Rhythm Pharmaceuticals Q3 Earnings Call Highlights

Key Points

• Third-quarter sales rose 29% sequentially to $92.1 million, driven primarily by strong U.S. demand for IMCIVREE in acquired hypothalamic obesity. Reimbursed patients increased 20%, while coverage reached approximately 60% of Medicaid lives and 75% of commercial lives.
• Rhythm launched IMCIVREE in Japan and is advancing European reimbursement efforts, with country-level launches expected to begin in Germany in 2027. Japan could represent a 5,000-to-8,000-patient opportunity, although two-week prescription limits will constrain the first year.
• The company plans Phase III studies of bivamelagon in acquired hypothalamic obesity and Prader-Willi syndrome, while revising its LG Chem agreement to reduce royalties to 1% in exchange for $350 million in payments through 2029. Rhythm ended the quarter with about $320 million in cash and plans an initial $250 million draw from a new term loan facility.

Rhythm Pharmaceuticals NASDAQ: RYTM reported third-quarter global net product sales of $92.1 million, up 29% sequentially, as the company cited a strong early U.S. launch for IMCIVREE in acquired hypothalamic obesity, or acquired HO. The company also outlined plans to advance bivamelagon into Phase III studies for acquired HO and Prader-Willi syndrome, while expanding its international commercial footprint.

Chairman, Chief Executive Officer and President David Meeker said the U.S. launch had generated strong demand and favorable early reimbursement trends. “Start forms are growing as expected, with encouraging market access translating to strong revenue performance of $92 million for the quarter,” he said.

U.S. acquired HO launch drives growth

Hunter Smith, chief financial officer, said $67.5 million, or 73%, of third-quarter product revenue was generated in the United States. The acquired HO launch was the primary driver of the company’s sequential revenue growth and accounted for the significant majority of the increase in reimbursed patients, he said.

Rhythm reported that the global number of reimbursed patients on therapy increased 20% during the third quarter. Revenue increased from $71.3 million in the second quarter to $92.1 million in the third quarter, including $15.1 million of U.S. growth. More than 90% of that U.S. increase was attributed to demand from acquired HO patients, Smith said.

Jennifer Lee, executive vice president and head of North America, said Rhythm had received more than 700 acquired HO patient start forms since IMCIVREE launched March 19, including forms for 71 clinical-trial patients. The company has received start forms from more than 500 prescribers, including about 200 first-time acquired HO prescribers during the third quarter.

About 25% of acquired HO prescribers had written two or more IMCIVREE prescriptions, compared with 20% at the end of the second quarter. Eighty percent of prescribers have been endocrinologists, split evenly between adult and pediatric endocrinologists, Lee said.

Rhythm said payer coverage continued to improve. As of the end of the third quarter, IMCIVREE policies for acquired HO covered about 60% of Medicaid-covered lives and about 75% of commercial-covered lives. Seventy-five percent of approvals had occurred at the prior-authorization stage, while more than 80% of approvals came within 60 days of receiving a start form.

Lee said the company expects a steady launch trajectory because acquired HO diagnosis and treatment remain patient-by-patient processes. She said physicians are still being educated on identifying the condition, validating suspected diagnoses and incorporating IMCIVREE into treatment decisions.

Japan launch and European market access efforts

Rhythm launched IMCIVREE for acquired HO in Japan on Oct. 14, following approval from Japan’s Ministry of Health, Labour and Welfare and inclusion on the country’s National Health Insurance Drug Price List. The company said the approval arrived less than six months after the U.S. approval.

Yann Mazabraud, executive vice president and head of international, said Rhythm estimates the Japanese acquired HO population at 5,000 to 8,000 patients. Its field teams have engaged with 300 of 350 priority hospitals and identified more than 1,000 patients who may be eligible for IMCIVREE.

Japan’s launch will face a structural limitation during its first year: prescriptions for newly launched drugs are limited to two-week supplies, requiring patients to return to hospitals every two weeks for continued treatment. Rhythm expects that restriction to be lifted in November 2027, after which eligible patients may receive up to three months of medication supply. Mazabraud said the company anticipates a greater commercial contribution from Japan in the second and third years after launch.

In Europe, Rhythm estimates there are about 10,000 acquired HO patients. The company said the final German G-BA process before launch is nearing completion, while reimbursement dossiers have been submitted in France, Italy, the United Kingdom, Spain and the Netherlands. Rhythm continues to expect European country-level launches in 2027, beginning with Germany.

Bivamelagon development and revised LG Chem agreement

Meeker said Rhythm plans to initiate a 52-week Phase III study of bivamelagon in acquired HO, with body mass index as the primary endpoint. The company expects to begin screening patients at initial sites by the end of 2026 and dose the first patients in January.

Rhythm also plans to engage regulators with the goal of beginning a six-month Phase III Prader-Willi syndrome study in 2027. Hyperphagia, measured by HQ-CT, is expected to serve as the primary endpoint. Meeker said the company expects to collect BMI data in that study, though regulators typically seek 12 months of data for BMI or weight-change endpoints.

The company amended its bivamelagon license agreement with LG Chem, reducing projected cross-portfolio royalty obligations from an estimated 5% to 7% under the prior agreement to a flat 1%, assuming U.S. approval for bivamelagon. In return, Rhythm will pay LG Chem $350 million in installments through September 2029.

• $70 million is due 15 days after closing.
• $100 million is due in September 2027.
• $100 million is due in September 2028.
• $80 million is due in September 2029.

The revised agreement also includes existing development and commercial milestones of $205 million, now payable on MC4R portfolio sales, and an additional $200 million commercial milestone if the portfolio reaches $3 billion in calendar-year sales. Smith said the present value of the $350 million payment stream will be recorded as research and development expense in the fourth quarter.

Financial position and outlook

Rhythm ended the quarter with approximately $320 million in cash equivalents and short-term investments. The balance did not include proceeds from a new term loan facility or the initial LG Chem payment.

The company entered a five-year term loan facility providing up to $750 million, including a $500 million commitment and an additional $250 million available by mutual option. Rhythm plans an initial $250 million draw. Borrowings carry interest at SOFR plus 4.6%.

Third-quarter R&D expense was $52.5 million, while SG&A expense totaled $66.8 million. The company reported a GAAP net loss of $0.61 per diluted share and approximately $3 million of cash used in operations.

Rhythm updated its 2026 non-GAAP operating expense guidance to $360 million to $380 million, including $165 million to $175 million in R&D and $195 million to $205 million in SG&A. The reduction in the R&D midpoint reflected research and formulation-development activities that are now expected to occur in early 2027 rather than late 2026.

About Rhythm Pharmaceuticals (NASDAQ:RYTM)

Rhythm Pharmaceuticals, Inc is a biopharmaceutical company focused on developing and commercializing therapies for rare genetic diseases of obesity and related metabolic disorders. The company's work is based on the melanocortin-4 receptor (MC4R) pathway, which plays an important role in regulating hunger and energy balance.

Rhythm's principal product is IMCIVREE (setmelanotide), a targeted therapy designed to restore impaired MC4R pathway signaling. In the United States, IMCIVREE is approved for chronic weight management in adults and children at least 6 years old with obesity caused by certain genetic deficiencies, including POMC, PCSK1, or LEPR deficiency, as well as Bardet-Biedl syndrome.

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