Good morning, everybody. Welcome back to another session here on our second day of Oppenheimer's 35th Annual Healthcare Life Sciences Conference. I'm Leland Gershell, one of the analysts on the Biotech Equity Research team here at Oppenheimer, and really delighted to have with us Rhythm Pharmaceuticals. We've been covering Rhythm for just a few months now, but we really like the story as the company has pursued the development and commercialization of therapies for rare genetic obesities and has a couple of very important catalysts coming up. So we'll be having a fireside chat with David Meeker, who is the company's chairman, president, and CEO. So welcome, David. Thank you, Leland. There is a way for you to submit questions, so please go ahead and do so if you'd like, and I can work those into the discussion. Maybe just to sort of set the stage for those who may be less familiar with Rhythm, maybe, David, if you could just give us an overview of the company's approach to rare genetic obesity disorders and how your product, Imcivree, fits into that strategy. Sure. We're focused on this pathway in the brain, the melanocortin-4 pathway. It sits in the hypothalamus, which in that pathway governs our sense of fullness, satiety, and also energy expenditure. It's a homeostatic mechanism. In short, when we eat a meal, our stomach's full, gut hormones signal to the pancreas, pancreas to the adipose tissue, the adipose tissue releases leptin, it goes to the brain, this part of the hypothalamus and the arcuate nucleus, and activates this POMC neuron, which is where the melanocortin-4 pathway sits. When you're signaling through that, you have a release of a hormone, alpha-melanocyte-stimulating hormone, and that interacts with its receptor, and the body understands, okay, there's food on board, we're full, you don't need to eat anymore, but also you can increase your energy expenditure. If that signaling is impaired, you have decreased amounts of the hormone, alpha-MSH, you're not getting the signal you're full, even if you've had a full meal, and then perversely, your body thinks there's no food on board, so it keeps your energy expenditure low, and this often results in severe obesity for many of the individuals who are affected, and for Rhythm, the way we're thinking about building Rhythm is, Leland said it, we're originally very focused on the genetic causes of impaired signaling through this pathway, and we're approved for three of those now and pursuing others. And then more recently, we've come to understand that that's not the only way you can impair signaling through the pathway, an injury of different forms, one of which is a tumor that grows into that area of the brain and can impair signaling, either the tumor itself or the surgery, the treatment for it, radiation. And so that's a second pillar. So we think about Rhythm as developing around exploring all the genetic ways this pathway can be impaired and now new, looking at the ways that injury itself can impair signaling through this. And our biology, as I said, is a very simple level where hormonal replacement, if signaling is impaired, your hormonal levels are low, and our drug, setmelanotide, is an analog of that hormone. The melanocortin pathway, obviously very distinct from the GLP-1 receptor and pathway that I think many people are familiar with. Maybe, David, you just run us through briefly kind of the key distinctions and applicability of MC4 modulators versus the GLP-1 agonist. Yeah, I mean, the GLP-1s, as we all know, of course, one amazing drug, an incredible breakthrough for many levels of society in general. They think about GLP-1s as pharmacologic intervention. You have otherwise relatively normal physiology. That's not perhaps totally true, but basically normal physiology, and you're giving excessive amounts of this hormone, GLP-1, which is a normal gut hormone, and that's interacting in the brain. It does have some peripheral effects as well, one of which is to slow gastric emptying. So you get a sense of fullness because you're not emptying your stomach as quickly. But then it has other receptors in the brain, many receptors in the brain. I think we're still coming to understand exactly how GLP-1s work, but at a simple level, and I think this is sort of my more current understanding, GLP-1s are probably working more on the appetite stimulating side of the equation. There's two major circuits maybe impacting this, one of which is on the Agouti-related peptide. These are all in the arcuate nucleus of the hypothalamus. That's appetite stimulating. It does so actually by interfering with signaling through this MC4 receptor, the melanocortin-4 pathway. And then there's another peptide, NPY, that's released, which is also appetite stimulating. So, as I said, GLP-1s do many things, but think about them as pharmacologic intervention. We're on a different pathway. They obviously have interactions, but different pathway, this melanocortin-4 pathway, predominantly in the POMC neuron. And it's back to if that signaling is impaired. You are deficient. You're low on a hormone. And so replacing that hormone, in theory, and what we maybe one difference in terms of how this is experienced by the patient, you read, I read about GLP-1 patients who are on them often developing an aversion to food almost. I used to like wine. I no longer like wine, or I leave a lot of food. I just don't have the same interest in food. That's not physiologically the way patients describe this. It's a recognition that they're full. So they'll leave food on their plate, but they don't have an aversion to food. And there's multiple. So again, I think about our approach for these patients, restoring that normal physiology, whereas the GLP-1s are more about, as many medications do, disrupting normal physiology to get an outcome that you want. Great. And you've been commercializing Imcivree in some very rare genetic obesities. You were also developing this product for what could be a much larger opportunity in hypothalamic obesity or HO. We're looking forward to data. I believe it's going to be in the first half of this year from the study that you're currently running. Maybe if you can give a sense of the numbers of patients out there with HO, I believe you've given 5,000 to 10,000. Maybe it could be a bit more than that. We seem to have some optimism for higher numbers from our discussions with physicians. But maybe in terms of the diagnosis and the nature of this disorder versus genetic, this comes from injury to the hypothalamus. And so patients are presumably much better identified. Is that right? That's correct. I think that's largely correct. So let's break that into two. So our first understanding was the classic description of this, which was often associated with these, sorry, benign tumors, often in pediatric patients, but they develop in adults as well. And they develop between the pituitary and the hypothalamus. A common one is craniopharyngioma. And as these tumors grow, other tumors like germinoma, hamartomas. I mean, there's a fairly long list of tumors that, and the key is not the tumor itself, it's where it's growing. And because they're benign, they can be resected, and these patients go on to live not necessarily a completely normal life because they had the brain surgery, but they can live a normal lifespan. So we ran our original Phase 2, not so confident that it would work, to be honest with you. And this was an entity where it was pretty well recognized, pretty well diagnosed, at least that part of it, these benign tumors. One, two, nothing works as a rule. There's case reports about different things, including GLP-1s having some effect in some patients, but in general, nothing has worked consistently, and so what was striking about our Phase 2 results was that we had literally every patient who took the drug had a response. So the consistency of the response is what was quite dramatic, and we've got a little more data since that original Phase 2, which is also consistent with that observation. So that was the problem, and as you said, I think we believe that that part of it is pretty well diagnosed, so when we did our original epidemiology, and you can do pretty good epidemiology. One of the challenges of rare diseases is epidemiology is inherently poor just because there's not a lot of data. People don't study it. It's just hard to get your arm around that, and over years, you get a better sense of it, often underestimating what the true potential is. But here you have tumor registries and like, and so you can have a pretty good idea as to what is the number, frequency of those tumor types and how many patients. The variable, the biggest variable in that modeling is the percent of patients who develop hypothalamic obesity as a consequence of that. 50% is the consensus number. It's what we used in our modeling. But if you look at the literature, there's a wide range. It can be as low as 20% in some series, as high as 90%. I mean, so people have coalesced around this 50% on average, but you have to understand that that number is softer and there's more variability there. So that's how we did our original epidemiology, got to this number of 5,000-10,000. The other part of the equation is we modeled about a, not about, we modeled a 20-year period post-injury. Now, if you have the tumor or the injury at age eight, you don't die at age 28, but that's basically how we modeled it. So there are patients. So those are aspects of our modeling which were inherently conservative, and we, I think, reasonably wanted to be conservative until we had a better understanding of this. So I think, long story short, we feel very good about that 5,000-10,000. I think it does represent a population that has a very high diagnostic rate. I think they, as a rule, sit in the endocrinology space, and they do that because of the obesity and the consequences of this injury might be best managed there. But more importantly, probably, is the fact that 80%-85% of these patients, they also have an injury to the pituitary gland. And so 80%-85% will be on one or more pituitary hormones. And that is something that tends to be managed by the specialist as opposed to being sent back to their primary care physician. So we do believe that these patients, pretty well diagnosed, sitting with a specialist, very accessible, and that's what drove a lot of excitement, I think, and interest in Rhythm in terms of beyond genetic obesity's work at the scope. Now, last to my very long answer here. The other part is, which we're just, as is often the case with any disease, but certainly rare diseases, until you have a treatment, people don't care. I mean, it's not that they don't care, but it's like there's no, if you don't make a diagnosis, so what, right? There was nothing to do. Once you have a treatment, then of course people start paying attention. You start looking for it more. People look for other non-classic presentations and the like. And so that world's opening up a bit here. We talked about congenital hypothalamic obesity, and we added a segment to our ongoing Phase 3, completely independent. It'll be analyzed separately, but we're going to run it in parallel with that study. But these are patients who that area of the brain, by definition, doesn't develop normally. So they have hypothalamic dysfunction as a result of not having a fully developed hypothalamus. So that's, and we'll see. And what happened was physicians, experts who follow these patients came to us and said, "Look, a number of these patients have obesity. It looks a lot like the acquired hypothalamic obesity patient. Maybe this could work." There was a couple of patients reported out of France very, very early, very few months on treatment and the like, but they're having a response. It's way too early to conclude, is it going to be the same kind of response? We have so much to learn about that population, but it's an example of that's another world. It's not so well recognized. The congenital defect's well recognized, but the obesity as a part of that syndrome, not so well recognized. Then another area, which is a complete case report literature today, is traumatic injury of any sort, inflammation, viral inflammation. I mean, you can find these case reports, but I've heard more than one classic, sorry, of a patient who had traumatic brain injury and has classic HO. When I say classic HO, what happens is not that you have an injury and you gain a few pounds. It's you have an injury and you have a dramatic shift in either your weight gain or for children, their growth, they shoot off their growth curves. I am confident that if you have a brain injury today in much of the Western world and you start gaining weight, nobody's thinking HO. Those are areas where I think there's a lot of work to be done in terms of education, and we'll start to learn more about that. But those are reasons why we think the 5,000 to 10,000 is a very good number. I think it's very approachable, but we're also, as you said, I think learning more and suspect that there's probably some upside to those numbers. Right. And as you say, an approved drug could certainly change that. Let's talk a bit about the Phase 3 trial. So that's a year-long study, two-to-one randomized, reading out, as I mentioned, first half. So you're looking at the change in BMI. And remind me, did you power that for, was it a 12% difference? Yeah, we're 99% powered to show a 10% placebo-adjusted difference. Really? Yeah, I mean, it sounds a little ridiculous, 99%. But the reason was we went to the FDA proposing a smaller study because we knew the strength of the efficacy effect was large. And so we didn't need a large number to show statistical significance, but we agreed on the larger number with them because they wanted a larger safety database in this new indication. There's been a lot of investor focus on what this exact difference is going to be. Obviously, we saw, as you mentioned, very strong and consistent data in the prior study. Anything you can share with us in terms of your outlook on maybe beating that number, coming in around that number, or, again, I have to ask the question because that's the question I get from lots of people, so. Yeah. Leland and I shared a stage here and I think at an obesity session. And I think one of the comments which registered for me were people talking about the Olympics of weight loss and how people are so incredibly focused on this percent decrease. And if you come in a few percentage points off of what the expectation is, people are very disappointed, whereas medically, it probably makes no difference at all. You're all in a range where you've got the same general benefit. Anyway, that's one part of the context here. The other part is that all of us, myself included, have been completely conditioned by the GLP-1 general obesity world, which is where these numbers are coming out of and people's expectation. Just remind people, FDA guidance and historic, the bar was 5%. 5% is the level of weight loss where you begin to get beneficial effects on the comorbidities. If you lose 5% of your weight, some of the other risk factors go down. So that's been the bar, still officially the bar, but now, of course, with the GLP-1 conditioning, people are 15%, 20%, 25% are the kinds of numbers that are being thrown around. What we've tried to do, and we've been caught up in this by getting many, many questions about this, and we've tried to help people understand a few things. One is it's truly apples and oranges. I mean, the biology behind these two diseases is completely different, as I explained at the opening of our session here, number one. Two, the way we run the trial, it's a classic rare disease approach. The GLP-1 world would never do this. We are enrolling four-year-olds and 65-year-olds. We're mixing them in the same trial with the same primary endpoint, which is% BMI loss. Now, of course, that's a tremendous amount of heterogeneity, and that's the challenge with rare diseases in your trials. You don't get to pick 100 perfectly identical individuals and bury your drug. I mean, you take whoever you can get, and so you have to deal with the heterogeneity, so anyway, so we have a highly heterogeneous group. One example of that is the age difference, which we'll be enrolling, then we remind people of in our Phase 2 trial, the youngest patient, who is six years old, had a 35% roughly decrease in their BMI,% decrease in their BMI at 16 weeks. The oldest patient in our trial, who's 24 years old, had a 14% decrease in their BMI. Now, the older patient lost more weight over the 16 weeks, but the% change was less. So you can see that, let's say we have many more six-year-olds in our trial, you could conceive that our% difference might be a little bit different. So these are fundamental things that will not be difficult. It'll be quite easy to figure out and sort that out. After the primary, our secondaries divide adults and kids. We're actually stratifying for three different age groups in that. There's the BMI Z-scores and the% of the 95th percentile in ways that people look at weight in children because children's BMI, you expect to go up. Now, all that said, these are reasons why the numbers that people are registering and saying, "Oh, you got to hit your whatever number because that's what GLP-1s did." Now, that's fundamentally the wrong question, not the way to think about it. What we believe and what we've said is anything more than 5%, we'd file on, of course, because I think there's nothing in this that's worked or approved for this consistently. So we'd file. I think we have a good chance of getting approved. Anything less than 10%, I'd be incredibly disappointed. I mean, I think everything we know about this is consistent, but the effect's been great and large. Beyond that, I won't project. I mean, the numbers today have put us north of 20%, right? But it's a small number of patients, and these factors that I'm highlighting here, we'll have more adults in this trial than we had in our Phase 2, which was predominantly pediatrics. Here, I think we're going to be closer to 50/50, probably a little more on the B side. So those are just things where the percentage may change, but what we are looking for, I think what docs are looking for is a good response and consistency. They want to know, which is not what you get with any other anti-obesity drug for this indication. You can put patients on any other drug, and you may get some response to that drug, but it tends not to be durable, and it's certainly not consistent, meaning that most patients will respond to that drug. Because if that were the case, they'd be using it. Maybe the last thing, Leland, which has been one of the most amazing things to us, we powered in building the trial, we assumed a 20% dropout rate. Because that was what we see in other trials, obesity trials, the daily injection, not so easy. We've had less than 10% dropout. It's two-to-one placebo, as you mentioned. So 40 of the 120 patients are on placebo in a world where maybe they're guessing. They're probably guessing right, often is the case. Sometimes when you have a strong effect with a drug, and if you're not seeing it, you might think you're on placebo. If there was another drug out there that worked, why would you stay in the trial? You moved to a GLP-1, you moved to whatever. They're not. They're staying. And they're staying because when they finish the trial, everybody rolls over, and this will be their fastest way to get drug. Right. That's terrific. And we did see some encouraging data from an early access program in France. So we saw a handful of patients there. The Obesity Week also seemed to be supportive for this opportunity. Exactly. Yeah. No, the first data was incredibly reassuring in that it just gave us more patients. But it was only eight. I mean, again, we had 18 patients in our Phase 2. This was eight additional adults. That was the key. They were all adults with a mean age of 30, and they were out 11 years on average from their injury. And so some of the questions that came up following the Phase 2 data was, "Wow, it looks great in kids, but maybe it just works in kids. Maybe it just works if you're close to when the injury happened." And so I think that data set very much put it to bed. And the five of the eight patients who had reached the six-month mark were at minus 21% on average. So again, it's back to consistency. It's not the 20%. It's the fact that consistently we're seeing a good response in everybody who takes the drug. If you stop the drug, this is one of those ones, and if you think about hormonal replacement, there's no durable effect. It's not like you can take it for a while and learn how to live with it. No, then you're back deficient again, and the body's going to start working against you, and you'll gain your weight back. Terrific. Yeah. And so let's talk a bit about the current commercial. So you've been selling Imcivree now for a few years. You've got Bardet-Biedl, a few other rare disorders. Maybe just, David, share kind of what you've learned in that process and how that's been moving ahead. A very nice quarterly update for us last month. So it seems like the Bardet-Biedl is really kind of catching fire, but interested to hear your thoughts. Yeah. Bardet-Biedl, what was striking, I've been on the board of Rhythm since 2015, so I knew it, but I took the CEO role in 2020 and got closer to everything, and what was really striking to me, I mean, this is the obesity. We're labeled for weight management, obesity drug in a simple sense. We're not just that, of course, but how classic this was as a rare disease. I mean, patients with Bardet-Biedl syndrome, I mean, relatively rare, 4,000-5,000 patients in the U.S., which is a good number for a rare disease, but it means that those patients, they have the same diagnostic odyssey that many patients with rare diseases go through. They see five or six experts before they get a diagnosis. If a doctor sees them, the first thing they think of is not BBS necessarily. They got to be lucky to see somebody who connects the dots and makes a diagnosis, so just classic challenges of a rare disease problem, and I've been, as many people know, I mean, I worked at Genzyme for many years, and I think about rare diseases in sort of two groups, which is one is you've got an indication, it's super rare, epidemiology is low, you're really struggling to find the patients. At the end of the day, you can't, so that was our first two genetic indications, the POMC and the leptin receptor biallelics, very rare. We didn't put a sales force on the field as we sort of came, I think those there are rare, and they're going to stay rare. BBS is that one where you have an initial assessment of the epidemiology, but it may well be low, and you learn that over time. And I think, again, many of the several of the enzyme replacement therapies, Gaucher, Pompe, Fabry, that Genzyme worked on, other companies now are working on, are examples of that. I mean, those numbers are much, much greater than they were when we first launched those drugs. So I think BBS is in that category. Then the second challenge was, okay, we're labeled for weight loss management. Are we in? we in? Yet it's an orphan disease price. I mean, we're in the, which is not orphan in the sense, it's an ultra rare price. That's why you would be at the higher end of the spectrum because the patients are relatively few. So $360,000 kind of whack price. And would the system pay for it? What was really gratifying is we got it to work in the sense that with education, the payers universe in the US and amazingly in much tougher healthcare systems in Europe and the like recognize it's a rare disease, it's a proved indication, this is the drug and it works. One of the things too that took a lot of education was, yes, we measured weight decrease, which is what people tend to look at, and that's part of the benefit. What these patients are really suffering from is that when they don't have this signal, they have what we call hyperphagia, which is this severe pathologic hunger. It's often associated with abnormal behaviors, food-seeking behaviors and the like. That's the relief. When that gets quieted down, the patient's life dramatically better, they can focus better, some of them do better in school, family life gets better, and so those are the elements that people have really rallied around, so back to your question, how things are going? They're going great, and as we indicated all along, this would be slow and steady because that's the nature of rare diseases, but they go slow and steady over a decade. Right. I think it's very important for people to realize that in this type of opportunity, as we've seen with Genzyme and other rare disease companies and the like, is that you have this very long and expansive opportunity. It seems like we're just barely kind of getting going here. You're also expanding into another disorder, which I'm very close to, given other research interests, but Prader-Willi. You'd mentioned making lives easier for the families, the parents. I mean, Prader-Willi is a very disruptive disorder. I'd just love to hear your thoughts as you enter a study in Prader-Willi. I know you've looked at setmelanotide before, but maybe just hit the highlights and current development. Yeah. I think you know and most people know. I I mean, A, it's an incredible unmet need. I mean, a horrible disease in that sense. Very difficult disease to study. And so even if you have a drug that works, arguably your trial may fail just because the disease is so challenging in that aspect. So we have a lot of respect for Prader-Willi. We did, as you said, ran an earlier trial. It was a wrong trial. The dose was too low. The trial was too short. So it didn't work, but we didn't conclude anything, I think, to be honest with you. So we want to try again. There's biology which says this could work. And obviously, that's why we're going to give it another shot. So we're running an open label study with one of the leading experts in the country, University of Florida. We'll use higher doses, much higher doses. We're going to go up to five milligrams. Our current labeled approved dose is three milligrams. So we have safety up well beyond that, but we're going to test up to five milligrams in this group for six months minimum. And we'll see. I'm cautiously optimistic, but very respectful of how challenging this disease is. Terrific. Yeah, we look forward to those data. Yeah, you have a couple of candidates that are behind, so to speak, Imcivree, one in oral, one once- weekly injectable. Both are differentiated clinically as well. It seems like you're going to be developing kind of both of those for maybe the larger indications going forward. Maybe just share with us your outlook on how you're going to be deploying resources toward those two aspects. Yeah. I mean, we're all in on the MC4 pathway because, as we've talked about, I mean, we think the opportunity there is incredibly significant. The next generation, they're better drugs. Both are more convenient, as you said, with the weekly and a daily oral. They both have our MC1 sparing, and that's a side effect where we hit the MC1 and it hits that receptor, and it causes an increasing pigmentation. So for many patients, it's not a concern, but a small percentage of patients, it's a very real concern. And so there's no benefit to it. We've dialed that out. So that should not be part of this. And yeah, the development, I mean, and also from a Rhythm standpoint, people sometimes our IP for setmelanotide ends in 2032, but our formulation patents go out to 2034 in the U.S. and 2036. So technically, for true biosimilar to come in, maybe 2034, 36 would be better numbers. And also what people lose sight of is that when in a rare disease, there's no patent cliff. The competitor comes in, they tend not to cut price because you can't make it up on volume and the like. And then patients are pretty sticky. They have patient support people who are working with them, and they don't like to give that up. So long story short is we won't have a cliff, but both of these drugs have patent protection out to 2040 plus. So it's very important from that standpoint, not only are they potentially better drugs, but they will extend our life and give us more time to work this problem. Terrific. I think you had about $30 million in your last reported cash runway into 2026. Maybe just as we think about kind of the financial side of Rhythm, your approach toward profitability and additional investments in R&D and very kind of balancing that with commercial spend? Yeah, so if Hunter was on, he'd give you the full ins and outs here. But I think what we say is we've got a lot of options. We're at that point where we could do an equity raise, and we've got a royalty financing, and we could maybe go back and explore more there. I mean, there's different strategies you can use, and we're at a place company-wise where they're all viable, so no decisions, but those are the things we can look at. What will drive how much and when and if is revenues, for one, and we'll see how quickly, hopefully, HO study will be positive. That will hopefully drive a different economic opportunity, and how quickly revenues build there will dictate some of this, so that'll be a big factor. R&D spend right now, I mean, we have studies that are tailing off and going down in terms of the spend, and then other stuff is coming on. So we're not looking for a huge pickup. And to the extent that there was a significant jump, it would be based on success and something that we'd obviously want to be spending on. So no specific answer, but we have options, and we'll be balancing, as you said, spend and revenue in. Excellent. So we'll obviously be looking out for the HO data. Any other milestones? Obviously, you have the EMANATE study looking at some other genetic subtypes and probably any other upcoming. I'm going to readout first half of 2026. It's fully enrolled and running now. Those are four cohorts, so that is one. This year, we hope we haven't specified exactly how and when we'll be able to share the data, but our goal is to have data on both the oral and Phase 2 in HO and the weekly injectable in HO by the end of this year. Great. We look forward to all that. And David, thank you very much for joining us. This has been a great discussion, and thanks to all of you who've tuned in for this fireside chat with Rhythm Pharmaceuticals. Have a great rest of the conference. Thanks, Leland.