RYTM

U.S. Commercial Launch of Incivary for Acquired Hypothalamic Obesity (AHO)

• Following FDA approval in March 2026, the launch had a promising first 14 weeks, with over 400 patient start forms received from approximately 300 unique prescribers; 66 of these start forms were from converted trial patients, representing almost all U.S. trial patients.
• Prescriber base is broad: 43% are adult endocrinologists and 37% are pediatric endocrinologists; 65% of priority AHO treatment centers have been activated, contributing 25% of total prescriptions.
• Payer coverage progress: by end-Q2, positive coverage policies for AHO were secured for ~25% of Medicaid-covered lives and ~35% of commercial-covered lives, with no GLP-1 step edits required on existing policies.
• The company restructured its North American commercial field team: 42 territory managers are now dedicated exclusively to AHO, with a new 10-person team dedicated to growing the Bardet-Biedl Syndrome (BBS) indication, already implemented as of Q2.

Pipeline & Clinical Development Updates

• Positive preliminary 16-week data from the Phase 2 trial of RM718, the company's weekly next-generation MC4R agonist, in AHO: 7 patients who completed 16 weeks of treatment achieved a mean BMI reduction of 11.6%, which compares favorably to 10.1% 16-week BMI reduction seen in setmelanotide trials, with no reports of generalized hyperpigmentation.
• Positive 6-month data for setmelanotide in Prader-Willi Syndrome (PWS) presented at ENDO, showing clinically meaningful reductions in BMI, BMI-Z score, and fat mass, with preserved lean mass and improvements in hyperphagia and anxiety; the company will provide an update on the PWS development path in the next few months.
• Enrollment for PWS patients in RM718 Phase 2 Part C is expected to complete by the end of 2026; initiation of a Phase 3 trial for Bivomelagon (another next-generation MC4R agonist) in AHO is planned by the end of 2026, with first patient enrollment for patients 12+ after CMC work on oral dissolvable tablets completes in Q1 2027.
• Both RM718 and Bivomelagon have patent protection extending past 2040, with comparable efficacy to setmelanotide and no generalized hyperpigmentation due to greater MC4R specificity.

International Progress

• Japan: Regulatory review is in the final stages, with approval and commercial launch for AHO expected by the end of 2026; the Japan market has an estimated 5,000-8,000 AHO patients, and a local team is already in place conducting pre-launch physician and patient engagement.
• Europe: The European Commission granted marketing authorization for Incivary for AHO in May 2026; country-level launches are planned for 2027, starting with Germany in H1 2027, followed by France, the UK, Italy, Spain, and the Netherlands; the company expects to secure an exemption from the German GBA Annex II exclusion list for lifestyle drugs, as it has done for prior indications.
• BBS: A new evidence-based consensus diagnostic algorithm for BBS was published to enable earlier diagnosis and expand treatment access for this underserved patient population.

Financial Performance

• Total Q2 2026 global net product sales grew 19% sequentially to $71.3 million, with U.S. growth driven by both the AHO launch and strong BBS demand; global patient count on reimbursed therapy grew more than 20% quarter-over-quarter.
• The company ended Q2 with $331 million in cash, cash equivalents, and short-term investments, which is sufficient to fund planned operations for at least 24 months.

• Full-year 2026 non-GAAP operating expense guidance is updated to $363 million to $397 million, consisting of $175 million to $195 million in non-GAAP R&D expenses and $188 million to $202 million in non-GAAP SG&A expenses.
• SG&A guidance remains unchanged from prior guidance; the midpoint of R&D guidance was reduced by $20 million due to timing shifts of CMC activities for RM718 and Bivomelagon from late 2026 to early 2027.
• The timing shift of CMC activities is not expected to impact the overall timelines for ongoing or planned clinical development of either asset.
• Regulatory and launch timelines remain on track: AHO approval and launch in Japan is expected by the end of 2026, with European country-level launches expected in 2027.

Rhythm operates with commercial product revenue centered on its MC4R agonist therapy IMCIVRI (setmelanotide/Incivary) for rare obesity indications, and a pipeline segment focused on next-generation MC4R agonists. Global net product sales of IMCIVRI totaled $71.3 million in Q2 2026, representing 19% sequential growth over Q1 2026. 72% of total product revenue ($51 million) was generated in the United States, while international revenue contributed $20.3 million (28% of total revenue). After adjusting for a one-time $3.8 million retrospective charge from France's statutory Contribution M mechanism, international revenue growth remains positive with a steady increase in the number of patients on reimbursed therapy. R&D expenses for the pipeline segment were $43.4 million in Q2 2026, while SG&A commercial operating expenses were $67.4 million.

• AHO is historically underdiagnosed and underrecognized, requiring substantial ongoing physician education to increase diagnosis rates, which may slow patient uptake over the near to medium term.
• The company needs to secure an exemption from the German GBA Annex II exclusion list to enable reimbursement for AHO in Germany; failure to secure this exemption would limit access and revenue in this market.
• It is still very early in the U.S. AHO launch, so discontinuation rates, long-term patient adherence, and sustained uptake trajectory have not yet been established, creating uncertainty for long-term performance.
• RM718 Phase 2 trial had two early discontinuations due to adverse events (one from injection site reactions, one from uncontrolled nausea), and long-term safety and efficacy in larger patient populations remains unproven.
• Further payer coverage expansion in the U.S. and Europe will take 3 to 9 months post-approval to finalize, which may temporarily limit patient access during this period.

Q: Management is asked what expectations they have for long-term setmelanotide discontinuation rates in AHO, and what factors may influence these rates. / A: It is too early in the launch to report definitive discontinuation rate data. The historical global discontinuation rate for BBS patients is ~30%. Clinical trial data for AHO shows lower discontinuation rates than BBS, and management expects the strong efficacy profile of setmelanotide for AHO and other patient factors will likely result in a lower long-term discontinuation rate for AHO compared to BBS, which the company will continue to monitor closely.

Q: The analyst asks about prior GLP-1 use among AHO patients, and whether payers are requiring GLP-1 step edits for Incivary coverage. / A: No existing AHO-specific payer policies require a GLP-1 step edit, which aligns with Incivary's approved label. Approximately 50% of prescribed Incivary AHO patients had prior or current GLP-1 experience, with ~25% still actively using GLP-1 (likely for diabetes or prior obesity treatment). Clinical trial data confirms AHO patients on GLP-1 had virtually identical BMI responses to Incivary as patients not on GLP-1, demonstrating that Incivary addresses unmet need not met by GLP-1 therapies.

Q: After positive early AHO data for RM718, the analyst asks for early read-through to upcoming PWS data and when PWS data will be available. / A: RM718 is a weekly MC4R agonist with greater MC4R specificity than setmelanotide, and the positive AHO data validates the development hypothesis for the asset. Enrollment of PWS patients in the RM718 Phase 2 trial will complete by the end of 2026, after which data will be released. The company will not wait for this data to make a final decision on which asset (RM718, Bivomelagon, or setmelanotide) to advance for PWS; the decision will be driven largely by CMC, formulation, and drug supply considerations, with planning already underway.

Q: The analyst asks whether the company would consider advancing both daily Bivomelagon and weekly RM718 for PWS to give patients treatment choice, following expert commentary favoring daily dosing for PWS. / A: Expert opinion favoring daily dosing for PWS will be considered in the final asset selection, but it is not the overriding decision factor. AHO and PWS are both large, meaningful market opportunities, and the company is fully open to developing both assets to offer patients choice, though development may not happen in parallel. A deeper dive on the Japan AHO launch will be provided on the next quarterly call, but the company noted it has a pre-positioned local team, strong expert support, and expects launch by the end of 2026 as planned.