Q4 2023 Rhythm Pharmaceuticals Inc Earnings Call

Participants

David Connolly; Head of IR & Corporate Communications; Rhythm Pharmaceuticals, Inc.

David Meeker; CEO & Chairman of the Board; Rhythm Pharmaceuticals, Inc.

Jennifer Lee; Executive VP & Head of North America; Rhythm Pharmaceuticals, Inc.

Yann Mazabraud; Executive VP & Head of International; Rhythm Pharmaceuticals, Inc.

Hunter Smith; CFO & Treasurer; Rhythm Pharmaceuticals, Inc.

Tazeen Ahmad; Analyst; BofA Securities, Inc.

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Rhythm Pharmaceuticals' fourth-quarter and full-year 2023 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would like now to turn the conference over to David Connolly, Investor Relations and Corporate Communications. Please go ahead.

David Connolly

Thank you, Michelle. I'm David Connolly here Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section on the investors page of our website, ir.rhythmtx.com.
This morning, we issued a press release that provides our fourth-quarter and year-end 2023 financial results, and a business update which is available on our website. As listed on slide 2, is our agenda. Here with me today in Boston are David Meeker, Chair, Chief Executive Officer, and President of Rhythm Pharmaceuticals; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, our Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International, is on the line joining us from Europe.
And on slide 3, I'll remind you that this call contains remarks concerning future expectations, plans and prospects, which constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual or quarterly reports on file with the SEC.
In addition, any forward-looking statements represent our views as of only today, and should not be relied upon as representing our views as of any subsequent dates. We specifically disclaim any obligation to update such statements.
With that, I'll turn the call over to David Meeker, who will begin on slide 5.

David Meeker

Thank you, Dave, and good morning, everyone, and thank you for joining the call. So 2023 was a truly a transformational year for Rhythm. Commercially, developmentally, financially, and strategically as we have expanded potential indication to next generation products.
2024 will be a year focused on execution, setting up an exciting year of milestone achievements in 2025. So on slide 5, we got the three boxes which highlight the important aspects of Rhythm. And in the first box, HO remains the cornerstone of Rhythm value. We finished the year having over enrolled our Phase-3 trial. Now, with all 120 patients in the primary analysis' cohort dosed. And this 120 will form the basis of the US and EMA filings, keeping us firmly on track for first-half 2025 topline readout.
Execution in that trial remains strong with a high level of sales site and patient engagement. We're excited also to announce that today, we have concluded extremely constructive interactions with the Japan regulatory authority, the PMDA, (technical difficulty) Japanese patients in the Phase-3 trial with acquiring an independent study in Japanese patients.
Japan is continuing to evolve their regulatory process to further facilitate the development of innovative medications for the Japanese population. And they are highly motivated to ensure that the Japan patients would be able to participate in the call in the Phase-3 trial. We were joined in our interactions by one of the leading experts in Japan, who help them understand the severe unmet medical need and the potential benefit of setmelanotide.
What's particularly interesting about Japan opportunity is that the prevalent HO is two times higher than in the US with our initial epidemiology work, suggesting there are 5 to 8,000 patients, which is about the same number as to the US, albeit, with a population a little more than half the size of the US. So if this opportunity plays forward as we think it will, the Japan opportunity could become the second most valuable part of the overall Rhythm portfolio behind the US-HO opportunity. So Yann will expand more on that epidemiology and our plans going forward.
Second, we made great progress advancing several programs. Both our newly acquired daily small molecule from LG Chem and our weekly formulation 718 are progressing well. I'll comment further on those in a couple of slides. With regard to the pediatric program, I will show again two slides you've seen before, reminding you of the strength of that data and why we think it is so important.
We have filed, as previously reported, to expand the use of IMCIVREE to patients between the ages of two and five in the US -- sorry in the EU, and will file in the US in the first half year. Third, we had another solid quarter commercially, with $24.2 million in revenue over 100 new prescriptions, and more than 70 approvals reimbursement. We are excited about our recent reimbursement approvals for BBS in Spain and Italy. And with those two approvals, IMCIVREE is now available commercially in 14 countries, including the US and Canada.
Revenues in the quarter were impacted by a change in policy made by single Medicaid program in one state in response to a disproportionately high volume of prescriptions. The state has a favorable policy in place and continues to cover patients, but is now requiring a higher level of documentation than previously required. For example, if a patient has eye findings consistent with the diagnosis of BBS, they will now require an ophthalmology consult to confirm the diagnosis. Whereas previously, it was simply the attestation of the prescribing physician.
With this change in policy, 30 patients came off coverage early in the quarter and were transitioned to our bridge program which is a free drug program provided while we work through coverage issues. There is no read-through to any other Medicaid program as this situation is unique to a specific demographic in this state with a higher prevalence of BBS patients who came on to treatment early. The impact of 30 patients coming off reimbursed treatment early in the quarter and going onto the br idge program was about $2 million.
Importantly, despite this dip in US patient numbers at the start of the quarter, the remainder of the US story continues to grow as expected, and we finished the quarter and a very good place. And Jennifer will, of course, provide more color in her section. So moving to slide 6.
So a little more in Japan. Typically, Japanese regulatory authorities require PK studies to be conducted in Japanese subjects in its -- however, following the extremely constructive discussions with Japan's Pharmaceutical Medical Device Agency or the PMDA, we have agreed on a plan to enroll 12 Japanese patients into our current Phase-3 trial. We will collect PK data in those 12 page patients, and there will be no requirement to perform an independent study in Japanese subjects.
Importantly, as I said, the additional cohort of Japanese patients and the timing for them to know impact in our timelines to complete the pivotal cohort, get to topline data and submit our filings in the United States and Europe. Specifically, we will file in the US and EU on the results from the first 120 patient to finish the trial. The remaining patients, the approximately 10 plus patients who are part of the over-enrolled patient group outside of Japan, and the 12 Japanese patients who will be part of a second close, which will be used to support Japanese approval. We will, of course, seek orphan drug designation in Japan in parallel.
So on slide 7, this is just remind you of our Phase-3 trial design for HO, which you all know well. It's the Phase-3 trials enrolled patients aged four years and older with hypothalamic obesity. Randomized two to one to setmelanotide therapy or placebo for a total of 60 weeks, which includes up to eight weeks for dose titration. The primary endpoint for this trial is a mean percent change BMI from baseline after approximately 52 weeks of a therapeutic regimen of setmelanotide compared with placebo.
We are 99 -- as I told you before, 99.5% powered to achieve a 10-point differential between the therapeutic arm and placebo. And given our 12-month data showing consistent response across all patient to adhere to their prescribed therapy in the consistent safety profile of setmelanotide and other indications, we are quite confident in the outcome.
Slide 8, speak a moment about LG Chem's molecule. We're particularly excited about the acquisition of the global rights for LB54640. And yes, we will be working on and aim for that, which we announced early in January. We believe this drug candidate could provide patients with an important new treatment option, and could be in important long-term value driver for our company.
LG Chem, a highly regarded company with deep chemistry and early translational experience and expertise has developed an oral drug candidate that, based on the early clinical data generated to date, suggests they have identified a specific therapy for MC4R diseases that will not result in hyperpigmentation or have associated cardiovascular side effects. We have had a highly collaborative working interaction with the LG team as we move to transfer full responsibility for the program to Rhythm. We anticipate the transfer to be largely complete within three months of signing and remain on track for that.
In the meantime, we are jointly progressing the two trials, with the primary focus being on site initiation of the single trial for hypothalamic obesity. A parallel focus will be on developing a pediatric formulation which will allow us to move to treating the younger patients who, as we know, for both HO and genetic causes of MC4 pathway diseases are in need of treatment.
On slide 9, a little more about the molecule LB54640. As previously described, we were impressed by the robust preclinical package and by the data in their Phase-1 study in healthy volunteers with obesity, which showed the expected dose-dependent decrease in BMI at four weeks. Importantly, they did not see hyperpigmentation nor any cardiovascular signal, which is consistent with their preclinical work.
Slide 10 shows the design of the SIGNAL trial. A Phase-2 28-patient open-label trial -- sorry, placebo-controlled trial to evaluate the molecule in patients with hypothalamic obesity. The trial is designed to evaluate safety, tolerability, pharmacokinetics, weight-loss efficacy, with an efficacy endpoint of mean percent (technical difficulty) four arms, three different dose groups and placebo (technical difficulty) and will be followed by an open label extension period of up to 52 weeks. This is very similar to the (technical difficulty) placebo control to the trial we ran originally with setmelanotide in HO.
We are fortunate to have a model such as HO, which appears to be quite sensitive to the effects of an MC4R agonist. So our expectation is that this relatively small trial will give us good insight into the efficacy, safety, and importantly, the dose range which we will look to develop as the program advances.
On slide 11, the 718 weekly program, as I highlighted in my intro, is advancing well. The IND is filed. We have selected our CRO, and are looking to dose our first patients in the first half of this year. And I can tell you that we are aiming to have those first patients dosed in March. Here, we're committing to the first half of this year. As a reminder, we will begin conventionally with single and multiple ascending dose cohorts in normal volunteer patients with obesity followed by a Part C, which one will age of patients followed for 28 days.
Those patients will be eligible to enter into a long-term extension study once we complete our chronic toxicity studies, which are required to support longer dosing and those chronic access, these studies are ongoing and running in parallel. Now on slide 12 and the last two slides, I wanted to revisit the data in pediatric patients we showed at our R&D day in December. It by these results quite remarkable for a couple of reasons. one is that despite the extremely young age patients between the ages of two and five with either policy leptin deficiency or BDS., they were severely affect that change. That should not be a surprise given the genetic cause of the disease, which means in most cases, it has been present since birth. Despite the severity we know from multiple anecdotes, these patients are not being recognized as having an underlying disease and in the worst cases, the parents to blame for their inability to control their child's food intake.
As you can see on this slide, patients responded extremely well to treatment with a mean decrease in weight of more than 18% at one year. Slide 13, I think this where the real story lies in the individual results, which show a waterfall plot of the individual results for the 12 patients. two takeaways. The Y axis shows the BMIZ. score, which is basically the number of standard deviation. That child is away from normal. The graph shows the change and BMIC. score with treatment for the first two groups, starting from left to right, I'm seeing that are on the left hand side of the Grab. These children are experiencing it five to seven point decrease in their BMIZ. scores from a starting point as high as 12 is important to remember, HBMIZ.
score change of greater than 0.2 is considered clinically meaningful. The BBS patients who remain quite not quite as severely affected, still showed a one to two point decrease. The only two patients who did not have a meaningful highly meaningful change in their BMIZ. score was one patient who was lost to follow up early in the trial. In a second patient who was noncompliant the medication, expanding the label to children to and above will not open up a significant additional market opportunity will add incrementally, of course, but it will reinforce the importance of thinking about genetic causes when confronted with early onset obesity. I will remind people the cumulative morbidity begins early in the earlier you intervene the specific there with the better your chance to modify the long-term outcomes. And third, it reinforces the safety of the medication and then it can be given and should begin to children as young as two, if clinically indicated, labeled Ascension.
And we look forward filing in the US in Q3 of 24. With that, I'll turn the call over to Jennifer.

Jennifer Lee

Thank you, David. We continue to face direct commercial. I keep saying that corner with new prospects, a prescriber and reimbursement beginning on Slide 15. We remain pleased with the Granite and consistent demand from February at Viking LTM active asset twenty-two, Michael, thanks for calling and our first full calendar year. And they're saying we continue to go into depth and breadth of prescribers and passive at the authorization of efficiency. During the fourth quarter of 2023, we received more than 100 FSK align a 70 approval for reimbursement from payers.
As David mentioned earlier, a positive trends were offset by account associated with one per share. one state Medicaid because of a higher than expected volumetric Pepsi RMBS patients, which was above the estimated prevalence at ATS, had requested additional documentation to support the magnetic our previously approved and reimbursed patients mealtime a February cap rates for these patients are send-out concerning patients do not have any gas supply chain network and separate retransmission 30 patients to freak at their average program F5. During Q4, our total number of reimbursed patients that the land where we exited three mega banks with limited to one state, where there appears to be a high prevalence of BBS patients, making that a link 50 racing. We are working with its Medicaid program and prescribers. Cancer patients diagnosed with DBS continue to receive access at February therapy. It is important thing at a state. Medicaid still has a policy in place to cap and separate buying back to 70 a profile in the quarter. We are seeing these cancer faster and we feel NPL. And in prior quarters, over 70% of approval for reimbursement during the quarter came at the time at prior authorization. Rca, a trend that has an incremental improvement each quarter sense flats next site why they have seven every prescriptions for baby at continuing to cap select outpatients accounting for 59% at CVS prescriptions plants today. This is a positive trend as we believe many about BBS patients who may it is at participating in the annual survey of the credits project three oiled wildlife to receiving specific cap RMBS are reengaging with a health care providers. As we've discussed this topic and legacy were the first approved therapy for disease raises awareness and pace away or reengagement of the broader diagnosed patient population. Exide, we see continued progress with additional first-time prescribers as well as repeat prescribers. While the breakdown by special team remains consistent. Adult and pediatric cardiologists account for 45% of prescribers flex today consistent reflects today's metrics report during the last year, correct need to read them prescriber for our physicians. Our territory managers had not previously CoBank. Prior to that 50% being received remains consistent, and we are pleased to see the source of credit continue as we find new prescribers are not perfect calculation. Fx integration first time prescribers for the heroic efforts in February that has stayed very consistent, averaging 48 new prescribers per quarter and 2023. And in Q4, we were consistent with at 47st time, right? And we are seeing incremental increase in the depth of prescribers, 30% FX CapEx, life-to-date effort and to our more prescriptions, which marks an increase from prior quarter prescribers are exceeding their patient benefit from that separate, and they remain interested specified for additional BBS patients identified next play. Overall, the payer mix for BDS remains consistent with almost 90% of prescriptions since launch falling under a commercial or Medicaid plan. We continue to see incremental improvement at carrying access and reimbursement rate with respect to overall coverage by state Medicaid programs. As we've done in recent quarters, we look at Medicare covers measure their CapEx side. We introduced this concept at the end of the first quarter when we reported that approximately 75% of Medicare covered by foreign state with either a positive and that Ray policy for an estate, we have been able to gain positive CapEx and at least one answer. And the absence of and separate policy. The remaining 25% of Medicaid lives are in states where we either had not yet had a prescription firm Carefree oil. We were still working to secure access for efforts caption are finally, where we had not been successful in gaining access to the appeals process. In Q2 and Q3, this breakdown shifted to 80 20. And at the end of this quarter it was 85 15. Within that 85%. We have stronger cap rates for MCFA as we have increased the number of states with a specific and separate policy and in place next site. Lastly, we are seeing strong success and reauthorization as a vast majority of react have been approved. This is indicative of patients benefiting from an F3 FA as well as payers recognizing these benefits life. To date, we've had a 110 approval Vault for reauthorizations for continued and February therapy. Most of these come at a one year at the time play. But there are few payers to policies call for reauthorization decisions at three or six months. As at the end of the fourth quarter, we only had 10 denial service lines and fixed asset base. Denials have been approved their appeal and we are working to get the remaining quarter as well. Overall, the fourth quarter and the first full year of BBS. commercialization has been strong. We will continue focusing our efforts on expediting diagnosis, BBS patients and supporting access 10th separate. With that, let me hand it over to Jan.

Yann Mazabraud

Thank you, Jennifer. 2023 was a very successful year for the international organization with a BBS. launch in Germany, Supreme Union approval, early access program in France for epidemic of obesity, many commercial provisions, new countries, and all the work the remainder of the US and Spain. And we are looking for a lot to some new in 2024 as well as we begin the year and on single developments in Japan. Slide 21, Japan will become a very important market for us. Capital prevalence pool, hypothetical visiting Japan two to three times higher sales on the prevalence rates in the United States and Europe through our discussion with local kit sales with the Japanese pediatric neurosurgery. So safety data from the Japanese brain tumor registry and also a high level was the total claims that are these analyses. It has been confirmed that there is a much higher prevalence of. Can you change your mind, Japan with some frequency of obesity dividends and as in the US and Europe, and we believe that there are between 5,008 thousand patients with hyperkalemia obesity living in Japan, there are more than 100 key hospital or treatments and dozens of bundled care for patients was. Can you found your most and also brings to move that may cause hypothetical busy building relationship with this center will be key to our strategy, and we have already started to do it. In addition, Japan, like many European countries is a single system was administered. This history of recognizing rare disease and dedicating the resources to Jefferson. Japan is the third-largest economy measured by GDP. And as David already say that the long-term, we believe that it will become the single most important market for reasons beyond the United States. In exploring this exciting opportunity, we consider multiple avenues to advance submitted time in Japan. We made the decision to move forward with a direct presence and was that resemble truly become a global revenue, endocrine disease company able to leverage our footprint in Japan for future opportunities. Next slide. Our work in Japan is off to a strong start in discussion with the Japanese PMDA. We had the benefit of one leading Japanese, except in epidemic of obesity, was able to emphasize the and minuscule medical unmet medical need in Japan and the relevance of enrolling Japanese patients directly in our Phase three trial. Just last week, we held our first reasons consult symposium in megacity during the yearly congress of the Japanese society for hypothalamic pituitary tumor cells. And it was slide 23. Meanwhile, our launch in Germany is positioned well, meeting our expectations with approximately 200 patients living with VBS. already identified and importantly, a subset of approximately 800 patients diagnosed with the U.S. and German. Our teams remain focused on engaging with physicians, carrier for patients and with the many centers where they are pretty we are expanding the number of treatment centers and hospitals. We are engaging with knows that we have more than nine months into the loans we have received prescription from 15 months until which are all within out and do well structured and resourced university hospitals. In addition, our resume at-home services to run through, which would provide efficient support for each patient and can you know, has been quite successful. Our teams treatments, Expedition the physicians and fulfill their retail services divisions, which for example, in home visits when needed. And since December, prefilled syringes have been available for both VBS. and PMCV. five patients. Next slide. We also recently announced that we achieved reimbursement for interior in Spain and Italy in Italy. We received a positive reimbursement decision for BBS. two weeks ago, and we're starting to launch in February. We believe that there are approximately 200 patients diagnosed and identified in the OR, and those are careful non-physician and our team in Italy. He is focused and engaging with physicians in hospitals and medical center 21 state 12 of the country in Spain. The recently announced positive reimbursement decisions covers both VITAS and from Silicon Valley divisions. There are approximately 100 patients with VBS. identified and our team and they are engaging with physician and this care center in 17 states. So some of the country to bring into the two patients in semi. Most countries we know must navigate regional access and tender management of local hospital levels in six weeks for patients to begin treatment. And we'll start to see commercial patients come on line was countries during the second quarter. We'll begin to see increasing contribution to our net sales on Mitch's countries in 2025. Slide 25 and last slide. We continue to advance country by country within Serono available for from Citibank OBBS. in 12 countries outside the United States and Canada. In France, we have paid early access available for BBS. as we negotiate with French authorities and pricing were in the midst of the negotiation now and hope to finalize it by the end of this year. We are nearly fully paid early access as well. Both of these early access for under a new cell division by division does take time, but we are building a strong foundation in terms of our relationship with the government authorities, PO leading expert centers of excellence and efficient that position. Looking ahead to next of the larger European markets to come on line with reimbursement for VBS. of the UK and the Netherlands, both in the second half of the year. Now I will turn the call over to Hunter.

Hunter Smith

Thank you, Jan. Let's start with a snapshot of the Q4 P&L on Slide 27. We recorded 24.2 million in net product revenue in the fourth quarter versus 8.8 million during the same quarter last year, an increase of 15.4 million or 175%. For the full year, net product revenue totaled 77.4 million versus 16.9 billion in 2022 quarter. Over quarter, we saw an increase of 1.7 or 8% of net product revenue, driven primarily by continued growth of the number of patients on Cinryze therapy in our international region. In the U.S., revenues were relatively flat quarter over quarter due to the shift of 30 patients to our bridge program early in the quarter. As David and Jennifer mentioned, given us 30 patients lost reimbursement early in the quarter after that change represented approximately a little more than $2 million foregone potential revenue in the fourth quarter. Including that discrete event at the beginning of the quarter, drivers of revenue, i.e., prescriptions and reimbursement were as expected. This pattern is consistent with our belief that revenue growth in rare diseases is difficult to trend quarter over quarter, but in the long term and globally, so slow and steady growth continues. In the fourth quarter volumes of vials dispense the patients were essentially the same vials shipped to our specialty pharmacy, resulting in no significant impact on revenue inventory growth at this at the specialty pharmacy, gross to net for US sales quarter over quarter increased to 85% from 83% in the third quarter, primarily due to a Medicaid rebate adjustment in the quarter, which was based on actual rebates paid as compared to rebate levels, accrued practices to accrue for Medicaid rebates based upon expected payer mix of an actual Medicaid invoices are received. This may result in differences versus crude amounts. Cost of sales during the fourth quarter was 3.2 million or approximately 13.3% of net product revenue, representing a 2.6% increase quarter over quarter. Cost of sales consist primarily of product costs that are 5% rhodopsin under our original licensing agreement for several out of time. R&d expenses were 29.9 million for the fourth quarter of 23 compared to 23.5 million during Q4 22 and an 11% decrease compared to Q3 23. Sg&a was 32.4 million for the fourth quarter this year versus $26.3 million in the fourth quarter of 22 and an increase of 6.2% from the sequential quarter basis. For the fourth quarter, weighted average common shares outstanding were 59.2 million, an increase of approximately 1.3 million shares over last quarter. Resulting primarily from the full weighting of this quarter of our equity issuance under the ATM program in Q three, quarterly net loss per share was $0.7. For a few highlights on Slide 28. For the reported 27th, 276 million of cash and cash equivalents at December 31st, 2023. The cash on hand sufficient to fund our planned activities into the second half of 2025. On the net revenue for the quarter of $24.2 million, 76% of these revenues were generated in the United States. This broker nitrogen increased from 20% to 24% quarter over quarter, reflecting strong growth in BBS patients on therapy in Germany, Q4 operating expenses, including stock-based compensation of $8.7 million for the quarter and 23.6 million for 2023. For 23, we guided to an OpEx range on a non-GAAP OpEx OpEx range and our spend came within that range. Non-gaap operating expenses for the year ending December 31st, 23 were 29 219.9 million and closes inclusive of GAAP operating expenses of 261,800,000.0, minus 9.3 million in cost of sales and minus 32.6 million of stock-based compensation. Turning to slide 29, I ask that you all pay attention to the left hand side of the guidance of the text box here and make sure this is modeled appropriately. We committed to pay 100 million in fixed cost to LG come for global rights. They'll be five four six EUR4 that was 40 million in cash in January, and we issued to them more than 430,000 worth of shares of common stock valued at $20 million. At the same time, we have also committed to pay 40 million in cash, 18 months from the close, which was in January. This EUR100 million will be accounted for in R&D expenses during Q1 2024 and one, the achievement of development and commercial milestones becomes probable. We will recognize these costs as R&D expense as well. Also for 24, as we did for 2023, we offer guidance on non-GAAP operating expenses. We anticipate approximately 250 to $270 million in non-GAAP OpEx comprised of SG&A, non-GAAP operating expenses of 105 to 110 million. R&d non-GAAP operating expenses of 145 to 1 60 million. This R & D amount includes 10 to $15 million of development costs related to LB five four six four zero. This amount excludes stock-based compensation and consideration paid to LG come and consider in connection with the licensing of LP five or six borrow. The growth rate at the midpoint of this range is 18% year over year. Excluding the impact of LB four, six four, oh, the growth rate would have been just under 15%. Finally, we are not offering revenue guidance. We have not offered. Revenue guidance in the past are not doing so. Again this year and February sales in the US will continue to be the main driver of revenue growth for rhythm for revenues from our international region. Germany will continue to be. The main driver of Spain and Italy are coming online for BVF will take time to get up and down running as we navigate the local hospital systems and their budgets. The Netherlands in the U.K. come on later in the year. And we do not expect sales in those regions to be a significant contributor for 2024. And with that, I'll turn the call back over to David, our boot.

David Meeker

So thanks all. It concludes the formal presentation. And I hope what you're taking away from this is that rhythm is maturing. We're firming up of the components, which are driving the underlying value of with them are executing on our global strategy. We're executing on our developmental strategy where we're exploring Ali, elemental potential opportunities related to the MC4 pathway. And we're setting up, as I said, a year 2024. It's hard to believe already two months into the year and given the amount that's already happened, but due 2024 will be about execution. And as I said, 2025, well have a series of from really tactful on cost on readouts for them. So that all our question operator, same scale.

Question and Answer Session

Operator

As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please stand by while we compile the Q&A roster. The first question comes from Tazeen Ahmad with Bank of America. Your line is open.

Tazeen Ahmad

Hi, guys. Good morning. Thanks for taking my questions. Have been at Alex. I think again a little bit of color on the comments that you made any or perhaps remarks about the clusters, BBS patients in a particular date. And just given all the work you've done on this and ultra rare disease, is this something that you would have anticipated happening? And then can you also give us color on what would cause I'm in a particularly large number of patients to be clustered in a post proximity? And how are you getting confidence you won't be seeing similar events in other states and he said on the call? Thanks. Yes. Thanks, isn't so good question. And so your first part of that was some did we have a line of sight to this answer was to know what do we think is going on? There are pockets in every rare disease or many rare diseases where you have a concentration of patients related to a founder effect on the most publicly, a clear example of this and BBS. world is in Newfoundland Canada, where if you look at an expected prevalence for BBSO. 1 to 75,001 and 100,000 the prevalence and that Canadian provinces about one and 18,000. So um, so that alone we know exists. We weren't expecting to see it in this state. But if you looked at the demographics of the state there, the demographics do are consistent with the fact that you could have a calendar effect. And we think that some That's what's going on. The second piece of this was that we also had positions in that state who works very interested, very motivated early on and were writing scripts, as I said, early and sofas specific state Medicaid plan, they saw some they were an early adopter in the sense that they had a policy in place early. And we're trying to quote unquote do the right thing, but they saw a much higher level of Scripps than what they had a bad model than their plan and their expected prevalence. And Jonathan, I had a call with their from their leadership, but on which was incredibly constructive, ma'am, you may say so there's no antagonism or no concerns about wanting to treat BBS. in that sense, some we basically just overwhelm them to a certain extent with them relative to what they had expectancy. So long story short, that's what we think drove the disproportionate. The second part of your question, Amir, let Jennifer speak to in terms of the other states here and why we see this is very unique situation related to this one state Medicaid plan here. So just any chances for uniqueness at this particular stage agents as David iterated, when you look at what they estimate aircraft line, could they be steadfast in our service, Mark and broad-based and a pipeline of estimates at a much better realization past app in an expectation in terms of this particular Medicaid? I will be there rate. We still have a positive policy in place and we're just working through the system. And in contrast in our app and not initial our largest MLR for a year from clients in terms of DBS, if you look at every other state, Medicaid and chances estimated classifieds versus the number of spreads that we have received and other states where we have vastly under testing churn at a number of active patients versus what they may have projected and Champs and potential for that product. So adaptive pricing. And but once again, just working collaboratively together with the figures fail. Hey, thanks for all of that color. And maybe just one last quick question. What's the question was the current mix of Medicaid so that breakout Medicaid patients in his current mix? What is the proportion of that 90% of patients pass away at our commercial person. Okay. Thank you. Please stand and Stanley your line is open. Good morning. This is Katherine on for Jeff. Thank you so much for taking our time on 17 and now LP. five, four, six 40. Can you provide more color of differentiation here, for example, to patients patient? Or are they emphasizing other aspects? Yes. Thanks, Kevin. And um, so perfect. I think both of our next-generation weekly, both of them are hyperpigmentation sparing. So that's a huge issue for some of what we're seeing is a very consistent in a number of percentage of patients that segmentation, 100% of the patients will have some change in their skin pigmentation, but much smaller percentage are bothered by it, but particularly non-carbs patient populations that finished to. So so both in the next generation products will offer that as tissue, which is one is a weekly injectable, though there's a daily oral about what's our strategy as we think about developing. Again, assuming that both of these molecules for patients, physicians, the ability to choose a treatment, which gives their patient the best chance of getting there well, well accepted way. So that's it from no more than that will be dictated by products do well, they should clearly be better drugs and Sentinel annotate, and then we'll reevaluate the role of settlement with always, you don't keep an inferior molecule out there if you've got clearly better alternatives. So thank you. Thank you. one moment for our next question question comes from Corey Johnson with Goldman Sachs. Your line is now 10. I guess how are you thinking about what a successful efficacy outcome looks like from the signal trial influence your view of why it's sufficient efficacy can be? And how do you think it will differ in particular and nine? Thanks, Chris. So to be honest with you, I don't expect it to be agonism. We're probably getting the desired effect from maybe at the maximum level. You can achieve weekly or daily oral to do better. And that may show up more in the real world is in terms of compliance was extremely high in that trial overall for will differentiate on efficacy. See. But So long answer to your question is will be looking for something that would be similar, but not exactly the same. Probably one moment for our next question. The next Well Fargo. Your line is open. Hey, good morning and congrats on the progress here. Nation denial. I guess what's the typical reason why that occurs and how long is it taking one? And then question two is any color you can share on what you're seeing from a discontinuation Weston and starting with the first one in terms of the real denials and the turn of the first category, the that at clinical benefits that were appreciated by the persistent asthma therapy, but they may be just shy in terms of interesting enough at several of these patients hit the 5%, and that's one of the full benefit versus that particular measurement things at the fitness investments to provide separate process. Our deck, just working with the physicians have been able to get some of those appeals through it. And you know, there are certainly a profile and but they didn't necessarily have a salmon is also don't have a particular. We are we go through the process and at the team is fired and have been successful. On the question as discontinue overall, the discontinuation rate has increased. Our asset-light 20% of net adds on to have increased, especially at the recent have remained consistent in terms of what we've outlined, the key areas, including assets. And I think that the main piece here for us is also opportunity and focused at to add expenses. So it's an opportunity for our teams to fax, titrating appropriately, maintain them during this period of time. The other piece is as patients get kind of we have seen patients have restarted. And in terms of the hyperphagia and there's different examples of people coming back a year just in terms of 18 direct threat. Very helpful. And then one more question just in terms of is that something we should expect this year? That program is moving work incredibly focused on it. We're guiding in this to the first dosing in the first time, getting that first patient dosed in March. If everything goes well, we should be comfortably enrolling H open until 2025. Thank you. Thanks, Peter. The next question comes from Phil Nadeau with TV Cowen. Your line is now and then one on commercial in terms of Japan, just so we're clear on the primary endpoint necessary for Japanese filing. Is it an analysis of all the patients were 120 that will be used to fund the US and Europe, U.S. Japan? Or is there a special analysis, but the point? Yes, Henry President and so it will be both. It'll be on base stations independently, of course, and what they'll be looking for since we're not powered to have us the standalone, we're looking for consistency with the other results. Got it. Okay. And then in terms of the similar to what you've been able to to achieve in the U.S., Jan, please. The usually consistent with the European prices, comparator modem or cost plus pricing system is no comparator. Also the UK's a German and French price and the list price of Copesul in that roughly 30 patients who discontinued commercial are all 30 of those patients back on commercial therapy to patients are still on average per gram as we can as needing to get specific impact from specialist. I imagine it takes quite a bit of time subtype. It depends appointments overall that though, I mean, Eric, as Jennifer said, it's going to take time for one yet. Don't expect them to drop back in next quarter. And frankly, documentation, there's no guarantee that we get all through some of them back on what's been the most important thing about this whole process aside from the constructive interactions we've had with all the more than compensated and that is running. And so on the status now is it will be upside to our current equation and spec posts. Thanks, sir. one moment for the next question. The next question comes from Whitney. Hey, guys, thanks for taking the questions. I've been in the last comment on the work to get this and thinking back on is there is the genetic diagnosis genetics and there is more of a clinical diagnosis need for this particular payer in terms of mix component as well as the clinical data set that are at now in place app and online than safety and efficacy in the Japanese group there. Do you have to speak to that for some minimum? There's no nothing that stands out in the small number of patients that we have. one, what is population. And so we designed this trial for renal Western society is well above what would be a cut-off grade 25 in Japan as determining Tom. So from Japan patients to get into the trial there. So that's significantly narrowed a bit the population of your question about PK. and differences. And we say data down in the very, very young kids. And there's a consistency in the way this drug performs. So there's been how this drug is handled by the Japanese population. I am expecting an update and e-tail from the Phase two LTE. this year with additional follow up on the October update from that process of putting our publications, um, we haven't really mobile reevaluate that. If we did anything, it will be in the current plan. I think we are giving good series of updates there for the moment. As Jen. The next question comes from Dave Gon Ha with Steve. And good morning, guys. Thanks for taking my questions and congrats on the progress. Maybe a few RGS equation. I was wondering if you could comment on sort of the German launch progress. I think you mentioned 15 academic centers are large treatment centers, patients we are currently on therapy. And as we think about Spain and Italy launch, how could the dynamic launch? And then switching over to the clinical side, if we think about the HOREHO. enrollment progress into kind of facilitate, if not at seven live data from all three of those studies? And if so, how should we think about the cadence between the three back so much? Yes. Jan, you have to go first here and we launched. Yes, I will start with Germany, some additions number, but I can comment on the on the loan for sure. So as I said, it's probably fill in those interact with all of the key German centers. So you had in terms of selectivity, interaction addition, Susie HEP's is very good and the decision continuation rate that we observe is low hold on one for the adult population, one for the pediatric populations will which will help us to Germany. But I can tell you that it is going with Spain and Italy, Brazil because there are many common Dynepo as often with rare disease and of the national mid negotiated deals and local hospitals in individual states. And that's why it will be slow and steady efficient for us and in the fastest regions. On the market access point of view, as I said earlier, the one with a more efficient and the fastest pace in terms of access and until mentioned, that also in four, gentlemen will be the main driver full in 2025 when we will also leverage and incredibly well on the Phase three trial. And that does speak to demand interest income in this trial in that for both of our weekly program and the on the small molecule daily oral program, Houston, HO patient, as I said, first for the weekly we've got on the small molecule, we're just getting those sites up and haven't quite gotten to a point where we're part of the growth. The trials established on my I don't have lightened line of sight to winning IBM. As you can imagine, we're highly motivated to get it as soon as possible, but I have to leave it there. Thanks. Please stand by for the next question. Hi, good morning. Thanks for taking our questions. First one on just looking at the interest two quarters, just wondering if you could comment on this trend. Do you feel like you'd reach a point in the US where there'd be a relatively steady state quarterly new prescription ad? And what on H., so in Japan, can you maybe talk about the amortization relative to what it is in the US? Are there any significant differences in diagnosis or registries and also other and Japan view using, say the Glip weight loss drug to treat ITO? Thank you. So Joe, I'll start and then hand it over to Jennifer. I think around scripts that we view that as the hardest thing traceability, um, we feel very good about the growth and a reimbursed patients on therapy perspective. But we do think it's going to be consistently difficult to model it, you will. And so and Jennifer cannot app. What's interesting is such that when you look at, let's say, hey, let's say, yes, and the first interaction place to be in our relay evaluating our patient, what makes it difficult different channels has delayed, including, as we outlined, sort of like a number of prescribers here remain consistent at quarter over quarter and ethnic experience with their patient had additional patients that come across. And that's that's what we wanted to this specific are paid for that ABSS. opportunities, higher growth path in achieving at stake for epilepsy patient situation in Japan? Yes. So I can speak have also a true in Japan. And one thing that we'll observe first is that when used after the surgery in Japan, the efficiencies, which I think is good because from an efficient, I don't see that we can speak to. But so will those two specialties WL. one of your question was the biggest societies in which these registries to set up reserves? Or is it prevents them the best given earlier also? Yes, they exist. We are well known using Zoom unresolved, good aspect from a patient point of view that these analyses for the prevalence. But we will continue to weigh on the largest centers. We have sufficient data that will help us from an economic commit until the communication and into the ability for us to say. But what happens to the details and to a vote that what should they do. And I was President of the of the Japanese society, some very specific to specific aspects as if this would consider a similar size to treat. These patients are interacting. It was a market that sounds very promising full force.

Operator

Thank you, Christian. one moment for our last question. Thank you, operator, and congrats as well guys in the quarter, given time and marketing in Japan and reaching that, Mike, Mike, I'm from in multiple impression is going to I'm just trying to clarify your marketing plan in Japan and you're going to go alone. Yes, so as I said earlier, so we will go alone with the Japan we have already or two before looking for us in the ground one from one person in my team in the next month as we did. As you know, in Japan, there are some positions that are mandatory. As Will said, we are working with to the two consultants to standalone and moving forward very nicely for rare diseases, particularly outside the US. We've experienced some and for Japan, we're going to end customer as well. I'm looking for some people we've worked with in the past, like so when you answer, we feel we can do this alone. We will talk to partners and will never say never on partnering and value of this overall rhythm picture on the bar to do anything else, but go direct would be extremely high. Thank you all again, soon. Yes. So I think very much look forward to reporting out again in another busy year coming up. This concludes today's conference call disconnect.