Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Dave Connolly, Investor Relations and Corporate Communications at Rhythm Pharmaceuticals. Please go ahead.

Thank you, and good morning, everybody. I'm Dave Connolly, IR and Corporate Communications here at Rhythm. For those of you participating via the conference call, our slides can be accessed and controlled by going to the investors section on the Investors page of our website at ir.rhythmtx.com. This morning, we had a press release that provides our third quarter financial results and business update, which is available on our website. And as listed on Slide 2 here today with me in Boston for the conference call are David Meeker, Chair, President and Chief Executive Officer; Jennifer Chien, Executive Vice President, Head of North America; Hunter Smith, our Chief Financial Officer; and Yann Mazabraud, Executive Vice President and Head of International is on the line joining us from France. With 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 report on file with the SEC. In addition, any forward-looking statements represent our views as only 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, who will begin on Slide 5.

Thank you, Dave, and good morning, everyone, and thank you for joining our third quarter earnings call. So we had a really strong quarter. Last week, we presented the full Phase II hypothalamic obesity data set, and we will review that data briefly on today's call, but the real focus of today is on the progress we are making with our commercial launches in both the U.S. and Europe. BBS is a really good rare disease opportunity, both in terms of the number of patients potentially needing treatment and the syndromic nature of the disease, which facilitates patient identification. Fundamental question has been whether we can get this system to work, and we felt good about the early signals in August and we feel even better about those signals today as we walk you here. On Slide 5, since BBS approval in June, we have received 120-plus scripts, 80-plus physicians have written prescriptions from 40-plus patients have been approved for reimbursement. Jennifer will go into some depth on all these. Country-specific launches are happening in Europe, and of course, we received EC authorization for BBS, which was followed in record time with approval for the early access program in France. Yann will provide the international update. In clinical development, we continue to progress our multiple programs with the opportunity for significant label expansion. Slide 6. So we had a strong presence at the BBC Society meeting with 11 presentations, both our presence at TOS and Improve meeting, which we hosted in Berlin are good examples of how this should work. In addition to being intensely focused on understanding and meeting the individual patients' needs, we want to lead with the science. We continue to learn more about the genetics, the diseases we are treating and the impact of setmelanotide. In…

Thank you, David. We continue to execute on our ancillary commercial launch in BBS, and we are very pleased by the reception across the BBS community, including physicians, payers and, of course, patients. Today, we plan to share some metrics that are cumulative through September 30, the close of the third quarter. I'll just remind you, we received our BBS approval on June 16 with just two weeks remaining in the second quarter. On our last earnings call, we shared some initial metrics of the BBS launch, which covered the first six weeks through July 28. Those numbers will be included in the metrics we report today. So let's go ahead and start on Slide 14. This slide outlines the journey that we are on with patients and physicians. Early on in this journey, we are educating physicians and patients to recognize symptoms to get to an accurate BBS diagnosis. Once a diagnosis is made, we engage physicians and patients in a dialogue on the impact of the disease itself, outlining hyperphagia and early onset obesity that results from impaired MC4R pathway signaling. This hasn't the opportunity to further educate on IMCIVREE as the only approved therapy that targets the root cause by restoring MC4 signaling. All this is aimed at driving the decision to treat. Once a decision to treat with IMCIVREE made, we help secure insurance coverage for patients with a prescription, transition them on to drug and provide support as they experience the benefits on Imcivree. Next slide. We are very pleased with our first full quarter results in BBS. These numbers are cumulative from launch through September 30. We have received over 120 IMCIVREE prescriptions for BBS patients, and we are pleased that these are coming from more than 80 unique prescribing physicians distributor across the…

Thank you, Jennifer, and good morning, everyone. It has been again a very dynamic quarter for the international region. I will start Slide 22 with a quick reminder that Europe is an important market for IMCIVREE, thanks to the European Rare Disease Center of Excellence and more advanced genetic testing capabilities, both leading to many patients with POMC and LEPR deficiencies and many patients with Bardet-Biedl Syndrome already identified. For POMC, PCSK1 and LEPR patients, the estimated European prevalence is 600 to 2,500 patients, and we have identified about 100 patients already diagnosed and receiving care. For Bardet-Biedl Syndrome, the European prevalence is estimated to be approximately 2,500 patients, and we know that there are more than 1,500 patients who are diagnosed and receiving care in EU4 plus UK. Slide 23. Regarding the European launch for POMC, PCSK1 and LEPR deficiency obesities, we have made tremendous progress in securing access in Europe. A few weeks ago, we launched IMCIVREE in the UK. And as you can see on the left of the slide, we do enjoy the support from leading obesity experts like Professor Sadaf Farooqi from Cambridge UK, who is widely recognized as one of the most influential leaders in genetic obesity and who treated about our first prescriptions. Now we are able to deliver IMCIVREE to patients in the UK, in France and in Germany. We are on track to launch very soon in Italy and in the Netherlands, also in Israel by the end of this year and in Spain, Sweden and Argentina in 2023. Slide 24. Regarding Bardet-Biedl Syndrome in Europe, we are beginning to deliver IMCIVREE to patients with BBS. who are looking for precision medicines that can significantly reduce hunger and body weight. We received the final authorization from the European Commission in September.…

Turning to Slide 27. We closed the quarter very well capitalized with $348 million in cash on hand, plus $14 million in additional proceeds from the green shoe from our offering. Pro forma, that would put cash on hand of $362 million. Including this partial exercise of the greenshoe, we raised $140 million in our public offering in September. Importantly, we successfully expanded and deepened our investor base, anchored by some of the most sophisticated long-term investors in biotechnology. In addition, following EC Marketing Authorization for IMCIVREE and BBS, we received the additional $37.5 million from Healthcare Royalty Partners during the quarter as per the terms of the revenue interest financing agreement concluded in June. ACR's investment demonstrates confidence in IMCIVREE for BBS and our potential to generate strong revenue growth in this indication. We remain eligible to receive an additional $25 million upon the achievement with certain sales milestones in 2023. Together, these transactions provide Rhythm with significant financial resources to execute on our global development and commercialization strategies and extend our runway into 2025. On Slide 28, the third quarter represented a strong start to our BBS launch with the more than 120 scripts written since PDUFA in June. Revenues of $4.3 million represent an early start to the sales growth we expect for BBS as the patient access process takes approximately one to three months following the receipt of a patient start form from a physician. In addition, given the additional the initial dose titration schedule, the first one month shipment of IMCIVREE to patients once approved, includes fewer vials of drug than the second and subsequent shipments. The initial product shipment has approximately 55% to 70% of the volume for the typical as dose shipment beginning in month two and continuing on from there. This lower…

Thank you, Hunter. So I hope what you've heard today is this is a really good quarter. We feel great about it. Moving forward, we remain laser-focused on executing against our strategic priorities for 2022 and 2023. That is continued execution in our U.S. BBS launch and internationally, continuing to work to market access for both POMC LEPR deficiency and now BBS and continued execution on our clinical development programs, not only in the transformative opportunity. We've talked about now twice on hyperchylobesity, but also continued progress in our ongoing M&A Daybreak pediatric and weekly trials. We look forward to our next update. With that, we'll open it up for Q&A.

[Operator Instructions] our first question comes from the line of Philip Nadeau from Cowen.

Congrats on the progress. A couple of commercial questions for us from us. First, can you speak a bit more about the InTune program? What is the team at InTune do to get the patients on therapy stay compliant with therapy? And how does InTune help the physicians with the appeals process? That's the first question. And then the second question, you mentioned the average time from script to reimbursements 1 to 3 months. Is that likely to decrease as the launch progresses? Where do you think ultimately that time will settle...

Right. So a little bit about InTune. So what we built here was a program that was to be quite customized for the needs of the customers overall. So everything here starts with a patient consent. And once we actually receive a patient consent, our patient education manager or pan then reaches out to the patient for introductions and also to just educate just in terms of what the process will look like moving forward. Similarly, for any new prescriber, there is a joint meeting with the PAN, the physician and our territory manager to once again outline expectations moving forward. So as a prior authorization stage, which is required for every script that we receive, the InTune service executes benefit verifications and then really works to understand that specific payers exact prior authorization requirements that needs to be filled out. At this stage, I will say that some of our patients have complicated insurance background. I mean we've had a patient that had three different insurers where we need to figure out who was the primary insurer and then work the process from there. So there's a lot of work done upfront to understand that. The InTune services initiates the prior authorization on behalf of this physician through CoverMyMeds, which then pushes all the relevant information to the doctor and in his account. The ACP does need to complete all required documentation. But one thing that we continue to do is we learn from the experiences that we have. And for example, what we found out quickly is at the PA state, a lot of these denials were either because of incomplete information or because they outlined BBS not to be included or approved for the indication. So we recommend just in terms of the first stage of preauthorization…

Our next question our next question will come from the line of Dae Gon from Stifel.

Hope you guys hear me, congrats on the progress from me as well. One on HO and one commercial question from me. With regards to the Phase III HO trial design that you outlined a couple of days ago, you mentioned it's about 120 patients, randomized placebo to setmelanotide and I guess, 99.5% powering as it stands. Can you maybe walk us through the thought process behind going after 120 patients. The 99.5% is extremely derisking, but just wanted to get your thoughts on why you sort of landed at that 120 number? And then commercial question, of the 120 prescriptions or more than 120 prescriptions, can you talk about how much overlap there is with the 350 that you had talked about previously identified, diagnosed? And maybe as an extension, how does that compare with the Cribs registry?

Yes. Let me take the HO question first, and Jennifer take the second. So the 120 patients going into the FDA meetings, we knew and you all knew that given the efficacy we had seen in the Phase II, the number of patients required to prove efficacy was likely to be relatively small. 120 patients is was more than that, not surprisingly. So that was really a discussion around safety. This is a new indication, and that was just negotiated, if you will, agreed upon a number of patients that would provide a robust evaluation of safety in this new indication, but it was not driven by efficacy. Next, Jennifer.

Relating to the 120 scripts, I will say that one piece is just in terms of the outline that almost 1/4 of the scripts were coming from HCPs that were not known to Rhythm prior to prescription. So that one piece speaks to the progress just in terms of the teams continue to make around diagnosing additional physicians with BBS patients. It speaks to the very collaborative relationship that we have with the BBS Patient Association just in terms of helping to inform patients of the availability of IMCIVREE. It also speaks to the very collaborative relationship that we have with the folks and health care providers over at Marshfield. In terms of the exact overlap of the scripts with folks that are in the cribs registry, we don't have that information in terms of understanding all the physicians with specific patients that are part of the crib registry itself. I will say that just in general, though, the teams are just continuing to expand the opportunity around educating the physicians that we have that already have BBS patients and once again, really trying to expand the opportunity just in terms of additional patients that get diagnosed.

Our next question will come from of Corinne Jenkins from Goldman Sachs.

You've shared that 4,500 patients is the more appropriate TAM from IMCIVREE and BBS, which is compared to the 2,500 you shared previously. So what are some of the key items since the launch that give you confidence in the expanded addressable market?

Yes. Maybe I'll lead off and then Jennifer can supplement. So this is math that we've just the original epidemiology and rare diseases, as we know, tends to be soft just because there's not a lot of publications and data to inform that. As we've gotten much deeper into this community, we've been able to triangulate different points of information to get to a confidence that the number we believe is larger, i.e. the 4,500 plus kind of opportunity. One of the major ones is just European opportunity where, again, we used France, as Yann said, the number of diagnosed BBS patients in France is 700 easily the number of patients with BBS is probably 2x that or more. But if you just use 1,000 patients as the number for France and then correct for the U.S. population, brands about USD 70 million costs$330 million. That's the kind of triangulation. The other thing that's beginning to give us what's really interesting and Jennifer highlighted this is the role that testing will play, we're extremely early in terms of that. But it's a clinical diagnosis, but blood test, genetic tests are part of a clinical diagnosis and they inform. And so in a prior world, instead of having to wait for a patient to develop 5 or 6 manifestations of both disease, we think there's a great opportunity for patients to be diagnosed earlier on. Their initial presenting signs and symptoms complemented by genetics. So we'll see where that goes. But does that answer your question, Corrine?

Yes, it does. And then what have you learned from the 25% of prescribers that you that weren't known to Rhythm prior to the launch that might inform kind of your next year of targeting as you continue to expand this opportunity.

So I think like just in terms of the background of the prescribers, it is interesting just in terms of where they are. So of the 25%, I would say that it's probably a higher percentage that may come from PCPs or family docs or pediatricians versus our target. With that said, some of them also similar to our targets, had certifications with interest in terms of obesity medicine and such. So I think it's a little bit of a mix in terms of the prescribers themselves in terms of how they came to us. It could be that they learned about IMCIVREE and had a BBS patient. It could also be because the patients themselves learned about IMCIVREE and went to their physician to inquire about the drug. So it's clear that in terms of organization, we have a certain level of field members on ground educating, but this is where we really turn on our non-personal promotion efforts to try to reach a broader set of physicians and patients out there to make them aware and educated in terms of the disease itself as well as the availability of drug.

And Corrine, maybe one thing that just in our experience in other rare diseases, what's quite remarkable, although they're not our target population, primary care positions, for example, as Jennifer said, if they come to attention because they have a patient and they're willing to give it a try. Some of those physicians continue to grow, they've take an interest and begin to take on more patients and truly become expert in the area. So it doesn't exclude the possibility that a primary care physician could be a leading treater, if you will.

Our next question come from the line of Joseph Stringer from Needham

A few from us. The first one is on the your identified and diagnosed BBS patients who previously had said greater than around 300. Just curious what percentage of those are below or under the age of 6 and are therefore not yet eligible for commercial drug? And then second question is, I understand that you're just over quarter into the launch in BBS, but just curious if you can provide some early metrics on persistence and compliance rates now that you're getting more patients on drug? Has it been in line with expectations so far?

Yes. Great... Jennifer?

Sure. So as outlined greater than 350 patients, I will say that at this point, we really don't know the percentage that are under 6 years of age. So that percentage I cannot outline at this point of time. But what I will say is that our focus is not, of course, on the greater than 350 but continuing to get additional patients to an diagnosis, and we have very targeted ways that are outlining to be quite fruitful from that perspective. And maybe one example I can provide on that point in terms of how we get additional patients to a diagnosis. I've mentioned in the past that there are very specific ways. We use machine learning as well as ICD-10 codes as well as a follow-up in terms of our URO results just to have very targeted follow-ups from our field teams, but a separate example is the fact that for BBS, lot of these patients have facial issues caused by retinal abnormalities. Now once again, sort of speaking to how we deploy our teams. There are many, many more ophthalmologists out there versus retinal specialists in the U.S. So our field team may focus on the retinal specialists while we go out and educate the broader group with our non-personal promotion efforts, and these are proving to be successful. So I wouldn't necessarily just focus on the greater than 350 number, but we are once again continuing to expand that opportunity. In terms of metrics around persistence and compliance. On this point, I will say that we spend a lot of time internally as an organization just to walk through and plan for just in terms of how can we educate both the patient and HCP to understand the profile of the drug and really try to maintain them through the initial titration phase so that then they could get to the appropriate therapeutic dose and then start to see the benefits of being on treatment. So I would say that, once again, it's very early days, but at the same time, we are quite, quite happy just in terms of the ability for these patients to get through and once again start to experience the benefits that we're hearing about.

Did that answer the question, Joseph?

Yes, it did. Thanks for the color.

Our next question is from the line of Michael Higgins from Ladenburg.

Congrats from me as well on the continued progress, impressive launch so far in BBS. A question for Jennifer and David. You've given us a lot of detail, answered a lot of our questions coming in on the launch. You provide a lot of detail on the patient count. Curious if you can give us patient counts for IMCIVREE on POMC, LEPR, PCSK1? Also help us understand the launch in BBS and how it's going?

Yes. I think we're not updating those numbers that we stuck with it from the beginning. I think they are informative and they're the right number. As we said, tens of patients on treatment was our expectation. We have tens of patients on treatment. We're not going to speak to that number specifically. And the reason, Michael, basically, is it doesn't inform BBS launch. They're quite different in terms of disease populations and the different metrics or circumstances, if you will, that allow a BBS patients to come to diagnosis and get access to treatment aside from the fact that it's just a larger population overall as well. So that's progressing. We have, like I said, the tens of patients, but the focus here is really on the BBS launch and how that's different from the other. Other than the reimbursement part of it, reimbursement, of course, that earlier population has been helpful and somewhat predictive of how things are going to go for BBS. And as Jennifer said, we feel good about that.

Appreciate that. One other one, if I could hear. The HO trial that's continuing on in the long-term extension. We have some patients at a 25-week point. Do you know when we may see an update on those and at later time points.

Yes. I mean, we'll obviously continue to follow these patients. So again, I can imagine that the subsequent earnings call, a little bit depends on sort of when we do data cuts on that, and we don't do data cuts weekly, obviously. So in fact, we try to time them about twice a year. So bottom line is, yes, we will update. It will be in 2023. We'll work to keep you informed, but we are going to be following that closely.

[Operator Instructions] Our next question is from the line of Jeff Hung from Morgan Stanley.

This is Catherine on for Jeff, thank you for taking our question. We have two. The first one is on the de novo study you're starting in 2023. Could you remind us of the study design and what you're hoping to see from the trial? And then our second question is on the Phase III in hypothalamic obesity, do you mind providing additional color on the rationale for all patients starting at 0.5 milligrams when in Phase II, they started on 1 or 2 milligrams...

Yes. Yes. So the de NOVA trial is a double-blind randomized controlled trial in patients predominantly with BBS. We will have a small number of patients with PPL since we'll be with POMC and LEPR specifically since we'll also be looking at the effect of the weekly dose in that population. And we'll be looking at the two major primary endpoints we pursued all along, which is the change in BMI. Again, that will be a population that will span children and adults. So again, BMI is the uniting endpoint, if you will, that allows us to at least aggregate that to a certain degree and then hyperphagia. And I'll just say on the hyperphagia point, again, this is something that as we come to understand this population and disease more thoroughly, the hyperphagia component continues to be reinforced. And I think it is growing in awareness on the health care provider side of the equation. I think patients are articulating it more of the quotes that Jennifer shared with you today. They weren't cherry picked. I mean those are quotes. There are just many of those quotes. And like I said, the vast majority of them speak to some level of improvement in their hunger and that being an important part of what how they're benefiting from the drug. So we'll be looking at that in that trial as well. On the Phase III trial in terms of the dosing, that was just a practical thing. We've been still experimenting a little bit with different titration regimens in the POMC, LEPR. We started lower and went slower. In the Bardet-Biedl we were more aggressive, if you will. And part of being more aggressive was to take advantage of a 14-week placebo-controlled period and where we wanted to get patients to their target dose as quickly as possible. The ongoing HL study is a year-long study, as you know, and therefore, there's less urgency to get people to target dose, and we do know that it's going a little more slowly and a little more just starting at a lower dose and going a little more slowly, increases the tolerability of the drug through that first four-week period, which is when they are at greatest risk for any of the GI complaints, which may cause people to struggle being on the drug. So that's it, practical.

I'm not showing any further questions in the queue. I'd like to turn the call back over to David Meeker for any closing remarks.

Well, thanks, everyone, again for tuning in. Two calls in a short order here, and we look very much forward to our next one, fourth quarter earnings coming up in 2023. Have a good day.

And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.