Rhythm Pharmaceuticals Reports Second Quarter 2023 Financial Results and Business Update
-- Second quarter 2023 net revenue of
-- Strong
-- Achieved commercial sales milestone and now eligible to receive third investment tranche of
-- Announced plans to submit an investigational new drug application for
-- Enrollment ongoing in pivotal Phase 3 trial evaluating setmelanotide in hypothalamic obesity; based on rapid progress, study now expected to be fully enrolled by the end of 2023 --
-- Management to host conference call today at 8:00 a.m. ET --
“The first half of 2023 was marked by strong execution across global commercial and clinical development programs. Our strong revenue performance was supported by robust patient demand for IMCIVREE® (setmelanotide) in the
“Based on rapid progress and substantial patient and physician interest in our ongoing pivotal Phase 3 clinical trial of setmelanotide in hypothalamic obesity, we now expect to complete enrollment by the end of 2023. Finally, we look forward to providing additional details on our pre-clinical development programs later this year, including
Second Quarter and Recent Business Highlights
Commercial Updates
- Today, Rhythm announced that more than 125 new prescriptions for IMCIVREE for BBS have been written in the second quarter of 2023 and more than 425 in
the United States sinceU.S. Food and Drug Administration (FDA) approval onJune 16, 2022 throughJune 30, 2023 . More than 250 physicians have written prescriptions since launch, and the Company has received payor approval for reimbursement for more than 250 of those prescriptions, as ofJune 30, 2023 . - Today, Rhythm announced that IMCIVREE is now commercially available in
Canada following theMay 5, 2023 approval byHealth Canada of IMCIVREE for weight management in adult and pediatric patients 6 years of age and older with obesity due to BBS or genetically-confirmed biallelic pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency due to variants interpreted as pathogenic, likely pathogenic or of uncertain significance. - In
May 2023 , Rhythm announced a collaboration withGenpharm Services FZ LLC (Genpharm) to commercialize IMCIVREE in GCC countries, includingSaudi Arabia ,United Arab Emirates ,Kuwait ,Qatar ,Oman , andBahrain . Under the terms of this exclusive agreement, Genpharm will distribute IMCIVREE to patients in GCC countries for the treatment of hyperphagia and obesity due to BBS or genetically-confirmed biallelic POMC, PCSK1 or LEPR deficiency. Providers in the region now have the ability to prescribe IMCIVREE to qualifying patients.
Clinical Development Updates
- Today, Rhythm provided an update on progress of its pivotal, Phase 3 clinical trial evaluating setmelanotide in patients with acquired hypothalamic obesity. Based on the initial pace of patient screening and site activations, Rhythm now expects to complete enrollment in the fourth quarter of 2023. This Phase 3 trial is designed to enroll 120 patients aged 4 years or older randomized 2:1 to setmelanotide therapy or placebo for a total of 60 weeks, including up to eight weeks for dose titration.
- Today, Rhythm announced that it anticipates submitting an investigational new drug application for
RM-718 , a new, weekly, MC4R-specific agonist, by the end of 2023.RM-718 is designed to be more targeted and potent than setmelanotide, and designed to be MC1R sparing, with the potential to not cause hyperpigmentation. This new product candidate is being developed as an injection administered through an autoinjector, for which Rhythm has patent protection into 2041, including patent term adjustment and patent term extension. - On
July 19 , the Company announced two new publications detailing the burden of hyperphagia and obesity for adult caregivers, families and patients living with BBS based on results of The CAREgiver Burden in BBS (CARE-BBS) study were published in the peer-reviewed journal,The Orphanet Journal of Rare Diseases . - In
June 2023 at theEndocrine Society Annual Meeting & Expo (ENDO), Rhythm and its collaborators presented new data from the long-term extension portion of Rhythm’s Phase 2 trial evaluating setmelanotide in patients with hypothalamic obesity. The data showed sustained and deepening reductions in weight and body mass index (BMI) in patients receiving at least six months of setmelanotide therapy. As of a data cutoff ofNovember 30, 2022 , 13 patients who had reached the 6-month point had achieved a 21.0 mean percent reduction in BMI from baseline, which progressed from a 16.8 mean percent reduction at week 16 across these 13 patients.
Corporate
- Today, Rhythm announced that in
July 2023 it achieved a commercial sales milestone under the RIFA withHealthCare Royalty Partners entered into inJune 2022 . In connection with the achievement of the milestone, Rhythm became eligible for a final investment tranche of$25.0 million fromHealthCare Royalty Partners . Rhythm previously received two tranches totaling$75.0 million under the RIFA.
Anticipated Upcoming Milestones
Rhythm expects to achieve the following near-term milestones:
- Present data analysis from the Phase 2 and long-term extension trials in hypothalamic obesity at a medical conference in the fall of 2023;
- Announce preliminary data from the open-label part of the Phase 2 DAYBREAK trial from one or more genetically-defined cohorts in the second half of 2023;
- Announce topline data from the ongoing Phase 3, open-label pediatrics trial evaluating one year of setmelanotide therapy in patients with MC4R pathway deficiencies between the ages of 2 and 6 years old in the second half of 2023;
- Provide pharmacokinetic and tolerability data from the ongoing Phase 3 switch trial evaluating a weekly formulation of setmelanotide in the second half of 2023;
- Complete patient enrollment in the pivotal Phase 3 clinical trial in hypothalamic obesity in the fourth quarter of 2023;
- Provide an update on pre-clinical development programs, including
RM-718 and the Company’s congenital hyperinsulinism (CHI) program, in the fourth quarter of 2023; and - Initiate a Phase 3, randomized, double-blind trial in patients naïve to setmelanotide therapy (“de novo study”) to evaluate the weekly formulation of setmelanotide in patients with BBS in 2024.
Second Quarter 2023 Financial Results:
- Cash Position: As of
June 30, 2023 , cash, cash equivalents and short-term investments were approximately$253.6 million , as compared to$333.3 million as ofDecember 31, 2022 . TheJune 30, 2023 cash position does not include the anticipated commercial sales milestone payment fromHealthCare Royalty Partners of$24.4 million of proceeds, net of debt issuance costs. - Revenue: Net product revenues relating to global sales of IMCIVREE were
$19.2 million for the second quarter of 2023, as compared to$2.3 million for the second quarter of 2022. For the second quarter endedJune 30, 2023 , 86% of the Company’s product revenue was generated inthe United States . - License Revenue: The Company did not record license revenue relating to out-license arrangements in the second quarter of 2023, following the termination of its agreement with
RareStone Group Ltd. (RareStone) inOctober 2022 . License revenue relating to the Company’s out-license arrangement with RareStone was$6.8 million for the second quarter of 2022. - R&D Expenses: R&D expenses were
$33.5 million in the second quarter of 2023, as compared to$31.5 million in the second quarter of 2022. The year-over-year increase was primarily due to increased costs associated with certain clinical trials and pre-clinical studies and increased headcount. This was partially offset by decreased costs associated with certain trials and manufacturing of clinical material. - S,G&A Expenses: S,G&A expenses were
$30.0 million for the second quarter of 2023, as compared to$22.3 million for the second quarter of 2022. The year-over-year increase was primarily due to increased headcount inthe United States and internationally, professional services and other expenses. This increase was partially offset by decreased marketing activities associated with theU.S. BBS launch. - Other income (expense), net. Other income (expense), net decreased by
$0.2 million from the second quarter of 2022 to the second quarter of 2023, primarily due to$3.3 million of interest expense related to the RIFA with HealthCare Royalty and a$0.1 million fair market value adjustment related to the RIFA embedded derivative, offset by interest income of$3.3 million earned on our short-term investments. - Net Loss: Net loss was
($46.7) million for the second quarter of 2023, or a net loss per basic and diluted share of ($0.82 ), as compared to a net loss of($45.0) million for the second quarter of 2022, or a net loss per basic and diluted share of ($0.89 ).
Year to Date 2023 Financial Results:
- Revenue: Net product revenues relating to sales of IMCIVREE were $30.7 million for the six months ended June 30, 2023, as compared to $3.8 million for the six months ended June 30, 2022.
- License Revenue: The Company did not report license revenue relating to out-license arrangements in the six months ended
June 30, 2023 , following the termination of its agreement with RareStone inOctober 2022 . License revenue relating to the Company’s out-license arrangement with RareStone was$6.8 million for the six months endedJune 30, 2022 . - R&D Expenses: R&D expenses were $71.5 million for the six months ended June 30, 2023, as compared to
$64.0 million for the six months endedJune 30, 2022 . This increase was primarily due to the acquisition ofXinvento B.V. and increased costs associated with headcount, certain clinical trials, pre-clinical studies and gene sequencing and was partially offset by decreased costs associated with manufacturing of clinical material, certain clinical trials and a development milestone payment associated with the weekly formulation paid to Camurus AB in 2022. - S,G&A Expenses: S,G&A expenses were
$54.7 million for the six months endedJune 30, 2023 , as compared to$43.8 million for the six months endedJune 30, 2022 . The increase was primarily due to increased headcount to support business and commercial operations in the United Sates and internationally, professional services and other expenses and was partially offset by decreased marketing activities associated with the BBSU.S. launch. - Other income (expense), net: Other (income)/ expense, net increased by
$0.2 million to$0.2 million for the six months endedJune 30, 2023 . Total other (income)/ expense, net for the six months endedJune 30, 2023 consists of interest income of$6.7 million primarily due to higher interest rates, partially offset by$6.4 million of interest expense related to our RIFA with HealthCare Royalty. The fair market value adjustment related to our RIFA embedded derivative for the six months endedJune 30, 2023 was de minimis. - Net Loss: Net loss was (
$98.9 ) million for the six months endedJune 30, 2023 , or a net loss per basic and diluted share of$(1.74) , as compared to a net loss of ($97.8 ) million for the six months endedJune 30, 2022 , or a net loss per basic and diluted share of ($1.94 ).
Financial Guidance: For the year ending
Conference Call Information
A live webcast of the call will also be available under "Events and Presentations" in the Investor Relations section of the
About Rhythm Pharmaceuticals
Rhythm is a commercial-stage biopharmaceutical company committed to transforming the lives of patients and their families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) diseases. Rhythm’s lead asset, IMCIVREE (setmelanotide), an MC4R agonist designed to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases, is approved by the
Setmelanotide Indication
In the United States, setmelanotide is indicated for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to POMC, PCSK1 or LEPR deficiency as determined by an FDA-approved test demonstrating variants in POMC, PCSK1 or LEPR genes that are interpreted as pathogenic, likely pathogenic, or of uncertain significance (VUS) or BBS.
In the European Union, setmelanotide is indicated for the treatment of obesity and the control of hunger associated with genetically confirmed Bardet-Biedl syndrome (BBS) or genetically confirmed loss-of-function biallelic proopiomelanocortin (POMC), including PCSK1, deficiency or biallelic leptin receptor (LEPR) deficiency in adults and children 6 years of age and above.
Limitations of Use
In the United States and Europe, Setmelanotide should be prescribed and supervised by a physician with expertise in obesity with underlying genetic etiology.
Setmelanotide is not indicated for the treatment of patients with the following conditions as setmelanotide would not be expected to be effective:
- Obesity due to suspected POMC, PCSK1 or LEPR deficiency with POMC, PCSK1 or LEPR variants classified as benign or likely benign
- Other types of obesity not related to POMC, PCSK1 or LEPR deficiency, or BBS, including obesity associated with other genetic syndromes and general (polygenic) obesity.
WARNINGS AND PRECAUTIONS
Skin Monitoring: Setmelanotide may lead to generalized increased skin pigmentation and darkening of pre-existing naevi because of its pharmacologic effect. Full body skin examinations should be conducted annually to monitor pre-existing and new skin pigmentary lesions before and during treatment with setmelanotide.
Heart rate and blood pressure monitoring: Heart rate and blood pressure should be monitored as part of standard clinical practice at each medical visit (at least every 6 months) for patients treated with setmelanotide.
Prolonged penile erection: Spontaneous penile erections have been reported in clinical trials with setmelanotide. Patients who have a penile erection lasting longer than 4 hours should be instructed to seek emergency medical attention for potential treatment of priapism.
Depression: In clinical trials, depression has been reported in patients treated with setmelanotide. Patients with depression should be monitored at each medical visit during treatment with setmelanotide. Consideration should be given to discontinuing setmelanotide if patients experience suicidal thoughts or behaviors.
Pediatric Population: The prescribing physician should periodically assess response to setmelanotide therapy. In growing children, the impact of weight loss on growth and maturation should be evaluated. The prescribing physician should monitor growth (height and weight) using age- and sex-appropriate growth curves.
Excipients: This medicinal product contains 10 mg benzyl alcohol in each ml. Benzyl alcohol may cause allergic reactions. Patients who are pregnant or breastfeeding should be advised of the potential risk from the excipient benzyl alcohol, which might accumulate over time and cause metabolic acidosis. This medicinal product should be used with caution in patients with hepatic or renal impairment, because of the potential risk from the excipient benzyl alcohol which might accumulate over time and cause metabolic acidosis.
Sodium: This medicinal product contains less than 1 mmol sodium (23 mg) per dose, that is to say essentially “sodium-free.”
ADVERSE REACTIONS
The most frequent adverse reactions are hyperpigmentation (51%), injection site reaction (39%), nausea (33%), and headache (26%).
USE IN SPECIFIC POPULATIONS
Pregnancy
There are no data from the use of setmelanotide in pregnant women. Animal studies do not indicate direct harmful effects with respect to reproductive toxicity. However, administration of setmelanotide to pregnant rabbits resulted in decreased maternal food consumption leading to embryo-fetal effects. As a precautionary measure, setmelanotide should not be started during pregnancy or while attempting to get pregnant as weight loss during pregnancy may result in fetal harm. If a patient who is taking setmelanotide has reached a stable weight and becomes pregnant, consideration should be given to maintaining setmelanotide treatment as there was no proof of teratogenicity in the nonclinical data. If a patient who is taking setmelanotide and still losing weight gets pregnant, setmelanotide should either be discontinued, or the dose reduced while monitoring for the recommended weight gain during pregnancy. The treating physician should carefully monitor weight during pregnancy in a patient taking setmelanotide.
Breast-feeding
It is unknown whether setmelanotide is excreted in human milk. A nonclinical study showed that setmelanotide is excreted in the milk of nursing rats. No quantifiable setmelanotide concentrations were detected in plasma from nursing pups. A risk to the newborn/infant cannot be excluded. A decision must be made whether to discontinue breastfeeding or to discontinue/abstain from setmelanotide therapy taking into account the benefit of breastfeeding for the child and the benefit of therapy for the mother.
Fertility
No human data on the effect of setmelanotide on fertility are available. Animal studies did not indicate harmful effects with respect to fertility.
To report SUSPECTED ADVERSE REACTIONS, contact Rhythm Pharmaceuticals at +1 (833) 789-6337. See Summary of Product Characteristics’ APPENDIX V for a list of European national reporting systems to communicate adverse reactions.
Please see the full Prescribing Information for additional Important Safety Information.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the potential, safety, efficacy, and regulatory and clinical progress of setmelanotide, including the anticipated timing for initiation of clinical trials and release of clinical trial data, our expectations surrounding potential regulatory submissions, approvals and timing thereof, our business strategy and plans, including regarding commercialization of setmelanotide in certain international regions, expectations surrounding sales and reimbursement of IMCIVREE, the potential financial impact, growth prospects and benefits of our acquisition of
Non-GAAP Financial Measures
This press release includes Non-GAAP Operating Expenses, a supplemental measure of our performance that is not required by, or presented in accordance with,
We define Non-GAAP Operating Expenses as GAAP operating expenses excluding stock-based compensation.
We caution investors that amounts presented in accordance with our definition of Non-GAAP Operating Expenses may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate this non-GAAP financial measure in the same manner. We present this non-GAAP financial measure because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.
Management uses this non-GAAP financial measure for planning purposes, including the preparation of our internal annual operating budget and financial projections; to evaluate the performance and effectiveness of our operational strategies; and to evaluate our capacity to expand our business. This non-GAAP financial measure has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for operating expenses or other financial statement data presented in accordance with GAAP in our consolidated financial statements.
Rhythm has not provided a quantitative reconciliation of forecasted Non-GAAP Operating Expenses to forecasted GAAP operating expenses because the Company is unable, without making unreasonable efforts, to calculate the reconciling item, stock-based compensation expenses, with confidence. This item, which could materially affect the computation of forward-looking GAAP operating expenses, is inherently uncertain and depends on various factors, some of which are outside of Rhythm's control.
Corporate Contact:
Executive Director, Investor Relations and Corporate Communications
857-264-4280
dconnolly@rhythmtx.com
Media Contact:
Berry & Company Public Relations
212-253-8881
adaley@berrypr.com
Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) (Unaudited) |
|||||||||||||||
| Three months ended |
Six months ended |
||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | |||||||||||||||
| Product revenue, net | $ | 19,221 | $ | 2,312 | $ | 30,691 | $ | 3,810 | |||||||
| License revenue | — | 6,754 | — | 6,754 | |||||||||||
| Total revenues | 19,221 | 9,066 | 30,691 | 10,564 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Cost of sales | 2,236 | 378 | 3,657 | 608 | |||||||||||
| Research and development | 33,543 | 31,456 | 71,487 | 63,966 | |||||||||||
| Selling, general, and administrative | 30,046 | 22,328 | 54,674 | 43,777 | |||||||||||
| Total costs and expenses | 65,825 | 54,162 | 129,818 | 108,351 | |||||||||||
| Loss from operations | (46,604 | ) | (45,096 | ) | (99,127 | ) | (97,787 | ) | |||||||
| Other income (expense): | |||||||||||||||
| Other income, net | (17 | ) | (133 | ) | 34 | (366 | ) | ||||||||
| Interest expense | (3,303 | ) | (46 | ) | (6,449 | ) | (46 | ) | |||||||
| Interest income | 3,221 | 274 | 6,660 | 434 | |||||||||||
| Total other (expense) income, net | (99 | ) | 95 | 245 | 22 | ||||||||||
| Net loss | $ | (46,703 | ) | $ | (45,001 | ) | $ | (98,882 | ) | $ | (97,765 | ) | |||
| Net loss per share, basic and diluted | $ | (0.82 | ) | $ | (0.89 | ) | $ | (1.74 | ) | $ | (1.94 | ) | |||
| Weighted-average common shares outstanding, basic and diluted | 56,867,662 | 50,398,003 | 56,788,757 | 50,362,512 | |||||||||||
| Other comprehensive loss: | |||||||||||||||
| Net loss | $ | (46,703 | ) | $ | (45,001 | ) | $ | (98,882 | ) | $ | (97,765 | ) | |||
| Foreign currency translation adjustment | (48 | ) | — | (27 | ) | — | |||||||||
| Unrealized gain (loss), net on short-term investments | 40 | (277 | ) | 105 | (905 | ) | |||||||||
| Comprehensive loss | $ | (46,711 | ) | $ | (45,278 | ) | $ | (98,804 | ) | $ | (98,670 | ) | |||
| Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (Unaudited) |
|||||||
| 2023 | 2022 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 115,684 | $ | 127,677 | |||
| Short-term investments | 137,918 | 205,611 | |||||
| Accounts receivable, net | 13,831 | 6,224 | |||||
| Inventory | 6,178 | 2,917 | |||||
| Prepaid expenses and other current assets | 10,267 | 11,807 | |||||
| Total current assets | 283,878 | 354,236 | |||||
| Property and equipment, net | 1,773 | 2,197 | |||||
| Right-of-use asset | 990 | 1,182 | |||||
| Intangible assets, net | 7,456 | 7,883 | |||||
| Restricted cash | 328 | 328 | |||||
| Other long-term assets | 15,518 | 16,655 | |||||
| Total assets | $ | 309,943 | $ | 382,481 | |||
| Liabilities and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 8,383 | $ | 4,797 | |||
| Accrued expenses and other current liabilities | 35,708 | 32,894 | |||||
| Deferred revenue | 1,286 | 1,434 | |||||
| Lease liability | 726 | 684 | |||||
| Total current liabilities | 46,103 | 39,809 | |||||
| Long-term liabilities: | |||||||
| Deferred royalty obligation | 79,347 | 75,810 | |||||
| Lease liability | 888 | 1,260 | |||||
| Derivative liability | 1,320 | 1,340 | |||||
| Total liabilities | 127,658 | 118,219 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock, |
— | — | |||||
| Common stock, |
57 | 56 | |||||
| Additional paid-in capital | 991,182 | 974,356 | |||||
| Accumulated other comprehensive loss | (14 | ) | (92 | ) | |||
| Accumulated deficit | (808,940 | ) | (710,058 | ) | |||
| Total stockholders’ equity | 182,285 | 264,262 | |||||
| Total liabilities and stockholders’ equity | $ | 309,943 | $ | 382,481 | |||
Source: Rhythm Pharmaceuticals, Inc.