Rhythm Pharmaceuticals, Inc. (RYTM) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company shows strong financial performance with a 54% YoY revenue increase and sustainable growth plans for BBS sales. The upcoming launch of IMCIVREE in hypothalamic obesity and positive payer feedback suggest potential market expansion. However, management's lack of clarity on certain aspects and the absence of a go/no-go decision for the PWS Phase III trial may cause some uncertainty. Considering the market cap, the overall sentiment is positive, predicting a 2% to 8% stock price increase over the next two weeks.
Key Financial Performance
Global IMCIVREE revenue $51.3 million in Q3 2025, a sequential 6% increase from $48.5 million in Q2 2025. The number of patients on reimbursed therapy increased by 10% globally during the quarter. Growth was driven by a high single-digit percentage increase in the number of reimbursed patients on therapy in the U.S. and a low double-digit percentage increase internationally. However, international revenue decreased by $3.4 million due to variability in ordering patterns and a one-time $3.2 million charge related to French reimbursement agreements.
U.S. IMCIVREE revenue $38.2 million in Q3 2025, representing 74% of total revenue. This was driven by a high single-digit percentage increase in the number of reimbursed patients on therapy and a $3.7 million increase in IMCIVREE dispensed to patients, indicating fundamental growth in demand.
International IMCIVREE revenue $13.1 million in Q3 2025, representing 26% of total revenue. Revenue decreased by $3.4 million quarter-over-quarter due to a one-time $3.2 million charge related to French reimbursement agreements and variability in ordering patterns for named patient sales in certain distributor markets.
R&D expenses $46 million in Q3 2025, compared to $37.9 million in Q3 2024, a year-over-year increase. Sequentially, R&D expenses increased by $3.7 million or approximately 9% over Q2 2025. The increase was primarily due to CMC work related to improving the formulation of bivamelagon and development of an auto-injector for RM-718, as well as increased headcount and stock compensation expense.
SG&A expenses $52.4 million in Q3 2025, compared to $35.4 million in Q3 2024, a year-over-year increase. Sequentially, SG&A expenses increased by $6.5 million or approximately 14% compared to Q2 2025. The increase was due to increased headcount costs and marketing costs associated with the upcoming launch in acquired hypothalamic obesity.
Cash on hand $416.1 million at the end of Q3 2025, bolstered by approximately $189.2 million in net proceeds from a follow-on equity offering completed early in Q3. This cash, along with projected revenue and planned spending, provides at least 24 months of runway.
Cost of goods sold (COGS) 10.7% of product revenue in Q3 2025, mostly attributable to cost of materials and royalty payments on setmelanotide to Ipsen. This is within the expected range of 10% to 12% of net product revenue.
Net product revenue year-over-year increase $18 million or 54% increase compared to Q3 2024, driven by growth in reimbursed patients and increased demand for IMCIVREE.
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Operating Highlights
IMCIVREE launch preparation: Rhythm is preparing to launch IMCIVREE for acquired hypothalamic obesity pending FDA approval. The PDUFA date is December 20, 2025. The company has expanded its commercial teams and is engaging with physicians and payers to ensure a successful launch.
Phase III and Phase II data: Rhythm presented robust Phase III data for setmelanotide and HO, and Phase II efficacy data for the next-gen oral MC4R inhibitor, bivamelagon.
Prader-Willi syndrome trial: Preliminary results from the exploratory Phase II trial in Prader-Willi syndrome are expected by the end of the year.
Global IMCIVREE revenue: Revenue reached $51.3 million in Q3 2025, driven by a 10% increase in the number of patients on reimbursed therapy. U.S. revenue accounted for $38.2 million, while international revenue was $13.1 million.
International expansion: IMCIVREE is now available in over 25 countries. Rhythm achieved reimbursement pricing agreements in France and expanded early access programs in France and Italy for HO.
Japan market potential: Japan is estimated to have 5,000-8,000 patients with acquired HO. Rhythm is building a local team and anticipates launching in 2027.
Financial strength: Rhythm raised $189.2 million in Q3 2025, ending the quarter with $416.1 million in cash. This provides at least 24 months of operational runway.
Operating expenses: Full-year 2025 non-GAAP operating expenses are projected at $295-$315 million, with R&D expenses at $150-$165 million and SG&A expenses at $145-$150 million.
Regulatory progress: The FDA and EMA accepted regulatory filings for HO. EMA approval is expected in the second half of 2026.
Market positioning: Rhythm is focusing on differentiating MC4R pathway diseases from general obesity to establish IMCIVREE as a foundational treatment for acquired HO.
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Risk or Challenges
Regulatory hurdles: The company is awaiting FDA approval for IMCIVREE in acquired hypothalamic obesity, with a PDUFA date set for December 20. Any delays or negative outcomes could impact the launch timeline and revenue projections. Additionally, European approval is not expected until the second half of 2026, requiring further regulatory navigation.
Market access and reimbursement: The company faces challenges in securing reimbursement for IMCIVREE in Europe, particularly in Germany, where it must seek an exemption from the Federal Joint Committee's exclusion list for lifestyle drugs. Establishing reimbursement in other European countries will also take time, potentially delaying revenue generation.
Supply chain and inventory management: Quarterly revenue was impacted by inventory effects, with increases in inventory at the specialty pharmacy affecting sales figures. This variability could pose challenges in accurately forecasting revenue.
Economic uncertainties: The company’s international revenue decreased due to variability in ordering patterns for named patient sales in certain distributor markets, highlighting potential risks from economic or market-specific factors.
Strategic execution risks: The company is preparing for a major launch in acquired hypothalamic obesity, which involves significant investment in marketing, sales, and patient education. Any missteps in execution could impact the success of the launch and subsequent revenue.
Clinical trial complexities: The exploratory Phase II trial in Prader-Willi syndrome is described as particularly challenging due to the complexity of the disease and the absence of a control group, which could complicate data interpretation and future trial planning.
Financial sustainability: While the company has a strong cash position, it is heavily reliant on the success of IMCIVREE for acquired hypothalamic obesity and other indications to sustain long-term growth. Any setbacks in these areas could strain financial resources.
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Guidance & Outlook
Launch of IMCIVREE in acquired hypothalamic obesity: Rhythm Pharmaceuticals is preparing to launch IMCIVREE for acquired hypothalamic obesity, pending FDA approval with a PDUFA date set for December 20, 2025. The company has expanded its commercial teams and is engaging with physicians and payers to ensure a successful launch.
Regulatory Approvals: The FDA and EMA have accepted regulatory filings for IMCIVREE in acquired hypothalamic obesity. European approval is anticipated in the second half of 2026, with launches in Europe potentially starting in Germany.
Market Expansion in Japan: Rhythm is building a local team in Japan, targeting a market with an estimated prevalence of 5,000 to 8,000 patients. Top-line data from a Phase III trial in Japan is expected in Q1 2026, with regulatory submission to follow.
Pipeline Developments: Preliminary results from a Phase II trial in Prader-Willi syndrome are expected by the end of 2025. A Phase III study with bivamelagon in acquired hypothalamic obesity is planned for 2026.
Revenue Growth Projections: The company expects continued growth in global IMCIVREE revenue, driven by increased patient access and new market launches.
Financial Guidance: Rhythm has updated its full-year 2025 operating expense guidance to $295 million to $315 million, with sufficient cash reserves to fund operations for at least 24 months.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the latest thinking on the trial design for the Phase III HO study for bVomeEalon?
A:The Phase III HO trial will be a double-blind randomized controlled trial, similar to previous MC4R pathway trials. The expectation is to provide a full year of data, potentially with 6 months of double-blind data followed by 6 months of open-label data. The primary endpoint will be percent BMI change, and the trial will include both children and adults. Feedback from the FDA is expected in the first quarter of next year.
Q:What are the efficacy endpoints for advancing IMCIVREE in PWS?
A:The goal is to achieve 10-20 patients on treatment for 6 months, with data available by the end of the year. Success will be judged on individual patient data rather than mean numbers, focusing on BMI percent change as the primary endpoint. Hyperphagia improvement is expected if BMI percent change is observed, but the company will not pursue a hyperphagia-only label.
Q:What are the reasons for extending the variability trial for IMCIVREE to 52 weeks and potentially adding sites?
A:The extension to 52 weeks allows patients to continue treatment beyond the initial 6-month endpoint if they wish. Adding sites is a contingency plan due to the high workload at the current site, Dr. Miller's site in Florida. No additional sites have been opened yet.
Q:What updates are there on the HO launch and payer conversations?
A:Patients in the trial will stay on the drug until they gain access, but there will be no early access program. Payer feedback has been positive, and the company expects to gain reimbursement even before formal policies are in place. The process will be similar to the BBS launch.
Q:How should investors think about the launch curve for hypothalamic obesity (HO)?
A:The company has a strong foundation from the BBS launch and has identified 2,000 potential patients. However, diagnosing HO patients may take time as they are more distributed among community endocrinologists. The launch curve may differ from BBS due to these factors.
Q:What is the anticipated gross-to-net ratio for HO compared to BBS?
A:The gross-to-net ratio for HO is expected to be influenced by the Medicaid-commercial mix, which was 50-50 for BBS. If Medicare access is achieved, the gross-to-net ratio will improve.
Q:What is the potential for additive benefit with setmelanotide in PWS patients on background VCA?
A:There is potential for complementary effects as diazoxide (VCA) and setmelanotide work through different mechanisms. There are no overlapping toxicities, so they can be used together safely.
Q:What are the international launch preparations for HO, particularly in Europe?
A:The company plans to launch in Europe in 2027, following a sequence similar to the BBS launch. Payers are already familiar with the drug, and the company will add staff to cover the larger HO patient population.
Q:Will the initial PWS data in December include a go/no-go decision for Phase III?
A:The decision may not be made immediately and could depend on the strength of the initial data. The company may wait for a complete data set before making a final decision.
Q:What impact might the German observational study findings have on prescribing decisions?
A:The study showed significant liver improvement in BBS patients, which did not correlate tightly with BMI change. This suggests additional benefits of the drug beyond BMI reduction, potentially influencing prescribing decisions.
Q:What information is available about the 2,000 potential HO patients?
A:These patients were identified through discussions with physicians, who either diagnosed them with HO or identified them as meeting the criteria for further evaluation. The process of confirming diagnoses is ongoing.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or lacked clarity on several questions. For example, they did not provide specific details on the anticipated gross-to-net ratio for HO compared to BBS, stating it was hard to predict. They also avoided committing to a go/no-go decision for the PWS Phase III trial, indicating that the decision might depend on incomplete data. Additionally, they did not provide detailed updates on the degree of participation or dropouts in the PWS trial extension to 52 weeks.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BBS POMC
Committee
Division Citizens
Division HC
Division Leerink
Division Wells
EMA
EU
Executive VP
FDA approval
HO Europe
HO FDA
HO disease
II trial
IMCIVREE
JMP Securities
LEPR BBS
LLC Research
MAGL
PDUFA date
POMC LEPR
Phase II
Phase III
RD
Research Division
SGA
Securities LLC
Slide
VP Head
access patient
equity offering
marketing authorization
need
pathway disease
prevalence
region
submission
target
RYTM Transcript
Rhythm Pharmaceuticals, Inc. (RYTM) Q3 2025 Earnings Call Transcript
Positive11-4
The company shows strong financial performance with a 54% YoY revenue increase and sustainable growth plans for BBS sales. The upcoming launch of IMCIVREE in hypothalamic obesity and positive payer feedback suggest potential market expansion. However, management's lack of clarity on certain aspects and the absence of a go/no-go decision for the PWS Phase III trial may cause some uncertainty. Considering the market cap, the overall sentiment is positive, predicting a 2% to 8% stock price increase over the next two weeks.
Rhythm Pharmaceuticals, Inc. (RYTM) Presents At Morgan Stanley 23rd Annual Global Healthcare Conference Transcript
Neutral9-9
Rhythm Pharmaceuticals, Inc. (RYTM) Q2 2025 Earnings Call Transcript
Unknown8-5
The earnings call summary indicates mixed results. The company has strong financial metrics, with a significant cash runway and international expansion. However, the Q&A section reveals uncertainties in clinical trials and a lack of clear guidance, which could dampen investor sentiment. The equity offering and increased expenses may also weigh on the stock. Overall, the market cap suggests moderate volatility, leading to a neutral prediction for the stock price movement over the next two weeks.
Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Q1 2025 Earnings Call Transcript
Unknown5-9
The earnings call presents a mixed sentiment. The company has positive developments, such as the completion of Phase 2 study enrollment and international expansion, but lacks specific revenue guidance, which is a concern. The Q&A reveals some uncertainties, like the FDA filing process and unclear patient mix insights. However, there are no significant safety issues, and the company is exploring new market opportunities, like China. Considering the market cap, these factors suggest a neutral stock price movement over the next two weeks.
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