Rhythm Pharmaceuticals, Inc. (RYTM) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Global Revenue for Q2 2025 $48.5 million, an increase of 29% quarter-over-quarter. Growth driven by increased sales in the U.S. and internationally, with U.S. revenue increasing by $7.6 million (31%) and international revenue by $3.2 million (24%). Growth attributed to increased patient numbers and early access programs for hypothalamic obesity in France and Italy.
U.S. Revenue for Q2 2025 $32 million, representing 66% of global revenue. Increased by $7.6 million (31%) over the prior quarter. Growth driven by mid-single-digit percentage increases in reimbursed patients and inventory adjustments at Rhythm Specialty Pharmacy.
International Revenue for Q2 2025 $16.5 million, representing 34% of global revenue. Increased by $3.2 million (24%) quarter-over-quarter. Growth driven by increased sales in France, the U.K., and Italy, as well as named patient sales in countries like Turkey, Greece, Poland, and the Czech Republic.
Net Product Revenues Year-over-Year Increased by $19.4 million (67%) compared to Q2 2024. Growth attributed to higher patient numbers and expanded access programs.
R&D Expenses for Q2 2025 $42.3 million, up from $30.2 million in Q2 2024. Sequentially increased by $5.3 million (14%) over Q1 2025. Increase due to CMC work for bivamelagon formulation, auto-injector development for RM-718, and increased headcount and stock compensation.
SG&A Expenses for Q2 2025 $45.9 million, up from $36.4 million in Q2 2024. Sequentially increased by $6.9 million (18%) over Q1 2025. Increase due to higher headcount and marketing costs, including stock compensation.
Cash on Hand at End of Q2 2025 $291 million. Strengthened by a $189.2 million equity offering in July 2025. Cash runway extended to at least 24 months, supported by anticipated revenues and planned R&D and commercial activities.
Cost of Sales for Q2 2025 11.4% of net product revenues. Expected to remain between 10%-12% of net product revenues for the foreseeable future.
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Operating Highlights
Phase III readout of setmelanotide in acquired hypothalamic obesity: The results showed a 19.8% reduction in BMI, consistent across all age groups and genders. Regulatory filings in the U.S. and Europe are on track for Q3.
Phase II bivamelagon trial: The 600-milligram cohort showed a 9% BMI reduction. Plans to initiate Phase III trials in 2026 after regulatory feedback.
IMCIVREE label expansion: Expanded to include patients as young as 2 years old, leading to increased prescriptions for pediatric and adolescent patients.
Geographic expansion: IMCIVREE is now available in over 20 countries, including early access programs in France and Italy for hypothalamic obesity.
Japan market entry: Building a team focused on regulatory, medical affairs, marketing, and market access.
Revenue growth: Q2 2025 revenue was $48.5 million, a 29% increase quarter-over-quarter. U.S. revenue grew by 31%, and international revenue grew by 24%.
Cash position: Ended Q2 with $291 million in cash, bolstered by a $189 million equity raise.
Regulatory filings: On track for U.S. and European filings for setmelanotide in hypothalamic obesity in Q3 2025.
Future pipeline: Plans to initiate Phase III trials for bivamelagon in 2026 and complete enrollment for other trials by 2026.
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Risk or Challenges
Regulatory hurdles: The company is preparing for U.S. and European regulatory filings for setmelanotide in hypothalamic obesity (HO) in Q3 2025. Any delays or issues in regulatory approval could impact the launch timeline and revenue projections.
Market access and reimbursement: While the company has achieved early access programs in France and Italy for HO, broader market access and payer reimbursement remain challenges, especially in new markets like Japan and other international regions.
Supply chain and inventory management: The company noted variability in named patient sales and inventory levels, which could lead to fluctuations in revenue and operational inefficiencies.
Competitive pressures: The company faces competition in the rare disease and obesity treatment markets, which could impact its market share and pricing power.
Economic uncertainties: Currency fluctuations, particularly the appreciation of the euro and other currencies, have impacted revenue. Economic conditions in international markets could further affect sales and profitability.
Strategic execution risks: The company is planning multiple clinical trials and regulatory filings, including Phase III trials for bivamelagon and other compounds. Any delays or failures in these initiatives could hinder long-term growth.
Patient identification and diagnosis: The company highlighted challenges in identifying and diagnosing patients with rare diseases like BBS and HO, which could limit the addressable market and slow down patient onboarding.
Financial sustainability: Although the company has a strong cash position, it is heavily reliant on future revenue from new product launches and ongoing R&D investments, which could strain financial resources if projections are not met.
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Guidance & Outlook
BBS (Bardet-Biedl Syndrome) Sales Growth: The company expects BBS to be a significant contributor to quarterly earnings for the next 15 years, with sustainable and steady growth.
Regulatory Filings for Setmelanotide: The company is on track to complete U.S. and European regulatory filings for setmelanotide in acquired hypothalamic obesity (HO) in Q3 2025, with updates to follow upon acceptance.
Market Opportunities: The company estimates 5,000 patients in the U.S. and similar numbers in Europe for BBS, and 5,000 to 10,000 patients in the U.S. for acquired hypothalamic obesity, with similar numbers in Europe. The Japan market also looks promising.
Patent Protection: Setmelanotide composition of matter patent extends to 2032, formulation patents to 2034 in the U.S., and next-generation compounds will extend protection to 2040+.
EMANATE Trial: The company anticipates the EMANATE trial readout in Q1 2026.
Phase III Trials for Bivamelagon: The company plans to initiate Phase III trials for bivamelagon in acquired hypothalamic obesity in 2026, pending regulatory feedback.
Launch of IMCIVREE in Hypothalamic Obesity: The company is preparing to launch IMCIVREE in hypothalamic obesity, pending FDA approval, with a focus on endocrinologists and leveraging learnings from the BBS launch.
International Expansion: IMCIVREE is now available in over 20 countries outside the U.S. for BBS and/or POMC/LEPR deficiencies, with early access programs for hypothalamic obesity in France and Italy.
Upcoming Milestones: The company plans to disclose preliminary results from the Phase II Prader-Willi trial by the end of 2025, complete enrollment of the 718 weekly Phase II study in HO patients in 2026, and release top-line data from the Japanese cohort of the Phase III acquired HO trial and the EMANATE trial in Q1 2026.
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Shareholder Return Plan
Accrued Dividends on Convertible Preferred Stock: $0.02 per share from accrued dividends on convertible preferred stock of $1.3 million.
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Key Q&A
Q:What is the nature of the Prader-Willi study and its design?
A:The Prader-Willi study is characterized as exploratory. The initial study in 2019 was negative due to challenges in trial design, low dosing, and short duration. The current open-label study escalates doses up to 5 milligrams and extends the trial duration to 6 months. The goal is to enroll 10-20 patients and analyze meaningful data by the end of the year.
Q:What is the expected follow-up for patients in the Prader-Willi study?
A:Patients benefiting from the treatment will continue beyond the 6-month trial duration. Long-term follow-up data will be collected to support the overall clinical development for Prader-Willi.
Q:What are the next steps if the Prader-Willi data is positive?
A:If the data is compelling, the company may proceed with setmelanotide or next-generation MC4R molecules like bivamelagon. Final decisions will depend on the timing and proof-of-concept data.
Q:What constitutes 'good data' for the Prader-Willi study?
A:Good data would include a 5% or greater decrease in BMI over a year, which aligns with FDA guidelines for obesity drugs. Improvements in hyperphagia are also expected, though patient-reported outcomes may be challenging to interpret in an uncontrolled study.
Q:What is the guidance on stock compensation expenses?
A:Stock compensation expenses increased significantly due to changes in the company's stock price. The $15.9 million in Q2 is considered a fair baseline for future projections.
Q:Will there be updated estimates for HO prevalence during the Commercial Day in September?
A:The company may not provide updated estimates but will reconfirm current understanding. They are confident in the higher end of the 5,000-10,000 range based on claims data and field team validation.
Q:What is the expected growth trajectory for ex-U.S. revenue?
A:Ex-U.S. revenue growth has been strong, but Q3 may be quieter due to vacation effects in Europe. Named patient sales are less predictable, but overall growth is expected to continue.
Q:What data is expected from Part C of the clinical update later this year?
A:No significant data from Part C is expected by the end of the year. Enrollment will continue into next year, and any updates are likely to come in 2026.
Q:Is there off-label use of IMCIVREE for HO in the U.S.?
A:There is minimal off-label use of IMCIVREE for HO in the U.S., with only a handful of prescriptions reported.
Q:What is the expected patient mix for the 718 study?
A:The 718 study will include patients aged 12 and older. The primary question is whether the weekly pharmacokinetic profile is effective, and the study aims to match the efficacy of other drugs in the same range.
Q:What is the long-term growth potential for Rhythm's products?
A:BBS is expected to grow steadily over decades, with a global expansion strategy. AHO has a larger epidemiology and may have a steeper growth trajectory but will also grow steadily over time. The company is focused on expanding into new markets like Asia.
Q:What is the guidance for patient enrollment in the Prader-Willi study?
A:The inclusion criteria allow for Prader-Willi patients aged 6 and above, including those stable on VYKAT. The study may include more challenging patients, such as diabetics.
Q:What is the status of the smaller pill for bivamelagon and the auto-injector for RM-718?
A:The smaller pill for bivamelagon is technically ready, with a 90% drug load. The auto-injector for RM-718 is focused on weekly dosing, with no current plans for less frequent dosing.
Q:What is the Phase III study design for bivamelagon in acquired HO?
A:The design will likely draft off the current HO study, with potential proposals for a historical control group and earlier readouts. Final design details depend on regulatory feedback.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on the following: 1. Updated estimates for HO prevalence during the Commercial Day in September, as they may not provide new data but only reconfirm current understanding. 2. Specific details on the Phase III study design for bivamelagon in acquired HO, as it depends on regulatory feedback and remains uncertain. 3. The exact nature of data expected from Part C of the clinical update later this year, as no significant updates are anticipated until 2026.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BBS POMC
BBS prescribers
EMANATE
EMEA
Executive VP
HO trial
III readout
III trial
IMCIVREE
IMPROVE meeting
Italy percentage
LEPR deficiency
LLC Research
POMC LEPR
Phase II
Phase III
RD
Research Division
SGA
Securities LLC
Slide detail
VP Head
bivamelagon
care
disease onset
expansion year
headcount
label expansion
milligram
month
obesity patient
offering
onset obesity
pathway disease
patient year
prescription patient
region
year age
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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