Rhythm Pharmaceuticals Inc (RYTM) 2025 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Q3 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Connolly, Investor Relations at Rhythm. Please go ahead.

Thank you, Heidi. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, Our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com. This morning, we issued a press release that provides our Q3 financial results and a business update, and that press release is also available on our website. Our agenda is listed on slide two. On the call today are David Meeker, our Chairman, Chief Executive Officer, and President; Jennifer Lee, Executive Vice President, Head of North America, Hunter Smith, Chief Financial Officer; and Yann Mazebro, Executive Vice President, Head of International, is on the line joining us from Europe. 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 on our most recent annual quarterly reports on file with the SEC. In addition, any forward-looking statements represent our views 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 Meeker who will begin on slide five.

Thank you, Dave. Good morning, everybody. Thank you for joining us this morning. Rhythm delivered strong growth and continued momentum during the third quarter as we prepared a launch in Sivri and acquired hypothalamic obesity pending FDA approval. That is a transformative opportunity for Rhythm. We are finishing strong in 2025, a year in which we delivered robust Phase III data with set melanotide and HO, presented outstanding Phase II efficacy data with our next-gen oral MC4R inhibitor, Bifamelegon, and strengthened our balance sheet with a $189 million equity offering in July. With our PDUFA date next month and additional data readouts coming this quarter and next, we are well-positioned to deliver sustained long-term growth.

The steady growth in global and survey revenue, driven predominantly by BBS, continued this quarter with 51.3 million in sales, representing growth of approximately 10% in the number of patients on reimbursed therapy. We have built a strong, global foundation for our business with Incivary, the only therapy that addresses the root cause of hyperphagia and the severe obesity of rare MC4R pathway diseases. The teams continue to engage with physicians and prescribers, identify patients, and ensure access to Incivary. Beyond commercial success, we have been executing on the regulatory front as well. For HO, both the FDA and EMEA accepted our regulatory filings this quarter, the EMEA EMA validated our Type 2 marketing authorization request and the FDA accepted our supplemental NDA filing. The regulatory dialogue has been promising and productive in keeping us on track for a December 20th BDUFA date and potentially European approval in the second half of 2026.

Jennifer and Jan will share some details on the quarter as well as the upcoming launch efforts in the US and the timing in the international region. We remain on track to report preliminary results from our exploratory Phase II trial in Prader-Willi syndrome by the end of the year. I have no further updates on today's call, but I will reiterate several of the comments we have made previously. There's a strong biologic rationale as to why MC4R agonism may work in PWS, based to a large extent on the involvement of the MAGL2 gene, where patients with isolated MAGL2 variants have impaired signaling through the MC4R pathway. We also know PWS is an incredibly complex disease due to defects in many genes and a clinical presentation characterized by obesity, hyperphasia, cognitive delay, and abnormal behaviors. It is this latter aspect of the disease which makes clinical studies particularly difficult.

Thus, our rather neutral prediction that we have a 50-50 chance of working. Success will be defined by a BMI percent change with the target being results that would give us confidence we could clear a 5% threshold in BMI decrease at 52 weeks in a Phase III trial. We are collecting measures of hyperphagia, specifically the HQCT questionnaire in this trial, but I remind you, it is an open-label trial, and absent a control group interpretation will be difficult. We are working with one site with a goal of enrolling 10 to 20 patients, followed for six months.

Obviously, we will not be reporting out on the full cohort in our end-of-the-year release. I know there will be questions on exact timing. There are practical aspects to that with regard to having as much data entered into the system and quality checked as possible, but we can commit that it will be prior to the Christmas break. One comment before we dive into the findings on slide six is that over my career working on a number of rare diseases, one aspect that is invariably true is that when you get a therapy approved, you have only just begun to learn the full impact of your therapy on that disease. In BBS, for example, we had the clinical data from approximately 50 patients at the time of approval. These MC4R pathway diseases are rare and absolutely fit that mold.

The paper, described here on slide six, is a German study that showed six months of set melanotide therapy was associated with clinically meaningful improvements in steatotic liver disease and kidney function. This prospective observational study was conducted at University Hospital Essen in Germany, where 26 patients with BBS, ages 6 to 52 years, all with metabolic dysfunction-associated steatotic liver disease, or MASLD, at baseline. These patients were followed for six months, and after six months of treatment, more than 80% of patients exhibited either resolution of mass load or stabilization at the lowest grade of S1. We know weight loss can improve liver function in patients with obesity, but these changes did not correlate closely with BMI change, raising the possibility that some other aspect of the bone-anal cord biology may be mediating these changes.

These results were recently published in the Journal of Clinical Endocrinology and Metabolism. On slide seven, our upcoming launch in HO represents an incredibly important milestone for Rhythm. As you heard from Jennifer at our investor event in September, and we'll hear again from her this morning, we have the pieces in place to execute a successful launch. She and her management team have done a great job expanding our existing commercial teams with the hiring of a group of highly experienced and extremely talented individuals who are excited to get started.

With an estimated prevalence of 10,000 patients in the United States, this is, as noted, a transformative opportunity for us. The unmet need is significant and clear. MS-Atlantide showed strong efficacy in Phase 2 and 3 trials. The regulatory dialogue is ongoing, and we appear to be on track for our PDUFA date of December 20th. Obesity Week begins this week in Atlanta. Dr. Christian Roth has an oral presentation of the outcome of patients on GLP-1 therapy in our Phase 3 trials. You have seen this data previously, but it will again be an opportunity to highlight the value of correcting the hormonal deficit in alkyl nanosite-stimulating hormone in patients who may not be getting the desired response from other anti-obesity medications. Overall, there is strong buzz in the community and a lot of excitement at RITM as we near launch. Lastly, slide eight are the upcoming milestones.

We covered the first two, alpidupid aid and potential HO approval, and the preliminary data readout and greater will aid, both likely coming in December. We aim to complete an enrollment of the RM718 weekly Phase II study in HO patients during the first quarter of 2026. We will also release top-line data from the Japanese cohort from our Phase III acquired HO trial in Q1, and we will release top-line data from the Emanate trial in Q1. We aim to complete enrollment Finally, we will initiate our phase three study with Biv and Melegon and Acquired HO next year. We'll further refine the timing once we've had feedback from the regulators. It's a busy end of the year. With that, I will turn the call over to Jennifer.

Thank you, David. I'm going to be starting on slide 10 today. So, it's an exciting time as we continue our preparations for launch in Acquired Hypolytic Obesity, pending FDA approval, by leveraging the strong foundation of our commercial efforts for BBS. BBS and HO are both rare diseases caused by an impairment to the MC4 pathway, which commonly results in hyperphagia or abnormal food-seeking behaviors and severe obesity. MCIVRI is unique in its ability to address the root cause of hyperphagia and obesity in these patients. And over the last three years, we have seen that physicians are prescribing MCIVRI for their patients with BBS, payers are providing access, and patients are benefiting with some now entering their fourth year on treatment.

The positive growth in BBS continued during the third quarter. Quarter over quarter, we have seen a steady volume in new prescriptions and an increase in number of patients on reimbursed therapy. We continue to see gains in both the depth and breadth of prescribers with approximately a 7% increase in the cumulative total number of BBS prescribers quarter over quarter. In the third quarter, the proportion of prescriptions for pediatric versus adult patients began to normalize following the uptick in prescriptions for pediatric patients during the first half of this year, which we discussed in our last quarterly call. For the third quarter, the breakdown of new prescriptions was as follows. 50% of new patients were adults, 22% were adolescents, and 28% were pediatrics, and these percentages are trending back to the typical mix prior to the MCIVRI label expansion to include patients as young as two years of age. Next slide. Moving on to our preparations for the acquired hypothalamic obesity launch, we have hired highly experienced professionals to supplement our home office and field organization and our teams have been actively engaging with customers.

As we outlined on our acquired hypothalamic obesity commercial ready list, of events in September, we are focused on engaging with and educating physicians in order to differentiate MC4 pathway diseases, including acquired hyperclimatic obesity from general obesity, expedite patient diagnosis, and following approval, establish MCIVRI as a foundational treatment for acquired HO and educate payers to secure access and support patients long-term once they have initiated treatment. Next slide. We also shared some insights into the market and our data-driven approach to this specialty-centered opportunity. We analyzed claims data to narrow down our top physician targets and size our field teams.

Let me walk you through that once again. We started with claims associated with brain tumors and treatment. Within these, we looked at those with hypothymic dysfunction and also obesity. And lastly, within these, We looked to patient visits with an endocrinologist within the past 18 months. This claims analysis allowed us to identify approximately 5,000 endocrinologists who potentially have one patient or more with hypothalamic obesity under their care. From these 5,000 endocrinologists, we narrowed our initial focus to 2,400 top-tier physician targets, who we believe manage a higher volume of patients.

Next slide. Throughout this year, our teams have focused on profiling our top targets. Their profiling activity to date has resulted in the identification of more than 2,000 potential patients suspected to have HO or formally diagnosed to have HO. We are still early in the process of profiling identified physicians, and our expanded sales organization is now on ground. focused on further penetrating these top-tier targets to identify more potential patients with acquired head splenic obesity. Next slide. Our teams are in place, and as we expanded our organization to support the upcoming launch.

Our access team is engaging with payers to educate them on acquired HO and cephalanotide data through pre-approval information exchange presentations to support reimbursement once approved. Our territory managers are in the field, engaging with the physician community to increase disease awareness, and once MCFRI is approved and acquired HO, they will educate on MCFRI's efficacy and safety data to support prescriptions. Our patient service team will engage with patients and their families to educate them on the disease, to help them navigate insurance coverage once prescribed MCFRI, and provide support to help guide treatment expectations and keep them on treatment long term. It's certainly an exciting time. With a strong foundation in place with many learnings on the needs of patients and their providers, a clear strategy, and experienced teams in place, we are ready to go, pending approval on December 20th. With that, let me hand it over to Yann.

Thank you, Jennifer. I begin on slide 16. We saw continued success with our international business during the third quarter, as MCV is now available for BBS and or POMC-LiPAR deficiencies in more than 25 countries outside the United States. And the number of patients with BBS, POMC-LiPAR deficiencies, or hypothalamic obesity on MCV continues to grow in the international region. During the third quarter, we reached an agreement with the French Economic Committee for Health Products on reimbursement pricing for mCVRI for BBS and POMC-Lipar. We are pleased with the result of the negotiations, as the negotiated price is in line with rare diseases pricing and also reflects the therapeutic benefit patients receive with mCVRI.

We remain very encouraged by our reimbursed early access programs for HO in France and Italy. both granted based on our Phase II data, which is very uncommon. The growth of these programs illustrates the important unmet need and potential to provide these patients with significant therapeutic benefit. And in parallel, name patient cells continue to provide access to patients in several additional countries outside the EU, foreign and UK. For example, just recently, we achieved our first commercial patient in Argentina through a name patient cell. Our team continues to execute and remains committed to expanding market access for patients in addressing the unmet need to treat these rare MC4A pathway diseases throughout the international region, establishing foundational relationships with expert physicians and local authorities built on patients benefiting from NCRI. This will help us to be successful as we prepare the next RISM chapter for the international region. Next slide. The next chapter is our international launches in hypothalamic obesity.

The global admit need for HO treatment is high, as demonstrated by the growth in our early access programs in France and Italy. During the third quarter, we completed the EMA submission to expand the marketing authorization for MCV to include acquired HO. The EMA has a set calendar to review such submissions. and if that timeframe holds and the review is positive, we anticipate the CHMP opinion and the EU marketing authorization in the second half of 2026. Establishing reimbursement for acquired HO in Europe country by country will take time. Germany would be the first country where we would launch, but as we did for POMC, DPAR and BBS, we will seek an exemption from the German Federal Insurance Committee Annex II Exclusion List that prohibits reimbursement for lifestyle drugs. such as drugs designed to treat hair loss, smoking cessation, and general obesity.

This process is necessary in order to secure federal reimbursement. We are confident we can have the same success we had with POMC, Lipar, and DBS, as MCV was the first ever precision medicine to be exempted and therefore reimbursed. We believe the same approach should hold for acquired HO, and that is demonstrating acquired HO clearly is a rare disease that is distinct from general obesity, so we are hopeful for a similar outcome. At the same time, we will engage in access and reimbursement negotiations in the United Kingdom, Italy, Spain, the Netherlands, and other countries. Taken together in these countries, we estimate the prevalence of acquired HO in Europe to be approximately 10,000 patients, making Europe a meaningful market for us.

Moving to slide 18. Japan will also be a very important market for us, with an estimated prevalence between 5,000 and 8,000 patients, which is two to three times greater per capita than Europe and the United States. We have started to build out a strong local team with a focus on regulatory, quality, CNC, medical affairs, market access, and marketing. We have now established a strong leadership team in Japan, and we have already 14 RISM employees in place. Notably, our general manager, who is already well-known to the team here from our time together at Sanofi Genzyme, previously led the highly successful launch of DupXent in Japan. As David said, we anticipate top-line data from the Phase III cohort of Japanese patients in the first quarter of 2026, which will be followed by submission of the Japanese NDA to the PMDA. Typically, regulatory review in Japan is approximately nine months. These XQOS timelines point to launches potentially during 2027.

With that, I will turn the call over to Hunter. Thank you, Jan.

Before discussing the specifics of the quarter, let me reemphasize the message of financial strength delivered during our last quarterly call. As we raised approximately $189.2 million in net proceeds from a follow-on equity offering completed in early in Q3, We ended the third quarter with $416.1 million in cash on hand. This cash, in conjunction with projected revenue from anticipated global sales of MCIVRI for currently approved indications and including HO pending FDA approval, as well as planned R&D and SG&A spending, provides us with at least 24 months of runway.

Rhythm's balance sheet is as strong as it's ever been. Now, looking at slide 20 and the revenue dynamics during the quarter, global revenue for the third quarter was $51.3 million, a sequential 6% increase, with $48.5 million for the second quarter of 2025. The number of patients on reimbursed therapy increased by 10% globally during the quarter.$ 38.2 million, or 74% of Q3 net revenue, was generated in the United States, and $13.1 million, or 26% of total revenue, was generated outside the United States. The US delivered another solid quarter, buoyed by a high single-digit percentage increase in the number of reimbursed patients on therapy. Approximately $3.7 million of the quarter-over-quarter increase in revenue was driven by an increase in incivory dispensed to patients, a good indication of fundamental growth in demand. As we've seen in prior quarters, there was also an inventory effect, Q2 into Q3, with increases in inventory at our specialty pharmacy driving $2.5 million of the sequential variance in quarterly sales.

The quarter ended on a Tuesday, the day that our specialty pharmacy takes delivery of product, with the result that their inventory days on hand increased from just under 10 days at the end of Q2 to approximately 16 days at the end of Q3. Outside the US, quarter-over-quarter revenue decreased by $3.4 million. Patients on reimbursed therapy increased at a low double-digit percentage during the quarter, indicating continued solid fundamental growth in demand for MCIVERY.

In France, as Jan mentioned, we agreed to a final reimbursed for MCIVRI for POMC, LEPAR, and VBS. Since 2022, we have been accruing revenue under the French Early Access Programs and provisioning for this eventual agreement. Based on this agreement, we recorded a one-time $3.2 million charge during the third quarter of 2025 to account for the difference between what has been accrued to date and what is owed.

Of the $3.2 million, approximately $0.6 million was related to revenue booked in Q3-25, and $1.5 million was related to year-to-date 2025, with the balance related to periods prior to 2025. Excluding this impact, international revenue was affected by variability in ordering patterns for name-patient sales in certain distributor markets. On slide 21 is the financial snapshot. In a year-over-year comparison to Q3 2024, the net product revenues increased 18 million, or 54%, and gross net for US sales was 84%, generally in line with gross net percentages we've shown in previous quarters.

Cost of goods sold this quarter was 10.7% of product revenue, which is mostly attributable to cost of materials and our royalty payments on Sentinel Anitide to Ipsen. We generally expect cost of goods sold to be between 10% and 12% of net product revenue with variation due to how our inventory balances are changing and the corresponding capitalization of labor and overhead costs. R&D expenses were $46 million for Q3 compared to $37.9 million in the same quarter last year. Sequentially, R&D expenses increased $3.7 million or approximately 9% over Q2 2025.

This increase was primarily due to chemistry, manufacturing, and controls, or CMC work, related to improving the formulation of Bivomelagon and development of an auto-injector for RM718, as well as increased headcount and stock comp expense. Year-over-year increased spending was partially offset by a reduction in clinical trial costs. SG&A expenses were $52.4 million for Q3 2025 as compared to $35.4 million in Q2 last year.

Sequentially, SG&A expenses increased by $6.5 million or approximately 14% compared to Q2 2025. Increased SG&A spent from Q2 to Q3 was due to increased headcount costs and marketing costs associated with the upcoming launch in acquired hypothalamic obesity. For the third quarter of 2025, the weighted average common shares outstanding were $66.3 million. The increase in Q3 was mostly due to the equity offering when we issued nearly $2.4 million shares, as well as the exercise of previously issued stock options. Cash used in operations was approximately $27 million during the third quarter. Our GAAP EPS for the third quarter of 2025 was a net loss per basic and diluted share of 0.82, including $0.2 per share from accrued dividends on convertible preferred stock of $$1.4 million.

We ended the third quarter with approximately$416 million in cash, cash equivalents, and short-term investments, which again, we expect to be sufficient to fund planned operations for at least 24 months. Lastly for me, On slide 22, there is further detail on our operating expenses for the third quarter and updated full-year operating expense guidance. For the third quarter, operating expenses of $98.5 million include a total of $18.8 million in stock-based compensation. For fiscal year 2025, we are tightening our full-year guidance and shifting the mix between R&D and SG&A expenses, given the resources we have committed to be ready for the anticipated launch of MCIVRI and acquired HO later this quarter. We anticipate approximately $295 million to $315 million in non-GAAP operating expenses comprised of non-GAAP R&D expenses of 150 million to 165 million and non-GAAP SG&A expenses of 145 to 150 million. With that, I'll turn the call back over to David.

Thank you, Hunter. We'll go to Q&A.

(Operator Instructions) Mike Oles, Morgan Stanley.

Yep, good morning. Thanks for taking the question, and congratulations on all the progress. Maybe just one quick one on Bivomegalon, if you can share your latest thinking on the trial design for your Phase 3 HO study. And just curious if you received any initial feedback yet from the FDA there. Thanks.

Yeah. You know, at this point, we've run many trials in this MC4 pathway area. data. The HO trial will be similar and will obviously mimic what we did in the HO trial. So our expectation at this point is it'll be a double-blind randomized controlled trial. We will have a discussion with the regulators around the duration of the double-blind period. Our expectation is that in some form they will want a full year of data. This is a new chemical entity, NCE. So again, data. We'll provide that six months of double-blind plus an additional six in an open-weight pool. That are the kinds of questions we'll bring forward to regulators. But in terms of primary endpoints and the like, again, we will be a percent BMI change, and we'll be enrolling children and adults in the trial. And then in terms of regulators, so we anticipate at this point our Our expected phase two, post-phase two meeting with the FDA when we would get this feedback is likely to be in the first quarter of next year.

Great. Thank you.

Phil Nadeau, TD Cowen.

Good morning, and congrats on the progress. Thanks for taking our question. Our question is to dive into the PWS and efficacy endpoints a bit further to understand what you need to see to advance MCV forward in PWS. So in terms of weight, you suggested something that suggests 5% weight loss at one year. Can you give us more of a sense of what that is? Is that 2.5% at 26 weeks, or is there a different way to think about it? And then in terms of hyperphagia, a similar question, you said it's gonna be hard Interpret, but nonetheless, hyperphagia is a major determinant of quality of life in Prader-Willi, so is there any level of hyperphagia change that would be proof of concept and warrant further development? Thanks. Yeah.

Yeah, I know, and I'll just preface the thing. I know there's going to be a lot of questions on Prader-Willi. I'll do the best, but needless to say, I won't have a lot more to add to the color we provided previously. But your question on what constitutes success and how will we interpret it, we talked Our goal is to get 10 to 20 patients on treatment for six months.

We'll have some part of that cohort available by the end of the year. Obviously, a very small data set. We'll present patient-by-patient data the way we've done in the past, so you can all see exactly what we're looking at. It's not a mean number. Again, we highlighted that for the BIVA data. It's going to be very much looking patient-by-patient, and if patients seem to do well, why did you know, what's our best understanding as to why they did well, and if another patient didn't do well or have the change, is there some other explanation for that? And you take all that into account.

So it's gonna be a judgment call, Phil, needless to say, and I don't think it'll be, well, let's put it this way. I mean, you can make these judgment calls in these small data sets, but that's how it'll be done. It's not a magic number of, you know, we got halfway to the 5% at six months. I don't expect necessarily that that's gonna be the metric per se, tend to be linear, but there'll be a level of confidence looking at the individual data points that the drug seems to be working, and when we run a larger trial, we'll be able to get to the virus.

That's very helpful. Thank you. And then just one last thing on the HQCT, just to remind everybody, our primary endpoint here is BMI percent change. We would not go into a Phase III trial without confidence that, as I just indicated, we could move that BMI. We wouldn't pursue a hyperphagia label only. I know a number of companies are out there seeking that approval at this time. However, based on the mechanism of our drug, if we do see BMI percent change, almost by definition, given the biology, we will improve hyperphagia.

That's helpful. Thank you.

Derek Archila, Wells Fargo.

Hey, good morning, and thanks for taking the questions here. So, first question, just can you discuss some of the drivers behind the changes to the ongoing variability trial for MCVRI? It looks like you extended it out to 52 weeks from '26, and what looks like the potential to explore adding sites to the trial? And then the second question, just briefly, can you discuss if you've had any FDA, you know, agreements or discussions around the indication statement for HO and whether it could or could not, you know, include hyperphagia. Thanks.

Yeah, I'll take the last one first. So on the HO, again, our regulatory interactions have been, I've characterized them as routine, which is kind of favorable given a lot of the news, certainly in the FDA, but exactly as we would expect, they come back with specific questions and we answer those. The labeling discussions tend to be late, so with regard to your specific question on indication, we are not entered into that specific dialogue, I guess, at this point. In terms of the updates that a number of you picked up on in clintrials.gov for the Greater Willie Phase II study, that's really housekeeping.

So there was two issues there we updated on. One is in any trial, rare disease trials, we set the six months as the endpoint, meaning that's the point at which we would look at the BMI and make this judgment, so to speak, are we seeing success or not, but allowing patients to continue if they feel like they want to. beyond six months, we needed to update the trial to allow that to happen, as opposed to leaving somebody and just saying, okay, we gotta stop the drug now. And then the second was, in terms of adding an additional site, again, that was just in case we needed, working with a single site, Dr. Miller's site in Florida, as you know, she's extremely busy, and so that was just in case we couldn't, as at this point, we haven't opened a second site, we're continuing to work with Dr. Miller, and she's doing well there, so.

So nothing to read through.

Whitney Lam from CG. Please go ahead. Your line is open.

Thank you for taking our questions. This is Angela for Whitney. Maybe switching gears a little bit, a question on the HO launch. Any updates you can provide around conversations you're having with payers? Should we assume that most or all patients will be on the free drug program until payers start to finalize their policy updates in three to six months after approval or any color to provide around the gross to net round knowledge?

Maybe just one comment before I turn it over to Jennifer. So, patients who have been in the trial will stay in the trial. So, the clinical trial patients will stay on drug. until they get access. But we will not have an early access program specifically. But beyond that, Jennifer, do you want to comment on it?

Yeah. So we feel very positive just based off of the feedback that we've received just through our discussions with payers, as well as the market research that we've conducted, just getting payer insights overall. I think from a process of reimbursement, post-approval, It's going to be a similar process just in general as we receive prescriptions. Even if there's not a specific policy in place by the time we receive the script, we still work through the process just in terms of going back to the payer to try to gain access, and we've been able to gain access even prior to that formal policy being in place. So I don't expect anything to be different, and I don't expect that we'd have to wait the actual time of evaluation of this particular drug with that specific payer to actually be able to gain reimbursement and put that patient on commercial therapy. Next question.

Thank you. We will take our next question. The question comes from the line of . Please go ahead. Your line is open.

Hi, guys. Thank you so much for taking the question. I wanted to ask about how investors and the street should be thinking about the launch curve in hypoglycemic obesity. I know you guys have put out this kind of these metrics of like 2,400 target physicians and 2,000 patients that you believe are kind of your top targets. How should we think about, you know, kind of prosecuting that opportunity and like what the shape of the launch curve could look like relative to like Barton Beadle or relative to other launches out there like the Prader-Willi launches? Thank you.

Thanks for the question. I think overall, just in terms of HO, we have such a solid ground just based off of what we have learned and put in place for the BBS launch. Even very specifically, a lot of work just in terms of the payer landscape to have them understand the difference in terms of our patient population and our drug versus general obesity to have that strong foundation in terms of that understanding as we potentially expand to other indications that are rare that also target a similar pathway. We have the right team in place. We feel very confident holistically just in terms of the ACP targeting that we have and are really pleased with the progress.

And I see you outlined – we outlined that we had about 2,000 potential patients that were suspected or actually diagnosed at this point of time. I think with that said, the things that are similar just in terms of BBS and Any Rare Disease is that without a therapy available, there really isn't that much incentive to get patients to a diagnosis, and there's not a lot of education to also help in terms of getting patients to that diagnosis, and that is very similar to what we have learned in the HO space.

You know, although it's easy potentially to identify potential patients with the background that may have HO, those patients have not necessarily gotten to that specific diagnosis, so that's going to take a bit of time, especially as it takes time for these patients to get back to the endocrinologist to be able to see them, have that discussion, get that diagnosis, and then post-approval have that discussion about potentially getting onto insipid rates. So we feel very confident just in terms of our ability to execute, but there are different factors that may impact the ramp in terms of launch.

And two things I'll just add in complement to what Jennifer just stated. First, the PWS situation is significantly different because many PWS patients are cared for in group homes. and dealt with in very specific specialized centers with the result that the opportunity for them to be prescribed in a more bolus-like fashion is greater. So our research has indicated that the HO patients are more distributed with community and local endocrinologists as opposed to in specialized centers. And secondly, conversely, as Jennifer stated, versus BBS, with a higher diagnosis rate and the care in a single specialty accounting for a much greater patient percentage of the patients, there is more opportunity there in the early days.

Got it. That's helpful. Thank you so much. Thanks. Next question.

Corinne Johnson, Goldman Sachs.

Good morning. This is Eric on for Corinne Johnson here. The question we have is, just to double-click a little more on the HO launch that we were just discussing here, how should we think about the process for and the cadence of reimbursement and the anticipated gross-to-net in HO, specifically relative to VBS? Can you just give us a little more color on that?

You want me to speak to gross-to-net to start? I think what we anticipate in terms of differences gross-to-net is It's a little hard to say. We've had around a 50-50 Medicare commercial mix for BBS. We don't know how different the HO population will be, but that is the primary driver of our growth to that because we don't rebate in any meaningful way. So it really is just a question of what's the Medicaid share. That, of course, assumes that we still do not have Medicare access. If we are able to get Medicare access, then that GTN mix will shift favorably.

On the process in terms of the flow here, I'm getting that patient from an initial script to treatment.

Yeah, so we're already engaging with payers just in terms of giving them that heads up just in terms of timelines approval within HO, so they at least have that preliminary background in terms of expectations. Once we received an RX, our teams work to be able to work through that reimbursement process, and that particular payer may be more prioritized in terms of our payer-facing team in terms of follow-up to educate them that we did get approval and we did get a script to be able to try to get a reimbursement for that patient. I think the timing overall in terms of getting specific policies in place, there's specific timings that different payers have in terms of review of drugs, so that policy timing is a bit different and could be delayed depending on the timing of that particular payer and the reviewer of a drug post-approval. But, you know, similar to BVS, we didn't necessarily have a policy in place before we got reimbursement for that patient. So we're going to be working both of those through.

Yeah, maybe just to close on that, as Jennifer said, it's a huge advantage to – this is a follow-on indication. So, you know, BVS was basically our first time through, and people were learning about the drug for the first time here. They know the drug. They've got to learn an indication. As Jennifer said, that'll take some time, particularly with policy. and so forth. The amazing thing that her team has done is, policy or no policy, we can get these patients reimbursed.

Got it.

Thank you. Next question.

Paul Mattis, Skyfel

Hi there. This is Julian on for Paul. Thanks so much for taking our question. You talked in the past about how Some patients in the PWS study may also be on background, VICAT. Just based on the mechanism, I'm curious on how you see the potential for added benefit that's set aside. Thank you.

Yeah, no, it's a good question. I mean, we're interested in learning more there. As you highlighted, patients who are on VICAT are allowed as long as they're stable, and stable is in the judgment of the treating physician, in this case, Dr. Miller, stable on their VICAT dose. they are allowed in the trial. Mechanistically, you know, how does diazoxide work? Once, you know, hyperphages, obviously, by definition, their approval is decreased, behaviors may be somewhat better. What circuits are they working on? I think the one thing we're confident of is we're not redundant. They're not working through, you know, MC4 agonists, and exactly however diazoxide working or not working through this MC4 pathway exactly. So there's certainly a possibility for them to be complementary. I think from a side effect profile, there's no overlapping toxicities, so they certainly can be used together with no concerns.

So we'll say, again, we're, like I said, open to learning here, and hopefully this trial will give us some insight. Thanks, Professor.

Thanks. Thank you. Your next question comes from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead. Your line is open.

Hi, this is Evan Wang. I'm with Seamus Fernandez. Two questions for me. First, on Prater-Willi, just a follow-up on the trial amendment. I'm curious in terms of, you know, the extension out to 52 weeks. and the degree of participation anticipated or deserves thus far. Have there been any dropouts as patients are entering that original 26-week conclusion? And then on HO, I'm curious about the international launch preparations, particularly in Europe. I'm just wondering if you'd comment on how you're preparing for another launch there, given existing approvals in DBS and, you know, any kind of major dialogues with major reimbursement authorities. Thanks.

Yeah. So, I'll go and then Jan, though. So let's take the international one. So I'm not going to update exactly where we are in the patients in the trial and who's behind that. That'll all be coming shortly. Again, we're targeting, it'll definitely be in December. And as I said, the goal is to put out what data we have prior to the Christmas break. Jan, you want to talk about the international launch?

Yes, sure. Thank you for the question. So as I've said during my presentation, we expect to launch in Europe across various countries during 2027. I think we will follow almost the long sequence we had for BBS. We have already started to engage with the payers, so the payers have known us for now many years, and they know SEPNANOTIDE very well, and they also have a lot of experts that they can reach out to to better understand the drug and the disease. So we are really confident with our launch preparation. And the last thing is maybe in terms of team, the HO patients population is, of course, larger than BBS. So we will add some staff to make sure that we can adequately cover all the HCPs necessary to make the most of this opportunity, but this will come later, and this will follow the launch sequence.

Yeah, thanks, Yann. And I just want to emphasize something Yann just said, which is a really important part of this international equation, is these single-payer systems, some, many of them, they use local experts. And these are all people, as Yann said, we work closely with. Many of them are trial, you know, have been part of our trials. And so they're not only experts in the disease, they know the drug well. They've been incredibly helpful in our prior discussions, and as Jan said, we anticipate them being very helpful in the upcoming HO discussions. Next question.

Thank you. Your next question comes from the line of Dennis Ding from Jefferies. Please go ahead. Your line is open.

Hi. This is for Dennis Ding. Thank you for taking our questions. We had one on the PWS. When you disclose the initial data in December potentially, should we also be expecting a go versus no-go decision in terms of moving into Phase 3? Or is there a scenario where you would wait for a longer follow-up before making that decision? Thank you.

Yeah, no, fair question. Yes, definitely that's a scenario. I mean, I think this is incomplete data and, you know, we We might be in a position to make a call, depending on how strongly we feel the data is signaling, or we may indicate that, look, we want to continue to get the full data set, and then we'll come back to you with that final decision. So, yes, all options are on the table.

Got it. Thank you.

Thanks.

Thank you. We will take our final question, and the final question comes from the line of Raghuram Selvaruri. from HC Wainwright. Please go ahead. Your line is open.

Thanks so much for taking our questions. I just wanted to ask about the German observational study findings and how you expect that to potentially percolate into other indications beyond Bardett-Beetle syndrome and what impact you anticipate this might have on prescribing decisions in those areas. Thank you.

Yeah, thanks for picking up on that question. I think what we found most interesting about that, hey, well, it's just interesting in general, right? I mean, these livers improved to a remarkable degree in BBS, and as I highlighted in my comments, it didn't seem to tightly correlate with BMI change, and so it raised the possibility. We know there's MC4 receptors in different places. We know MC4, our agonism, interacts with the autonomic nervous system. The vagus interacts, you know, There are not MC4 receptors in the liver. There are MC1 receptors in the liver. As I said, you get a drug-approved KOL, others start making observations, and you begin to learn a lot more. My point, again, of sharing that was that I think there's a lot more to be learned about this mechanism beyond simply the reduction in hyperphagia associated increase in energy expenditure and associated BMI weight decrease. So that's it. Like I said, these were pretty remarkable results, and we thought it was worth highlighting. Thank you.

Raghuram Selvaruri Thank you.

Thank you. We do have a question, and the question comes from the line of John Wolban from Citizens. Please go ahead. Your line is open.

Hey. Thanks for taking the question and squeezing me in. Just wondering, and sorry if I missed this earlier, of the 2,000 potential patients, have you been able to identify any more information on them, on who may or may not be good candidates for one reason or the other? Or is it simply that you have kind of an identifier through the claims analysis you've done?

The 2,000 patients are ones that, through the discussions of our field organization and just discussions with the physicians, they have outlined that either they have X number of diagnosed HO patients or they have Y number of patients that meet that definition and criteria that they wanted to further evaluate as that patient came through in terms of visiting to get them to an actual diagnosis. So that process is ongoing and we're very happy just overall in terms of understanding that there is this addressable opportunity in terms of getting patients to a quicker diagnosis. And there's also an interest from the physician perspective with a lot of aha moments to get patients to this particular diagnosis. So that process is ongoing.

Got it. Thanks, John.

Thank you. This concludes today's question-and-answer session. I will now hand back to David Meeker for closing remarks.

Well, thank you again for tuning in this morning, as you heard, hopefully understood. We're really excited about where we are. We've made great progress and set ourselves up for some interesting and pretty important milestones in the fourth quarter and a lot that's going to continue to

in 2026. So look forward to the next update. Thanks all.

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