. IMCIVREE has now demonstrated benefit across multiple diseases driven by this biology, reinforcing the durability of our franchise and supporting our continued investment in international opportunities and our next-generation MC4R agonist.

For hypothalamic obesity, we moved with urgency following proof of concept in the summer of 2022. Following this FDA approval, we look forward to updating you on our Japanese filing progress in Q2. Our EMEA submission for HO is under review. We anticipate the CHMP opinion in Q2 and the EU marketing authorization in the second half of 2026. These are all important milestones for patients with acquired hypothalamic obesity and for Rhythm.

Now before I turn the call over to Jennifer, I want to take a moment to thank the patients and their families. I've been part of many clinical trials over my career, and I don't think I've ever worked on a more complicated disease. Injury to this part of the brain leads to many problems which require treatment. Their medication list alone may be 1 or 2 pages.

Once you add all the additional testing required to be part of a clinical trial, it can become overwhelming and 1/3 of the patients manage all of that as part of the placebo group for a full year. Their contribution and sacrifice is a real gift to their community.

Finally, I want to thank the investigators and their clinical teams for their dedication and to all of the Rhythm employees who worked on this trial, and there were many. It is a passionate and dedicated team who believed in the difference this therapy could make in the lives of patients living with hypothalamic obesity.

With that, I'll turn the call over to Jennifer.

Thank you, David. This is indeed a long-awaited day, and I am excited for all the patients, their families and physicians as they now have a therapy that specifically targets the root cause of their acquired hypothalamic obesity.

I am also excited for Rhythm's North America team who have been preparing and planning for this day for well over a year. Beginning on Slide 11, acquired hypothalamic obesity represents a meaningfully larger opportunity than our genetic indications, including POMC [ leptin biallelic ] as well as BBS, while remaining very much a rare disease launch.

We estimate there are approximately 10,000 patients living with acquired hypothalamic obesity in the United States with roughly 500 incident patients per year. With today's approval, IMCIVREE becomes the first FDA-approved therapy to address the underlying biology of this disease. Historically, there was no approved treatment and therefore, little incentive to diagnose acquired HO.

With the availability of IMCIVREE, we expect more drive to get patients to an accurate diagnosis. And understanding that the need for a treatment option is high, this will lead to more and more patients beginning IMCIVREE over time. Next slide. Our expanded teams are in place, and we are ready to go. As we have shared in the past, we expanded our sales team of territory managers to 42, which is an increase from the 16 territory managers we had in place for the BBS commercial effort.

Our territory managers have been and continue to focus on engaging with physicians at key medical centers across the country. Our Access team as well as our Rhythm InTune patient service team are also in place. Together, these teams support securing reimbursement for patients, educating patients on what to expect when they begin treatment and helping patients stay on therapy to realize the benefits of IMCIVREE.

Next slide. With the treatment now available, we expect acquired hypothalamic obesity to become more widely recognized as a potential repercussion of not only brain tumors and their management, but also potentially the results of other hypothalamic injuries. AHO caused by certain tumors and/or related treatment account for the vast majority of AHO cases, and this population is our immediate focus.

Within this population, our goal is for all incident AHO patients to be diagnosed quickly so they can begin and stay on treatment with IMCIVREE. We will similarly work with urgency to give the broader prevalent population to a diagnosis and an initiation on IMCIVREE.

Next slide. We are excited to have IMCIVREE available to ACPs in acquired hypothalamic obesity patients. The feedback consistently suggests a high unmet need. And as seen in this slide that was shared back in September, the IMCIVREE product profile is resonating with strong interest to prescribe in AHO patients.

Now on to my final slide. Today's approval represents a significant milestone for patients. Our full team has been in the field for months, and we are well positioned to execute the launch and continue to increase diagnosis rates, expand access and to see more patients benefiting from therapy. We are ready and look forward to updating you on our progress.

Thank you, Jennifer. And I think now we can turn the call or open the call for questions.

[Operator Instructions] Our first question comes from the line of Derek Archila of Wells Fargo.

This is Simone on for Derek. Congrats on the approval. Before you had indicated that you will use patient start forms to measure the launch in the beginning. How should we think about the initial patient start form cadence in the first 1 to 2 quarters post launch?

Yes. Maybe I'll lead off here and then Jennifer can then amplify. I think as we've been pretty clear as we've had this question multiple times, and it's the right question coming in. Jennifer said, we're incredibly excited about this opportunity. I mean it's meaningfully larger. It's organized in a very different way in these specialties. And so our ability to identify patients is going to be significantly greater than BBS, for example, which is a bit more of a needle in a haystack exercise. However, as Jennifer said, this is -- has many elements of a rare disease.

And those elements, which are not everybody has a diagnosis. And so even though a health care provider may say, yes, that patient fits the profile, I hadn't thought about that, they will want to bring that patient back in. And so there'll be issues such as getting access to their physician, health care provider.

There's not -- these endocrinologists tend to be busy, so there won't necessarily be immediate access in that sense. So that will be a little bit of a delay. And then although we're in a really good position with the payers having launched PPL, our POMC leptin receptor and BBS, and they have good familiarity with the drug, and we have very good coverage across all payer segments there with the exception of Medicare. That will be our starting point, but you still need policies put in place. But having taken the bulk of the answer, Jennifer, other things there that we should add?

So I think you've covered the majority. I would say that the expansion of the team also will allow us to expedite the education and outreach to the physicians that we have outlined. David, you already mentioned the access environment, which I think took years to get to, which is an amazing starting point in terms of the next indication.

And we've had positive feedback through the research that we've conducted in terms of the payers understanding that this is an extension in terms of a different indication that is an MC4R disease, different than general obesity. I think the other piece is that the data for IMCIVREE is quite strong in the patient population and the unmet need in this patient population, who have some of them tried other things is quite high.

So all of this leads to positive condition just in terms of us launching in this indication. I would say that even on the caveat side, everything that you outlined in terms of timing is true. The alignment in terms of rare disease, not all patients are suspected, but we are having very good discussions with physicians, who are suspecting and wanting to get patients to a diagnosis. And that's amplified now that there's a treatment option available. So very excited overall in terms of our ability to get this product out to the market.

So Simone, the short answer to your question is there will be a steady ramp faster than BBS, we anticipate, but not we've contrasted with up Prader-Willi launch, for example, which is a near-term reference point that a lot of people point to.

Our next question comes from the line of Tazeen Ahmad of Bank of America.

Congratulations on the approval. I maybe wanted to get a sense, David, about what metrics we should be expecting to get. So for similar types of launches, companies at least initially provide things like script data, maybe number of touch points with physicians, how many physicians are writing scripts, et cetera.

Can you give us a sense of what to expect here, if anything, on that granularity that I just asked about? And should we expect you to start breaking out your revenues by indication?

Yes. No, thanks, Tazeen. You highlighted exactly what I would anticipate. It's very much what we did with BBS. So we will give you start forms. We will give you insight into payer coverage as we get a sense for lives covered and again, we'll do our best to give you a feeling for how that part of the process is going.

Physicians' writing scripts is also something that we've done at least qualitatively. So those are the 3 categories, in which you can expect to get information. We will not be breaking out revenue initially. I think revenue early on in a rare disease launch is not so helpful because of all the points we highlighted in the answer to the prior question.

I think the things with all of you and what we'll be looking at is are patients getting in, getting the diagnosis? Are they getting a script written? And then how are we doing in terms of beginning to work them through the process.

Our next question comes from the line of Michael Ulz of Morgan Stanley.

This is Rohit on for Mike. Congratulations on the approval. I think in the past, you've said greater than 75 patients are enrolled in the extension trial. How soon do you expect them to get on paid drug? And then in terms of pricing, will it be the same as BBS?

Do you want to take that, Jennifer?

Sure. Pricing-wise, we are keeping a similar pricing for all indications for IMCIVREE. In terms of the patients that were in the study, our patient service team has been in very close contact with our clinical teams, who've also been putting them in contact with the PIs. So that is an ongoing process just in terms of being able to understand the actual prescriber that would be prescribing the drug to transition patients over from a clinical trial over to commercial.

So we're going to be working quickly just in terms of getting those Rxs over and then working the process just in terms of reimbursement and gaining access for those patients.

Our next question comes from the line of Corinne Johnson of Goldman Sachs.

Congrats again on the approval. In the past, you spoke -- I think at last fall, you talked about having 2,000 patients or so identified. I'm curious where that number stands today? And if you could speak to the process of getting those patients actually on the drug. And then kind of separately on the reimbursement front, could you remind us what the payer mix is here and how it compares to your other indications with any kind of read-through implications to the coverage piece of this?

Jennifer?

Sure. So we had outlined the 2,000 number back in September. Since that point, our teams have been continuing to reach out to physicians and so that number is growing. We are not updating that number at this point of time.

But just in terms of process-wise, I think that there are going to be physicians with diagnosed patients that are ready to go just in terms of ready to prescribe IMCIVREE. The timing element is -- the timing element of when that next physician -- next physician will actually be seeing that patient in the next visit.

So there's a bit of a lag from approval to actually getting the Rx as the physician has a discussion with that patient. From a payer mix perspective, our data outlined as we went through the process, more patients that had backgrounds that were very similar to AHO patients starting with the brain tumor, the management, the evidence of endocrinopathies, evidence of obesity and was seeing an endocrinologist on an ongoing basis.

So while we have that information, we don't have validation that they're all diagnosed AHO patients. So the payer mix is still TBD at this point of time. I think with that said, from BBS versus AHO, these tumors are bimodal just in terms of age distribution.

So I would expect that there would be a skew towards older patient population in general, which may impact the payer mix. But similarly to BBS, we're going to have to see what the age distribution and payer mix ultimately looks like. In the initial stages of the BBS launch, we saw younger patients in general that were scripted initially. So we're going to have to see how that goes as we move forward with the launch.

Our next question comes from the line of Samantha Semenkow of Citi.

I'm wondering, just based on the payer interactions that you've had to date prior to the approval, what are payers looking for in terms of a patient disposition? Is there a certain amount of BMI change that they're looking for? Is it the rapid weight gain? I'm just curious what they are going to be scoring on in order to approve treatment with IMCIVREE.

Yes. So what was interesting, even looking at the BBS launch is that they were definitely looking similar just in terms of does this drug actually work. I think that was like the main thing, and that will be similar for the HO patient population. The standard is a change just in terms of BMI from baseline to the first evaluation point.

But there were other things even that indicated that there was clinical benefit, especially if it was expressed by the physician in terms of impact on hunger and those types of parameters. So I think it's like holistic just in general, and they are really looking to see that the patients are benefiting on this drug.

Our next question comes from the line of Jon Wolleben of Citizens.

Congrats. I'm wondering if you could talk a little bit about your expectations for prior authorization, what payers are going to want to see to get patients on drug and remind us of what's necessary for an actual diagnosis of HO?

Right. So in terms of the market research that we did, we did ask general questions in terms of what would be required for documentation of the diagnosis, and we also probe specifically on different points. So in terms of documentation by the physician, it was a clinical diagnosis similar to our study.

There was no specific requirements for imaging in terms of MRI or CT scans to prove this point, but more like looking back in terms of the fact that, that patient had, for example, the brain tumor patients, an injury that happened with confirmation that there was obesity that also -- a weight gain that happened shortly after. So more of a clinical diagnosis versus a requirement for imaging that was expressed in the market in sights.

Our next question comes from the line of Thomas Smith of Leerink Partners.

This is Brian Conley on for Tom Smith. Congrats again on the approval. Just curious here if you can elaborate on your launch readiness in terms of the size of the sales team. And maybe if you can comment on your strategy in focusing on patients that had previous tumor treatments versus patients that are currently being treated or seen by an endocrinologist.

Sure. So our sales team was hired last year, and we have a rightsized team that is 42 on ground that have been working through the tiered list in terms of targeted ACPs to educate. Holistically, our data leads us to the physicians that have the highest volume of potential AHO patients just in terms of prioritization.

It just also naturally led us to key centers that treat pituitary brain tumor patients. And these centers are outlined across the nation. And this is where the patients go when they're diagnosed with a brain tumor. That's where they get their management. It's where they are linked also with an endocrinologist that is there to treat their resulting endocrinopathies.

So I would say that, that is a high area of focus and it allows us to potentially get patients to a really quick diagnosis once the symptoms of AHO actually initiate. However, like I said, like our list leads us to the physicians and not all the physicians that we've identified are dislocated just in these centers themselves. So we're going physician by physician in terms of that education, and we'll continue to do that throughout the launch.

Our next question comes from the line of Ellen Horste of TD Cowen.

Congratulations on the approval. I'm on for Phil. One question from us. Previously, you mentioned that you're in the process of getting an ICD-10 code for HO. Do you have an update on the estimated time line for that? And do you see that as a growth lever in the early launch?

Sure. Our efforts just in terms of getting the ICD-10 code specific for HO are ongoing. And the timing will be TBD as we continue those discussions. And we hope very much to have something in place similar to our success in terms of getting one in place for BBS.

I think that because, of course, having the ICD-10 code in place would be a true -- would be great just in terms of having another crumb that's quite strong to lead us to the right physician to educate.

With that said, as I've outlined, I think that the data that we have to triangulate to that right physician in HO is so much stronger than our ability to do the same for an indication like BBS. So I feel very confident just in terms of the list that we have in terms of physicians even without that code at this point in time.

Our next question comes from the line of Seamus Fernandez of Guggenheim Securities.

This is Evan Wang on for Seamus. Adding our congrats on the approval. Understanding that there's no update on the patients identified, but can you talk more about the -- its reception from the physician outreach thus far, I guess, both in terms of if the number of patients they're managing is in line with your estimates and also how they're planning to initially prescribe IMCIVREE among their patients?

Sorry, can I just ask you to repeat the last part of the question?

Curious if any learnings from the physician outreach in terms of how they plan to initially prescribe IMCIVREE among their patients.

Okay. Sure. I think overall, just as we have gone through the list, one, the data limitation is that our purview of look back is limited to patients who had brain tumor management within the past 10 years. So that's one limitation. But it's also potentially one reason why some of the patients or some of the physicians actually have more patients than what our claims analysis has shown. On the flip side, we have come across some physicians, who were identified as having a patient that has indicated that they do not.

So it's a bit of a mix, but I would say holistically, just in terms of even taking a look at that number that we outlined in September, we feel very good just in terms of being able to identify the right physician that ultimately may have one of these patients.

And I would say that a lot of those discussions are leading to those moments where the physician may not even know that they have that patient, but in reflection in terms of the background, they're thinking twice in terms of whether or not they actually do have these patients within their practice. And that's the evaluation that they're doing following our education.

In terms of Rxs, like I said, it's -- as in any disease, any -- I would say that there are physicians who are -- have and quite aware just in terms of AHO and been diagnosing those patients and treating those patients and understands the need for another therapy and are ready to prescribe.

And on the other end of the spectrum, like I said, there are certain physicians who -- well, they didn't even realize that they may have a patient and our education is getting them to that point where they need to do further evaluation. So I think the education is what will lead to the Rxs with some ready to go and some needing a bit more time.

Our next question comes from the line of Dennis Ding of Jefferies.

This is Anthea on for Dennis. Congrats on the approval. Could you provide a little bit more information on kind of the CMS' receptivity to rare obesity indications and what the gating factors are for coverage, not only for HO, but also whether that could come online for BBS and POMC as well?

Go ahead.

Maybe I -- Jennifer, go ahead.

So we -- when we got approval for BBS, we engaged with all payers, including CMS, knowing that there was the restriction that was specifically outlined in terms of Medicare for weight loss medications. At that time, it was a different group that we spoke with that there was clarity just in terms of wanting just something more than weight loss in terms of the indication and the PI itself.

We reengaged in discussions, but decided more recently in terms of HO to hold off until we actually saw what our ultimate label would look like. That doesn't mean though we weren't continuing our efforts. We continued our efforts across the Board to support access, which included what David outlined in terms of our work compendia by compendia. These are clinical compendias and pricing compendias.

And throughout all that work, we were able to convert the classification of IMCIVREE from an anti-obesity medication to something different in each of those categories, whether it's genetic protein replacements or endocrine and metabolic agents. And through that process, we've gone back to payers, and we've had success just in terms of being able to once again gain access through that differentiation.

So now that we have our indication, we do plan to go back to CMS and outline the progress that we've made and continue those discussions. David, I don't know if you want to add anything there.

No. It's perfect.

Our next question comes from the line of Lisa Walter of RBC.

Congrats on the approval. Just curious, does your market research with payers suggest that they would be open to covering a combo treatment with IMCIVREE and a GLP-1? Any color here would be helpful.

So our market research was focused on covering IMCIVREE. So we did not ask the specific question in terms of combo therapy. I think holistically, our real sort of positioning of the drug is the initiation and the foundation treatment for these patients to address what's missing in their -- and the cause of their specific obesity. So that was the discussions that we had. So I don't have color just. In terms of combination.

Yes. And the only thing I'd add to that, I think we, over the past few years, learned a lot about GLP-1s and their potential use in patients with MC4R deficiency. For the most part, POMC, leptin receptor biallelics, BBS, they're not used, not to say that there isn't some use. And we had additional data as part of this current study, where we had about 30 patients in the trial, who would -- either about half of those patients had previously used a GLP-1 and not had the response they wanted or they were on the drug when they started the trial, which was allowed as long as they weren't actively losing weight.

And we were able to have the weight curves or BMI curves, if you will, for each of those patients, and you could see the accelerated weight gain when they had their injury, you could see when they started their GLP-1s and almost always, in each of these patients' cases, in those where there was some weight loss, it tended not to gain sustained for the most part, and then it would start to regain and then they had a good response to setmelanotide.

But I think the conclusion here is if you have a deficit in your MC4R signaling, one of the other anti-obesity medicines is going to have a hard time working. It's not that it can't have any effect, but it will have a hard time working. So back to Jennifer's point that we do think that you want to restore the normal physiology first, replace what's missing in this case, the alpha-melanocyte-stimulating hormone with an analog such as IMCIVREE.

And then once you've done that, if you need additional, then, of course, you can add something on. And I don't know if Jennifer mentioned, I mean, we have not basically had a requirement to step through GLP-1s. They have not been researched in this indication. They're not specifically indicated for that, although they're indicated for weight reduction. So we'll see. But I think the biggest issue is they're not the biologic answer here.

Our next question comes from the line of Paul Matteis of Stifel.

This is Julian on for Paul. Congrats on the update and positive news. Just wanted to clarify whether you all were expecting for the treatment of hyperphagia to be included in the indication statement? Or does it read exactly as you anticipated with its inclusion in the clinical data section? And then one other quick question as well is on the warning slide for the monitoring patients for adrenal insufficiency, do you have a sense on what that exactly entails? And is that surprising to you given the population here?

Yes. I'll take the adrenal first. And then Alicia, maybe you want to make a comment on how the whole hyperphagia piece evolved. The adrenal insufficiency caution there and the warning is something we favored being put in. 80%-ish of these patients -- well, 80-plus percent have some degree of hormonal insufficiency, pituitary insufficiency, often which includes the presence of either vasopressin insufficiency, formerly known as diabetes insipidus, and/or adrenal insufficiency.

And so if they have an acute injury or some severe event, then they need coverage of their steroids, stress dose steroid dose, if you will. And for the diabetes insipidus, the vasopressin insufficiency part of their disease, their challenge there is that they can't manage their salt and water.

So they have to be very closely monitored. And that's their baseline state before they enter the trial or went on IMCIVREE. The point of that warning was just that as you -- if you are losing weight and you're eating changes and the like, you want to pay attention to both the doses of the medications you're on, and they are on many because particularly if there's a weight-related part of that.

And in this case of the vasopressin insufficiency, your water balance and so your sodium. So it's to make sure that doctors are vigilant. They don't just start a medication like this and realize that these complicated patients may not have other things which need to be monitored. Alicia, do you want to just comment a little bit on the hyperphagia?

Yes, sure. Thanks, David. So giving hyperphagia or reduction in hunger in the indication statement, we were limited because the FDA will not accept a subgroup analysis for labeling claims. Our hunger instrument assesses self-reported in age 12 and over, which is the self-reported is what they place the most value on and caregiver reported under 12.

And just to finish on that, the question was, was it what we expected? Yes, this is what we expected. Was it what we had hoped for? No. We had hoped for potentially that this time we would be able to break through. But as Alicia said, they've been just remarkably consistent on their general response to how they see the hyperphagia piece of it.

I'm showing no further questions at this time. I'd now like to turn it back to David Meeker for closing remarks.

Great. Well, thanks, everybody, for tuning in, as I said, on short notice. Obviously, an important moment for Rhythm, but a really important moment for patients with hypothalamic obesity. I mean the role this part of their disease plays on their overall quality of life is immense. And I think as all of us have heard these stories and got to know some of these patients and their families, they were really -- they are desperate for help. And setmelanotide is not a cure, but I think it has an opportunity to make a real difference for these patients. So we're really excited to get going, and I think we're well positioned to do that, and we look forward to updating you all. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Connolly, Investor Relations. Please go ahead.

Thank you, Daniel, and good afternoon, everyone, and welcome. This afternoon, we issued a press release with the Phase III top line results for our EMANATE trial. You can access the press release as well as the slides that we will be reviewing today by going to the Investors section of our website. Listed on Slide 3 are the speakers for today's call. David Meeker, Chair, President and Chief Executive Officer, will walk through these data. And Dr. Alastair Garfield, our Chief Scientific Officer; and Hunter Smith, our CFO, are available to answer questions on this call as well.

Before we get started, I would like to remind everyone that these statements we make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the risk factors in our Risk Factors section of our SEC filings. In addition, any forward-looking statement made on this call represents our views only as of today and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements.

With that, I'll turn the call over to David.

Thank you, Dave, and thank you all for joining this afternoon. It's been a long road, ending not exactly where we had hoped, missing the primary endpoint in all 4 cohorts, but with some positive elements, which will position us well going forward. As expected, we saw positive signals in the POMC Het cohort. Somewhat unexpectedly, the SH2B1 cohort was negative. And surprisingly, we did see a clear signal in the SRC1 cohort. We will look at each of these in greater detail.

We continue to look forward to our March 20 PDUFA date, and I will have no further comments about that on today's call. In addition to the signals in the POMC and SRC1 cohorts, we have learned more about each of these genes, which will position us to design a better study going forward. We know patients with impaired signaling through the pathway have a difficult time losing weight with diet and exercise, and we have not seen a clear placebo effect in any of our trials. The stronger placebo response in some of the cohorts is consistent with a larger number of patients having benign variant and a pathophysiology more consistent with general obesity.

Finally, this trial suffered from an exceptionally high dropout rate, which becomes extremely challenging when you perform the conservative multiple imputation analysis on the primary endpoint. Slide 6 shows the top line data. The values are the least square mean difference between setmelanotide and placebo for the modified intent-to-treat analysis using multiple imputation for the missing data points. As you can see from the p-values, we missed the primary endpoint analysis for each of the 4 genes.

Now before we dig more deeply into the data, let's briefly revisit how we got here, beginning on Slide 7 with a familiar cartoon of the MC4R pathway. Our approach to identifying genetic populations likely to respond to setmelanotide was always a holistic process based on evolving scientific and clinical data that supported MC4R pathway dysfunction as a contributor to obesity in these patients. The genes under investigation in our EMANATE study all impact POMC neuron function and are predicted to reduce alpha-MSH, suggesting that replacement with setmelanotide would be effective in reestablishing pathway function and reducing body weight. The success of this approach is predicated on understanding that the gene variants we enrolled do indeed compromise MC4R pathway function.

As shown on Slide 8, this variant classification process is a significant challenge for both the medical genetics field and Rhythm in no small part due to the fact that scientific understanding of variants is always evolving, leading to a dynamic classification process. For our POMC, PCSK1 and LEPR heterozygous cohorts, we had a good understanding of our enrolled variants that enable more accurate patient enrollment, which as you will see, is borne out in our genetically confirmed cohort analyses.

By comparison, much less was known about the SRC1 and SH2B1 cohorts where almost all variants are classified as VUS, variants of unknown significance. As a reminder, on average, only 20% of VUS variants end up being classified as P, pathogenic or likely pathogenic. The gray box in the upper right corner shows which variant classifications were enrolled in each cohort. For POMC, PCSK1 and LEPR Hets, we enrolled pathogenic, likely pathogenic and suspected pathogenic variants, the latter representing variants still classified as VUS, but the data is increasingly pointing towards that variant being pathogenic. For SRC1, all patients were VUS, whereas the SH2B1 gene had a mix with the 16P11 deletion patients by definition, having loss of function of the gene.

Slide 9 shows the number of patients enrolled in each cohort, which is noteworthy for the small number of patients in the leptin receptor Het cohort. This is an extremely rare indication, and we were not able to enroll fully. The trial design was a standard double-blind, placebo-controlled trial randomized 1:1 with a primary endpoint of change in BMI at 52 weeks.

Slide 10 shows the demographics, which were similar across cohorts. On average, patients in each group suffered with severe obesity with BMI values greater than 40. The adverse event profile as shown on Slide 11 is similar to other trials run with setmelanotide with injection site reactions, GI complaints and hyperpigmentation being most common.

Slide 12 shows the dropout rate with an average 40% to 60% of patients discontinuing with the exception of the LEPR Het group with a very small number of patients, the dropout rate was similar between treated and placebo patients.

Slide 13 shows the reasons for discontinuations, aggregating patients across all 4 studies. Patient decision was the most common reason for patients on placebo and adverse events were the most common reason for patients on setmelanotide. Now beginning with the POMC Hets cohort on Slide 15, let's dig into the clinical data. As you might expect, we have looked at the data several ways. We missed on the primary endpoint in the modified intent-to-treat population using the conservative multiple imputation method required by regulatory authorities where the imputed data is informed by the opposite arm. Specifically, a patient who discontinues in the setmelanotide arm at whatever time point will be considered as though their outcome at week 52 was the same as the placebo group.

On Slide 15, we show a post-hoc analysis using the last observation carried forward methodology where the last value a patient has prior to discontinuing is used for the final analysis. This showed a highly statistically significant difference of 5.53% for the same modified intent-to-treat population.

Moving to Slide 16. As noted in the intro, we have utilized an in-vitro assay to assess loss of function for each of the variants in the POMC and LEPR genes. This allowed us to classify variants as pathogenic, likely pathogenic and suspected pathogenic. The study protocol included reconfirming the genetic eligibility and variant classification for each patient in order to conduct a prespecified analysis for genetically confirmed patients. That reconfirmation resulted in a net 11 patients being removed for not having that genetic confirmation. On Slide 16, we show using the last observation carryforward methodology in the genetically confirmed cohort, a statistically significant difference of 6.8%.

Slide 17. Finally, using the rationale that a response to setmelanotide, a highly specific peptide of the MC4R receptor provides further evidence that the MC4R pathway is central to that patient's disease, we looked at those genetically confirmed patients who completed the study. This additional post-hoc analysis showed a highly statistically significant lease square mean difference of 9.7%.

The short story for the LEPR Het cohort is summarized on Slide 19. These patients were hard -- rare and hard to recruit. A small number of patients recruited had one variant, which on reanalysis was down classified by our central lab. We do not anticipate doing further work on this patient population.

The SRC1 cohort, as we have highlighted multiple times, by virtue of the fact that all variants enrolled were classified as VUS had a low probability of success. Despite that, the primary endpoint modified intent-to-treat analysis with multiple imputation for the almost 60% of patients who discontinued from this cohort was a least square mean value of minus 4% and showed the strongest trend towards significance with a p-value of equal to 0.12.

On Slide 21, in the same post-hoc analysis we performed for the POMC Het patients using the last observation carried forward methodology, we saw a highly statistically significant lease square mean difference of 6.24%.

On Slide 22, we looked at the post-hoc analysis of genetically confirmed patients who completed the study where we saw a statistically significant difference of 8%.

Finally, on Slide 23, to give you an example of the process by which we can work to better understand loss of function and the ability of patients with a true loss of function variant to respond to treatment, we examined those patients who had a variant in the critical binding domain for the protein for the SRC1 protein. 19 patients carried this variant with 12 of the 19 completing the trial. In those 12 patients, the placebo-adjusted difference was 12.7%.

The most disappointing cohort was SH2B1/16p11. We had hypothesized that the 16p11 deletion patients who, by definition, would have loss of function of the SH2B1 gene, which is embedded in the deleted region, should respond. The modified intent to treat showed no effect on average. And when we look at the genetically confirmed completer analysis shown on Slide 25, the difference was only 3% and not statistically significant.

A further analysis looking only at the known loss of function 16p11 patients on Slide 26 similarly showed only a modest effect, which did not reach statistical significance. In summary, we are disappointed by the top line results, but encouraged by the findings in the POMC Hets and SRC1 cohorts. We will continue to interrogate these and other DAYBREAK genes from our Phase II study to improve our ability to determine loss of function variants.

Our priorities going forward for our next-generation therapies will be the HO studies, the Prader-Willi studies, BBS studies and patients with confirmed loss of function genetic variants. Patients with genetically impaired signaling through the MC4 pathway represent a significant unmet medical need and addressing that need is one of the 3 key pillars of Rhythm's strategy. The other 2, as you know, are anatomic abnormalities of the hypothalamus, which acquired HO is perhaps best known, and we look forward to the upcoming PDUFA date. The third pillar is Prader-Willi syndrome, a genetic disease but with unique challenges and representing a large unmet need.

I want to close by thanking the patients, their families and our clinical investigators and their teams. This trial was not easy. It was statistically negative, but not negative in terms of the learnings, which will move us closer to developing a meaningful treatment for these diseases. And with that, we can open it up for questions.

[Operator Instructions] Our first question comes from Phil Nadeau with TD Cowen.

Just a question on next steps to dive in a little bit further. It seems like the imputation analyses that you did computing what placebo would have done are very conservative and maybe not appropriate for a study with such a high dropout rate. So I guess first part of the question is, why wasn't that the imputation method that was chosen? And then second, on next steps, it sounds like you're not going to take the data to the FDA to see if like the completer analysis or LOCF could support a filing. Is that fair?

Yes. Taking the second part of the question, that's correct. We're not going to file on any of these. So I think the way we're looking at this data, if it was robustly positive, we would, of course, as we've said, taken that to the regulators, FDA. Your question about whether they would accept a different approach, no. I think there -- across all of our programs, they've used the same, call it, conservative, they would call it standard multiple imputation analysis. We use it for HO. If we've done a less observation carried forward even in that trial with a much smaller dropout rate, we would have had a slightly better result. So it is a more favorable way of looking at that.

The value in doing it that way is to help us internally. I think our goal was to try to use this data to understand does it work in that gene or not. I think we're exiting this saying, I still think it works on Leptin Receptor Hets, to be honest. That's so rare that's -- and it was challenging -- so challenging to recruit. I think it's unlikely, as I indicated in my comments, that we would do more work. SH2B1, that was pretty negative. It's not 100% negative, but I think we're not going to rush there to do additional work. Whereas for the POMC Hets and the SRC1, I think we will. It won't be the highest priority coming out of the list of things that I put forward there, but we will get to that. So does that answer your question, Phil?

Our next question comes from Tazeen Ahmad with Bank of America.

I just wanted to ask about the potential of looking at these same basket indications for your next-gen assets. Based on what you saw for setmelanotide, does that reduce your interest in looking at the ones that didn't work for the follow-on compound? And if not, can you give us a sense of how you're thinking about when you might try to look at the next-gen compounds in these indications?

Yes. Thanks for allowing me to clarify that. Yes, all additional work, future work will be done with the next gen. So we would not go back and run another trial with setmelanotide in these. I think this data is relevant in the regulatory conversation, and we know that, that it's providing with the subsequent -- some post-hoc, some not post-hoc, but the subsequent analysis, I think, give us reasonable confidence, and I think regulators would look at this as supportive evidence for the role of MC4R in these indications, and then we need to run a positive trial with one of the next gen, which we would do.

As I mentioned in my response to Phil, we -- our initial priorities, not surprisingly, are going to be to run the HO studies, definitely getting Prader-Willi up and running as quickly as we can. We want to have the next-gen run in BBS so that we check the boxes on our approved indications and get those taken care of. And then we'll be looking at the additional genes, and we'll be weighing both what we've learned here and also what we know from what we learned in our DAYBREAK studies, and we'll begin to pick and there's probably 5 plus or minus genes across this group, which would be of the highest priority.

Our next question comes from Derek Archila with Wells Fargo.

Just wondering if the level of discontinuations you saw in the trial were expected. And maybe just remind us how these populations are different from Bardet-Biedl and HO in terms of sensitivity to adverse events seen with setmelanotide.

Yes, it's a good question. I think there's more for us to learn here about exact reasons why. But just to highlight a few things. Let's take Bardet-Biedl, where we had a 20-plus percent discontinuation rate. Those patients, many of them had caregivers who are working with them. So there were other support structures around them, which made it easier for them to stay in a trial. We also had a shorter placebo period.

HO in contrast was a full year study. Most probably also had supportive structures around them to a higher degree than this population, but they also were seeing a larger benefit. And so motivation to stay on there might have been greater. I think this trial, we started running back in 2022. It's been going for a long time. We are running against the emergence of GLP-1s, for example. And so I think there's a lot of patients in this study who might have been looking over the fence at other things they could be taking, if they weren't seeing a dramatic response and being in a trial like this has a pretty significant burden in terms of commitments and the number of tests that need to be done. So there's no one answer, but the aggregation of things, timing, level of burden, not the most dramatic response on average, I think, left us where we are with a high discount rate.

Our next question comes from Seamus Fernandez with Guggenheim Securities.

This is Ed Lang on for Seamus. Just following up on some of the discontinuation rates. Any more details you can provide on specific AEs or subject decision that comprise the majority of dropouts versus some of the expectations? And really just curious potential to mitigate with the next-gen or [indiscernible] assets. I'm wondering if this is more Sentinel related or whether there's other optimizations that can be done.

Second, just curious in terms of prioritization of next-gen assets here, which ones you may think could be more appropriate? And then third, is there an opportunity to further exploit dose for patients reaching max dose of Sentinel?

Okay. You're breaking the one-question rule there. Let's see what we can do here. So I think in terms of discounts, I don't -- the split, as we said, the placebo group was basically patient choice, and that's everything, mostly the list that I ran through. I think those in the set group had adverse events. The adverse event profile, again, as highlighted, is exactly what we've seen in the other trials where we didn't have that kind of discount rate. So I think you couple an adverse event with maybe not getting the result that they had expected, whatever, it's invariably a combination of factors for them.

Have you run a better trial, I think the focus on running a better trial will be taking what we've learned from this, and we have learned and there's stuff we're in the process of learning today, to be honest with you, about how to better identify patients with true loss of function. So you take that into the next trial, which says we want to minimize the number of patients who don't have true loss of function. They're not going to benefit. And if you can truly be more specific about the true loss of function, again, they'll run a better trial. And then it's just execution on the trial. And there are things that we just didn't execute on well, either as a company or as a CRO, we're working with. And so those are learnings.

Again, Rhythm, we've matured a bit as a company. And so I think we can just run a better trial. But the bigger factor will be getting the right patients in, of course. Your question about higher doses, I don't think -- that's an interesting question. When we come to the next-gen, I mean, they're not apples-to-apples in terms of dosing. So what is the dose for the weekly and what is the dose for the daily oral, we'll figure that out. But I think for any population we're in, we're always asking the question of, are we in the right dosing range and for Set, I think somewhat luckily, for the most part, we have been. We'll continue to ask that question going forward.

Our next question comes from Corinne Johnson with Goldman Sachs.

Maybe you could talk a little bit to your last point about the trade-offs between getting more specific on identifying the patients that would respond best to the therapy versus the pace of enrollment and finding those patients? And related to that, how has the genetic testing progressed, if at all, since you started EMANATE that you could kind of take advantage of in a future iteration of this program?

Yes. So that -- I would take the trade-offs part of it. As you know, Corinne, my background in rare diseases have really been shaped by I think this is true across all medicines. It certainly works or all diseases certainly works in rare diseases. You want to get responders. And the more diluted you are by patients who don't respond, even though you can feel good about a "higher faster rate of enrollment, you're not serving anybody and you end up in a place where we are today probably with a nonsignificant result, and we probably could have done better if we've been able to better identify the patients. So that's going to be the highest priority.

I think we have insights into that, certainly for the POMC Hets and for the SRC1 that will allow us to be better at that. The genetic testing is a key part of the genetic strategy. And I think many of you have heard us talk about this, which is Rhythm's goal is not to be a testing company, but we recognize in a rare disease space, the company often has to provide the testing. We do that today. We've learned a lot from that.

Our goal ultimately, as we get more genetically driven diseases approved, then the value of testing goes up. And so you're running a panel. And if you're looking for one, your hit rate off the panel will be low. If you have 5 potential genes on that panel, which might translate to responding to therapy, then by definition, you'll have a higher hit rate and you're likely to test more. So there's a virtuous circle that we'll be entering into as we begin to develop this further.

And then ultimately, back to us not being a testing company, as obesity evolves here, 2 things -- multiple things will happen. But one of the things that's going to happen is as GLP-1 use becomes broader, it's not everything, it's a hammer and everything is a nail. That's no longer true. And increasingly, people will recognize GLP-1 failures, how do they work them up. One of the obvious things you can do is test those patients for their genetics. And so these things are going to come together and Rhythm and the MC4R pathway diseases are going to surface, I think, in that kind of dynamic. So did I answer your question?

Our next question comes from Mike Ulz with Morgan Stanley.

This is [indiscernible] on for Mike. Due to the rare nature of these genes, is there anything that you can do to accelerate enrollment for future next-gen trials? And then how much did hyperpigmentation contribute to discontinuations?

Yes. And the second part, I don't know -- that's probably in the data set. I don't know it today. I'll just answer that by saying, overall of our experience, hyperpigmentation is about 5% of patients who discontinue about 5% of it is due to the hyperpigmentation. I would guess it's probably similar here in terms of overall percentage.

What can we do to accelerate enrollment? That's just increasing testing and increasing awareness. And like I said, I really think this dynamic of patients who fail to respond to GLP-1s, that world is exponentially growing. And so the pool of patients who have a history of early onset obesity, who failed to respond to a GLP-1, they're going to be prime candidates to be tested.

And one of the things about the VUS challenges that we talked about, which is, okay, you got tested, but your results show that you have a VUS. I don't know what to do with that. If you are an individual who's failed a GLP-1, had a history of early onset obesity and certainly, if you had hyperphagia, the probability that your VUS is pathogenic is higher than if you're just a random individual with a variant in that gene. So I think these are things that will increasingly make the next trial easier to run and to recruit into.

Our next question comes from John Wolleben with Citizens.

Just wondering if you could talk a little bit more when you say additional work with the next-gen, what that could look like? Would they be smaller Phase II studies or a chance for a Phase II/III pivotal program?

Yes. So here's one. So the first thing I want you to take away is the priorities for Rhythm right now are these more important from a company strategic standpoint, trials, the Prader-Willi [indiscernible] and BBS, as I indicated. On the genetic side of the equation, some of -- there's some investigator-initiated work going on now. You could imagine, and we are looking at it, that some of the syndromes where, by definition, if you have a syndrome, we know you have loss of function to the extent that we have some insight into that through early proof of concept, then we might run a study there, and we would run study, call it a 2, 3, whatever. But I think -- and the dosing for the most part, when we say 2, 3, you're sort of -- the 2 part is trying to figure out your dosing and the like. We'd run 1 trial and however, we would have to design it. But we -- for each of these genetic, it would be only one trial. And to the extent we go back to POMC Het, for example, or SRC1, this data, as I said earlier, would be supportive in that regulatory filing in terms of the role of MC4R pathway, and we would be enrolling patients with a slightly narrower scope, but with a higher probability of having loss of function in their gene.

Our next question comes from Lisa Walter with RBC.

It sounds like the plan is to explore development path forward with the next-gen MC4R agonist. But I'm wondering what the strategy might be to ensure fewer placebo arm discontinuations going forward even with these next-gen assets. Any color here would be helpful.

Yes. I mean that's a challenge. I think -- so aside from just supporting patients in any trial, which is what a well-run trial does, you just try to get patients to hang in there. I think we did a really good job in our HO study and those patients hung in there. One of the things that helps placebo patients stay in is, a, a belief that they don't have other good options. So I'm a GLP-1 failure, nothing else has worked. This is my hope. And I know that when I finish the trial, then I have a shot, I will get the drug. So that's the biggest thing. And then secondly, back to expectations of having a reasonable response. So you manage placebo groups by having the reward at the end be meaningful to them in addition to the just general support.

I'm showing no further questions at this time. This concludes the question-and-answer session. I would now like to turn it back to David Meeker for closing remarks.

Okay. Well, thanks, everybody, for tuning in on short notice here. back to where I started. I'm disappointed in this. But actually, this is a solid building block going forward. And I think you've heard me speak before, and you'll hear me speak again. I think I'm pretty excited about where Rhythm is and all the things we have coming down the pike here. So we look forward to our next conversation. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect you lines.

Good day and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Fourth Quarter and Fiscal Year 2025 Earnings Conference Call.

[Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dave Connolly. Please go ahead.

Thank you, Tanya. I'm David Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com. This morning, we issued a press release that provides the fourth quarter 2025 and full year 2025 financial results and a business update, and that press release is also available on our website.

Our agenda is listed on Slide 2. On the call today are David Meeker, our Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International is on the line joining us from Europe.

On Slide 3, I'll remind you that this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC.

In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent dates. We specifically disclaim any obligation to update such statements. With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Thank you, David. Good morning and thank you all for joining. We preannounced our revenue for the fourth quarter, highlighting the continued strong performance by our commercial teams. The BBS opportunity continues to grow at a steady rate, both in the United States and ex-US markets.

Jennifer's North American team, which was fully hired and in place at the start of the fourth quarter, continues to take full advantage of the PDUFA extension to prepare for our expected launch. Our growing early access experience with HO in Europe reinforces our belief in this opportunity, as Yann will highlight.

I'm pleased to report we had our end of Phase 2 meeting with the FDA for the Bivamelagon HO study. We were able to share the 9-month data, which included a minimum of 6 months on drug for the original placebo patients. I will share these new data that show persistent BMI reductions and consistent safety and tolerability over the next few slides. Our goal will be to present the data, including the full 52-week data at a medical meeting midyear.

Slide 6 is to remind you of the original Bivamelagon Phase 2 design. Patients were randomized to either placebo or 1 of 3 dosing cohorts for a period of 14 weeks. Last July, we announced positive top line results at 14 weeks with patients in the 400 and 600-milligram arms achieving a mean BMI reduction of 7.7% and 9.3%, respectively.

Similar BMI reductions as achieved by setmelanotide at the same time point. At the end of 14 weeks, the study remained blinded and all patients were then redose escalated to preserve the blind from 200 milligrams to the target dose of 600 milligrams for the balance of the open-label extension period.

Slide 7 shows the disposition of the 28 patients. As a reminder, 1 patient discontinued after the first visit due to rectal bleeding, judged unrelated to study drug. One 64-year-old male who had lost 14.5% at 14 weeks in the 600-milligram cohort chose not to continue into the open-label for personal reasons. Since then, one patient has stopped taking the drug but remains in the trial as a retained dropout. In summary, 26 of 28 patients remain active in the trial, including retained dropout patients, so 25 out of 28 remain on active drug.

The next 4 slides show individual patient data at 40 weeks. Slide 8 shows the placebo patients whose baseline BMI was calculated, in this slide, whose baseline BMI was calculated from their 14-week clinic visit when they converted to active drug. With the exception of the 12-year-old female, who we believe was not compliant, all patients showed a response to drug after 14 weeks, which included the up-titration period with further deepening at 26 weeks, the week 40 visit. And of note, 1 patient did not have a 40-week visit, but she remains in the trial.

Similarly, for the original 200-milligram cohort on Slide 9, all patients with the exception of the retained dropout patient who is actively gaining weight and the patient who we believe is not compliant have had a response at 28 weeks and further deepening at 40 weeks. The modest response on 200 milligrams alone at 14 weeks does suggest that this dose is probably subtherapeutic for many patients.

Slides 10 and 11 show the data for the original 400 and 600-milligram cohorts. With the exception of the 2 patients who are not fully compliant, one each in the original 400 and 600-milligram cohorts, all patients have had a good response to drug with 11 of 14 patients decreasing by 10% or more.

The mean BMI decrease for the 400-milligram cohort at 40 weeks, including the noncompliant patient was 10.8% and the mean BMI decrease for the 600-milligram cohort, including the noncompliant patient who gained 7.5% and the patient who dropped out at 14 weeks was 14.3%.

Of note, the setmelanotide Phase 3 data at the 40-week time point in patients not on a concomitant GLP-1 from our Phase 3 study was 15%. With regard to safety, the drug is better tolerated when taken with a small amount of food. The side effect profile continues to mimic what we see with setmelanotide. The nausea and vomiting tends to occur early and then patients tolerize. The episodes of diarrhea tend to be a little more sporadic or mild in severity and no patients have discontinued because of diarrhea.

In this trial, the compliance issues have been predominantly in the younger teenagers who we believe have struggled with the size of the pills. As we have indicated, we will have an easier to swallow single pill formulation going forward for each of 200-, 400-, and 600- milligram doses, and we will have a chewable tablet for younger patients.

Next steps for this program will include bioequivalent studies comparing the new and old formulations, a drug-drug interaction study and a hepatic impairment study. We expect to have the majority of this work completed in drug supply for Phase 3 studies by the end of the year with the goal of initiating the Phase 3 HO study by year-end 2026.

I would characterize our FDA meeting as highly constructive on multiple fronts. They confirmed that pivotal is ready to move to Phase 3. As many of you know, we were hoping, given the prior setmelanotide data and the placebo cohort data that we could negotiate a 6-month double-blind period and a smaller number of subjects given the effect of the drug. They were confirmed that with a new chemical entity, a full 12-month double-blind randomized controlled trial would be required as well as a larger number of patients to build up the safety database. We are awaiting the final minutes from that meeting but expect that number to be closer to the full 142 patients studied in our setmelanotide trial.

Our plan will be to run this trial largely in countries where setmelanotide will not be available for acquired HO in the near future, which should facilitate enrollment. There was no discussion of setmelanotide in the upcoming PDUFA date, but the FDA is communicating with us on the expected timeline, and we have received the first feedback on the label. I'm not going to make further comments today on that feedback as it is preliminary and pending the final submission of data on all 142 patients, which will be incorporated into the label.

As shown on Slide 13, we have multiple upcoming milestones with PDUFA for HO, top line data from our Japanese HO cohort and the EMANATE readout all coming in March. For EMANATE, we are working to get the top line data with the goal of releasing that data by the end of March. The PWS trial continues on track to get to the full 6-month data by midyear. At our December release, we indicated that 1 patient had discontinued the trial. Since then, we've had no further dropouts with all remaining 17 patients continuing on treatment.

We have taken no further data cuts and have no further patient updates to provide on this call. The 718 weekly formulation continues to enroll in HO, and we are on track to have initial 3-month data by midyear.

With that, I'll turn the call over to Jennifer.

Thank you, David. Starting with BBS, we had another steady quarter of growth in prescriptions as our teams continue to focus on educating healthcare providers to expedite patient diagnosis and working with payers to secure approval for reimbursement.

Importantly, patients are benefiting from IMCIVREE therapy as it is the only approved therapy that targets the root cause of rare MC4R pathway diseases like BBS. We continue to be inspired by patient success stories. For example, one adult male patient with BBS, who is a resident of an assisted living facility had such severe hyperphagia and preoccupation with food that he could not participate in group outings.

After 6 months on IMCIVREE therapy, he not only lost 40 pounds, but his hyperphagia had quieted down meaningfully, and now he's able to socialize with others and participate in group activities.

Now on Slide 15. Our teams are continuing to prepare for the acquired hypothalamic obesity launch, pending regulatory approval and our March 20 PDUFA goal date.

Acquired HO is a distinct post-injury neuroendocrine disease characterized by impairment of the MC4R pathway leading to hyperphagia and accelerated and sustained weight gain. With an estimated prevalence of 10,000 in the United States, acquired HO represents a significant opportunity for Rhythm to expand the reach of IMCIVREE and the benefit it brings to patients.

If approved, IMCIVREE would be the first therapy for these patients that currently have no approved treatment option. As we've discussed previously, we expanded our sales force from 16 to 42, all highly experienced launching new therapies in rare diseases. With the extra time ahead of launch, our engagement efforts have continued. Claims data helped us identify healthcare providers who we believe are caring for patients with acquired HO.

Our HCP engagement has been focused on disease awareness to help drive suspected cases to formalize diagnoses of acquired HO. We already have engaged with HCPs who care for more than 2,000 patients diagnosed with or suspected to have acquired HO. Let me outline an example of the ongoing dialogue around patients suspected to have HO.

Our team engaged with an endocrinologist who treat several patients with sustained hypothalamic injury. During a meeting with a field team member who outlined that injury in the hypothalamus could cause impairment of the MC4R pathway, leading to acquired hypothalamic obesity, the physician noted that one patient in particular stood out. This patient experienced severe weight gain following treatment of a brain tumor, subsequently underwent gastric bypass surgery and later initiated GLP-1 therapy with minimal benefit.

Now with a clear understanding of the clinical diagnosis of acquired hypothalamic obesity and appropriate screening criteria, this physician indicated that he suspects additional patients may have acquired HO, and he'll bring them back for evaluation and diagnosis confirmation.

Moving on to the next slide. We have also learned more about the management of aHO patients through our Territory Managers' disease education efforts. In addition to the ongoing engagement of our MSL or Medical Science Liaison team, we have identified approximately 40 priority medical centers throughout the nation based on their significant concentration of aHO patients. Approximately 1/3 of the potential aHO patients who we have identified via claims data are managed within these centers. The majority of these have pituitary centers where hypothalamic disorders are managed by multidisciplinary teams.

While there are similarities within these organizations relating to which specialty is brought in to manage the tumor and treatment as well as the hormonal dysfunctions associated with the procedure, there is variability in terms of who manages aHO.

In one center, the endocrinologists involved in the treatment of the hormonal dysfunctions would also take on the responsibility to treat the weight gain. In another center, these patients' hormonal dysfunctions would be managed by the endocrinologists, but they would be sent to the community PCP or obesity specialists to be treated for their weight gain.

Understanding these differences allows us to better pinpoint who would potentially be the diagnoser of aHO versus the obesity treater and future potential prescriber of IMCIVREE if approved for aHO. Our team continues their HCP engagement and identification of patients who would benefit from IMCIVREE once approved.

Now on to my last slide. Beyond HCP engagement, we also continue to engage with payers to secure access for patients as soon as possible following approval. Our education and engagement around BBS established a robust base for securing access for aHO as payers have come to recognize the differentiation of MC4R pathway diseases and the value that IMCIVREE offers patients. For acquired hypothalamic obesity, payer coverage following approval, our expectation is for policy updates to occur within 3 to 9 months.

We are excited by the progress we have made and are ready for launch pending approval in acquired hypothalamic obesity.

Now, let me turn it over to Yann.

Thank you, Jennifer. I will begin on Slide 19. We had a strong year in 2025 as our international organization has grown to more than 100 employees across 13 countries. With the ongoing BBS and POMC/LEPR sales and the reimbursed Early-access programs for acquired hypothalamic obesity in France and Italy, IMCIVREE is now available in more than 25 countries outside the United States, including 8 countries newly added during the year.

Our growth in 2025 was driven by sales in countries with established access and new countries coming online. Our team engages with key experts across Europe to advance education and the understanding of rare MC4R pathway diseases. In 2025, 64 abstracts, both originals and encores were accepted for posters or oral presentations at 12 international and national scientific congresses.

Next slide. Here, I highlight one recent publication entitled Early-onset of Obesity Model, Impact of Early-onset Obesity on Comorbidity Risk and Life expectancy, which was very recently published in Obesity facts, the European Journal of Obesity. This peer-reviewed Early-onset obesity disease model, which we developed in collaboration with leading European experts, integrates data from more than 140 publications to quantify how the age of onset, the severity, and the duration of obesity negatively affect the risk of comorbidities, the health outcomes, and the life expectancy.

This reinforces that Early-onset Obesity is a serious progressive disease and stresses the urgent need for early intervention. These findings supports rent focus on early diagnosis and treatment of obesity driven by impairment of the MC4R pathway, where addressing the underlying cause earlier has the potential to reduce long-term disease burden and create meaningful benefit for patients, families and healthcare systems.

Next slide, Slide 21. Now moving to acquired hypothalamic obesity. We are planning for multiple opportunities in Europe and Japan with a higher per capita prevalence of acquired HO than the United States and Europe and an estimated population of 5,000 to 8,000 patients, Japan represents a meaningful long-term opportunity for our MC4R agonist franchise.

We continue to make significant progress ahead of our anticipated Japanese launch, establishing a strong leadership team focused on engaging with experts and healthcare centers. Earlier this month, our team had a very positive in-person meeting with the Japanese PMDA. And as David said, we anticipate top line data from the Phase 3 cohort of Japanese patients in March.

In Europe, our EMA submission for HO is under review. We anticipate a CHMP opinion in Q2 and the EU marketing authorization in the second half of 2026. The steady growth in our reimbursed early access programs for HO in France and Italy is a very positive indicator for our success in Europe and help establish foundational relationships with expert physicians and local authorities.

The French regulatory authorities renewed this month the authorization for the IMCIVREE AP1 reimbursed early-access program, which clearly illustrates the benefit patients are receiving as part of this program and the high unmet need. Pending marketing authorization from the EMA in the second half of 2026, we will begin establish reimbursement for acquired HO in Europe on a country-by-country basis as we have done before for POMC and LEPR, and BBS.

With that, I will turn over to Hunter.

Thank you, Yann.

2025 proved to be a strong year with solid growth in global sales of IMCIVREE and multiple value-driving milestones achieved across our portfolio of MC4R agonists. We enter 2026 well capitalized with more promising potential catalysts ahead.

I'll begin on Slide 23 and walk you through our results for the fourth quarter, which was another solid quarter as well as the full year revenue, both of which we preannounced in January.

Revenues from sales of IMCIVREE were $57.3 million for the fourth quarter of 2025, representing a quarter-over-quarter increase of 12% and $194.8 million for the full year, an increase of approximately 50% from 2024. On a sequential quarterly basis, revenue growth was driven by an increase of approximately 10% in the number of patients on reimbursed therapy globally.

In the fourth quarter of 2025, $39 million or 68% of product revenue was generated in the United States and $18.3 million or 32% of product revenue was generated outside the United States.

On Slide 24 is the walk from the $51.3 million in global sales in Q3 to the $57.3 million in Q4. In the fourth quarter, the volume of vials shipped to our specialty pharmacy in the United States was approximately $1.7 million greater than the vials shipped, than the vials dispensed to patients. This compares to an excess of vials shipped over dispense of $3 million in Q3 2025. The net effect produced a negative $1.3 million inventory swing from Q3 to Q4.

For the second consecutive quarter, inventory days on hand at the specialty pharmacy increased ending approximately 20 days versus a normalized level of around 10 to 15 days. As was the case with year-end 2024 and as is common across our industry, this type of growth in days on hand represents a potential pull forward of revenue from the quarter of actual patient demand and can, with all other things being equal, have a dampening effect on the first quarter of the year.

US revenue grew by $2.1 million quarter-over-quarter due to increases in product dispensed to patients. ex-US revenues increased $5.2 million or 40% versus the third quarter of 2025. The sequential increase was largely due to the negative impact on the third quarter of a onetime $3.2 million charge related to the final agreement with France on the reimbursed price for IMCIVREE for the treatment of BBS, POMC and LEPR deficiency.

On Slide 25 is the financial snapshot of year-over-year performance as well as the fourth quarter 2025 results compared to the fourth quarter of 2024. Net product revenues in Q4 2025 increased by $15.4 million or 37% over Q4 2024. Gross to net for US sales was approximately 84.6%, generally in line with the gross to net percentage from previous quarters.

Cost of goods sold this quarter was 8.5% of product revenue and was mostly attributable to cost of materials and our royalty payment on setmelanotide due to Ipsen. COGS as a percentage of product revenue was down slightly this quarter based on an increase in finished goods inventory. We generally expect cost of goods sold to be between 10% and 12% of net product revenue with variation due to how our inventory balances change and the corresponding capitalization of labor and overhead costs as was the case in Q4.

Research & Development expenses were $42 million for Q4 compared to $41.2 million in the same quarter last year. Sequentially, R&D expenses decreased by approximately $4 million compared to the third quarter of 2025. More than half of that decrease was due to the transition of our area development managers in the United States to sales reps or territory managers, moving their salaries and stock compensation to SG&A effective October 1.

Costs in the fourth quarter from our Phase 3 HO trial with setmelanotide and our Phase 2 trial with Bivamelagon decreased from the third quarter. SG&A expenses were $57.5 million for Q4 2025 as compared to $38.1 million in Q4 last year. Sequentially, SG&A expenses increased by $5.1 million or approximately 10% compared to the third quarter of 2025. Increased SG&A spend from Q3 to Q4 was due to increased headcount costs and professional fees associated with the anticipated launch in acquired hypothalamic obesity, including the transfer of the field force described previously.

For Q4 2025, weighted average common shares outstanding were approximately 67 million. Our GAAP EPS for the fourth quarter of 2025 was a net loss per basic and diluted share of $0.73, which includes $0.02 per share from $1.3 million of accrued dividends on convertible preferred stock.

Cash used in operations was approximately $25 million in the fourth quarter and $116 million for the full year. We ended 2025 with approximately $389 million in cash, cash equivalents and short-term investments, which we expect to be sufficient to fund planned operations for at least 24 months.

On Slide 26, a few additional items of note. First, our GAAP operating expenses for 2025 totaled $362.3 million. That included $66.8 million in stock-based compensation. Non-GAAP operating expenses for the year were $295.5 million. This came in at the lower end of the range that we guided for at this time last year.

Our common share count is 68,285,039 shares as of February 24. This number includes 729,164 shares of common stock, which were converted from preferred shares since the end of the third quarter. Recall, we raised $150 million in gross cash proceeds through the issuance of convertible preferred shares in April 2024.

Following this partial conversion, there are 2,395,831 potential common shares that could be converted from the remaining preferred shares. The recent conversions represented almost 25% of the initial preferred shares, hence reducing our liability of dividends payable to preferred shareholders.

Lastly, on Slide 27, we are offering annual guidance on non-GAAP operating expenses. For 2026, we anticipate approximately $385 million to $415 million, which includes non-GAAP R&D expenses of $197 million to $213 million and non-GAAP SG&A expenses of $188 million to $202 million.

The overall increase in non-GAAP operating expenses for 2026 of approximately $104.5 million at the midpoint, which is about 35% over 2025 is the result of the success of our clinical programs in 2025 and represents future investments derived at driving long-term growth and increasing shareholder value. There are 3 primary drivers of the growth in anticipated 2026 spending.

First, approximately 30% of the year-over-year increase will come from increased spending on formulation development, manufacturing and clinical supply of our next-generation MC4R agonist, Bivamelagon and RM-718 as we continue to move both compounds through proof-of-concept studies and hopefully registrational studies in the coming years.

Second, approximately 25% of the increase will be on US commercial operations in support of the HO launch.

Third, approximately 15% of the increase will be to build out Rhythm's operations in Japan in anticipation of a potential approval in HO.

Overall, this forecasted year-over-year growth in operating expenses is the product of the last few years clinical, regulatory and commercial success and represents a meaningful opportunity to invest in Rhythm's long-term potential to serve patients with MC4R pathway diseases.

With that, I'll hand the call back over to David. Thank you.

Thank you, Hunter. And Tanya, we can open it up for questions.

[Operator Instructions] Our first question will be coming from Derek Archila of Wells Fargo.

Congrats on all the progress here. David, just first on Bivamelagon's Phase 3, your comments suggest that this will largely look like setmelanotide Phase 3. So in terms of sample size and duration, but are there any changes to enrollment criteria that you would think of or other features of the trial that you can comment on?

No. I mean those are the principal things that we were looking to get feedback on. I think to your point, the trial will largely mimic our Phase 3. We continue to look at our patient reported outcome measures. Are there other things we can do to get better and better at, for example, understanding hyperphagia/hunger. Some of these patient-reported outcome tools have not been validated, et cetera. So that's an area which as a company, we might modify, but we didn't get specific feedback from the FDA.

Got it. And then maybe just a follow-up. On the guidelines potentially for HO that could be implemented or kind of evolve over time, I guess, specifically for postsurgical patients where it seems like physicians want to intervene early prior to that significant weight gain. But just any comments on how that might evolve over time and what you're hearing?

Yes. I mean it's a good question. We've had a 6 months post-surgery as an entry criteria to make sure that patients were stable on their hormones. That's very much a developmental issue because you don't know everything and you want to have things as, or the minimal number of things that might confound your interpretation of the results.

In the real world, which is your question, and we've had this feedback from multiple thought leaders and the like, I mean, earlier is better. Why would you know the patient has HO, why would you make them wait 6 months to begin intervene? You wouldn't do that for their thyroid hormone replacement, for example. So I don't think there'll be that kind of guidance in the label. We'll see where guidelines quote unquote "come out." Those will emerge over time, but I haven't heard that. I think the consensus would be as soon as you, the treating physician are comfortable, yes, you want to intervene.

Our next question will be coming from the line of Tazeen Ahmad of Bank of America.

Can you give us an update on where you are with the PWS study? When is the next data update from that? And what type of deepening response are you looking for? Are you looking for more weight loss? Are you looking for better hunger control? Or just can you give us a sense of that?

Yes. Thanks, Tazeen. So as I said in my comments, we're still on track for midyear in terms of providing that update for the 17 patients who remain on drug. I think the one piece of updated data I gave you today was that 17 of 18 patients remain on treatment. I think for a challenging disease. These patients tend not to remain on drug if they don't feel like they're benefiting. So we would take that as encouraging.

I don't have an additional cut of the data. So as I said, I don't have further updates there. In terms of what we're looking for, again, we've been very clear and continue to learn. This is a more challenging disease in the sense that there's a lot of other things going on. They have multiple genes affected, not just those potentially impacting the MC4R pathway that are at play in this disease and can confound results.

But I think our goal remains the same. We'd be looking to clear 5% on the BMI change. We'll see how we do there. And of course, we'll collect hunger. I mean, the hyperphagia scores, HQ-CT, we shared that data in December with the caveat. This is an uncontrolled trial. So those kind of measures, you really need a placebo-controlled group to know exactly how you're performing, but we will have that data, and of course, we'll share it.

And our next question will be coming from the line of Mike Ulz of Morgan Stanley.

Congratulations on all the progress as well. Maybe just one question on IMCIVREE trends. You mentioned the potential for dampening of sales in 1Q, given some pull forward in 4Q. Maybe you can give a little bit of color on how to think about the growth? Is it just a slowing of growth? Or should we think more flattish?

Well, I'm not going to give you a comment sort of on where external estimates are. We did see negative growth Q4 to Q1 in 2024 into 2025. The buildup of inventory this year in absolute terms is less, so we'll see how that shakes out.

But that, it's just that dynamic in and of itself that inventory represents a pull forward of sales from one quarter into, from Q4 out of Q1 into Q4. I think the only other thing is we have the typical experience that faces us every Q1 where there are a lot of planned renewals and planned changes for individual patients. So some patients rotate on to our bridge program and then those get resolved and they rotate off.

And our next question comes from the line of Whitney Ijem of CG.

I just wanted to follow up on EMANATE. You guys have talked about POMC PCSK1 and the SH2B1 substudies as being higher probability. Can you just talk to us a little bit, remind us, is that just driven by the enrollment and the powering of those sub-studies? Or are there genetic biological considerations there as well?

Yes. Let me summarize what I've said previously, but important to remind. So the way we've handicapped this is, yes, we think that the POMC/LEPR are the most likely to be positive, and that's based on the fact that we did have an assay going into the trial that allowed us to determine which of the variants were most likely to be pathogenic meaning that they had true loss of function. There's a range of variants there, of course. So, and the assay has its limitations. But the bottom line is we felt that in that cohort, we were enrolling predominantly patients who would have true loss of function. So that was our best, and we were able to enroll that cohort fully.

The leptin receptor, we also had insight into which patients might have true loss of function, but it turns out the leptin receptor head group is extremely rare, those that have this potential loss of function variant. And so that cohort was very significantly under enrolled. And so we weren't so optimistic there or not. And then SRC1, mostly a boost variant of unknown significance, variants of unknown significance disproportionately tend to be benign. And so again, we think there's a high risk that one may not be positive.

And the reason we remain somewhat hopeful on SH2B1 is that there's two groups there. One is those who have this deletion, 16p11.2 deletion. So by definition, with a deletion, they would have loss of function.

The other part group of that, that's enrolled, the missense mutations associated with SH2B1, then you're back in this, how many of those are VUS and of the VUS, how many are benign versus pathogenic. So long story short, that's how we handicapped it.

Again, we're working to get that data out by the end of the year. The other thing I've said is we, like I said, we've been careful and modest in terms of our projections here and what we think might happen. I think whatever we get, we're going to learn a lot from these studies. And minimally, they will form the basis for the next round of studies with our next-generation studies molecules, which we would do anyway. So when we report out, we'll try to give you some insight into how we think about the future there.

Got it. That's helpful. And just one quick follow-up. Should we still be thinking about kind of the 5% weight loss as the kind of bar for success either based on powering or just how you're thinking about it?

Yes. I mean 5% is the guidelines. That's why we Prader-Willi, of course, where we think it's a really tough disease. I mean that is the minimal threshold. And so that's certainly the threshold here. I think in some of our other indications, you get into the world expects more today from a weight loss drug. But technically, it's 5% plus. I think what we would look at is, A, is the study positive? And then B, do we think it's clinically meaningful and would be a meaningful offering to patients with that specific genetic defect.

And our next question will be coming from the line of Corinne Johnson of Goldman Sachs.

Maybe you mentioned the study for Bivamelagon and that the FDA was pretty explicit that new molecules would require a year-long Phase 3. I guess how are you thinking about that then as it relates to the planned development of 718 in the same indication? And kind of separately, but in the same vein, how do you think about managing kind of quality control of the Phase 3 program as you think through enrolling patients' kind of ex-US in order to get that patient population?

Yes. It's a good question. So first on 718, yes, the read-through there would highly likely to be the same. I mean, to be honest, we'd go back, I would look to have another conversation with them. I think part of Biva is it's a small molecule. I think 718 is a peptide. It's highly analogous to setmelanotide. I don't know if they would look at that any differently. But a conservative base case here is, yes, 718 will have to do the same thing that we're being guided to for Biva.

Quality control outside the US, the world is small. I mean, the sophistication of running trials outside in these other countries, I mean, there are a number of centers and one or more centers in many or most countries, which are pretty sophisticated. CROs are structured to run trials globally. So I'm not at all worried about quality, I mean, you pay attention to that, we'll be careful, of course. But I think quality control is not the issue. Our challenge, as always, is rare diseases, you want to find sites that have good access to patients.

And our next question will be coming from Phil Nadeau of TD Cowen.

Congrats on the progress. Two from us. So first, in the bivamelagon Phase 3 trial, what dose will you be exploring? It seems like you think 200 milligrams is underdosed. 600 did look a little bit more potent, but the patient numbers were small. So we're curious what dosing paradigm you will use.

And then second, on hypothalamic obesity, I think the last number of identified patients that you gave to us was 2,000. It sounds like, as your sales reps are out there shaking the trees and doing medical education, you're finding more and more patients. So, any update to that number?

Yes. So, what was the question on? Yes, the dosing. So we will dose escalate from 200 up to 600, 600 will be the target dose. We look at the data the same way you did. I think there is a difference between 400 and 600 milligrams. I think we're still on a dose-response part of the curve there. The other thing that has been pretty encouraging, and I will say, we've got a number of patients out for the full year.

So I have a little insight there. I mean, what happens in HO is that many of the patients continue to just gradually deepen over time. And I'll remind you back to a patient from our Phase 2 study, the most severely affected, oldest individual in that trial, a 24-year-old man who had a starting BMI of 52, 50-plus. And over a period of 4 years, he just continued to gradually decrease his BMI down to a normal BMI of 24. And I think what we're seeing here is not inconsistent with a gradual deepening over time.

And so the short answer to your question is, yes, well, the target dose will be 600. There'll be patients who maybe do fine on 400, just as there are patients who do okay on 2 milligrams as opposed to 3, but with setmelanotide. But I think we're incredibly encouraged here. And I think this data gives us high confidence that this pathway is central to HO, and we're correcting as you might expect in the hormonal replacement strategy.

With regard to patients, we updated in September, and we've stayed away from sort of giving you monthly or quarterly updates on those patient numbers because a while, I'm not sure how helpful that is. But you are absolutely correct.

And as Jennifer highlighted in her comments, the team has been doing a lot of work. We're continuing to find more patients. So yes, that number has gone up. We're learning a lot about the nature of this community, how many patients carry a diagnosis of HO, and how many patients are quote unquote in the suspected category. So this belief in the overall opportunity, the 10,000 is high, and it's higher than it was last September, for example, and we feel really good about the progress we're making.

Our next question will be coming from the line of Jon Wolleben of Citizens.

Just one on Japan. Hunter, you mentioned the investment you guys will be making there. Just wondering how we should think about the opportunity in Japan and the trajectory of a potential adoption.

Yes. Yann, do you want to take that?

Yes. So, potential first. So as I said earlier, we estimate a prevalence between 5,000 and 8,000 patients, and it's a well-documented prevalence. So we are quite sure of this number. The second point was your question about our capabilities. So we are currently building out our team. We have set up an affiliate. We have a full management team in place, and we already have a field medical team on the ground. And from a timeline point of view, David mentioned the data in March. And following that, you can count on 12 months of regulatory and market access and pricing aspects, which means that we should have a launch in the next 12 months from now.

And our next question will be coming from the line of Thomas Smith of Leerink Partners.

Just on the aHO expansion, I appreciate the color on the regulatory interactions. It sounds like you're entering labeling negotiations, which is great. As we think through some of the color you're giving here around reimbursement and payer coverage and activating sites and patients, can you just elaborate a little bit on how you're thinking about the launch cadence relative to BBS?

Yes. So, from the perspective of aHO versus BBS, I think there are similarities and some differences. I think from a similarity perspective, there's still a lot of opportunity, as we've outlined, just in terms of getting these patients to an actual diagnosis of acquired hypothalamic obesity versus just being seen as a patient with obesity for many causes that may not be the root cause in terms of what they are going through.

So there's still an opportunity there. I think the other piece is from the perspective of a time line of payer coverage, although we have a great starting point just in terms of all the dialogue we had with BBS in terms of the differentiation of MC4R pathway diseases versus general obesity, it's still going to take some time just in terms of going through the process of having specific PNT meetings so that we get a specific policy for the expansion of the indication in place. And we're similarly in the meantime, going to be working through the process as we get the Rxs in payer by payer.

So there are some similarities. I think some of the differences is that in terms of aHO, the precision and confidence just in terms of the data we have, to really pinpoint it down to the right physician to educate to get these patients to a diagnosis. We feel a lot more confident about that. I think in comparison to BBS, those sort of crumbs to lead us to the right physicians is stronger. I think the other aspect is we know, even though like our teams are targeted by the data and following where the patients are, it just made sense that we are actually being led to these medical centers that have these pituitary centers and capabilities.

So we know where they go once they have the brain tumor and where they're treated and they stay in that situation for a period of time so that as they start to encounter the symptoms of aHO, we have the ability to really target those incident patients to get to a diagnosis that is not missed. So that's a bit different than what it was like for BBS, which once again gives us a bit more confidence just in terms of being able to identify them earlier in their journey.

Our next question will be coming from Seamus Fernandez of Guggenheim Securities.

This is Evan Wang on for Seamus Fernandez. Just 2 from us. First, with 718, I saw some narrow timelines for Part D. Curious if there's any potential strategies to accelerate time lines there, potentially like a Phase 2/3, just given some of the feedback and data sets around and set. And then second, curious if you're exploring or planning to explore other areas of MC4R development, maybe, or other kind of avenues to treat obesity.

Just to clarify on the last part of the question, other indications that we're thinking about, other approaches? Is that what you're asking?

Other indications or approaches for I guess mostly obesity-related treatment.

Yes. Okay. So for 718, is there a strategy to accelerate? I mean we take, I think, a pretty aggressive view in general. I mean the regulators don't always agree with our approach. And so we end up sometimes in more conservative or conventional approaches. But I think 701, as I said earlier, is likely to be highly similar to Bivamelagon. We'll go with this initial experience in this open-label study and move right to a Phase 3. I don't know if there's an opportunity to accelerate things further there. The other thing is the pressure on the next-gen in HO is we want to get it out as soon as possible.

It's a little different from an initial indication opportunity where those patients have no other treatment and setmelanotide will be approved and out there. So patients will have an option. So again, we want to, we'll move as quickly as we can, but it's not quite the same criticality as it might be if there was no treatment available at all.

With regard to other indications, I mean, we've talked about the different kinds of, or the different areas that we're interested. So one is genetics, M&A being the first beyond our initial approvals in POMC and LEPR. We have the DAYbreak study. So we will be coming back to specific genes. We will do that development work, as we've said, with next-generation molecules, probably not both molecules in every one of those genetic indications, but we'll come back to you with an updated plan there.

And with regard to other approaches to obesity, I mean, yes, we're open to that. We have early programs where we're thinking about different ways, we might complement MC4R. That's all early. We're not at a point where we're prepared to talk about that yet. But we are fully committed to optimizing therapy for these patients with MC4R and deficiencies, and that would include potentially additional approaches.

And our next question will be coming from the line of Joseph Stringer of Needham & Company.

This is Eddie on for Joey. Just a follow-up on MC4R and the EMANATE sub studies. Can you remind us again if you intend to submit these as a combined sNDA for a broader MC4R pathway, or just talk about how the regulatory path might necessitate sort of mutation-specific approvals and then how this might change for these next-gen therapies as you kind of move through the trials in later years? And then a follow-up, I'm sorry if I misheard, did you say that in the BIVA-HOLE that you saw moderately better results, patients not on GLP-1? If I heard that right, can you describe why that might be the case?

Yes. Let me take that last piece first. So when we're trying to create an apples-to-apples comparison from, we took the patients in our 040 Phase 3 setmelanotide trial. If you remember, there was in the treated group, about 15 patients who were on a GLP-1. That group did have a better result. If you remember, they got in the trial by not having responded to a GLP-1. Once they got setmelanotide, they had a very good response. And if you were just to look at that cohort, their actual percent decrease was greater than the group that did not get a GLP-1.

Trial was not designed to prove that might be a better outcome. But what we've concluded biologically is, yes, once you correct the underlying defect in setmelanotide, restore the hormonal deficiency, then your ability to respond to another anti-obesity medicine might be restored, and we gain weight for a different reason.

And so if you're a patient who's got incremental weight because they love ice cream and they need ice cream all the time, then GLP-1 in that setting, once you've corrected the hormonal deficiency might make sense. So anyway, that was an apples-and-apples change there, and that was the goal there. Your question about M&A in terms of regulatory filing strategy, no, these will be filed individually. Even if all 4 were positive, we would file 4 separate sNDAs. They would be, I said, one at a time evaluations. And then, in the future, I mean, is there an opportunity for a mechanistic kind of approval that wouldn't require a full Phase 3 for every genetic indication? I think that's possible. I would say we're definitely not, or the regulators are definitely not there today. But that's not an unreasonable question for the future.

Our next question will be coming from Paul Matteis of Stifel.

This is Matthew on for Paul. I guess I had one on acquired HO. So for the FDA review, we appreciate the pivotal Phase 3 was already large, but will you be able to supplement your data package with the Japanese cohort? Does the timing work out such that you'll be able to include this before the PDUFA?

Yes, Matthew, it's a good clarification. The answer is yes, and that's partly, I mean, when the FDA gave us their extension back in November, they were very aware of the exact timing of the last patient in visits.

And so they had done the calculation, recognizing that there was a very short period of time between when we would have data from that last patient, a Japanese patient and being able to get the data in on the full 142 patients, which is what they wanted. So we're on that path, and we will get that data in. And yes, they are prepared to deal with the fact that, yes, it's, now we're down to a relatively short period of time between that final data submission and the label or potential approval on March 20.

And our next question will be coming from Samantha Semenkow of Citi.

Just maybe one clarification on the Phase 3. You mentioned that you were going to primarily enroll outside in countries where setmelanotide is not available. How does that work necessarily for enrollment in the US? And then just on Prader-Willi, can you just talk about your latest thinking on a potential Phase 3 trial? Would you plan to take both setmelanotide and 718 forward? Or is it more likely that you choose one of these drugs to advance?

Yes. Okay. So, with regard to the Phase 3 for HO, yes, we will run it predominantly outside. I wouldn't exclude having a US site, but setmelanotide will be approved. Patients here have an option. So, the US for multiple reasons becomes a little more complicated. We do not need to have a site in the US I mean we already have US data coming out of our Phase 2 study. So I'm not, again, I'm not so worried about our ability to execute the trial, not using the US, but you never say never, so I would defer final decisions on that.

So for Prader-Willi, setmelanotide versus 718, I think this is something, as we've highlighted before, the advantage of going forward with setmelanotide is we've got data in setmelanotide already, may be a supplemental NDA, and so we could, in a sense, roll into that Phase 3. The advantage of going with 718, for example, is that it's a next-gen. We're going to use, do a next-gen study sooner or later, and that's the end game. And if the 718 program is at a point where the gap between when we might start with setmelanotide and when we could start with 718 is not so great, then I think we would take that time delay, if you will, and just go right to 718 and avoid having to run two studies there. But that decision is yet to be made. We'll see how all of this plays forward.

And our last question will be coming from the line of Lisa Walter from RBC

Congrats on the progress. I just have one on Biva. Wondering if you can expand on your dose selection comments. And I realize this might be a bit early as the Phase 3 has not yet even started. But long term, is it possible patients could dose down with a maintenance dose if they happen to reach a normal BMI in the real world? Any color here would be helpful.

Yes. Yes, I'll briefly repeat what I said before on the dose selection. I do think 200 is probably on the border in terms of being therapeutic for most patients. I think 400 to 600 is more likely in range and 600 does seem to have a continued dose response. And so 600 for sure will be our targeted dose just the way 3 milligrams was our targeted dose in the HO setmelanotide trial. With regard to dosing down, what's interesting here is the biology, pathophysiology, it's a hormonal deficiency.

So in theory, you take whatever amount you need to restore your hormonal deficiency, but it's not a biologic setting where dosing down makes sense. So I think our expectation is most patients will stay at their target dose. That's been true with setmelanotide as we go forward. So it's not, you get your weight loss and then you can kind of go to a low dose to maintain. That's not the pathophysiology.

I'm showing no questions. I'd now like to turn the call back to David Meeker for closing remarks.

Great. Thank you. So thanks all for tuning in. Again, we remain really excited about the progress here at Rhythm, lots of exciting things coming up. 2025 was a big year. 2026 is going to be equally big. So we look forward to our next update. Thanks all.

And this concludes today's program. Thank you for participating. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Rhythm Pharmaceuticals Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Dave Connolly, Head of Investor Relations. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome. This morning, we issued a press release announcing that the preliminary data from our exploratory Phase II trial showed setmelanotide demonstrated a positive efficacy signal in Prader-Willi syndrome. You can access the press release as well as the slides that we will be reviewing today by going to the Investors section of our website.

David Meeker, Chair, President and Chief Executive Officer of Rhythm Pharmaceuticals, will present these data this morning. We are also joined on the call by Dr. Jennifer Miller, University of Florida -- a Professor of Endocrinology, excuse me, at the University of Florida in the Department of Pediatrics. She is the principal investigator for this Phase II trial. And Hunter Smith, our CFO, is also here and available to answer questions on this call as well.

Before we get started, I'd like to remind everyone that the statements we make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of our SEC filings.

In addition, any forward-looking statements made on this call represent our views as of only today and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements.

With that, I'll turn the call over to David, who will begin on Slide 5.

Thank you, Dave. Good morning, everybody. Thank you for joining the call. Today, we're sharing preliminary data from our open-label Phase II study in patients with PWS as the data have reached the point where we can make some important decisions about the next steps in the program. We are running the trial as a single-center study at the University of Florida with Dr. Jennifer Miller, who joins us on the call.

We are pleased to announce positive changes in BMI and HQ-CT at 3 and 6 months and short of new information, which is inconsistent with what we have seen to date, we will proceed to a Phase III program in PWS. More on that later.

Furthermore, based on these promising early data, we have initiated a Part D arm in the Phase I study of our weekly MC4R agonist RM-718, where we will test 718 in up to 20 PWS patients. That amendment has been filed, and we anticipate screening our first patient this month. We have received many questions leading up to today as to how we will interpret the study and what is the bar we need to hit to proceed to a Phase III study.

We have been clear, we would analyze the data patient by patient, trying to understand the context around each patient and their response to treatment. And that the bar would be results, which gave us confidence we can run a successful Phase III study, achieving a 5% reduction in BMI at 1 year. We have completed enrollment with 18 patients treated to date. Today, we are sharing the data from the first 8 patients who reached 3 months or more and the 5 patients who reached 6 months or more.

We entered this study with conviction that the MC4R pathway plays a critical role in the underlying biology and a very realistic view of the challenges of running clinical trials in patients with PWS. A major advantage of working with Dr. Miller, who is one of the world's leading experts in PWS is a deep understanding of the patients she follows. She has a large practice, and she knows not only the patient, but the family, which is invaluable and trying to interpret some of the individual patient responses. She will share some of her thoughts once I have reviewed the data.

I want to start with a short introduction to PWS beginning on Slide 6. PWS is a severe complex multisystem disease characterized by hyperphagia, a severe preoccupation with food, often accompanied by abnormal food-seeking behaviors and reduced energy expenditure, leading to severe obesity in the majority of patients unless their energy intake is rigorously restricted. There is a significant unmet medical need with limited therapeutic options to manage the hyperphagia, decreased energy expenditure and consequent weight gain. U.S. prevalence is estimated at approximately 20,000 patients with a similar frequency of the disease in other parts of the world.

Moving to Slide 7. This cartoon attempts to capture the complex pathophysiology underlying this disease. Multiple genes are involved, including at least 2 genes which can directly impact signaling through the MC4R pathway. We have talked specifically about MAGEL2 loss of function variants, which are present in virtually all patients with PWS, we studied in our Phase 2 DAYBREAK study. The response in those patients gave us optimism. We would see a response in PWS.

While multiple factors may contribute to the hunger in abnormal behaviors in PWS, we believe a central part of the pathophysiology affecting satiety and energy expenditure is a deficiency in the MC4R pathway and therefore, our interest in studying setmelanotide. Before getting to the data, we also want to provide some historical context. Most PWS studies have failed and no therapy is approved for weight or BMI reduction.

On Slide 8 is beloranib data from 2016, which is arguably the only drug that has shown meaningful changes in weight in PWS patients. That trial was stopped early due to thrombotic events and development of the drug was discontinued. However, it is a useful benchmark. They observed placebo-adjusted decreases in weight at 6 months of 8% and 9%. Importantly, however, the actual weight decreases in the trial were 4% and 5% at the 2 doses with the placebo group gaining weight, supporting the view that simply stopping weight gain in PWS is clinically meaningful.

Slide 9 shows the results for a cohort of patients from our original trial of setmelanotide and PWS conducted in 2016. Of the 4 patients who received the highest dose of 2.5 milligrams for 8 consecutive weeks, 3 of them lost weight, thereby suggesting setmelanotide could have a meaningful clinical effect.

Slide 10 shows the very simple open-label trial design. 18 patients aged 6 or greater were enrolled. Each patients dose escalated to 5 milligrams daily as tolerated for patients less than 12 years of age or dose escalated to 3 milligrams as the maximum dose. Endpoints in addition to safety and tolerability included change in BMI, HQ-CT scores and body composition.

Slide 11 shows the demographic data for all 18 patients enrolled to date. We have a very good mix of patients by age with 3 of them younger than 12 years old, 4 between the ages of 12 and 18 and 11 patients 18 or older. They all suffer with severe obesity with a BMI for all 18 patients.

Today, we are focused on the 8 patients who reached month 3 and setmelanotide and their baseline BMI was 43.7 on average. 5 patients reached the 6-month mark and 1 patient discontinued prior to their 6-month visit. Of the 18 enrolled patients, 17 patients remain on active therapy. Now let's move to the results. On Slide 12, there's a bar graph showing the percent BMI decrease at 3 months for the 8 patients. Underneath each patient number is the patient age, sex and starting BMI.

Four patients denoted by the asterisks had diabetes and in 2 patients 1 and 3, it was poorly controlled. The V denotes the 2 patients who are on Vykat, patient 6 and 7. 6 of 8 patients had a decrease in BMI ranging from minus 1.3% to 4.8%. We will discuss in more detail the last 3 patients, 2 of whom had gained weight at 3 months and patient 5 who subsequently began to gain weight during a period of what we believe was noncompliance.

Slide 13 shows the HQ-CT results. Think it is recognized that this is not the best tool to capture clinically meaningful changes in patients with PWS, but it is validated and it has served as the basis for a recent approval. This trial was not designed to capture changes in HQ-CT and that it is an open-label study, and there is no requirement for a baseline level of severity. For example, one patient, as you can see, had a 0 score at baseline and their score has remained 0.

Since it is an open-label trial, the results cannot be compared with data from other blinded trials. However, it is additional data, and it gives us confidence that patients are experiencing meaningful changes. 6 out of 7 patients with an elevated score at baseline showed a decrease in score. Patients 6 and 7 are both on Vykat which might explain their lower score on entry and both moved modestly further down with setmelanotide treatment.

Moving to the 6-month data on Slide 14. Shown here are all 8 patient data at 3 months in dark blue and then the 6-month data in light blue for the 5 patients reaching the 6-month mark. Patients #3 and #2 have cleared the 5% level. Patient 6 is flat from 3 to 6 months at approximately 2.5%. But his DEXA scan tells an interesting story, and I'll show you that on the next slide.

On Slide 15, we have the DEXA scans from 4 patients at 6 months. Patient #1 was too heavy for the DEXA machine, so we have no scan. The first 3 patients all show more fat than lean loss with fat mass decreasing by approximately 8% in the first 2 patients and more than 10% in patient #6. Patient #6 is the patient whose BMI had plateaued at approximately 2.5% at month 6. The DEXA scan results would suggest he was having a much more meaningful response to therapy than suggested by the BMI. Patient 5 gained fat mass consistent with the increase in his BMI.

Now let's go back to the summary data at 3 and 6 months repeated on Slide 16 and provide a little more color around the 3 patients who did not decrease their BMI at 6 months. Patient #4 was only intermittently compliant initially and then discontinued the trial prior to reaching the 6-month visit. Patient 5 had a good initial response, actually losing 4% in BMI at 2 months, but then traveled out of the country over the summer with what we believe to be poor compliance with treatment. He is now back home on treatment in a more stable situation and decreasing his BMI again after his 6-month visit.

Finally, patient #1 is the most complicated patient. Dr. Miller can provide more background, but she entered the trial with a BMI of 67, gaining weight steadily prior to trial entry, very poorly controlled diabetes and gained further weight with some improvement in her diabetes management. She also has severe lymphedema in her lower extremities with the edema likely complicating some of the weight measurements.

Her BMI has been relatively stable since our initial trial weight gain. And of note, she did have a decrease in her HQ-CT score from 20 to 11. Slide 17 lists the AEs for all 18 patients. Setmelanotide has been very well tolerated in this population with the majority of patients getting to 4 or 5 milligrams. The AE profile has been similar to what we've seen in other populations with hyperpigmentation and injection site reactions being most common.

So with that, I'd like to turn to Dr. Miller to get her thoughts on the program. So Dr. Miller, thank you for joining this morning on what I know is an incredibly busy clinic day, and I also know you're actually calling from clinic. So the first -- the first question, just what type of patients did you enroll initially and why? So maybe you could give us a little background there.

Sure. So the first 5 patients I enrolled were patients that were basically what I described as the worst of the worst. I mean they were people that would not have qualified for Vykat therapy because of their medical conditions. They were all morbidly obese. They -- many of them had type 2 diabetes already. Many of them had lymphedema, which was going to make it difficult to determine if they develop worsening edema from Vykat, I felt that I would be unsure as to whether or not that I could assess that adequately. They also all 5 had untreated obstructive sleep apnea. And so again, I was worried about putting them on Vykat with the risk of edema that comes with that.

And so basically, they were patients that were at the end of the road in my personal opinion. And I said to these families, like we have no other choice, like we can't do Vykat. There's really nothing else out there. We're doing this trial. Let's try it. It's worth a try. There's really nothing else. Patients 6 and 7 who you showed data for who are on Vykat had done well with Vykat , as you saw from the hyperphagia scores in terms of improvement in hyperphagia severity. However, both were large individuals to start with prior to starting the trial, both did develop type 2 diabetes on Vykat on DCCR during the trial and were -- the diabetes was somewhat difficult to control.

So I had asked to put them on to this trial so that we could see if setmelanotide did indeed cause weight loss, maybe we could get their diabetes under better control just with some weight loss or as we saw in patient #6, maybe some redistribution of body composition with less fat mass and more lean muscle mass. So again, and I say this a lot, these patients were at the end of the road, unfortunately, and they are at the end of the road if -- this is kind of it. And so they all know that and their families know that, but I'm very grateful to them to trusting me to do this trial and see if it works.

Perfect. So maybe -- I mean, you've been involved with many trials in Prader-Willi patients, if not all of the trials. So how would you interpret these results? Can you give us a little context for how you see the changes we're seeing today?

Well, I've been very excited about the changes that we're seeing in BMI reduction and body composition in the great majority of the patients. Their diabetes control has improved with minimal to no adjustments in their diabetes regimen other than patient #1. They just -- they're moving better, their body composition looks better. There -- the parents feel that they are eating somewhat less, that they're less obsessed by food and that they're able to exercise more easily and that they're choosing to exercise on a regular basis, which is remarkable to me.

So and, maybe you were also a lead investigator. I think you enrolled close to 20 -- approximately 20 patients in our HO040 study. I'm just curious in terms of biologic effect of an MC4R agonist like setmelanotide, are there any similarities? The diseases are quite different, but any similarities in terms of what you're seeing?

Yes. Yes, definitely. I mean, yes, the diseases are quite different. It was -- I was hoping for the same degree of magnitude of results that we saw in the HO trial in this population. But as you point out, it's a completely different disease. But the similarities that we saw in both groups are what I mentioned before, the increased tendency to want to go out and do stuff and exercise increased happiness, like everybody reports that less irritability. That was something that was consistently reported in both groups across the board after about 2 months on setmelanotide, that was a consistent finding. So those things were all very, very positive to me.

And going back to the challenging patients. So patient 5 and patient #1 have gained weight since they started the trial. So why would they stay on therapy?

Because -- yes, good question. They really feel better on the drug. Both of them, when I've threatened because I've been worried about noncompliance and I've said, probably we should stop if we can't be compliant. And both have had major furniture type throwing meltdowns here about having to come off of the study because they both feel that they are doing better on the drug. They feel happier, they feel better overall. They themselves. This is not a parent perspective. This is the people perspective. And so they really don't want to stop the drug. They perceive that it's helping them significantly.

So I know we didn't collect formally their prior weight loss history as part of their case report forms and the clinical trial specifically, but you followed a number of these patients for a long period of time. Were they gaining weight and specifically patient 1 and 5? And what was their natural history coming into the trial?

To be clear, I followed every single one of these patients in this trial since they were infants. So for a very, very, very long time. And so yes, every one of them was gaining weight excessively prior to entry into the trial. And the ones who are not on Vykat, so the ones who are just on setmelanotide at the entry to trial are we're gaining weight at a pretty rapid clip at every clinic visit that I saw them at, no matter what we tried to do to intervene, we were unable to slow down their weight gain.

And this has slowed it. I've said to the parents like stable to me is a win. When your kid was gaining, gaining, gaining and the BMI was 110% of the 95th percentile, and now it's just kind of hanging there. So crossing percentiles as these are -- some of them are teenagers, right? So they're growing and their BMI is actually improving because they're growing. And the adults are at least hanging stable and not continuing to go up. I consider that a very big win from a metabolic health perspective.

Perfect. So maybe last thing, anything else that strikes you? Again, we're early in the trial, and we're going to let the data mature, of course, but welcome any additional thoughts you have.

No. I think overall, with the exception of a couple of patients, compliance has been really good, considering it is a daily injection. But these are patients that are used to taking daily injections. Most of them are on growth hormone. And as you mentioned, many of them have type 2 diabetes and are on insulin for that. So no, I think it's been exciting to see, and it's been exciting for the families to see the changes in their children's body composition.

Okay. Great. So thank you. So I have a couple more comments to make, and then we'll open it up for general Q&A. But thank you, again, for your efforts those of your PWS patients who volunteer for the trial, these early trials, of course, any of these trials in PWS are not easy. So now for a few concluding remarks before opening up the Q&A. We recognize these results are early and preliminary. However, as you know, in these rare disease populations and particularly with small data sets, we put tremendous emphasis on the results from each individual patient, those who are responding to the treatment and even more attention to those who may not be responders.

Are they true nonresponders? Or are there mitigating factors? So for the first 8 patients, the BMI is 6 of 8 patients is trending down. One patient was noncompliant and discontinued and patient #1 is compliant, we believe, but may be a true nonresponder as her BMI is not decreasing. However, as you've heard, she is perhaps the most challenging patient in terms of her underlying disease and her poorly controlled diabetes. And as we learn more, even stabilization, as Dr. Miller mentioned, for her may represent a response. Ultimately, body composition is measured by DEXA scans out to be a better measure of response. As we have seen with our HO trial, restoring signaling through the MC4R pathway seems to lead to significantly more fat than mean mass loss, which is what we would hope to see.

Patient 6 is a good example where the BMI change did not capture the magnitude of the decrease in fat mass. Although the trial was not designed to formally assess hyperphagia, we are encouraged by the changes in HQ-CT scores, and we believe these scores reflect the fact patients are experiencing a change on treatment. In light of the disease severity of the first patients enrolled and the relative consistency of the results to date, we believe these data support moving to Phase 3 with confidence we can run a positive trial with primary and key secondary endpoints of BMI change, a responder analysis HQ-CT scores and body composition.

Based on the biology of the MC4R receptor, we also believe that if we hit the BMI endpoint, we are likely to have a positive result on the hyperphagia scores. And for the next steps with setmelanotide, our plan is to complete this trial, get all 18 patients past the 6-month time point. We'll release the data at that point and then submitted a Phase III trial proposal to the FDA for review. We will aim to disclose the full 6-month data during the first half of 2026, as I noted, as well as at a medical meeting next year.

Lastly, these data from the setmelanotide trial support our confidence that MC4R agonism is a biologically sound approach to treating patients with PWS. And with that in mind, we have added Part D to our ongoing Phase I study, open-label study evaluating 718 weekly specific MC4R agonist designed not to cause hyperpigmentation and will enroll up to 20 patients with each patient dose escalating from 10 to 40 milligrams as tolerated. We have the ability to go to 50 milligrams if needed. Our goal is to have that part of the trial enrolled by the second half of 2026. The Part C portion of that trial in HO patients remains on track to complete enrollment, as you know, in the first quarter of '26.

With that, we'll open it up for questions. Operator?

[Operator Instructions] Our first question comes from Phil Nadeau with TD Cowen.

Congrats on the data. David, we wanted to dive into your comments about the Phase 3 trial and the likelihood of success in a bit more detail and kind of have 2 questions in that vein. So first, could you go into a bit more detail about what you think the primary endpoint of a Phase 3 trial would be? Would it be a change of -- change in mean BMI from baseline with the expectation that, that would hit a 5% hurdle? Or do you think the responder analysis could be the primary endpoint? And then second question, kind of along those lines, I guess, as we look at the data, it does seem like at least in 2 of the patients, the weight loss was progressive that gets you to that BMI of over 5% by month 6 and admitting there's mitigating circumstances for the 3 patients, but it wasn't necessarily progressive in the other 3.

So how confident are you that the BMI reductions here could be progressive to get you to that 5% level by month 12? And are you thinking maybe in a placebo-adjusted trial, the placebo group would actually increase. So you don't need an absolute reduction of 5% in the patients, but placebo adjusted if you could get there anyway?

Yes. Thanks, Phil. So we're early. We'll -- again, as we said, we'll let this data mature and the results from the full 18-patient cohort at 6 months will help us answer some of those questions. But we made the decision and we're going forward to Phase 3 based on these results and obviously are thinking about that. I think the primary endpoint, again, let's get the 18-patient data, but it will be likely BMI percent change. And as you highlighted, and we've been clear all along that our goal is to get to a BMI reduction of 5% or more at 52 weeks.

I think that's completely doable. I think the probability we can hit a placebo-adjusted 5% difference is extremely high. So -- and that is all we will need, FDA agreeing here, but that is exactly the way the regulation is written. The regulation is written is a 5% placebo-adjusted change. So if you look at the history of these patients, as Dr. Miller said, gaining weight coming into the trial, if you look at the fact that in the vast majority of patients, we are having a clear biologic effect with a reduction. And even in those who have gained some weight, there's a plateauing there, maybe a further decrease over time. So all of that gives me a lot of confidence that this BMI primary point percent change can be the primary endpoint, and we can hit it, one.

Two, responder analysis is important for the regulators and FDA specifically. So that will very much be part of it. Just to remind people on BBS, we had about -- and that's another tough disease. We had about 60% of the patients who cleared 5% at 52 weeks. So it's not that, that specific indication at 100%. And so we have some history there with challenging populations. Third, the HQ-CT scores, again, in a placebo-controlled trial based as I indicated on the biology, I think that will be positive. And then, of course, body composition change, and we will get DEXA scans on all patients in our Phase 3 trial. So that will not be a primary, but that will be a key secondary. And in rare diseases, you bring the totality of the evidence to bear. It's not just a pure primary. I think we'll hit the primary for the reasons I said, but it will be supported strongly by the key secondaries.

That's really helpful. Maybe just one follow-up question. What change in BMI would you expect for an untreated patient similar to the ones that you enrolled in this trial over 12 months? How much is the average?

Dr. Miller, maybe just...

It's about -- it's actually the opposite direction. So it can be close to 5% in 12 months.

Perfect. That's very helpful. Congrats again on the data.

Yes. And to that Dr. Miller's point, I mean, that's supported by the data from the randomized controlled trial of beloranib that was run originally.

Next question comes from Tazeen Ahmad with Bank of America.

Thanks for the update on PWS. I wanted to get a sense about how you're thinking about the profile of patients you plan to enroll in Phase 3. So just based on the data that you presented today, you've talked about certain caveats about why certain patients may not have had ideal weight loss, for example.

So how do you take that information and translate that into entry criteria for your study? And then as it relates to 718, you've chosen to look at it, is it primarily because it doesn't have the hyperpigmentation side effect? Or do you think it could have mechanistically reason to induce more weight loss and maybe more control of hyperphagia than you've seen with setmelanotide?

Yes. Thanks, Tazeen. Let me take the 718 question first. No, the -- a couple of reasons for proceeding with 718. One is we had an early sense that this drug was working. So we activated that plan because we had a vehicle here with the 718 study where we knew we could add a Part D arm, number one. Number two, I think between the weekly injectable and the daily oral, particularly because we didn't have our smaller formulation ready to go, concern about patients joking on a pill, for example, in a Prader-Willi population was more of a concern and the weekly seemed like a preferable approach there.

Three, our goal for all of our indications is to get our next-generation programs approved for those. And so this gave us a running start by getting -- being able to get some information. So we're well underway here in terms of getting that arm activated. As I said, the first site has been initiated, and we hope to have our first patient screened by the end of the month. So all that was what went into choosing to go forward with 718. In terms of entry criteria, yes, that's -- it's a really important question. And again, what you've heard, and I'm not sure this is just such a complicated population. My initial response is it would be an all-comers trial. I mean one of the advantages is that we can enroll the patients that Dr. Miller highlighted who have no other option. And I don't think we would be looking to enroll a trial where we cherry picked a few patients.

So I imagine an all-comer trial, patients with obesity, so we can see the change in their BMI. But remember, again, when you do an all-comers trial and it's randomized, those patients who end up in the placebo group, they'll drive the placebo change. And so with the primary endpoint of placebo adjusted, it will work fine in our benefit. So -- and I'm not -- I think as Dr. Miller also highlighted, severe diabetes, I don't think that's a major compounding problem for us and those patients have no other options. So yes, a long way of saying, I think it would be an all-comers trial.

Okay. And maybe just a quick follow-up. For PWS, if patients experience hyperpigmentation, do you think that this population is similar to how you described HO or doctors have described HO as that would not be rate limiting?

Dr. Miller?

I'm sorry, I was interacting with the patient. I apologize.

No, no. Yes, Tazeen just asked, how significant do you think hyperpigmentation is in this group? Yes, did have one patient...

Not at all other than that one patient. Yes, no, they don't care. Actually, they kind of like it because they tend to -- especially the deletion patients delete a pigment gene. And so they tend to be very fair skinned. And so the hyperpigmentation actually makes them color-wise more similar to their family. And I've had -- other than the one who discontinued, I've had 0 patients complain about it.

And our next question will come from Mike Ulz with Morgan Stanley.

Congratulations on the early data as well. Maybe just a question among those patients that had lost weight, can you talk about the pattern of weight loss over the treatment period? Was it more choppy? Or was there a general downward trend in those patients? And do you think continuing to treat those patients longer may result in even greater weight loss?

Yes. Dr. Miller, I'm going to ask to help here. I mean we did see choppiness, of course, and part of that was in a couple of the patients related to their diabetes and other meds, but what do you think?

Yes. I think it was a steady downward trend. Of course, there's always choppiness, but it's been sort of slow and steady, a pound or 2 a month, so -- which I feel is kind of a healthy way to lose weight. And it also tends to be more visceral fat than subcutaneous fat, at least on DEXA and looking at them, you can see an improvement in the fat that's accumulated around the abdomen, which is from a metabolic perspective, awesome. And so yes, I think, again, slow and steady. It's -- some of them are disappointed where there's a month where they haven't lost weight, but we're also at holiday season. And so people eat for different reasons besides hunger, too. So I'm going to try to tell everybody that slow and steady wins the race, but I do anticipate that by a year, we'll see more significant changes.

And our next question will come from Seamus Fernandez with Guggenheim.

Congrats on the data. Apologies for the background noise. Just wanted to quickly ask, in terms of the ability to evaluate not just BMI, it seems like there would also be the possibility of Z-score depending on the patients that get recruited into the study. So just interested to know, again, maybe along the lines of Phil's questions, the types of endpoints, how you think the agency is likely to evaluate the drug here? And then could you also help us understand how necessary the higher dose regimen was and the percentage of patients that reached the top dose and stayed on it?

Yes. Sam, let me just clarify. Your first question was about BMI Z scores as being an additional piece?

Yes.

Yes. So yes, for sure. So let me take that first. What we've done -- we'll do the same thing we've done in all of our trials. We don't -- in rare disease, again, particularly these groups, we don't have the luxury of running an adult only, adolescent only under 12 only. So we'll run one trial. It's likely to be as the entry criteria for this one are 6 years and above or 4 years and above, we'll see where we are. But -- so we'll need an endpoint that captures both. So BMI, of course, is better than weight.

But BMIZ analysis will be done for those kids for the children who are under 18 years of age. And then our responder analysis will be similar to what we've done previously, which is to say how many patients cleared 5% on their BMI and for those under 18, how many had a BMIZ score change of greater than 0.2 clinical meaning. So those will be the -- that will be added, and it will give us greater insight and also mitigate some of the fact that BMIs do increase as kids are growing. Sorry, what was the other one was -- the dosing, how they've done in the dosing. So the majority of patients and Dr. if you're there, maybe you can just comment, the majority have been between 4 and 5 mgs, but Dr. Miller, maybe you can just comment on dosing.

Yes. I think there's only one patient that remains on 5 milligrams, and that's patient #1. And so most have hung out at 4 to 4.5 and seem to be doing very well with that -- sorry, I'm measuring waist circumference as we speak. And so they seem to be doing very well with that. Sorry. They seem to be doing well with the dose of 4 to 4.5 the episode of fatigue that was reported as one of the AEs was due to -- with somebody on the 5-milligram dose. These patients take a lot of medications, especially a lot of psych medications. So parents tend to be of the mindset that the smaller the effective dose, the better, which I don't disagree with. So we went up to 5 on almost everybody, but most of the people seem to do the best on 4 to 4.5. All the little ones under 12 are on 3 as a maximum dose and are doing very well on that. So yes, so it's not many that are on the maximum dose, but there's -- I would say, everyone, except for one over the age of 12 is above -- is at 4 or 4.5 milligrams, except for the one at 5 milligrams.

Okay. And then maybe if I could just ask one last follow-up. The percentage of patients that you think would be applicable just given your initial experience to treatment with either setmelanotide or a weekly 718 in this patient population, is it 50%, 80%, 100%, 20%? Just helpful to know how you're reacting to these data in those terms? I know it's a little bit of an unfair question.

It is a little bit of an unfair question because, of course, weight issues differ across different providers and where individuals with Prader-Willi live and environmental security and all that kind of stuff. I mean, honestly, if you look at people who would be eligible from if you just look at weight, for example, it's probably about 40% of the population that would be eligible. I would say if you're looking at weight and hyperphagia, it's probably going to be less than that. But yes, I still think it's a very -- a pretty significant proportion of the population.

And our next question will come from Derek Archila with Wells.

Congrats on the update. So just one for David, and one for Dr. Miller. David, I guess, should we assume that the start of this Part D cohort with 718 in Prader-Willi patients implies that Part C and HO is trending positively? And then a question for Dr. Miller is more centered around the Vykat and IMCIVREE combo usage in the trial. It didn't seem like there was much synergy there, but just curious to get your thoughts if there's any things underlying there. And I guess, whether or not you see roles for both Vykat and IMCIVREE in your practice?

Dr. Miller, why don't you take the Vykat first and then I'll answer...