Rhythm Pharmaceuticals Inc (RYTM) 2021 Q4 法說會逐字稿

Thank you for standing by, and welcome to the Rhythm Pharmaceuticals Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call. (Operator Instructions) As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, David Connolly with Rhythm Pharmaceuticals. Please go ahead.

Thank you, and good morning. I'm Dave Connolly, Head of IR and Corporate Communications here at Rhythm Pharmaceuticals. For those of you participating via conference call, the accompanying slides are available and can be controlled on the Events section of the Investors section of our website at ir.rhythmtx.com. This morning, we issued a press release that provides fourth quarter and year-end 2021 financial results and a business update, which is also available on our website.

As listed on Slide 2 is our forward-looking statement. And I'll remind you that this call will contain certain 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 factors, including those discussed in our most recent annual report on file with the SEC. In addition, any forward-looking statements represent our views only 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.

And on Slide 3, is a list of today's speakers. We're all here today in Boston. David Meeker, Chair, President and Chief Executive Officer is here; Linda Shapiro, our Chief Medical Officer; Yann Mazabraud, our Executive Vice President, Head of International; Hunter Smith, Chief Financial Officer; and Jennifer Chien is also here for Q&A, she's Executive Vice President, Head of North America.

And with that, I'll turn the call over to David.

Thank you, Dave, and good morning, everybody. Thank you for tuning in this morning. So we're really pleased to report out another strong quarter, wrapping up what was an incredibly important year for Rhythm. And today, we'll take you through some of the more recent highlights, which are captured on Slide 5.

First and foremost is, we continue our preparations for BBS launch. And hopefully, most of you have had a chance to review or see or tune in to our event about 2 weeks ago where we heard from Mary Morris, a caregiver, a mother of 2 children with Bardet-Biedl Syndrome, and I'll speak a little more about Mary's story in a moment. And we also heard from 2 of the experts, Dr. Haws and Dr. Conroy, and that session gave us all, I think, a much stronger sense of both the challenges faced by individuals and families looking at BBS as well as how the experts view this community coming together and the ultimate opportunity for setmelanotide.

As you know, we heard recently from the FDA requesting some additional analyses. No new data was required but additional analyses, all of which we felt were good, strong, supportive of the overall file and then perhaps, ultimately, a better way of looking at the data. So no issue there. But it did come with an additional 3-month delay in our PDUFA date, which is now set for June 16.

We also indicated in our recent communication that we had -- we made the strategic decision to remove Alstrom syndromes from the file in Europe. This was based largely on a calculation that we didn't want to prolong the review in Europe, and there was a risk that engaging more around the Alstrom opportunity that might do that.

Also strategically, I think as we look at market access opportunities in Europe, it is advantageous to go in a layered way. I think going to the authorities with the combination of BBS and Alstrom's made it a little more of a complicated file. So again, from a very strategic standpoint, we decided to withdraw Alstrom's at this time from our European application. There's no change to our plans for the U.S.

Second, we're going to hear from Yann Mazabraud today about our international. And I have come to understand, believe, I've spent time in Europe that if you can get it right internationally in a rare disease opportunity and more specifically in Europe, you can pretty much get it right anywhere. It's some of the more challenging healthcare systems in the world, and you'll hear from Yann about exciting progress in that sphere.

We're also very pleased with our U.S. commercial experience to date. I'll spend one slide on that, but it's going as predicted and laying the foundation for our BBS launch. And finally, you'll hear from Linda as she takes us through a couple of different programs that we're excited about, meaning they are progressing well. We have a number of milestones met with a number of these trials now underway. And again, she'll speak to that in a little more detail.

Next slide, #6. So this is a picture of Mary Morris and her family, her 2 children, Ashley and Carly. And again, if you have a chance to listen in, what we heard during that session is just the incredible challenges that individuals living with Bardet-Biedl Syndrome and their families face as they deal not only with obesity, but they deal with the underlying cause that genetically driven central defect, which causes the increased hunger. And we focus -- this is hyperphagia. This is not the hunger that you and I know. And again, when you listen to individuals who are suffering and are living with somebody suffering from it, you begin to understand. I don't think we can fully understand if you don't experience yourself, but you begin to understand that this is not what you and I experience when we miss a meal.

We heard yesterday at our company-wide meeting from a caregiver who told the story of her family and their son's challenges of living with Bardet-Biedl Syndrome. It wasn't -- it was unique, of course, different in a sense that a completely different individual and family, but the nature of that, she spoke for an hour. And literally, 55 minutes of the hour was focused on the hyperphagia and the challenges of living with hyperphagia, the consequence, the obesity, the weight gain, the other factors, of course, were important. But what is so striking here is that this is a different disease. These are different diseases from what we see in patients who are living with general obesity.

So again, you can hear more about that if you tune into our session. Slide #7 just highlights again the progress or how we think about the frame for our BBS preparations. First is understanding the unmet medical need, which I just spoke to, the importance of the hyperphagia, but also the rapid weight gain, the severe obesity, which occurs early and incurring fact that it occurs early means that the complications of obesity come with it and they start early and so the cumulative effect over a lifetime is much greater.

The solution growing confidence in the solution, which is setmelanotide, I think, is a targeted therapy addressing the MC4 receptor melanocortin-4 pathway, which governs hunger and energy expenditure. The story is not completely in the numbers. The numbers are important. The amount of weight loss is important. The scales are important. But as you listen to the stories, you get a much better sense of how, in fact, a drug like setmelanotide can change the overall picture.

And finally, we spoke about our preparations for launch and feel really good about that. A number of us, we have a highly experienced team here led by Jennifer Chien, and a number of people that both she and I have worked with over the years as well as some new people to us who come from other deeply experienced background. And that's what it takes. I think to be successful in a rare disease are individuals with an entrepreneurial mindset and the ability to problem solve in a customized way. We've made great progress, and I'll speak a little more about that in the next slide in terms of building this community and helping more and more patients come to diagnosis. And as I said, organize the overall opportunity.

So next slide, #8. Now we spoke on the call about 350-plus individuals who have been identified. We spoke about the process of identifying those individuals, which consisted of going to physicians where we had a strong understanding that they were caring for an individual with Bardet-Biedl Syndrome, the goal of those visits were to connect in, to validate and confirm that, in fact, they were still following that patient. And so that represents one part of this group, the identified and diagnosed group. We also know that there's a large number of patients out there who are diagnosed today but may not be actively engaged in the system. That's another opportunity as we've done genetic testing.

The genetic testing, our current panel of 80 genes includes 23 genes for Bardet-Biedl. And we know the hit rate when you do screen an individual with a history of early-onset obesity and hyperphagia for Bardet-Biedl is on the order of 1.5% of those individuals will come back biallelic for Bardet-Biedl gene. Now that doesn't mean that they will meet the diagnosis for Bardet-Biedl, but that does create a road map to somebody whose probability of having Bardet-Biedl may be slightly higher. And so again, following in the suspected category.

And as always in rare disease by far, the largest part of the population is undiagnosed. It is a syndrome. It has advantages in the sense that if you can connect the dots, you have a better chance of making a diagnosis, but you don't connect those dots if you haven't seen one in a reliable way, and you can look at something that's obvious to an expert as a non-expert, and you just miss it. And so as a result, many of these patients are on this prolonged diagnostic odyssey, where their ability to get a diagnosis despite some classic parts of the presentation, they may see 5 to 10 different physicians before somebody puts all it together and says, you may have Bardet-Biedl Syndrome.

So we feel good about the 350-plus patients we talked about. The fact that the PDUFA date has been pushed out by 3 months doesn't change anything. Foundationally, everything remains the same, and we'll continue those efforts and really look forward to June 16 when we will hopefully be able to move into a commercialization phase.

Next slide, #9. So as I said, we're really pleased with where we are in terms of our initial commercial experience and we reported $3.2 million in revenues for 2021 with $1.8 million in the last quarter. As or more importantly, is what we've learned, logistics are in place, contact and interactions with payers is going well. And the -- perhaps one of the most important things as we bring up our patient services group and we have the opportunity to interact directly with patients, who have consented and so they want to be in contact with Rhythm for all the services we can provide, it gives us greater insights into how we can best support this population, both in terms of disease education, what they can expect, the onboarding as they start therapy and what they can expect from therapy and just again, general support in a rare disease world that they can't always get from the healthcare system itself.

And finally, on Slide 10, I just want to remind you all that we announced in December our partnership with RareStone for the opportunity in China. Really excited about that. It's hard to do, maybe not so hard to do the deals, I think it's hard to find the right partner. And as we've interacted over the past 2 months, our confidence that we've got the right partner in RareStone is growing. They are -- we're completely aligned from a cultural standpoint, from a philosophical standpoint. They're highly experienced, having taken a couple of different products through the regulatory process, and they are well on the way with filings related to Rhythm's opportunity itself. And we're quite hopeful that in that exercise, they will be in a position to be participants in our Phase III effort, the M&A trial specifically and contribute to that.

So with that, I'd like to turn it over to Linda Shapiro, our CMO, who'll take you through our regulatory and clinical update. Linda?

Great. Thank you very much, David. Let's begin on Slide 12. So as David provided an update on the regulatory efforts relative to Bardet-Biedl Syndrome and Alstrom syndrome, I intend to focus on our robust clinical development efforts. Setmelanotide and Rhythm's approach to rare genetic diseases of obesity is truly unique. We have known for decades that the MC4R pathway regulates hunger, energy expenditure and consequently, bodyweight. And for just as long, it has been a target of biopharma companies looking to develop medications to impact it. With setmelanotide, Rhythm has shown we can do just that.

Setmelanotide is the first-ever MC4 receptor agonist that targets the root cause of the debilitating hyperphagia and early-onset severe obesity that are the hallmarks of rare genetic diseases of obesity. In addition to our unique precision medicine, setmelanotide, we are undertaking a unique approach to obesity driven by our belief, which is supported by decades of research that all obesity is not the same.

Yesterday, we recognized Rare Disease Day with an internal employee engagement event, featuring a patient caregiver speaker, who was truly inspiring, along with some artwork generated through team-building exercises to shine a light on rare diseases. Importantly, for the greater Rhythm community, Rare Disease Day falls at the beginning of Obesity Care Week, which is a campaign to increase awareness, education and action on the complexities and chronic nature of obesity as a disease as well as on weight bias and stigma.

And Friday, March 4, is World Obesity Day. With this year's theme of everybody needs to act, encouraging all of us to work together to ensure happier, healthier and longer lives for everybody. With that in mind, I'd like to encourage you to check out leadforrareobesity.com, a website where the Rhythm community offers educational resources, educates on the importance of genetic testing and shares stories. We welcome you to join us in leading the effort to provide education and access to treatment for rare diseases of obesity.

And with that, let's move to our clinical development programs. Slide 13. We are reporting updates on several clinical trials today. In addition to completion of enrollment in the hypothalamic obesity trial, which we'll talk about shortly, today, we announced that the first patient has been dosed in our Phase III pediatric trial, evaluating setmelanotide in patients aged 2 to less than 6 years with obesity due to biallelic, POMC, PCSK1 or leptin receptor deficiency or with a clinical diagnosis of BBS with genetic confirmation.

In January, we announced the dosing of the first patients in the Phase II DAYBREAK clinical trial, which is evaluating setmelanotide for the treatment of severe obesity and hyperphagia, potentially caused by a genetic variant in 1 or more of 31 genes with strong or very strong relevance to the MC4R pathway. DAYBREAK is the most comprehensive Phase II trial ever initiated in rare genetic diseases of obesity.

Also in January, we announced the dosing of the first patients in the Phase III Switch trial, evaluating a once-weekly formulation of setmelanotide in patients 6 years of age and older with rare genetic diseases of obesity, who are currently taking the daily formulation of setmelanotide. And we expect to initiate the Phase III M&A trial in the first half of 2022. We faced some delays due to COVID and the Omicron surge with our CRO and other vendors.

Slide 14. We also have quite a few data readouts coming in the next few months. Several patients with SRC1 deficiency or SH2B1 deficiency advanced from our exploratory Phase II Basket study to our open-label long-term extension study, and we are looking forward to reporting 12-month data from those patients at a congress this spring.

As a reminder, last year, we presented 3-month data in patients with SRC1 that showed a mean weight reduction of 7.9% in adult responders and a BMI score reduction of 0.48 in responders younger than 18 years. In SH2B1, adult responders achieved a mean reduction of 7.2% and there was a mean reduction in BMIz score of 0.25 in responders younger than 18 years.

Also, we look forward to a fulsome presentation of 24-month data in patients with Bardet-Biedl Syndrome. Dr. Bob Haws presented a preview of the BBS data last month with data from 19 patients at 24 months, showing a mean reduction in body mass index from pivotal trial baseline of 14.3%, a mean reduction in body weight from pivotal trial baseline amongst 6 patients 18 years of age older of 14.9% and a mean reduction in BMIz score from pivotal trial baseline among 12 patients younger than 18 years of 0.72.

We are also looking forward to presenting 2-year data for patients with biallelic POMC PCSK1 or leptin receptor deficiency obesity. Importantly, we expect these data to continue to build the case for long-term therapeutic value of setmelanotide as the long-term data we presented to date have shown consistently that setmelanotide achieved sustained meaningful effect.

Slide 15. Now let's turn to hypothalamic obesity. Hypothalamic obesity is a rare acquired form of obesity that develops following injury to the hypothalamic region of the brain that control -- that contains the MC4 pathway neurons and are responsible for controlling physiological functions such as hunger and weight regulation.

Hypothalamic obesity most frequently follows the development of a craniopharyngioma, a rare brain tumor or its treatment by surgical removal or radiation. Approximately half of patients with craniopharyngioma experience rapid weight gain, an insatiable hunger in the first 6 to 12 months following tumor resection and ultimately develop severe obesity. While clinical and preclinical evidence suggests an apparent MC4 deficiency in these patients, the impact of the injury to the hypothalamus and its effect on the MC4 receptor itself remain difficult to ascertain. Currently, therapeutic options are very limited for patients with hypothalamic obesity.

Slide 16. Today, we announced that we completed enrollment in our Phase II open-label proof-of-concept study evaluating setmelanotide in individuals with hypothalamic obesity. We enrolled 18 patients older than 6 years in this study. The trial consists of 16 weeks of treatment with setmelanotide administered once daily by subcutaneous injection, including an initial dose-titration period. The primary endpoint is the proportion of patients with 5% or greater reduction in BMI from baseline after 16 weeks of setmelanotide treatment compared to a historic control of less than 5% in this patient population.

We are fortunate to have one of the country's leading key opinion leaders in hypothalamic obesity as a principal investigator for this trial, and Dr. Christian Roth of the endocrine division of Seattle Children's Hospital. We're looking forward to showing preliminary data from this trial in the middle of this year.

And with that, I'll turn the call over to Yann for an update on international.

Thank you, Linda, and good morning, everyone. As most of you know, it is crucial to be in Europe and in other key international markets to build a successful rare disease company. Over the last 18 months, we've made a lot of progress building out our international organization. We are now 20 people with most of the position being across EU4 plus the United Kingdom and also 4 position in 4 other key regions of country with strong potential, namely the Netherlands, the Nordics, Turkey and Argentina.

We are highly skilled and very engaged team, relentlessly working closely with the main European centers of excellence and their referral networks to increase disease awareness and drive diagnosis, engaging and partnering with the local payers and providing operational support for Rhythm robust clinical operation as Linda just described for you.

Before to talk to you about our market access highlights, I want to say a few words about the European rare disease landscape and how both the patients we serve and Rhythm will benefit from it. In the last 20 years, I've had the privilege to launch and commercialize more than 10 rare disease drugs in Europe, in Latin America and in the U.S. and the European rare disease ecosystem is by far better organized than any of the others.

More than 20 years ago, European countries began a very well-structured approach to rare disease, beginning with rare disease national plans with dedicated budget and national centers of excellence, leading to better diagnosis and care for patients with rare disease. Then we saw the advance of the European rare disease networks, ultimately leading to increased expertise and diagnosis acceleration.

Specifically for the rare genetic disorders of obesity, we are extremely lucky as a company to leverage more than 30 years of research and clinical excellence in many large university hospitals in the most important European cities. Before us, before Rhythm, there were already patients with rare genetic disorders of obesity diagnosed. It has accelerated and increased since we started our many clinical trials back in 2014. And there are now more than 100 patients diagnosed with biallelic POMC, PCSK1 or LEPR deficiency obesity being cared for, in sorry, European centers of excellence.

Another example, in France, where the French HAS and the national reference center for rare genetic disease of obesity introduced last summer, formal guidelines for the diagnosis and management of patients with rare genetic disease of obesity.

Next slide. As you can see on this time line, we've made tremendous progress in the international markets since Q3 2020 from submitting our market authorization application for IMCIVREE, POMC, PCSK1 and LEPR in July 2020, followed by the European and United Kingdom authorization in July and September 2021. We have been very busy.

We have engaged very early with the most important European HTA bodies, which is without any doubt, the #1 key success factors in terms of market access. And today, I'm happy to report many significant successes across Europe and more importantly, our first commercial sales, which are expected in Germany and France in the second quarter of this year.

Next slide. And just before to give you some details about these 2 countries, I am proud to say that there is a genuine excitement about IMCIVREE in Europe. And along this line, I'm very proud to report that IMCIVREE has been highlighted 2 weeks ago in the EMA's 2021 edition of its human medicines highlight and listed as 1 of the 8 drug with an outstanding contribution to public health within a total of 92 positive opinions, [20] last year.

Next slide, Germany. So Germany is, as you know, the largest and most important country in Europe from a healthcare business point of view. In Germany, drugs classified as lifestyle drugs, which includes those designed to effect weight loss, smoking cessation, hair loss are not eligible for reimbursement.

Today, we are excited to announce that the German Federal Joint Committee, or G-BA, excluded IMCIVREE from its lifestyle drug for POMC, PCSK1, or LEPR deficiency obesities. This first-ever exclusion marks an important recognition that IMCIVREE is designed to treat rare genetic disease that manifests as obesity and that this group of disease is distinct from general obesity. With this exemption status, IMCIVREE will now be eligible for national coverage and reimbursement, and we are looking forward to first commercial sales in Germany in the second quarter of 2020.

Next slide. France now, last month on the 19th of January, so 5 weeks ago, the French Haute Autorite de Sante or HAS granted paid early access for IMCIVREE for patients with POMC, PCSK1 or LEPR deficiency in obesity, which means that any obesity specialist in France can now prescribe for genetically-confirmed POMC, PCSK1 or LEPR patients 6 years and above. This is a very strong recognition of the important medical need on the value of setmelanotide, but also a testament to strong support coming from the obesity and rare genetic obesity communities and KOL, which we enjoy in France.

Next slide. We will have more pending commercial sales to report in the coming months. In 2021, we have submitted the POMC, PCSK1 or LEPR reimbursement dossier in EU4 plus the United Kingdom, plus the Netherlands, plus Israel, and we have already started to work at the next filing for Bardet-Biedl Syndrome.

You just heard about Germany and France. Initial feedback from Spain and Italy are very positive. And in the U.K., following the selection of highly specialized technology, which is, by the way, a very high bar to reach, we've had so far very positive interactions with NICE and are on time for our market access plan.

Next slide. Last but not least, a few words about the Bardet-Biedl Syndrome indication in Europe. We are expecting a CHMP approval in the second semester of this year. The estimated European prevalence is 2,500 patients. And here again, there are a lot of patients already diagnosed more than 1,500 actually.

Lastly, I would like to say that we are in a very good place in the most important European countries, while opening new horizons in other key countries around the globe with a high sense of prioritization and focus.

Now I would like to turn the call over to Hunter to review our fourth quarter and full year 2021 financial results.

Thank you, Yann. Turning to Slide 26. As David mentioned at the start of the call, we are pleased to report product revenue of $1.8 million in the fourth quarter of 2021, an increase of 80% over the third quarter. For the full year 2021, which is effectively 3/4 of sales, revenues were $3.2 million. All revenue came from sales of IMCIVREE in the United States, and there were no revenues during the comparable period of 2020.

Loss from operations was $50.9 million in the quarter, an increase of $15 million over the comparable quarter of 2020. For the full year 2021 loss from operations was $170.1 million, an increase of $33.5 million over the prior year. For both periods, these increases were due to increases in both clinical trial activity as well as higher headcount across our research and development, commercial and G&A functions.

We expect our operating expenses to continue to increase during 2022 due to costs associated with our expanding clinical development efforts as well as commercialization activities related to potential IMCIVREE launch in BBS and ongoing efforts across Europe. Our share count was 50.3 million basic and diluted shares and common loss per share was $0.85, an increase of $0.06 over the fourth quarter of 2020. And for the full year, our share count was 49.6 million basic and diluted shares and loss per common share was $1.40, a decrease of $1.64 over the full year 2020.

We concluded the year in a strong financial position with cash, cash equivalents and short-term investments of $295 million, which we believe will be sufficient to fund Rhythm's operations into the second half of 2023. And now I'll turn the call back over to David for concluding remarks. Thank you.

Great. Thank you, Hunter. So I hope what you're taking away from this initial part of the presentation is that we feel great about 2021, but we're even more excited as we look ahead to 2022. A number of milestones, Linda took us through some that have already been achieved with the initiation of a number of these trials.

We're looking forward to some additional data readouts, which, again, it's -- obviously not in a position to predict, but these are exciting questions. How will we do in a hypothalamic obesity world or an MC4 receptor deficiency world? So again, we look forward to reporting out those results from those studies in and around the midyear.

Also, we'll have the long-term data that we'll continue to roll forward as we collect more data on those patients with biallelic deficiencies, genetic variants and those patients who we have studied in our existing ongoing Basket study, we rolled into the long-term extension.

And finally, the BBS world, as we've highlighted, and we'll continue to highlight, this remains an incredibly strong focus for Rhythm. It's extremely important that we get this right. There's a big unmet need. We think we have a meaningful solution, and again, feel good about our preparations to date for that.

So with that, we'll turn it back to the operator and open it up for questions.

(Operator Instructions) Our first question comes from the line of Phil Nadeau from Cowen and Company.

Congratulations on the progress. First question on the BBS launch. Can you discuss in a bit more detail what you can do between now and the June PDUFA to identify patients and physicians who could be amenable to IMCIVREE?

Thanks, Phil. So Jennifer, Jen who is joining us.

Thanks for the question. Although we were disappointed just in terms of the news of the delay, I would say that a lot of the work that we are doing right now until approval would be similar just in terms of the engagement that we are doing currently. So as David mentioned, there are various different areas that we have opportunities in terms of, one, validating the number of patients that were within our sphere already through the work that was done by our field teams and MSLs on ground. That work is ongoing.

In addition, there are several other opportunities in terms of, one, really finding the BBS patients that have already been diagnosed and are lost in the system, and we have very targeted ways to go about that activity; and two, then finding and diagnosing and expediting the diagnosis of patients who yet have -- not yet found a diagnosis. So a lot of those activities and engagement with physicians are ongoing, and we will also support an excellent launch as we move forward.

That's very helpful.

Go ahead, Phil. Yes.

Sorry, David. You go.

No, no, I was just going to build on that, referring you back to Jennifer and the team took everybody through it in a little more detail of the different tools that they're using, which included our genetic screening and exercise working with IQVIA on ICD-10 coding and algorithmically defining. So there's a number of things that we can do. And in the rare disease world, this never stops. You continue -- you don't saturate a market in a sense. You don't reach full penetration ever. I think it's an endless journey of continuing to increase awareness and these activities will over time continue to bear fruit. So sorry, back to you, Phil.

Perfect. That's very helpful. Second question is on the Phase II data in hypothalamic obesity. Can you discuss a bit what would be considered proof of concept there? How much weight loss versus changes in hyperphagia would you need to see to progress development?

Linda?

Sure. Thank you for that question. So similar to our other programs, demonstrating a clinically meaningful improvement in weight or body mass index or BMIz score would be adequate to demonstrate that proof of concept, and that's the way we've designed the trial instead of the primary endpoint.

Perfect. That's helpful. And then last question is on Germany. I think in the press release, you mentioned that the exclusion from the lifestyle list is a 1-year exclusion. Did I interpret that correctly? And if so, does that decision have to be revisited every year? Or is there a point at which it becomes a final decision that is perpetual?

No, thank you. No, no, it's not a 1-year exclusion. It's exclusion for life. So we'll enter this exclusion for the next hundreds of [years].

Our next question comes from the line of Derek Archila from Wells Fargo.

This is [Adam] on for Derek. I have just a few for you this morning. Do you believe the FDA requested additional analyses because they are questioning the efficacy in Bardet-Biedl or is it more a labeling consideration? And is there a possibility the FDA could complete their review before June?

Yes. So just to clarify on that, so what the FDA requested was analyses, which were not part of our prespecified endpoint. So when we put the file in, we put it in as, of course, you always do is based on your statistical analysis plan and your protocol, and they came back and asked for some which specifically had to do driven largely around analyzing the data by less than 18 and greater than 18. Our primary endpoint analyzed the group of patients as 12 and above, and of course, this introduced a confounding variable that those patients, of which there were a number, almost half of the primary analysis group who are between 12 and 18. And so that group is still growing. And so weight, in that case, was compounding.

So I think what they asked for, we're fully supportive. It's how we talked about the data, but these were not prespecified. So no, I don't think it introduces a risk, if you will, to the overall approval, but I do think requests that made sense.

In terms of their ability to complete it at an earlier time point, again, if they were focused on this, and we were the only file in front of them, I think for sure, they could complete this review in shorter than 3 months. That said, we're not the only file in front of them. And so we have little expectation that we're going to get an approval in advance of the prespecified June 16 date.

Sure. That makes sense. And then I suppose related to my last question, how large is that amended data package?

Thank you. That's a good question. In reality, it was over 300 pages. It was 100-plus data outputs of cutting the data, as David mentioned, across the age groups, also across gender with looking at weight BMI, BMIz score every which way you could imagine cutting the data that they asked us to cut the data. So it was quite a large package and therefore justifies their decision to take 3 months to review it.

The very encouraging news is no matter how we cut the data looked at it, it was all supportive of the same thing. So there wasn't a subgroup by any of those cuts where setmelanotide did not demonstrate a clinically meaningful improvement. So that was very encouraging. And now it's just a matter of time for FDA to review all of those data that they requested.

Our next question comes from the line of Joseph Stringer from Needham & Company.

Two from us. One, just given the recent request from FDA on BBS and Alstrom, just curious if that's changed your thinking or the design of the Phase III M&A trial in any way just in terms of data analysis there? And secondly, on the diagnosed BBS patients who may not be in the system or identified at an academic or medical center, how -- what's the reasons for why these diagnosed BBS patients are not sort of part of the system? Is it just that they're -- have a less severe phenotype or these are sort of older patients that have kind of gone to sort of live with the disease and just make up a significant portion of the BBS population? And maybe more specifically, how -- what are the specifics around sort of capturing these potential patients?

Yes. Thanks, Joe. So Jennifer will take your second question on the BBS diagnosis. With regard to the FDA and whether this recent communication changes our plans for M&A, no, there's no change. This was a set of requests, which were very specific to our somewhat unique trial design, which incorporated BBS and Alstrom as we analyze them together. And as I explained, we have the age greater than 12 issue. So they were very specific to the existing file. So no change to M&A. Jennifer?

So on the second question, I just wanted to make maybe a clarifying point. I think similar to many different rare diseases, there's certainly a large pool of patients that have not yet gotten to a diagnosis, but there also may be patients that are diagnosed, but may not be visible to the company. So for us, that's where it really lies because we have had field teams on ground, really educating different physicians and interacting with them and also trying to understand if they indeed do have a BBS patient on hand.

However, through those efforts, they may not have gotten to all of the physicians who have BBS patients on hand because our efforts were focused initially on obesity specialists or ped endos or endos, and some of these patients may be in the hands of other specialties, including PCPs and GPs as well.

The mechanism though, one of the mechanisms that we are using different terms of trying to identify those additional patients is, although there's not a specific BBS ICD-10 code, there is a code where BBS is one of several indications and the ability to use different claims to try to identify HCPs that more likely has a BBS patient because of the symptoms is one targeted way of really going about and trying to educate the right physician and interact with them and then once again try to understand if they have an already diagnosed patient under their care.

And maybe, Jen, could you just comment one other part of the question was, do you think these patients are sitting out there because they have a less severe form or they're just equally severe and unrecognized?

Yes. So I think that it could -- it does not necessarily mean that they're less severe. I think that in the case of different diseases where there are no therapeutic options, they may have been more persistent in terms of trying to identify the appropriate options in terms of managing their care. But over time, as they're -- they've gone to physician and then realized that there isn't anything effective, they may have been less persistent because there are just no therapeutic options. So the potential availability of a therapy like IMCIVREE may provide more hope in terms of engagement and opportunity from that perspective.

Our next question comes from the line of Michael Higgins from Ladenburg Thalmann.

My question, I guess, questions, I guess, are really focused on the upcoming data here before midyear and hypothalamic obesity, it's not genetically driven. So the outcomes that you're expecting, would these be different from the previous data set that you had before, maybe in terms of hyperphagia or weight loss?

Linda?

Thank you. That's a great question. So you're correct. Although the etiology is not genetic, it's acquired. Presentation is similar. So the outcomes actually are similar even though the etiology is different. So we are looking at the changes in weight and changes in hunger scores similarly and would anticipate a similar effect of setmelanotide in the patient population.

Okay. And a couple of quick follow-ups from that. If you could review for us again the control arm. I believe you had mentioned historic controls, what you're expecting for that? And then relatedly, too, here, the number of patients we may be seeing in that study.

Sure. So in the study, we have 18 patients who have been enrolled. It's an open-label treatment arm. So the control is a historic control. And it's based on data of patients who gain weight year-over-year after having the treatment for their craniopharyngioma or whatever tumor and therefore, the resultant hypothalamic obesity.

Many of these patients have been tracked very closely since the diagnosis of their tumor and their treatment. And so we have natural history on them and then the intervention of setmelanotide, and we're looking at the change in that trajectory curve as well as the absolute change over the treatment period.

So am I hearing their control is this is kind of a self-control based on their natural -- their own natural history, not in the group of hypothalamic obesity patients.

No. No, that's just an additional layer. So the historic control is beyond these patients, but we are able to get an additional layer to the individuals as well.

Maybe just one other comment. It's worth adding that this is -- it's acquired, as Linda said. And as a result, it's a much better organized, defined community. And so there is more information out there in that sense. And there's been a number of big unmet medical need. Again, if you tend to look into that as we obviously are doing a number of things have been tried, none with a really significant medical effect here. So a large unmet medical need, we'll see how we do here. But this is clearly a group that's presenting with clearly impairment in this pathway, consistent presentation. And so therefore, the hope that a drug like setmelanotide can make a difference.

Next question?

Our next question comes from the line of Jeff Hung from Morgan Stanley.

Of the over 350 BBS patients that Rhythm has identified, how many of them are in the CRIBBS registry? And then I have a follow-up.

Jennifer?

So the 350 patients that have been identified have really been through the Rhythm-specific efforts. We, at this point of time, do not know or have access to the physicians or patients that are in the CRIBBS registry. So I wouldn't be able to outline how much overlap there is between CRIBBS versus the patients that we have identified.

Okay. Understood. And then in the past, you've talked about the potential launch in BBS as a potentially slow ramp. Now that you've identified the 350 patients, what are your expectations for how long it might take to treat those patients once you have approval in BBS? Are there any constraints or gating factors on why they can't all be treated in a relatively short order?

Yes, Jeff, I think you're taking those comments from comments I've made in a number of different conversations. I wouldn't characterize it necessarily as a slow ramp. I'd characterize it as a characteristic rare disease ramp. And by that, I just mean that if you have a well-organized community, large indication, you write a script and somebody goes to a local CVS and picks it up, but that's a very different setting than the world that we live in. We need to get the whole system working.

As I pointed out, we have physicians who are perhaps writing for the first time a prescription for a drug at a rare disease price point, a $300,000-plus drug. We have a reimbursement process, which invariably requires a prior authorization. In a number of cases, patients will need to go through appeal, not necessarily because they were judged as not worthy. It's just that the system automatically says no, and then you go back and you educate and you can get the approval through.

So these are the factors that caused the startup to be quite lumpy. The additional 3 months, if you will, of course, continues to put us in a stronger and stronger position in the sense that the building of that community, the more patients who are putting up their hand and wanting to go on therapy. And I'll again, reference you back to these stories. Mary story, you can hear the story we heard yesterday at our all-hands meeting. These are individuals who need therapy and they today and I assume once the drug is approved, will continue to put pressure on the system to respond. So again, I'm not going to project, it's very difficult to project exactly what that means in terms of patient numbers over the first 6 to 12. But our confidence in where this is going and the opportunity here continues to grow. And yes, we'll be further along in June than we were in March or will be in March.

Our next question comes from the line of Corinne Jenkins from Goldman Sachs.

So I think that the approval in BBS in Europe is going to come relatively shortly or kind of around the same time as a lot of those market access decisions you're talking about. But I'm curious if they apply across the multiple indications.

Sorry, whether the exemption that we've got from Germany?

No. So like will market access apply to BBS once you've made kind of had those conversations with payers in Europe. Does that apply to multiple indications, or will you have to go back to them once you have the approval in BBS as well?

Yes. So Yann, the specific question is, we're going through presenting the initial approval for the POMC, LEPR, biallelic group, then we'll get BBS, do you have to go back again and represent each one of these health authorities, the BBS case?

Yes. So thank you, David. Thank you for the question. Yes, indeed, we have to do that. We have already started, by the way, both from an unmet medical need point of view and also a drug point of view we have started, and we are moving forward into a filing and a submission.

Corinne, it's an important question. And as Yann said, I'll just reinforce what he just said there is, I think the success we've had to date and looking forward, the success we anticipate, it is the early interactions and it's the relationships. And Yann and his team well over a year in advance have been working with these different health technology assessment groups and reimbursement teams within the country. So that's what allows -- we'll be going there with a new indication, but not as a new company or a new set of relationships.

Okay. That's helpful. And then with respect to the BBS launch and this kind of idea of 350 identified patients and even more potentially out there, just can you help me think about how quickly you should be able to drive that patient identification? And what are some of the efforts that are specifically required to help bring additional patients into that identified and diagnosed population?

So Jennifer, maybe you can speak a little bit. So I mean, we've highlighted a few of the things Jennifer just spoke to, including things like the testing. So we're doing broad-based genetic screening in patients who have this history of early onset obesity. BBS is one of the clear causes or drivers of that. Secondly, we talked about the algorithmically defined, if you will, ICD-10 coding exercise where we can -- as Jennifer said, that larger group, we can narrow down in that. So those are 2 areas which will continue to generate fresh leads. But Jennifer, maybe you can just speak a little more about the network effects and as we reach out and how to get connected with different -- and you grow from there. It's not random.

Yes. So I would say that there's been one, to the point that David just made relating to specific opportunities for diagnosis. I think that -- over the years, we've made strides just in terms of becoming much more efficient in our targeted disease education efforts than we were 10-plus years ago. And so hopefully, that is helping. And I will say that in terms of the various different opportunities that we have outlined in terms of how we are going about our specific disease education efforts from a field perspective, we have identified additional patients through those efforts, and they've been encouraging, which was also one of the reasons why we decided to increase our field teams as well to support these efforts and really expedite that patient identification.

So I think the other aspect is, once you do get positioned to our educated and suspecting, that can also have a trickle effect in terms of those physicians also being able to continue to identify additional patients along the way. So it is a trickle effect just in terms of our initial education efforts as well as the sustained ability for those educated communities to be able to continue to identify patients moving forward as well.

And Corinne, to that point, as Jennifer said, there's a little bit of if you build it, they will come. As you mentioned earlier, many patients have disengaged from the system because there's nothing there and they're tired of being told to go on a diet. Suddenly, there's a therapy, and they re-engage so they come out. Second is the -- as we build the community and you identify physicians who have an interest, there's a therapy, there's something to do, they decide they want to make this a little bigger part of their overall practice. That's the build it and they will come and that news tends circulate through the community and they say doctor so and so has a special interest, maybe you should go see that first.

And so again, these are the networking kind of effects that as you go and they're a bit exponential, hopefully, it starts maybe a little bit slow, but as you get it going, this becomes a very important driver of the overall process.

I think that one add and maybe going back to a question that was asked is in terms of severity and such, I do think that it is indeed the case that people who over time may get disheartened because of the lack of therapeutic options. And going back to a comment that we made in an earlier call, a lot of the patients that we have within our sphere and a lot of the patients that are within the sphere of the CRIBBS are younger and under 18 years of age. So there's still a lot of adults that likely have been diagnosed that are also in need of therapeutic options to be able to control and treat their disease.

And the percentage of patients in the CRIBBS were under 18.

So the percentage of patients that were under 18 was 80% in the CRIBBS registry.

Thank you, Jennifer. Corinne, any other questions?

That's all.

(Operator Instructions) Our next question comes from the line of Tazeen Ahmad from Bank of America.

David, can you give a little bit more color about what you mean by the metrics will be like a rare disease launch. Now you are an expert on rare disease launches, no doubt. But in this world, there appear to be quite a wide array of qualities of launches. So we're following an HAE launch right now that's going much better than people had expected, but we're also looking at other launches for other rare diseases, GHD, et cetera, which people are expecting to be slower. So where would you kind of comp the genetic obesity launch that you're managing and will continue to expand upon, if there is another rare disease just so that we have a better sense of what ramp expectations could look like? That's my first question.

And then secondly, in a real-world setting for BBS, what would you expect the discontinuation rate to be with users? And based on your conversations with physicians, how long do you think a doctor would keep a patient on drug before deciding if it's working or not?

Tazeen, thanks for helping organize my answer to your first part of the question. So a, it is hard to fully or specifically define these because there's a lot of unknowns. But I think as you framed it, so HAE hereditary angioedema, that's a population with existing therapies. It's been very well organized. So if you're entering into that world today, you have the benefit of coming in on the back of all the work that's been done previously, patients are identified, what to expect from therapies there, treaters are in place. So that, for sure, if you have a compelling offering is a world where you could have a rapid uptake in a rare disease sense.

Cystic fibrosis, another example of a very well-organized community. There's newborn screening. Patients are diagnosed early. There's well-established centers of excellence around the world. Again, you bring a therapy compelling offering into that group, rapid uptake in a relative sense.

The other groups, you -- and for better or worse, I think BBS is in that other group. We're the first therapy in. And in a disease which has all of the classic elements here of no attention, nothing to do about, disengagement, as Jennifer highlighted, over time. And so we have to build it. So yes, we are going to be in that group.

I'll give you one other example. Again, as you know, coming out of Genzyme, the lysosomal storage disease world, those were diseases that when they first launched looked more like BBS or worse in the sense that fewer patients identified, maybe not all of the signs and symptoms that BBS has -- a patient with BBS has, which gives them, if you will, an advantage in getting diagnosed. And so they started slowly.

Subsequent offerings that came in after that world had been built and was well established had the potential for a much more rapid ramp. So I would measure it based on sort of, obviously, your starting point and the degree of organization within the community. So yes, we're in a bit more of a desert here. But in a relative sense of those that are starting fresh, I got to say, having 350-plus and I'll put the emphasis on plus, having 350-plus patients as a starting point in the U.S. only, Europe, much better organized and many more to start with, that's pretty good. So I'm expecting us to do better than the others, but it's still going to be lumpy and it will have fits and starts, if you will.

The second part of your question is on real-world discontinuation rates here. We're still getting our arms around this. Clearly, not every patient responds, not every patient responds in exactly the same way. But I have to say what we're hearing over and over again is weight is not necessarily the best measure of response. And so some patients may lose very significant amounts of weight. Other patients may not be that overweight, and we heard a story again yesterday that was told where the patient's family with just incredible discipline was managing the caloric intake. And so that patient's total weight was -- they were overweight, they were obese, but clearly not as great as it might be if they lived in an unrestricted environment.

That said, the hyperphagia that the child and the family were living with was devastating. And so they may not demonstrate so much change in weight from baseline because they were already so tightly controlled, but the opportunity to transform their life as much is equally great. So I think the hyperphagia is the variable that is in many ways going to dictate the continuation rate. We'll lose people for many different reasons. Again, some related to the drug, side effects, some unrelated to the drug. So I can't give you a number, but I can tell you that I am optimistic or increasingly optimistic that there's a number of factors, which will cause the patient to adhere.

Remember, when they go off the drug and we've seen this in our trials where we had a randomized withdrawal in our POMC, LEPR group, the hunger came back very quickly, and we've heard this anecdotally as well. And so there's a reminder that your drug was doing something. You go off, you feel it, you may want to go back on in that setting. So again, things that give me hope that we may have reasonably good compliance.

Our next question is a follow-up from the line of Michael Higgins from Ladenburg Thalmann.

Just looking ahead into data coming up in the first half where we see initial data from Phase II and MC4R patients in the hypothalamic as well as the long-term data. Just looking for some patient numbers. Can you share that with us ahead of time?

Yes. So I'm sorry, so the question is about the patient numbers in each of those groups? Is that...

In general, we have a number of groups reporting out there. So just maybe the hypothalamic obesity number, which we highlighted and then MC4R, which we haven't shared, but we can give you a general sense or I guess...

Great. So there's 18 patients in the hypothalamic obesity group. There's -- as we mentioned, the long-term data for Bardet-Biedl Syndrome and that was presented by Dr. Haws has 19 patients at 24 months. We're all in the range of this roughly a dozen patients, plus/minus in each of these cohorts is what we're anticipating reporting later this year.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to David Meeker for any further remarks.

Great. Well, thanks to everyone, again, for tuning in and for your questions, and we look forward to updating you on our progress as we go through the year. It's going to be an exciting year. Thank you, and (inaudible).

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.