Rhythm Pharmaceuticals Reports Second Quarter 2023 Financial Results and Business Update

August 1, 2023

BOSTON, Aug. 01, 2023 (GLOBE NEWSWIRE) — Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM), a global commercial-stage biopharmaceutical company focused on transforming the lives of patients and their families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) pathway diseases, today reported financial results and provided a business update for the second quarter ended June 30, 2023.

“The first half of 2023 was marked by strong execution across global commercial and clinical development programs. Our strong revenue performance was supported by robust patient demand for IMCIVREE® (setmelanotide) in the U.S. with more than 125 Bardet-Biedl syndrome (BBS) prescriptions written in the second quarter of 2023. Globally, we have expanded our footprint with IMCIVREE to include Canada and in Gulf Cooperation Council (GCC) countries,” said David Meeker, M.D., Chair, President and Chief Executive Officer of Rhythm. “And in July, we achieved the specified sales milestone under our Revenue Interest Financing Agreement (RIFA) with Healthcare Royalty Partners, making us eligible to receive an additional investment of $25 million in non-dilutive capital.”

“Based on rapid progress and substantial patient and physician interest in our ongoing pivotal Phase 3 clinical trial of setmelanotide in hypothalamic obesity, we now expect to complete enrollment by the end of 2023. Finally, we look forward to providing additional details on our pre-clinical development programs later this year, including RM-718, a new weekly, MC4R-specific agonist designed not to cause hyperpigmentation. This program is on track for an IND submission by the end of this year.”

Second Quarter and Recent Business Highlights

Commercial Updates

  • Today, Rhythm announced that more than 125 new prescriptions for IMCIVREE for BBS have been written in the second quarter of 2023 and more than 425 in the United States since U.S. Food and Drug Administration (FDA) approval on June 16, 2022 through June 30, 2023. More than 250 physicians have written prescriptions since launch, and the Company has received payor approval for reimbursement for more than 250 of those prescriptions, as of June 30, 2023.
  • Today, Rhythm announced that IMCIVREE is now commercially available in Canada following the May 5, 2023 approval by Health Canada of IMCIVREE for weight management in adult and pediatric patients 6 years of age and older with obesity due to BBS or genetically-confirmed biallelic pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency due to variants interpreted as pathogenic, likely pathogenic or of uncertain significance.
  • In May 2023, Rhythm announced a collaboration with Genpharm Services FZ LLC (Genpharm) to commercialize IMCIVREE in GCC countries, including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain. Under the terms of this exclusive agreement, Genpharm will distribute IMCIVREE to patients in GCC countries for the treatment of hyperphagia and obesity due to BBS or genetically-confirmed biallelic POMC, PCSK1 or LEPR deficiency. Providers in the region now have the ability to prescribe IMCIVREE to qualifying patients.

Clinical Development Updates

  • Today, Rhythm provided an update on progress of its pivotal, Phase 3 clinical trial evaluating setmelanotide in patients with acquired hypothalamic obesity. Based on the initial pace of patient screening and site activations, Rhythm now expects to complete enrollment in the fourth quarter of 2023. This Phase 3 trial is designed to enroll 120 patients aged 4 years or older randomized 2:1 to setmelanotide therapy or placebo for a total of 60 weeks, including up to eight weeks for dose titration.
  • Today, Rhythm announced that it anticipates submitting an investigational new drug application for RM-718, a new, weekly, MC4R-specific agonist, by the end of 2023. RM-718 is designed to be more targeted and potent than setmelanotide, and designed to be MC1R sparing, with the potential to not cause hyperpigmentation. This new product candidate is being developed as an injection administered through an autoinjector, for which Rhythm has patent protection into 2041, including patent term adjustment and patent term extension.
  • On July 19, the Company announced two new publications detailing the burden of hyperphagia and obesity for adult caregivers, families and patients living with BBS based on results of The CAREgiver Burden in BBS (CARE-BBS) study were published in the peer-reviewed journal, The Orphanet Journal of Rare Diseases.
  • In June 2023 at the Endocrine Society Annual Meeting & Expo (ENDO), Rhythm and its collaborators presented new data from the long-term extension portion of Rhythm’s Phase 2 trial evaluating setmelanotide in patients with hypothalamic obesity. The data showed sustained and deepening reductions in weight and body mass index (BMI) in patients receiving at least six months of setmelanotide therapy. As of a data cutoff of November 30, 2022, 13 patients who had reached the 6-month point had achieved a 21.0 mean percent reduction in BMI  from baseline, which progressed from a 16.8 mean percent reduction at week 16 across these 13 patients.

Corporate

  • Today, Rhythm announced that in July 2023 it achieved a commercial sales milestone under the RIFA with HealthCare Royalty Partners entered into in June 2022. In connection with the achievement of the milestone, Rhythm became eligible for a final investment tranche of $25.0 million from HealthCare Royalty Partners. Rhythm previously received two tranches totaling $75.0 million under the RIFA.

Anticipated Upcoming Milestones

Rhythm expects to achieve the following near-term milestones:

  • Present data analysis from the Phase 2 and long-term extension trials in hypothalamic obesity at a medical conference in the fall of 2023;
  • Announce preliminary data from the open-label part of the Phase 2 DAYBREAK trial from one or more genetically-defined cohorts in the second half of 2023;
  • Announce topline data from the ongoing Phase 3, open-label pediatrics trial evaluating one year of setmelanotide therapy in patients with MC4R pathway deficiencies between the ages of 2 and 6 years old in the second half of 2023;
  • Provide pharmacokinetic and tolerability data from the ongoing Phase 3 switch trial evaluating a weekly formulation of setmelanotide in the second half of 2023;
  • Complete patient enrollment in the pivotal Phase 3 clinical trial in hypothalamic obesity in the fourth quarter of 2023;
  • Provide an update on pre-clinical development programs, including RM-718 and the Company’s congenital hyperinsulinism (CHI) program, in the fourth quarter of 2023; and
  • Initiate a Phase 3, randomized, double-blind trial in patients naïve to setmelanotide therapy (“de novo study”) to evaluate the weekly formulation of setmelanotide in patients with BBS in 2024.

Second Quarter 2023 Financial Results:

  • Cash Position: As of June 30, 2023, cash, cash equivalents and short-term investments were approximately $253.6 million, as compared to $333.3 million as of December 31, 2022. The June 30, 2023 cash position does not include the anticipated commercial sales milestone payment from HealthCare Royalty Partners of $24.4 million of proceeds, net of debt issuance costs.
  • Revenue: Net product revenues relating to global sales of IMCIVREE were $19.2 million for the second quarter of 2023, as compared to $2.3 million for the second quarter of 2022. For the second quarter ended June 30, 2023, 86% of the Company’s product revenue was generated in the United States.
  • License Revenue: The Company did not record license revenue relating to out-license arrangements in the second quarter of 2023, following the termination of its agreement with RareStone Group Ltd. (RareStone) in October 2022. License revenue relating to the Company’s out-license arrangement with RareStone was $6.8 million for the second quarter of 2022.
  • R&D Expenses: R&D expenses were $33.5 million in the second quarter of 2023, as compared to $31.5 million in the second quarter of 2022. The year-over-year increase was primarily due to increased costs associated with certain clinical trials and pre-clinical studies and increased headcount. This was partially offset by decreased costs associated with certain trials and manufacturing of clinical material.
  • S,G&A Expenses: S,G&A expenses were $30.0 million for the second quarter of 2023, as compared to $22.3 million for the second quarter of 2022. The year-over-year increase was primarily due to increased headcount in the United States and internationally, professional services and other expenses. This increase was partially offset by decreased marketing activities associated with the U.S. BBS launch.
  • Other income (expense), net. Other income (expense), net decreased by $0.2 million from the second quarter of 2022 to the second quarter of 2023, primarily due to $3.3 million of interest expense related to the RIFA with HealthCare Royalty and a $0.1 million fair market value adjustment related to the RIFA embedded derivative, offset by interest income of $3.3 million earned on our short-term investments.
  • Net Loss: Net loss was ($46.7) million for the second quarter of 2023, or a net loss per basic and diluted share of ($0.82), as compared to a net loss of ($45.0) million for the second quarter of 2022, or a net loss per basic and diluted share of ($0.89).

Year to Date 2023 Financial Results: 

  • Revenue: Net product revenues relating to sales of IMCIVREE were $30.7 million for the six months ended June 30, 2023, as compared to $3.8 million for the six months ended June 30, 2022.
  • License Revenue: The Company did not report license revenue relating to out-license arrangements in the six months ended June 30, 2023, following the termination of its agreement with RareStone in October 2022. License revenue relating to the Company’s out-license arrangement with RareStone was $6.8 million for the six months ended June 30, 2022.
  • R&D Expenses: R&D expenses were $71.5 million for the six months ended June 30, 2023, as compared to $64.0 million for the six months ended June 30, 2022. This increase was primarily due to the acquisition of Xinvento B.V. and increased costs associated with headcount, certain clinical trials, pre-clinical studies and gene sequencing and was partially offset by decreased costs associated with manufacturing of clinical material, certain clinical trials and a development milestone payment associated with the weekly formulation paid to Camurus AB in 2022.
  • S,G&A Expenses: S,G&A expenses were $54.7 million for the six months ended June 30, 2023, as compared to $43.8 million for the six months ended June 30, 2022. The increase was primarily due to increased headcount to support business and commercial operations in the United Sates and internationally, professional services and other expenses and was partially offset by decreased marketing activities associated with the BBS U.S. launch.
  • Other income (expense), net: Other (income)/ expense, net increased by $0.2 million to $0.2 million for the six months ended June 30, 2023. Total other (income)/ expense, net for the six months ended June 30, 2023 consists of interest income of $6.7 million primarily due to higher interest rates, partially offset by $6.4 million of interest expense related to our RIFA with HealthCare Royalty. The fair market value adjustment related to our RIFA embedded derivative for the six months ended June 30, 2023 was de minimis.
  • Net Loss: Net loss was ($98.9) million for the six months ended June 30, 2023, or a net loss per basic and diluted share of $(1.74), as compared to a net loss of ($97.8) million for the six months ended June 30, 2022, or a net loss per basic and diluted share of ($1.94).

Financial Guidance: For the year ending December 31, 2023, Rhythm continues to anticipate approximately $200 million to $220 million in Non-GAAP Operating Expenses (see below under “Non-GAAP Financial Measures” for more details), comprised of $120 million to $130 million from R&D expenses and $80 million to $90 million from S,G&A expenses. Based on its current operating plans, Rhythm expects that its existing cash, cash equivalents and short-term investments as of June 30, 2023, together with the anticipated $25 million milestone payment based on commercial sales from Healthcare Royalty Partners, will be sufficient to fund its operating expenses and capital expenditure requirements into 2025.

About Rhythm Pharmaceuticals
Rhythm is a commercial-stage biopharmaceutical company committed to transforming the lives of patients and their families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) diseases. Rhythm’s lead asset, IMCIVREE (setmelanotide), an MC4R agonist designed to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases, is approved by the U.S. Food and Drug Administration (FDA) for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1) or leptin receptor (LEPR) deficiency confirmed by genetic testing, or patients with a clinical diagnosis of Bardet-Biedl syndrome (BBS). Both the European Commission (EC) and the UK’s Medicines & Healthcare Products Regulatory Agency (MHRA) have authorized setmelanotide for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or genetically confirmed loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 6 years of age and above. Additionally, Rhythm is advancing a broad clinical development program for setmelanotide in other rare MC4R pathway diseases, as well as a preclinical suite of small molecules for the treatment of congenital hyperinsulinism. Rhythm’s headquarters is in Boston, MA.