Good day and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to our speaker today, David Connolly, Head of Investor Relations and Corporate Communications at Rhythm. Thank you. Please go ahead.

Thank you. Good morning. I'm David Connolly, Head of IR and Corporate Communications here at Rhythm Pharmaceuticals. With me today for our second quarter financial results and business update conference call are David Meeker, Chair, President and Chief Executive of Rhythm Pharmaceuticals; Murray Stewart, our Chief Medical Officer; Jennifer Chien, Executive Vice President, Head of North America; Yann Mazabraud, Executive Vice President, Head of International, who is dialing in from Europe this morning; and Hunter Smith, our Chief Financial Officer, who's here in Boston with us. For those of you participating via conference call, the accompanying slides can be accessed and controlled by going to the Events section of the Investors page of our website, ir.rhythemtx.com. This morning, we issued two press releases, one of which provides an update on our comprehensive expansion of clinical development program, with five new Phase II and III trials planned to evaluate setmelanotide in rare genetic diseases of obesity and a second press release that provides our second quarter financial results and business update. Both press releases are available on our website. On today's call, on slide two, David will provide an overview and some introductory remarks. Murray will provide an update on regulatory and clinical development plans, Jennifer will provide an update on US commercial, Yann will provide an update on international, and Hunter will provide an update on our finances and balance sheet. Lastly, the team will be available to answer questions. On slide three, I'll walk you through our forward-looking statement. I'll remind you that this call will contain 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 factors, including those discussed in our most recent annual report on file with the SEC. In addition, any forward-looking statements represent our views only 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.

Thank you, Dave. And I'd like to offer my welcome to everyone for Rhythm's first quarterly earnings call. Starting on slide 5, as Dave highlighted, it's been a highly productive quarter. Not a lot of flashy headlines. But we're really pleased with the significant progress that we've made. And I think you'll hopefully appreciate that, particularly on the clinical development front, which Murray will walk you through. Some of the highlights from the second quarter. On the clinical side, again, many discussions with the FDA and EMA leading to our current state with a newly named Phase III EMANATE trial, our newly named Phase II DAYBREAK trial, and then the Phase III study in pediatrics, children ages two to six, and then two Phase III trials for our weekly formulation. We've been very encouraged by our first full quarter of IMCIVREE availability. We're learning a tremendous amount, which Jennifer will walk you through, and we are making significant strides in building out our infrastructure. We got our European Commission Authorization for IMCIVREE, and we knew this was coming, but an incredibly important milestone, nevertheless. And I'm very happy with the indication, the labeled indication that we've got. We're approved for the treatment of obesity and the control of hunger. We have hunger in the US label, but in the European label, it is included in the indication, and again, signals the importance of that aspect of this disease, given the underlying biology. Yann's going to take you through the progress in Europe and outside. We recently announced our agreement with Medison Pharma to commercialize IMCIVREE in Israel. Again, he'll go into a little more depth there. But this agreement signals, again, our commitment to go global with this opportunity. The CRIBBS collaboration, again, recently announced, is an important step certainly…

Great, thank you. Let's go to slide 10. As David said, we've been busy. We've been holding multiple meetings with both the FDA and EMA, and we're pleased to report out today that we've achieved agreement on regulatory submissions and several clinical trial designs, which are important steps as we work to expand the label for setmelanotide. We submitted a briefing document to the FDA and did a pre-SNDA meeting with them to discuss the content of the regulatory for Bardet-Biedl and Alström Syndrome. The meeting was successful, and the FDA have agreed to review the BBS and Alström data independently. And while we're cautiously optimistic, given the totality of the data, we do know that the more limited Alström data will not negatively affect our BBS submission. So, we are on track to complete and submit a regular package for supplemental NDA to the FDA in this quarter. For Europe, we also had a successful meeting. And we're on track to complete our submission seeking a Type 2 amendment to our European Marketing Authorization in the fourth quarter. But we are excited about the transformational expansion of our clinical development program, with five new Phase II and III trials, all of which meaningfully broaden the rare genetic disease of obesity patient population we can help with IMCIVREE. The pivotal EMANATE trial studies five specific genes in the MC4R pathway, representing approximately 100,000 to 200,000 patients in the US who may respond to setmelanotide, with a similar number in Europe. The Phase II DAYBREAK trial is designed to buy setmelanotide an additional 31 genes associated with the MC4R pathway. A Phase II trial in pediatric patients aged two to six is designed to address high unmet need and enable better earlier care for children with rare genetic diseases of obesity.…

Thank you, Murray. If you go to slide 23, you'll see that our main focus is building a community and providing educational resources and expertise as well as tools for identifying, testing and supporting the diagnosis of patients. Diagnosis supports the identification of patients who may be eligible for one of our clinical studies, but also supports identification of patients who may be eligible for IMCIVREE. We are leveraging the clinical development program, its growing network of trial investigators, in addition to diagnosing and treating physicians at referral centers to build this community, which in turn will help support our commercialization efforts. Slide 24. Genetic testing, of course, remains at the center of our corporate strategy. For us, that means uncovering rare obesity, or URO, our free genetic test designed to identify and help physicians diagnose patients with rare genetic diseases of obesity. As David mentioned, we extended the panel to test for 80 genes with ties to obesity. To date, we have completed approximately 10,000 URO tests. It's important to note the panel was just expanded to include all 80 genes. So, now, all the genes in EMANATE and DAYBREAK will be screened moving forward. We have also evaluated and made additional improvements in the URO program. We've developed a new website to make it easier for physicians to order the tests, receive results, and access contact information for genetic counseling support. Physicians will receive the test kits within five days. And in partnership with prevention genetics, we can turn around results within 21 days. Through the years, we have learned a tremendous amount about who orders the test and for whom. So far, more than 1,600 unique HCPs have submitted tests, with pediatric endocrinologists and pediatricians accounting for more than half of them. Medical geneticists, PCPs and family…

Thank you, Jennifer. And good morning, everyone. It is a very exciting time for Rhythm at the international level. Two weeks ago, we announced that the European Commission granted marketing authorization to IMCIVREE for the treatment of obesity and the control of hunger associated with genetically confirmed loss of function, biallelic POMC, PCSK1 or LEPR deficiency in adults and children six years of age and above. IMCIVREE is the first and only treatment option available for patients in Europe to address the underlying cause of obesity driven by certain genetic defects in the melanocortin-4 receptor pathway. In Europe and many key countries in the Middle East, South America and elsewhere, we are executing on a similar strategy as Jennifer's team in North America, with, first, a focus on community building to support the robust clinical development program already detailed and the commercial efforts. Second, securing market access for IMCIVREE on a country by country approach. And third, planning for BBS launch next year. But there are some differences in Europe. First, for rare genetic disease of obesity, Europe is somewhat better organized with a lot of historical expertise, many national centers of excellence, and three very well established European reference networks with a total of 50 academic centers. More genetic testing focused on this disease has been done as many of these centers do their own genetic testing. On genetic testing, there is an opportunity for us to complement with this existing testing. That is what we are doing as we evolve our European genetic testing and diagnostic strategy. Of course, pricing and reimbursement are also different in Europe and vary by country. We are advancing a country by country reimbursement process and work to make IMCIVREE available to patients as rapidly as possible. I will give you more details…

Thank you, Yann. And now I'll do a brief review of the second quarter financials. IMCIVREE net revenue was approximately $274,000 in the second quarter, and there was no revenue in the comparable period of 2020. R&D expenses totaled $25 million and SG&A totaled $15.5 million for a net loss of approximately $35.4 million. Shares outstanding were $50.2 million and our net loss per share was $0.70. Rhythm remains very well capitalized. As of June 30, 2021, cash, cash equivalents and short-term investments were approximately $368.2 million, including net proceeds of $98.4 million from the sale of our PRBs and proceeds of $162 million from Rhythm's underwritten public offering which closed in February. This is sufficient to fund our operating expenses and capital expenditure requirements into at least the second half of 2023. As you heard from David, Murray, Jennifer and Yann, we're advancing a robust corporate and clinical development strategy toward a meaningful increase in our identifiable patient population and building out our company to do so. We're well capitalized and well positioned to achieve these goals, thanks to the confidence and support we receive from many of you on the call today. With that, I'll turn it over to David to conclude.

Great. Thanks, Hunter. So, hopefully, what you've appreciated is that we're about halfway through a transformational year for Rhythm. The first half of the year was marked by our announcement of proof of concept data in the het patients, SRC1, SH2B1 deficiency obesity. And we updated you on the genetic sequencing and epidemiology data at that time. Jennifer gave you a little more insight into those efforts, which of course are continuing. We have, as you've heard, made IMCIVREE commercially available and we started our Phase II hypothalamic obesity trial. The second half has even more milestones. The EU decision has already come in. We will present full data analysis from the pivotal Phase III trial in BBS at ESPE in 2021. We will have our US and EU regulatory submissions for BBS and Alström. We're initiating the Phase III trial in peds, the Phase III EMANATE, the Phase II DAYBREAK and two Phase III trials for the weekly formulation, as you heard from Murray, and we will be presenting initial data from the Phase II ongoing basket study in the MC4, our rescuable patients and initial data from the Phase II trial in hypothalamic obesity in the first half of 2022. So, we'll finish on slide 36. And this is a look at our pipeline. And I'll just leave you with that thought. I think many rare disease companies are pursuing a strategy where they'll have a therapy which is specific for a certain disease, they may have multiple therapies for multiple different diseases. And I think many of those companies are well viewed, as they should be. We're a company that has one therapy, but we're pursuing a gene by gene opportunity here. And each one of these genes, where we can establish safety and efficacy, does open…

[Operator Instructions]. And our first question comes from the line of Phil Nadeau from Cowen and company.

Congratulations on all the progress. Just a few clarifying questions on the new trial designs that were announced this morning. First, on the EMANATE trial, are you enrolling variants, pathogenic, likely pathogenic or VUS for all six genotypes or are those specifically for POMC and LEPR with the other genotypes enrolling just pathogenic variants?

Starting in reverse order with the last one. So, the last one, by definition, is just one variant, so it's a deletion in N221. So that stands alone. Regarding SRC1, SH2B1, we will include people with pathogenic variants. But we don't need to stratify for them, for most those will be pathogenic variants. It's particularly important for the hets to stratify by the pathogenic and VUS. So, it's just two that we're particularly stratifying for.

The latter will mostly be pathogenic variants, so SRC1…

Yeah.

Second, on the DAYBREAK Phase II, if I heard you correctly, looks like under 18 years, you're using BMI as the endpoint. Why are you using BMI instead of BMI-Z? It seems like under 18, you clearly patients increasing their BMI simply because they're going through puberty or aging?

These we're moving to BMI as BMI allows you to look at both adults and children. So, BMI correlates very well – so BMI corrects for your height in kids. And obviously, an adults, your height isn't changing. So, that's why actually BMI is very solid to use for adults and children. So, in our studies going forward, we've learned from our previous analysis that BMI is probably going to be the major focus for us. When you're dealing with kids, you can look at BMI-Z. You don't have charts for adults, so you can't look at BMI-Z in adults. So, BMI is probably going to be the more robust. But for kids, you can look at BMI, BMI-Z or the 90 percentile, or 95% and the 95 percentile [ph]. So, a number of ways of doing it, but our focus is shifting for BMI because of this ability to look at adults and children.

You're correct in the sense that the BMI-Z may add a little more in terms of sensitivity, if you will, but we believe, and I think with good reason, that since the BMI does include the one major variable we're trying to adjust for of height that it will work.

Just a couple more. On the weekly de novo Phase III, it looks like primary endpoints are week 18. But there is a 14 week open label period after the primary endpoint. What's the purpose of that period? Is that something that the FDA requested or do you just want to keep patients on therapy?

No, we want to actually see what the long-term effect of the weekly is. So, I think at 18 weeks, knowing the daily data, we will show statistical significance and clinically meaningful, and we may be able to file actually on that 18 weeks. But, actually, to see the long-term data on the weekly will be beneficial to patients and to us.

Last question. In terms of the pediatric Phase III, do you need to have one patient at least of each of the POMC, PCSK1 and LEPR genotypes? Or would it be possible for the five patients that could have those genotypes, like if they were all POMC?

The agency has agreed to either one POMC, PCSK1 because that's a rare, LEPR and then one BBS. So, you really just need three. We've actually got them already lined up. So, I don't think the regulatory requirement for getting that data – I think we'll reach that easily.

So you need one of each and then the others can be of any change. Okay, perfect. Congrats again on the progress.

Our next question comes from the line of David Lebowitz from Morgan Stanley.

This is Avatar Jones on for David this morning. We have two questions. First, on the CRIBBS registry collaboration, do you anticipate this partnership will have an impact on, one, patient identification or a launch trajectory in Bardet-Biedl syndrome? And our second question is on market access. Can you possibly provide any quantitative metrics to date?

The CRIBBS registry has approximately 625 BBS patients within their registry, with a goal of having approximately 675 patients by the end of the year, and the vast majority of these patients are from the US. So, a credible source of information just in terms of launch preparation. In parallel with that, as I outlined, we are working with our already existing MSL team and are currently recruiting BBS territory manager team. And because BBS is syndromic, we have the opportunity to be even more targeted in terms of our disease education efforts and also patient identification efforts. In parallel with this, through our just broad RGDO disease education efforts, we are also uncovering biallelic patients that have BBS genes. So, there's already existing patients in the hundreds in the US that have been identified to support a robust launch. And we will be, of course, moving forward just in terms of supplementing that with additional patient finds through our field efforts. From a market access standpoint, as I mentioned, the feedback from the payers have been positive. Our real focus has been on really trying to differentiate our target patient populations from broad obesity based off with a genetic backgrounds. The fact that from early onset, they have this hyperphagia and obesity caused by this mutation in the pathway. And so, once again, we have been successful with over – some of the payer decisions made to date, with the vast majority of these being positive. When we do encounter challenges, we have a support team in place to really work to overcome those challenges and get access for the patients.

Our next question comes from the line of Tazeen Ahmad from Bank of America.

Congrats on the progress for me as well. I have a few focused on commercial. As of right now, can you give us an idea of what the distribution is? Just based on what percent are commercial payers versus what percent are government payers? And then, as you look forward to enrolling the EMANATE trial, you've given us an idea of basically when you expect to file. And so, how have your patient finding efforts resulted in you getting confidence at the rate of enrollments of the study?

Yeah, I think, on the commercial side, Jennifer, just you want to – if we provide, we can't provide full – probably a lot more detail here, Tazeen. But the majority of the payers that we've talked to and have enrolled so far have been commercial payers, by far. And we have been in the Medicaid population, the majority of the Medicaid that we have been working with, we have enrolled to date, again, have been positive, not 100%. But I don't know if that helps.

Tazeen, I would just say, we have as a working assumption for this population that about a third of the patients will be Medicaid. On a long term basis. It's going to jump up and down as we add individual patients. But on a long term basis, we're working with a third as the baseline.

Would that also hold when you expand out to this – potentially 100,000 to 200,000 patients in your bigger indications?

I don't know that we have enough info yet on that demographic to say so. All I would say is that, for the most part, our patients are skewing younger and Medicaid coverage among the young is higher than among the total covered lives in the US.

Your second question on the EMANATE trial and enrollment, I think it's – unfortunately or whatever – early as well. As Jennifer highlighted, there's – in the screening efforts to date in the US, 650 patients would qualify for either the EMANATE trial or the DAYBREAK trial. Our original screen said that we've expanded our URO panel to include 80 genes at the current time. And that does include all 31 genes in the DAYBREAK and the five in the Phase III EMANATE trial. Our previous screen had always included the Phase III EMANATE trial genes. So, a larger percentage of that 650 falls in that bucket. It had only included seven genes in our new 31 genes. So, the expansion, that's been somewhat recent in terms of expanding to 80. There's a good set of genes that we're just starting to look for. But most importantly, to your question, the EMANATE trial has been part of our prior screening efforts. So, we're off to a good start. And then, of course, as Yann said, in Europe, those centers tend to be again better organized with more definitive genetic testing done, than we see in the US.

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

Two from us. One is just following up on that last comment on – you had a slide, I think slide 30, on some metrics for BBS patients and you're making a comment that some of the European markets may be a little bit more organized than, say, relative to the US. Just curious, you gave a number 2,000 BBS patients ID-ed across EU15 and 1,500 in EU4 plus UK. How does that compare relative to saying what a US – what some US metrics may look like in in terms of genetic identification? And then secondly, on the BBS [indiscernible] SNDA, just curious to get your thoughts on discussions with regulators around inclusion of the [indiscernible] in the SNDA. I know there are some debates, potential debate about whether or not to include that based on some of the Phase III data, but some more color on that would be helpful.

I'll have Jennifer comment just on the US numbers for BBS relative to the European and then Murray can comment on the BBS filing.

The CRIBBS registry has outlined that there are approximately 625 patients in the registry with a goal of increasing that over the years. The vast majority of these patients are from the US. What's interesting is that – and it makes sense – in terms of the patients that are followed, a lot of these patients skew to be younger because they have motivated parents who are also interested in terms of learning more about the disease and participating in terms of the registry with the questions and such. There are opportunities, of course, to – as we move forward with a specific therapy for treatment of these patients to do more disease education, targeted disease education to identify additional patients that may have already been diagnosed and lost in the system, but also to diagnose patients who have been seeking for years for that accurate diagnosis.

With regards to Alström, the agencies were actually welcoming for us to have a frank discussion. They were aware that Alström patient sample were small in the 023, the pivotal study. There were just six Alströms, three of which are evaluable. And part of the dialogue, we went in and said, we wanted to put in the totality of the data, which included Phase II in supplemental. And when we do that, we've got 12 Alström patients. Many of the Alström patients are young and showing some benefit. This may be lost if you just look at weight. So, we put in case narratives of the Alström and both agencies were willing to review the Alström data as part of a separate indication.

[Operator Instructions]. And our next question comes from the line of Graig Suvannavejh from Goldman Sachs.

Certainly got a busy second half before you. If I could ask maybe three questions. First, given all the new trials that you've got, that are about to start, is there a way that perhaps you can easily just summarize when you expect approximate timelines around the readouts for these multiple trials just to help frame it for us and put it in context? The second question I have, and maybe this question is better asked for Hunter, in terms of the spend and OpEx that we should anticipate in the second half, if you can provide some color on what that was like relative to the first half? And then, exiting the fourth quarter, how we should think about 2022? And then, I'll follow up with a third question after you hopefully answer the first two.

I'll start here and then Murray can amplify here. So, from a timeline standpoint, if you take the EMANATE, the Phase III trial, five independent studies. They will enroll by definition at different rates. We've indicated in this presentation that we expect overall a 12 to 18 month enrollment period. The N221D sub study is the most prevalent of the genes. And we would fully expect that to enroll the fastest and be on the early side of that. The pathogenic, likely pathogenic portion of the hets is by far the least common. And we would expect those to be the slowest. And so, for the POMC het and the LEPR hets, and they would be at the upper end of that. And again, there's a huge question more to be learned about sort of how the rates of these are going to play forward. The SH2B1, SRC1 are somewhat in the middle. Let me just give you some numbers because that'll be the most helpful here. In terms of prevalence, the pathogenic, likely pathogenic part of the het have a frequency in this severe early onset obesity population of about 0.2. The SH2B1, SRC1 are 2% plus – 2%, 2.5%. And the N221D is around 5%. So, you can see in a relative magnitude, if it was just a function of screening and frequency of finding based on screening, you can see how that might roll forward. The pediatric trial, as Murray said, 10 patients is the goal, 3 patients is the minimum, those 3 in a sense already identified. So that, again, we expect to play forward over the next year. And similarly, with the weekly, the first switch part of that study, that includes patients, by definition, who are already on therapy, so they're all identified in within the network. That trial will initiate first and should be quite efficient. So, again, should play forward in 2022. And what am I missing here, Murray?

The Phase II DAYBREAK – so the EMANATE will take a while because if you get 18 months recruitment and then 12 months for the actual study, and that's all blinded, you're not going to hear much from EMANATE for a while. But the good news about the DAYBREAK study is because we're looking at people coming in and we can look at each gene in the first section, it's open label, we'll get an idea how that's going. So, we'll hopefully be able to report out next year on some of the Phase II DAYBREAK genes, and then accelerate them. So, I know you asked for a simple answer to when the timelines are. Unfortunately, it's complicated because we'll get quicker readouts in Phase II, longer readouts in the Phase III. And the pediatrics, if we do that quickly, we can get data on that again the end of next year.

Greg, to your question about cash usage as we go forward, obviously, much of this is enrollment and startup dependent and those types of things we have baseline assumptions for. We had an operating use of cash of about $31 million in the quarter, and we paid our $5 million to Ipsen for first commercial sale that we had accrued in the first quarter. And we do expect things to rise from there in Q3 and Q4, but I'm not going to provide too much more guidance beyond the overall cash-out timing of the second half of 2023.

My other question just has to do with the CRIBBS registry and the 600 patients you have there. Could you maybe provide an idea as to what proportion of those patients do you think would be eligible for treatment and if it's some portion, all of them, however you want to describe that? And then beyond that, how quickly, assuming an approval in that indication, do you think they could get on therapy?

We're not going to provide guidance for the launch yet. But I'll let Jennifer take the first part of your question.

In BBS, through different publications and such, approximately 80% of the patients have obesity. Through the work of the CRIBBS registry that captures an incredible amount of demographic data and the patients as well, we'll gain a better understanding in terms of the split out of patients by age and BMI and such that will also help guide the question that you are asking and understanding in terms of uptake within each of these patient populations. I also want to outline that, in contrary to our PPL biallelic study, the BBS study actually did have a large portion of the patients coming from the US. That is a nice initial bolus in terms of patients that can be converted over to commercial patients as a starting point.

And to that point, our goal is some of those patients will be used in the switch study. And again, we're highly focused on getting that switch study initiated and completed in time to coincide with the approval in the US.

And there are no further questions at this time. I'd like to hand the conference back to your speaker, Mr. David Meeker. Please continue.

Okay, great. Well, thanks again all of you for joining in for our first earnings call and that we appreciate your questions and your interest as we go forward. And we look forward to updating you again through a very meaningful second half of the year. Talk soon.

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