• Cash and Cash Equivalents: $320.6 million at the end of 2024.
• Revenue: $41.8 million in Q4 2024; $130.1 million for the full year 2024.
• Cost of Sales: $3.8 million in Q4 2024, approximately 9% of net product revenue.
• R&D Expenses: $41.2 million for Q4 2024, up from $29.9 million in Q4 2023.
• SG&A Expenses: $38.1 million for Q4 2024, compared to $32.4 million in Q4 2023.
• Net Loss per Share: $0.72 for Q4 2024, including $0.02 per share from accrued dividends on convertible preferred stock.
• Operating Expenses: Totaled $382.3 million for 2024, including $39.7 million in stock-based compensation.
• Non-GAAP Operating Expenses: $250.2 million for 2024, at the low end of the $250 million to $270 million guidance range.
• US Revenue Contribution: $31.7 million in Q4 2024, accounting for 76% of quarterly revenue.
• Gross Margin: Gross-to-net in the US remained consistent at about 85% for Q3 and Q4 2024.

• Warning! GuruFocus has detected 3 Warning Signs with RYTM.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rhythm Pharmaceuticals Inc (NASDAQ:RYTM) is well-capitalized, having raised $75 million, extending its cash run rate into 2027.
• The company completed enrollment in its phase 2 daily oral Maigon study, indicating progress in its pipeline.
• There is significant opportunity in genetically driven impairments to the MC4R pathway, with potential for long-term growth.
• The company received FDA approval for a label expansion to include younger patients, enhancing its market reach.
• International expansion is progressing well, with access achieved in over 15 countries outside the US.

Negative Points

• The company faces challenges in accurately predicting the efficacy outcomes of its trials, particularly in the phase 3 HO trial.
• There is uncertainty regarding the uptake and market penetration of new therapies, especially in comparison to existing treatments like GLP-1s.
• The company anticipates increased R&D and SG&A expenses in 2025, which could impact profitability.
• There are complexities in diagnosing and treating congenital hypothalamic obesity, which may affect trial outcomes and market potential.
• The company must navigate reimbursement challenges and prior authorization processes, which could slow down market adoption.

Q & A Highlights

Q: Will the sad mad portion of the RM 718 study be shared separately, or will it be included in the second half 2025 update with part C? Also, what is the expected mix of adults and pediatric patients in the phase 3 trial on HO? A: We don't have specific plans to present the sad mad portion separately; it will likely be included with the Part C update. Regarding the phase 3 trial, the regulators wanted more adults, so we focused on that, achieving about a 50/50 split between adults and pediatric patients. The Japanese cohort will have a similar mix.

Q: How do you see the uptake in the HO patient population compared to BBS or genetic populations? Could the pre-existing obesity set point impact the phase 3 HO trial results? A: The HO patient population is more identifiable and concentrated in endocrinology, leading to potentially faster uptake than BBS. Regarding the pre-existing obesity set point, our drug aims to restore normal physiology, potentially bringing patients back to their pre-injury state, but it is not a treatment for general obesity.

Q: What does management consider a successful outcome for the Se Melannoide phase 3 trial in terms of weight loss? Also, is there a possibility of a modestly down quarter due to inventory destocking? A: We would be disappointed with less than a 10% weight loss, though the regulatory hurdle is 5%. We anticipate inventory destocking in Q1, which could impact quarter-over-quarter results.

Q: Can you discuss the prevalence of HO beyond cranial pharyngioma data and any ongoing work to understand other etiologies, including congenital forms? A: We are gaining confidence in our prevalence estimates, which may be conservative. Other tumors contribute significantly to the population, and we are exploring congenital syndromes where obesity may be related to hypothalamic impairment.

Q: What weight loss would doctors like to see to use Se Melannoide in HO patients? Would you consider a cash raise after the HO data set reads out? A: Doctors are interested in consistent efficacy rather than specific weight loss percentages. Regarding a cash raise, we have extended our runway to avoid needing a raise immediately after the data readout, but future raises will depend on program success.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.