Rhythm Pharmaceuticals (RYTM) – Impressive IMCIVREE
Rhythm Pharmaceuticals (RYTM) is a commercial-stage biotech company committed to transforming the care for patients living with rare genetic diseases of obesity. The company’s main drug, IMCIVREE (setmelanotide), was approved back in November 2020 by the FDA. Its target is for a subset of individuals who have severe obesity due to genetic variants that impair the melanocortin-4 receptor (MC4R) pathway, a pathway in the brain that is responsible for regulating hunger, caloric intake, and energy expenditure, which consequently affect body weight. The company holds worldwide rights for IMCIVREE and is the first-ever therapy developed for patients with certain ultra-rare genetic diseases of obesity.
Fast forward to July and September 2021 when the European Commission (EC) and Great Britain’s Medicines & Healthcare Products Regulatory Agency (MHRA), respectively granted marketing authorization to IMCIVREE for the treatment of obesity and the control of hunger associated with genetically confirmed loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 6 years of age and above. These approvals were based on Phase 3 data demonstrating a statistically significant and clinically meaningful reduction of weight and hunger in patients 12 years old or older with severe obesity due to POMC, PCSK1 or LEPR deficiency.
News flow has not stopped for this company this year either as back on June 16th, it announced that the FDA approved the company’s supplemental new drug application, or sNDA, for IMCIVREE for patients with Bardet-Biedl syndrome, or BBS. Bardet-Biedel Syndrome is a rare genetic disorder with highly variable symptoms which may include retinal degeneration, obesity, reduced kidney function, or polydactyly (extra digits of the hands or feet).
Along with this BBS news, it also announced that it entered into a financing agreement with HealthCare Royalty Partners for a total investment amount of up to $100M. As per the terms of the revenue interest financing agreement, RYTM will get an initial amount of $37.5M from HealthCare Royalty due to the FDA approval of its IMCIVREE drug to treat obesity in Bardet-Biedl syndrome patients. It will get an additional amount of $37.5M when the European Union approves IMCIVREE, while the final amount of $25M will be obtained upon achievement of sales milestones in 2023.
Stifel was out with a note shortly after the BBS approval saying it was in-line with their expectations and expands IMCIVREE’s addressable market by 1500-2500 estimated BBS patients in the U.S. The exact growth ramp remains unknown, but with 350+ patients already identified/diagnosed, today’s approval is a step forward in unlocking additional value.
Then, on July 12th, the company announced positive interim results from a Phase 2 clinical trial evaluating IMCIVREE for the treatment of severe obesity and hyperphagia in people living with hypothalamic obesity. This refers to obesity that is caused by physical or inborn damage to the hypothalamus. The hypothalamus is part of the brain that makes hormones that control specific body functions such as sleep, body temperature, and hunger.
Based on the encouraging results observed, the company said it intends to proceed to Phase 3 clinical development following consultation with regulatory agencies. As of the data cutoff date of May 6th, 11 patients were available for assessment, including nine patients who completed 16 weeks of treatment and two patients who discontinued early due to treatment-related adverse events. Management would say, “We look forward to engaging with regulatory agencies to finalize our Phase 3 development plans in the months ahead, as we aim to expand our reach and make setmelanotide available to the approximately 5,000 to 10,000 people living with hypothalamic obesity in the United States.”
A number of sell side notes came out after this news with Stifel saying they think positive safety and efficacy data from the remaining patients in fall 2022 could pave the way for constructive discussions with regulators in 2H22. If all goes well, the design of a Phase 3 trial could be confirmed ahead of possible trial initiation in 1H23. Ladenburg Thalmann, meanwhile, would say that compared to its data in rare obesities, this data demonstrates better effectiveness at 16 weeks. The analyst says that with the best data in the biggest market opportunity, the hypothalamic obesity data boosts his IMCIVREE revenue projections. Finally, Wells Fargo would ultimately raise their price target to $35 as they now include the hypothalamic obesity opportunity for IMCIVREE in their model.
Q2 Earnings Recap
The big takeaway from earnings on August 2nd was management indicating that 6 weeks since FDA approval, over 20% of doctors have prescribed IMCIVREE for BBS patients. Importantly, management commented that these providers are evenly distributed across the country further suggesting that the drug is gaining widespread rather than regional interest amongst BBS-treating physicians. Stifel notes that currently, the time from prescription to reimbursement ranges from 30-90 days, which is typical of rare disease drug launches, and they anticipate that as RYTM continues its launch activities, this window may be narrowed with greater access for patients. Additionally, IMCIVREE’s commercial progress is not limited to the U.S. There is continued expansion expected in the near-term with launches in the UK (October 2022), Italy and the Netherlands (YE22), and Spain, Sweden, Israel and Argentina (2023).
Morgan Stanley was out with a post-earnings note saying that Rhythm announced initial launch metrics for BBS, including 50+ scripts written from 35+ physicians in the first 6 weeks. Given management’s commentary in recent months suggesting a more gradual launch in BBS, they were surprised by the speed with which ~14% of identified BBS patients have been prescribed IMCIVREE. “We are further encouraged that [1] 22% of prescriptions were not from targeted physicians, [2] Prescribers were not concentrated in any particular area of the US, and [3] ~2/3 of prescriptions were for patients not in the long-term extension study. As a result, we are more constructive on the prospects of the BBS launch and continue to expect IMCIVREE sales to be driven by BBS starting in 2H…We would watch for additional details in the coming quarters on additional BBS patients prescribed Imcivree and the translation of scripts to sales.”
Expert Call
On August 8th, Needham was out with a note after hosting a call with Dr. Jennifer Shoemaker, MD, a pediatric endocrinologist at Vanderbilt University with 6 Bardet-Biedl Syndrome and 50 Hypothalamic Obesity (HO) patients under her care, to discuss Rhythm’s IMCIVREE programs. The key takeaways were:
–Dr. Shoemaker has started to prescribe IMCIVREE for her BBS patients, but does not have any patients on the drug yet. She notes that her BBS patients have been ID’d and the eligible patients have filled out and submitted start forms. So far, she considers the forms and submission process “very easy,” but will have to wait and see how payers react.
–She considers the recent IMCIVREE Phase 2 results in HO “incredibly impressive.” She was particularly impressed with the magnitude of the weight loss in a relatively short 16-week treatment period. “She has not seen anything like this with other weight-loss drugs in HO patients, including GLP-1 agonists. She has experience using GLP-1 agonists in HO trials and although ~50% of patients show some weight loss, the magnitude is nowhere near the ~17% reduction seen in the IMCIVREE Phase 2 HO trial.”
–Based on Phase 2 HO data, Dr. Shoemaker would prescribe IMCIVREE to all her HO patients. Safety and tolerability profile to date is not an issue. She points out that HO patients have a high tolerance level given their journey (cancer survivors, chemotherapy, blood draws, brain surgery, etc.) so if a drug is having a positive effect, they would very likely tolerate it.
Upcoming Catalysts
-On the BBS front, a positive CHMP opinion/approval decision is expected in Q4. If positive, country-specific coverage decisions can emerge thereafter.
-As for the clinical catalysts starting with hypothalamic obesity, full Phase 2 data is expected in Fall 2022. Then, an initiation of a Phase 3 trial sometime in 1H23.
-Additionally, topline data from the Phase 2 exploratory basket MC4R variant study are expected in Fall 2022.
