RHYTHM PHARMACEUTICALS, INC. Q3 FY2026 earnings call

US Launch Execution: Patient demand remains strong with over 700 start forms received since launch. Prescriber base is broadening, with ~200 new first-time prescribers added in Q3. Payer access is improving rapidly, with >80% of approvals occurring within 60 days and coverage policies affecting ~75% of commercial lives. Japan Launch: MCIVRI launched on October 14, 2026, following MHLW approval. Japan is expected to become the second-largest market. Pre-launch engagement identified >1,000 eligible patients across 350 priority hospitals. First-year prescriptions are limited to two-week supplies to build institutional experience. Clinical Development: Phase III study for Bivomelagon in acquired HO initiated, aiming to dose first patients in January 2027. Plans announced for a six-month Phase III study in Prader-Willi Syndrome (PWS) starting in 2027, focusing on hyperphagia as the primary endpoint. Strategic Amendments: Amended LG Chem license agreement reduces cross-portfolio royalty obligation from 5-7% to 1% flat in exchange for $350 million in payments. This aligns economic incentives for developing next-generation assets like Vivimelagon (718). Pipeline Strategy: Emphasis on MC4R pathway precision agonists. Decision to start PWS development with Bivomelagon due to CMC/supply availability, with plans to develop combination therapies long-term.

Global net product sales of MCIVRI totaled $92.1 million, representing a 29% sequential increase from the second quarter ($71.3 million). The United States was the primary driver, generating $67.5 million (73% of total revenue), while international revenue reached $24.7 million (27%). International growth was partly aided by the absence of a $3.8 million retroactive charge recognized in Q2. Reimbursed patients increased by 20% globally during the quarter.

Management updated its 2026 non-GAAP operating expense guidance to $360–$380 million. This reflects a reduction in R&D guidance midpoint by $15 million (to $165–$175 million) due to shifting formulation activities to early 2027, while SG&A guidance remains stable at $195–$205 million. Guidance excludes stock-based compensation and milestone payments, meaning the $350 million LG Chem payment does not impact this metric.

Regulatory and Approval Risks: Uncertainty regarding FDA acceptance of a six-month hyperphagia endpoint for PWS; management relies on precedent set by other rare disease approvals but has not yet engaged regulators on specific trial design thresholds. Commercial Execution Risks: Acquired HO requires clinical diagnosis rather than genetic testing, leading to potential delays in patient identification and treatment initiation compared to monogenic indications like BBS. Operational Constraints: In Japan, the two-week prescription limit for the first year of launch may constrain early revenue acceleration until restrictions are lifted in late 2027. Financial Obligations: Significant near-term cash outflows required for the LG Chem amendment ($70 million initial payment plus subsequent installments), although mitigated by the new term loan facility.

Q: Analysts asked about the sustainability of patient start form volumes (~100/month) and whether uptake would accelerate once payer access normalizes.

A: Management stated that steady uptake is expected due to the complexity of diagnosing acquired HO, which lacks a genetic test. They noted that physician education on distinguishing AHO from other weight gain causes is an ongoing process, and conversion takes time as busy clinicians transition patients from prior therapies or confirm diagnoses iteratively.