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Rhythm Pharmaceuticals Inc (RYTM) Q1 2024 Earnings Call Transcript Highlights: A Detailed ...

GuruFocus Research
·4-min read

  • Net Product Revenue: $26 million in Q1 2024, up from $11.5 million in Q1 2023.

  • Cost of Sales: $2.8 million or approximately 10.8% of net product revenue.

  • R&D Expenses: $128.7 million in Q1 2024, significantly higher than $37.9 million in Q1 2023.

  • SG&A Expenses: $34.4 million in Q1 2024 compared to $24.6 million in Q1 2023.

  • Net Loss Per Share: $2.35 in Q1 2024, increased from $0.92 in Q1 2023.

  • Cash and Cash Equivalents: $201 million as of March 31, 2024.

  • Convertible Preferred Financing: Raised $150 million, extending financial runway into 2026.

  • US Revenue Contribution: $19.4 million, accounting for 74% of total net revenue.

  • International Revenue Growth: Increase from 24% to 26% of total revenue, quarter over quarter.

Release Date: May 07, 2024

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

Positive Points

  • Rhythm Pharmaceuticals Inc (NASDAQ:RYTM) reported a solid quarter with a focus on expanding the use of IMCIVREE in rare MC4R-related conditions.

  • The company successfully completed a convertible preferred financing, extending its financial runway well into 2026, which fully funds its investment in the LG Chem molecule.

  • Phase 2 HO data published in Lancet Diabetes and Endocrinology showed significant patient improvement, with mean BMI decreasing by 14.5% at 16 weeks and 25.5% at one year.

  • The 120-patient pivotal cohort of the Phase 3 HO trial is fully enrolled, with low dropout rates, indicating strong commitment from the patient community.

  • Rhythm Pharmaceuticals Inc (NASDAQ:RYTM) is expanding internationally, with new countries coming online and expected to contribute to revenue in the second half of the year.

Negative Points

  • A change in one state's Medicaid plan increased the stringency of approval criteria, leading to the removal of 30 patients from the company's internal models.

  • The company experienced an increase in patient discontinuations, which are expected to level out in the 20% to 30% range long term.

  • There were challenges with hyperpigmentation and perceived lack of efficacy leading to discontinuations in about 9% of patients.

  • The adolescent age group showed higher discontinuation rates, posing challenges in maintaining adherence to the chronic daily injectable therapy.

  • Rhythm Pharmaceuticals Inc (NASDAQ:RYTM) faces normal ups and downs in building out a novel therapy for a complex rare disease, including payer challenges and the need for continuous patient and physician education.

Q & A Highlights

Q: Can you provide insights into the emerging clusters of Bardet-Biedl patients treated in the US with Native American and Hispanic heritage? A: Jennifer Lee, Executive Vice President, Head of North America at Rhythm Pharmaceuticals, confirmed observing higher BBS prevalence in certain areas among the Native American and Hispanic populations, similar to other rare diseases where genetic frequencies may vary based on population.

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Q: What are the gating factors for the 54640's trial and how many of the experienced sites from your IMCIVREE experience will be incorporated? A: David Meeker, Chairman, President & CEO, noted that the trial will include about 10 to 12 sites, mostly new, with a couple from the original trial. This setup aims to manage simultaneous trials for their weekly injectable and the small molecule.

Q: Last quarter, 30 patients came off therapy due to changes in a state's Medicaid plan. Any updates on these patients? A: David Meeker explained that the process of re-evaluating these patients is laborious and encouraged stakeholders to not expect these patients back on commercial drug in the near term.

Q: How many patients typically enter the bridge program each quarter, and what is the average duration of their stay? A: Jennifer Lee clarified that the number varies based on individual circumstances, such as changes in jobs or insurance. The duration to transition off the bridge program is similar to the time taken for initial authorization, typically four to six weeks.

Q: Can you provide the denominator for the reauthorization number and details on the workability of the 11 denials? A: Jennifer Lee mentioned that more than 140 reauthorizations were approved with 11 denials, which are workable through additional information or appeals, showing a high success rate in reauthorization.

Q: What percentage of this quarter's revenues comprised international sales, and what successful strategies from France and Germany could be applied in the US? A: Hunter Smith, Chief Financial Officer, confirmed that 26% of the quarter's revenues were from international sales. Yann Mazabraud, Executive Vice President, Head of International, discussed leveraging experiences from Centers of Excellence and patient support programs across regions to enhance performance.

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

This article first appeared on GuruFocus.