Rhythm Pharmaceuticals, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Rhythm Pharmaceutical's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to David Connolly, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Michelle. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference online, Our slides can be accessed and controlled by going to the Investors section on the Investors page of our website, ir.rhythmetx.com. This morning we issued a press release that provides our fourth quarter and year-end 2023 financial results and a business update, which is available on our website. As listed on slide two is our agenda. Here with me today in Boston are David Meeker, Chair, Chief Executive Officer and President of Rhythm Pharmaceuticals, Jennifer Lee, Executive Vice President, Head of North America, Hunter Smith, our Chief Financial Officer, and Jan Masebro, Executive Vice President, Head of International, is on the line joining us from Europe. And on slide three, 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 represents our views as of only 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 five.

Thank you, Dave. Good morning, everyone, and thank you for joining the call. So, 2023 was a truly a transformational year for Rhythm, commercially, developmentally, financially, and strategically, as we have expanded potential indication to meaningful next generation products. 2024 will be a year focused on execution, setting up an exciting year of milestone achievements in 2025. So on slide five, we've got the three boxes which highlight the important aspects of Rhythm. And on the first box, HO remains the cornerstone of Rhythm of Value. We finished the year having over-enrolled our phase three trial, now with all 120 patients in the primary analysis cohort dosed, and this 120 will form the basis of the US and EMA filings, keeping us firmly on track for first half 2025 top line readout. Execution in that trial remains strong with a high level of site and patient engagement. We're excited also to announce today we have concluded extremely constructive interactions with the Japan Regulatory Authority, the PMDA, which will allow us to include 12 Japanese patients in the Phase 3 trial without requiring an independent study in Japanese patients. Japan is continuing to evolve their regulatory process to further facilitate the development of innovative medications for the Japanese population. And they were highly motivated to ensure that the Japan patients would be able to participate in the call in the phase three trial. We were joined in our interactions by one of the leading experts in Japan who helped them understand the severe unmet medical need and the potential benefit of several antitibes. What's particularly interesting about Japan opportunity is that the prevalence of HO is two times higher than in the U.S. with our initial epidemiology work suggesting there are 5,000 to 8,000 patients, which is about the same number as in the U.S., albeit with a population a little more than half the size of the U.S. So if this opportunity plays forward as we think it will, the Japan opportunity could become the second most valuable part of the overall rhythm portfolio behind the U.S. HO opportunity. So Jan will expand more on that epidemiology and our plans going forward. Second, we made great progress advancing several programs. Both our newly acquired daily small molecule from LG Chem and our weekly formulation 718 are progressing well. I'll comment further on those in a couple of slides. With regard to the pediatric program, I will show again two slides you've seen before, reminding you of the strength of that data and why we think it is so important. We have filed, as previously reported, to expand the use of insurgery to patients between the ages of 2 and 5 in the US, sorry, in the EU, and we'll file in the US in the first half of this year. Third, we had another solid quarter commercially with $24.2 million in revenue, over 100 new prescriptions, and more than 70 approvals for reimbursement. We are excited about our recent reimbursement approvals for BBS in Spain and Italy. And with those two approvals, Incivary is now available commercially in 14 countries, including the US and Canada. Revenues in the quarter were impacted by a change in policy made by a single Medicaid program in one state in response to a disproportionately high volume of prescriptions. The state has a favorable policy in place and continues to cover patients, but is now requiring a higher level of documentation than previously required. For example, if a patient has eye findings consistent with a diagnosis of BBS, they will now require an ophthalmology consult to confirm the diagnosis, whereas previously it was simply the attestation of the prescribing physician. With this change in policy, 30 patients came off coverage early in the quarter and were transitioned to our bridge program, which is a free drug program provided while we work through coverage issues. There is no read-through to any other Medicaid program as this situation is unique to a specific demographic in this state with a higher prevalence of BBS patients who came on to treatment early. The impact of 30 patients coming off reimbursed treatment early in the quarter and going on to the bridge program was about 2 million. Importantly, despite this dip in US patient numbers at the start of the quarter, the remainder of the US story continues to grow as expected And we finished the quarter in a very good place. And Jennifer will, of course, provide more color in her section. So moving to slide six. So a little more in Japan. Typically, Japanese regulatory authorities require PK studies to be conducted in Japanese subjects in advance of testing and investigational therapy in patients. However, following extremely constructive discussions with Japan's Pharmaceutical Medical Device Agency, or the PMDA, We have agreed on a plan to enroll 12 Japanese patients into our current phase three trial. We will collect PK data in those 12 patients, and there will be no requirement to perform an independent study in Japanese subjects. Importantly, as I said, the additional cohort of Japanese patients and the timing for them to be added to and complete the study will have no impact on our timelines to complete the pivotal cohort, get to top line data, and submit our findings in the United States. Specifically, we will file in the U.S. and EU on the results from the first 120 patients who finish the trial. The remaining patients, the approximately 10-plus patients who are part of the over-enrolled patient group outside of Japan, and the 12 Japanese patients will be part of a second close, which will be used to support Japanese approval. And we will, of course, seek orphan drug designation in Japan in parallel. So on slide seven, this is just to remind you of our phase three trial design for HO, which you all know well. The phase three trials enrolled patients aged four years and older with hypothalamic obesity, randomized two to one to set melanotide therapy or placebo for a total of 60 weeks, which includes up to eight weeks for dose titration. The primary endpoint for this trial is the mean percent change of BMI from baseline after approximately 52 weeks on a therapeutic regimen of set melanotide compared with placebo. We are 99, as we told you before, 99.5% power to achieve a 10-point differential between the therapeutic arm and placebo, and given our 12-month data showing consistent response across all patients who adhere to the prescribed therapy and the consistent safety profile of cephalantide and other indications, we are quite confident in the outcomes. In slide eight, I'll speak a moment about LG Chem's molecule. We're particularly excited about the acquisition of the global rights for LB54640, and yes, we will be working on a name for that. which we announced early in January. We believe this drug candidate could provide patients with an important new treatment option and could be an important long-term value driver for our company. LG Chem, a highly regarded company with deep chemistry and early translational experience and expertise, has developed an oral drug candidate that based on the early clinical data generated to date suggests they have identified a specific therapy for MC4R diseases that will not result in hyperpigmentation or have associated cardiovascular side effects. We have had a highly collaborative working interaction with the LG team as we move to transfer full responsibility for the program to Rhythm. We anticipate the transfer to be largely complete within three months of signing and remain on track for that. In the meantime, we are jointly progressing the two trials with the primary focus being on site initiation of the signal trial for hypothalamic obesity. A parallel focus will be on developing a pediatric formulation, which will allow us to move to treating the younger patients who, as we know, for both HO and the genetic causes of MC4 pathogenesis, are in need of treatment. On slide nine, a little more about the molecule LB54640. As previously described, we were impressed by their robust preclinical package and by the data in their phase one study in healthy volunteers with obesity, which showed the expected dose-dependent decrease in BMI at four weeks. Importantly, they did not see hyperpigmentation or any cardiovascular signal, which is consistent with their preclinical work. Slide 10 shows the design of the signal trial, a phase two 28-patient open-label trial sorry, placebo-controlled trial to evaluate the molecule in patients with hypothalamic obesity. The trial is designed to evaluate safety, tolerability, pharmacokinetics, weight loss efficacy, with an efficacy endpoint of mean percent change in BMI from baseline at 14 weeks. The trial is four arms, three different dose groups in placebo, and would be followed by an open-label extension period of up to 52 weeks. This is very similar to the exception of the placebo control to the trial we ran originally with 7-melanotide in HO. We are fortunate to have a model such as HO, which appears to be quite sensitive to the effects of an MC4R agonist, so our expectation is that this relatively small trial will give us good insight into the efficacy, safety, and importantly, the dose range, which we will look to develop as the program advances. On slide 11, The 718 weekly program, as I highlighted in my intro, is advancing well. The IND is filed. We have selected our CRO and are looking to dose our first patients in the first half of this year. And I can tell you that we are aiming to have those first patients dosed in March here. We're committing to the first half of this year. As a reminder, we will begin conventionally with single and then multiple ascending dose cohorts in normal volunteer patients with obesity, followed by a Part C, which will enroll HO patients followed for 28 days. those patients will be eligible to enter into a long-term extension study once we complete our chronic toxicity studies, which are required to support longer dosing, and those chronic toxicity studies are ongoing and running in parallel now. On slide 12, on my last two slides, I want to revisit the data in pediatric patients we showed at our R&D day in December. I find these results quite remarkable for a couple of reasons. One is that despite the extremely young age, patients between the ages of 2 and 5 with either POMC, left-by deficiency, or BBS, they were severely affected. That should not be a surprise given the genetic cause of the disease, which means in most cases it has been present since birth. Despite the severity, we know from multiple anecdotes, these patients are not being recognized as having an underlying disease. And in the worst cases, the parents are blamed for their inability to control their child's food intake. As you can see on this slide, patients responded extremely well to treatment with a mean decrease in weight of more than 18% at one year. With slide 13, I think this is where the real story lies in the individual results, which show a waterfall plot of the individual results for the 12 patients. Two takeaways. The Y-axis shows the BMI-Z score, which is basically the number of standard deviations the child is away from normal. The graph shows the change in BMI-Z score with treatment. For the first two groups, starting from left to right, palms and left are on the left-hand side of the graph, these children are experiencing a 5 to 7 point decrease in their BMI-Z scores from a starting point as high as 12. It is important to remember a BMI-Z score change of greater than 0.2 is considered clinically meaningful. The BBS patients who were not quite as severely affected still showed a 1 to 2 point decrease. The only two patients who did not have a highly meaningful change in their BMI-Z score was one patient who was lost to follow-up early in the trial and a second patient who was noncompliant with the medication. Expanding the label to children two and above will not open up a significant additional market opportunity. It will add incrementally, of course, but it will reinforce the importance of thinking about genetic causes when confronted with early onset obesity. It will remind people the cumulative morbidity begins early, and the earlier you intervene with a specific therapy, the better your chance to modify the long-term outcomes. And third, it reinforces the safety of the medication in that it can be given and should be given to children as young as to if clinically indicated. So as I said, we filed for our European label expansion, and we look forward to filing in the U.S. in Q3 of 2024. With that, I'll turn the call over to Jennifer.