리듬 파마슈티컬스(RYTM) 2026년 3분기 실적 발표 컨퍼런스 콜: 임시브리 매출 9,210만 달러 기록

리듬 파마슈티컬스(Rhythm Pharmaceuticals)의 2026년 3분기 실적은 획득성 시상하부 비만 치료제 '임시브리(IMCIVREE)'의 미국 출시 성과에 힘입어 전 세계 제품 순매출이 9,210만 달러를 기록했다. 경영진은 또한 일본 출시 현황, 비바멜라곤(bivamelagon)의 임상 후기 단계 계획, 장기 로열티 부담을 줄이기 위한 라이선스 계약 수정안에 대해 상세히 설명했다.

핵심 요약

• 전 세계 임시브리 제품 순매출은 9,210만 달러에 달해, 2026년 2분기의 7,130만 달러 대비 전분기 대비 29% 증가했다. 미국 매출은 6,750만 달러로 전체의 73%를 차지했다.
• 3월 19일 미국에서 획득성 시상하부 비만(HO) 치료제를 출시한 이후, 리듬은 임상시험 환자 71명을 포함해 700건 이상의 환자 치료 시작 서식을 접수했다. 500명 이상의 처방의가 치료 시작 서식을 제출했으며, 이 중 약 200명은 3분기에 획득성 HO 치료제를 처음 처방한 의사였다.
• 보험 급여 인정 추세는 우호적으로 유지되었다: 승인 건수의 75%가 사전 승인 단계에서 확보되었으며, 80% 이상은 치료 시작 서식을 접수한 지 60일 이내에 이루어졌다.
• 임시브리는 10월 14일 일본에 출시되었다. 리듬은 일본 내 획득성 HO 환자 수를 5,000명에서 8,000명으로 추정하고 있으며, 1,000명 이상의 잠재적 투여 대상 환자를 확인했다.
• 리듬은 연말까지 획득성 HO를 대상으로 하는 52주간의 비바멜라곤 임상 3상 연구 스크리닝을 시작할 계획이며, 내년 1월 첫 환자 투여가 예상된다. 또한 규제 당국과의 논의 결과에 따라 2027년 프라더-빌리 증후군에 대한 6개월 임상 3상을 개시하는 것을 목표로 하고 있다.
• 경영진은 일부 연구 및 제형 개발 활동이 2027년 초로 이월됨에 따라 2026년 비GAAP 연구개발비(R&D) 가이던스의 중간값을 1,500만 달러 하향 조정했다.

주요 재무 데이터

미국의 수요 관련 매출 증가분 1,510만 달러 중 90% 이상이 획득성 HO에서 발생했다. 전문 약국 재고 보유 일수가 20일에서 21일로 증가하여 3분기 매출에 130만 달러의 긍정적인 재고 효과를 가져왔다. 미국의 총매출 대비 순매출 비율(gross-to-net)은 86%로 2분기와 동일했다.

글로벌(미국 외) 매출은 주로 2분기에 반영되었던 380만 달러 규모의 프랑스 소급 기여금 부담금이 없어진 데 따른 혜택을 입었다. 해당 항목을 제외하면 지정 환자 프로그램(named-patient) 시장 출하량이 변동성을 보였음에도 불구하고 실질적인 해외 사업은 전분기 대비 성장했다.

사업 및 경영 성과

미국의 획득성 HO 치료제 출시

경영진에 따르면 환자 수요는 출시 후 두 번째 분기 전체와 4분기 초까지 안정적으로 유지되었다. 환자 치료 시작 서식은 21세 미만과 21세 이상 환자 간에 균등하게 분배되었으며, 20%는 4세에서 12세 사이의 소아 환자에서 발생했다.

수요에는 최근 진단받은 환자와 유병 기간이 긴 환자가 모두 포함되었다. 처방의 약 15%는 최근 2년 이내에 시상하부 손상이 발생한 환자로부터 나왔으며, 치료 시작 서식의 3분의 1 이상은 손상이 최소 10년 이상 지난 환자와 관련이 있었다.

획득성 HO 처방의 중 약 25%가 임시브리를 최소 2회 이상 처방했으며, 이는 2분기 말의 20%에서 증가한 수치다. 내분비내과 전문의가 전체 처방의의 80%를 차지했으며, 성인 및 소아 전문의 비중이 균등하게 나뉘었다.

분기 말 기준, 획득성 HO 보험 급여 지침은 메디케이드(Medicaid) 가입자의 약 60%, 사보험 가입자의 약 75%에 적용된다. 경영진은 지침 도입이 계속 확대될 것으로 기대하지만, 현재 수준에서 승인 소요 기간이 급격히 단축될 것으로 예상하지는 않는다.

일본 출시

리듬은 규제 당국의 승인 및 건강보험 약가 등재에 따라 10월 14일 일본에서 획득성 HO 치료제로 임시브리를 출시했다. 이 회사는 일본에 50명 이상의 임직원을 두고 있으며 350개 우선 대상 병원을 목표로 하고 있다. 영업·의학 현장팀은 이 중 300개 의료기관과 접촉을 완료했다.

공공 약가는 바이알당 2,200달러로, 미국 도매가격(WAC)의 약 60% 수준이다. 경영진은 관련 약가 상한제 및 조정 절차에 따라 이 약가가 10년간 유지된다고 밝혔다.

출시 후 첫 1년 동안 처방은 2주 분량으로 제한되므로 환자는 2주마다 병원을 방문해야 한다. 리듬은 2027년 11월에 이 제한이 해제될 것으로 예상하며, 출시 2~3년 차부터 일본 시장의 상업적 기여도가 더 커질 것으로 전망한다. 경영진은 일본이 자사의 두 번째로 큰 시장이 될 것으로 기대하고 있다.

유럽

리듬은 유럽 내 획득성 HO 환자 수를 약 10,000명으로 추정하고 있다. 프랑스와 이탈리아에서는 100명 이상의 환자가 유상 조기 접근 프로그램(paid early-access program)을 통해 치료를 받았다.

유럽연합 집행위원회(EC)의 승인 이후, 회사는 각 국별 보험 급여 절차를 진행 중이다. 독일 G-BA 절차는 완료 단계에 가까워졌으며 프랑스, 이탈리아, 영국, 스페인, 네덜란드에는 급여 신청 서류를 제출했다. 경영진은 독일을 시작으로 2027년 중 유럽 국가별 출시가 이루어질 것으로 지속 기대하고 있다.

비바멜라곤 및 프라더-빌리 증후군

계획된 획득성 HO 임상 3상은 52주간 진행되며 체질량지수(BMI)를 1차 평가변수로 사용한다. 리듬은 연말까지 임상시험 기관 스크리닝을 시작하고 내년 1월 첫 환자 투여를 진행할 예정이다.

프라더-빌리 증후군에 대해 리듬은 HQ-CT로 측정된 폭식증(hyperphagia)을 1차 평가변수로 하는 6개월 임상 3상과 관련해 규제 당국과 논의할 계획이다. 회사는 2차 평가변수로 BMI 데이터를 수집할 예정이다. 경영진은 베이스라인 최소 HQ-CT 점수를 아직 확정하지 않았으며 임상 디자인은 대체로 확립된 선례를 따를 것이라고 언급했다.

리듬은 지난 1년 동안 비바멜라곤에 대한 생물학적 동등성, 음식물 영향, 약물 간 상호작용 및 간장애 임상시험도 완료했다.

LG화학 계약 수정 및 자금 조달

수정된 비바멜라곤 계약에 따라, 비바멜라곤의 미국 승인을 전제로 리듬은 LG화학에 4년간 3억 5,000만 달러를 지급하여 기존 구조에서 추정되었던 5%~7%의 포트폴리오 교차 로열티 의무를 단일 1%로 낮추기로 했다.

대금 지급은 계약 체결 직후 7,000만 달러, 2027년 9월 1억 달러, 2028년 9월 1억 달러, 2029년 9월 8,000만 달러로 구성된다. 전체 의무의 현재 가치는 2026년 4분기에 연구개발비(R&D)로 인식될 예정이다.

기존 2억 500만 달러 규모의 개발 및 상업화 마일스톤은 유지되지만, 이제 MC4R 포트폴리오 매출을 기준으로 지급된다. 또한 연간 매출이 30억 달러에 도달할 경우 LG화학은 2억 달러의 마일스톤을 추가로 받을 수 있다.

리듬은 이와 별도로 최대 7억 5,000만 달러 한도의 5년 만기 기간 대출(term-loan) 약정을 체결했다. 확정 금액은 5억 달러이며, 상호 옵션에 따라 2억 5,000만 달러를 추가로 이용할 수 있다. 리듬은 우선 2억 5,000만 달러를 인출할 예정이다. 차입금 금리는 SOFR + 4.6%이며, 만기 전 정기 원금 상환 의무가 없고 지분 연계 요소나 중도상환 수수료(exit fee)는 없다.

경영진 가이던스

리듬은 이제 2026년 비GAAP 영업비용을 3억 6,000만 달러에서 3억 8,000만 달러로 예상하며, 이는 다음과 같이 구성된다:

• 비GAAP 연구개발비(R&D): 1억 6,500만 달러 ~ 1억 7,500만 달러
• 비GAAP 판매관리비(SG&A): 1억 9,500만 달러 ~ 2억 500만 달러

R&D 가이던스 중간값은 기존에 2026년 말로 계획되었던 연구 및 제형 작업이 2027년 초로 이월됨에 따라 1,500만 달러 하향 조정되었다. 비GAAP 가이던스에는 주식 기반 보상 및 LG화학 의무 인식을 포함한 라이선스 계약 관련 마일스톤 지급액이 제외된다.

경영진은 분기 말 기준 현금이 최소 24개월 동안 계획된 운영 자금을 충당하기에 충분하다고 밝혔다. 이 평가에는 기간 대출 조달금이나 LG화학에 대한 1차 지급액 7,000만 달러는 포함되지 않았다.

리스크 및 관전 포인트

• 획득성 HO는 여전히 임상적 진단 영역에 속해 있어, 경영진은 의사 대상 교육 및 환자 발굴에 지속적으로 시간이 걸릴 것이라고 언급했다.
• 희귀질환 치료제의 보험 급여는 일반적으로 사전 승인을 필요로 한다. 이의 신청 절차로 인해 처방부터 치료 개시까지의 기간이 연장될 수 있다.
• 보험 정책 변경으로 인해 1분기 중 리듬의 브릿지 프로그램이나 무상 약제 프로그램 이용이 일시적으로 증가할 수 있다.
• 일본의 2주 처방 제한은 해당 규제가 해제될 것으로 예상되는 2027년 11월까지 초기 출시 성장의 제약 요인으로 작용할 수 있다.
• 유럽 출시 시기는 각 국가별 별도의 보험 급여 절차에 따라 달라진다.
• 프라더-빌리 증후군 임상 3상 디자인은 여전히 규제 당국과의 논의 대상이며, 베이스라인 HQ-CT 필수 요건은 확정되지 않았다.
• LG화학 계약 수정안은 2029년까지 확정 지급 의무를 발생시키는 한편, 신규 기간 대출은 SOFR + 4.6%의 변동금리가 적용된다.

애널리스트 Q&A 주요 내용

경영진은 4분기에 들어서도 획득성 HO 처방량이 둔화되지 않았다고 말했으나, 월별 치료 시작 서식 데이터 공개는 거부했다. 회사는 진단, 의사 진료, 치료법 변경이 환자 개인별로 이루어지기 때문에 환자 전환율이 급격히 가속화되기보다는 꾸준하게 유지될 것으로 예상한다.

경영진은 출시 초기 단계임을 강조하면서도, 획득성 HO 환자의 대다수가 치료를 지속하고 있어 순응도(유지율)가 높게 나타나고 있다고 밝혔다. 리듬은 획득성 HO 환자가 임상 연구에서 상당한 BMI 감소 효과를 보였고 주사형 호르몬 치료에 이미 익숙한 경우가 많기 때문에 BBS(바르데-비들 증후군)와는 순응도 양상이 다를 수 있다고 보고 있다.

프라더-빌리 증후군과 관련하여 경영진은 폭식증 중심의 6개월 연구가 BMI를 1차 목표로 하는 12개월 임상보다 더 단축된 경로를 제공한다고 말했다. 회사는 3~4개월 후 플라세보(위약) 효과가 감소할 것으로 기대하며 약 5점 이하의 치료 차이를 선례로 언급하면서도, 규제 당국과의 논의는 아직 이루어지지 않았다고 덧붙였다.

로열티 인하(buy-down)와 관련해 경영진은 리듬이 먼저 계약 수정을 제안했다고 밝혔다. 이번 결정은 획득성 HO 및 프라더-빌리 증후군에서 비바멜라곤의 가능성에 대한 자신감과 더불어 MC4R 포트폴리오 전반에서 파이프라인 자산 및 적응증을 선택할 때 경제적 불이익 요소를 제거하고자 하는 의지를 반영한 것이다.

실적발표 콘퍼런스 콜 전문

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전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Rhythm Pharmaceuticals Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to Dave Connolly, Head of Investor Relations. Please go ahead.

David Connolly

Thank you, Michelle. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides can be accessed and controlled by going to the Investors section of our website, ir.rhythmtx.com.

Last night, we issued a press release announcing the amendment to our bivamelagon licensing agreement. And this morning, we issued our press release that provides our Q3 2026 financial results and a business update. Both press releases are available on our website. Our agenda is listed on Slide 2.

On the call today are David Meeker, our Chairman, Chief Executive Officer and President; Jennifer Lee, Executive Vice President, Head of North America; Hunter Smith, Chief Financial Officer; and Yann Mazabraud, Executive Vice President, Head of International is on the line joining us from Europe.

On Slide 3, I'll remind you 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 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

Thanks, Dave. Good morning, and thank you for joining today. Rhythm continues to execute on multiple fronts, and we are excited to update you on our progress.

So let's start on Slide 5. We are very pleased to announce a strong third quarter, driven by an excellent start to the U.S. launch. Start forms are growing as expected with encouraging market access translating to strong revenue performance of $92 million for the quarter. Jennifer will provide more details.

We are excited about launching in Japan with the first commercial patients already on treatment. We have every expectation that Japan will become our second largest market. Yann will provide more color there. I will say more about our clinical development plans and the recently announced amendment to our LG Chem deal over the next couple of slides.

Slide 6 is a reminder of our three major strategic pillars. The first pillar is the genetic indications where we have multiple approvals, and we will be looking to expand the list of genes we are investigating. More to come on that in 2027. Second is HO, where we have a growing conviction in the magnitude of this opportunity globally, as you will hear more about today. Third is Prader-Willi syndrome, a devastating genetic disease with only one approved therapy in the U.S. and a desperate need for more treatment options.

Let me spend a minute on why PWS is so strategically important to Rhythm and why we believe we can make a meaningful difference in this disease.

I often draw the analogy to where the cystic fibrosis community was at the time the first disease-modifying treatments were being approved. Like CF, PWS patients are almost universally diagnosed at birth. The newborn is hypotonic, floppy, which leads to early genetic testing. Average survival is age 30, which speaks to the severe unmet medical need and providing care for these patients is challenging for their families, the healthcare system and society as a whole.

The PWS community is well organized with a strong patient organization, specialized clinics staffed by experienced clinicians, providing these patients with greater access to the healthcare system than many patients with HO, for example, who still don't have a diagnosis. It is a complex genetic disease with multiple genetic -- multiple genes involved, but central to the disease is impaired signaling through the MC4R pathway. The 6-month Phase II data Dr. Miller presented at ENDO in June, showing a reduction in hyperphagia scores, anxiety scores and BMI values, supports the potential role of an MC4R precision agonist in the management of this disease.

Now I will extend the CF analogy one step further. Vertex recognized with their first approval in CF that they had a unique ability to make a major difference in this disease. So they literally doubled and tripled down on trying to optimize outcomes. Our strategy will be similar. We will run our first Phase III trial with bivamelagon, but with the expectation given the size and importance of this opportunity, we would develop both of our next-generation therapies in this disease. As previously indicated, the decision to start with bivamelagon has some practical aspects, most specifically related to CMC and availability of supply. We simply have an ability to start earlier than we would with RM-718.

Furthermore, as with CF, we expect a monotherapy to work and be approved. But given the complexity of the disease, optimal outcomes will be achieved by combination therapies. We are not prepared to discuss our portfolio at this time. We will do that in 2027. But the message today is simply that we are working to develop the best possible approach to MC4R diseases based on our understanding of the biology, and that will include proprietary combination approaches.

Moving to Slide 7. We're excited to initiate our Phase III bivamelagon HO study. This is a 52-week comparably sized study to the original TRANSCEND study with BMI as the primary endpoint. We hope to begin screening patients at the first site by the end of the year and expect to dose the first patients in January. With the decision to proceed with bivamelagon in PWS, we will now engage with regulators with the goal of initiating a 6-month Phase III study in PWS with hyperphagia as measured by HQ-CT as a primary endpoint in 2027.

I want to provide a shout to the Rhythm teams who have not been idle on the development front. In preparation for the Phase -- biva Phase III studies, we needed to complete the following: a bioequivalent study with a new formulation, a food effect study, a drug-drug interaction study, and a hepatic impairment study, all of which have been completed satisfactorily in the past year, further derisking bivamelagon as a core asset as we move into Phase III trials.

Finally, a brief word about our recently announced amendment of the LG Chem deal. Our decision to amend was driven by two factors. First, our growing belief in the overall opportunity related to MC4R pathway diseases, giving us the confidence to buy down the existing royalty. And secondly, the original structure, despite our best efforts to align the 2 companies' interests, left us with an economic disincentive to fully develop bivamelagon as that would drive a disproportionate royalty burden relative to developing RM-718, for example. In the current structure, we are fully aligned and can simply, as we would want to do, follow the science and develop the best possible treatment for the indication.

I remind you that the patent protection for both biva and RM-718 extends into the 2040s, providing sustainable long term value for shareholders. Hunter will provide more details on the LG transaction.

I'll now turn the call over to Jenn.

Jennifer Chien

Thank you, David. I'll begin on Slide 9. I'm pleased to report on the strong performance we're seeing in the U.S. launch of IMCIVREE for acquired hypothalamic obesity. In the third quarter, the second full quarter of launch, patient demand continues to be strong and consistent with what we experienced our first quarter of launch. We're seeing growth in a broadening base of prescribers. On the patient access side, reimbursement trends are highly encouraging, reflecting our ongoing payer engagement, leading to an increase in IMCIVREE policy adoption.

On Slide 10, I'll start with metrics related to patient demand. Since launch on March 19 and through the first 2 quarters, we have received more than 700 patient start forms for acquired HO, including start forms for 71 clinical trial patients. Consistent with the first quarter, the patient age distribution remains evenly split amongst older and younger than 21, with 20% of patient start forms from patients between 4 and 12, pointing to the urgency that comes with caring for children.

We are pleased with the distribution of time from hypothalamic injury among patients with prescriptions. Consistent with the prior quarter, approximately 15% of prescriptions have come from patients inured within the last 2 years. Hence, they were diagnosed and treated early in their disease journey. More than 1/3 of patient start forms have come in for those whose hypothalamic injury was 10 years ago or more. These early dynamics are encouraging and demonstrate meaningful demand across a broad range of patients and a long-term growth opportunity in both incident and prevalent patients.

Slide 11 outlines how we are approaching the opportunity, balancing the institutional medical centers where patients begin their journey and then following the patients through their care.

The first point of contact for patients with hypothalamic injury comes at a major medical center or large healthcare organization, where there is a concentration of new patients each year. Upon launch, we identified 43 of these priority accounts. And as we've had more engagement in the field, we continue to see a growth in the number of these identified accounts. Approximately 30% of patients remain engaged with the care teams at these larger centers, while approximately 70% of patients transition beyond their original point of care. The total number of accounts and percentage of patients within these accounts will continue to evolve throughout the launch.

With that said, our HCPs tiering provided to our sales teams are based off of where the volume of potential patients are, and our commercial approach balances physician engagement at these institutional accounts as well as the physicians across other care settings, reflecting where patients enter care and where they are receiving ongoing follow-up care. We remain focused on driving earlier diagnosis and treatment of acquired HO patients within a year of onset of their acquired hypothalamic obesity symptoms while working to ensure prevalent patients who have been living with acquired HO for several years also get to an accurate diagnosis and treatment.

On to Slide 12. We continue to see strong growth and a broadening base of prescribers. Launch to-date, we have received start forms for more than 500 prescribers, including approximately 200 first-time acquired HO prescribers during the third quarter. Of the HO prescribers to-date, approximately 25% of them have written 2 or more IMCIVREE prescriptions for acquired HO, an incremental increase from the 20% repeat prescriber metric at the end of the second quarter. This points to a positive experience with prescribing IMCIVREE, but also reflects the early stage of the launch and the opportunity that remains as many of these HCPs have more than one potential acquired HO patient under their care. Overall, 80% of prescribers are endocrinologists, evenly split between adult and pediatric endos, further supporting that acquired HO is a specialty opportunity.

Slide 13. We have made significant progress with payers during the third quarter and the early access trends and speed of approvals for reimbursement are highly encouraging. Payers are recognizing the differentiation and severity of acquired HO. Of approvals launched to-date, 75% of them have come by the prior authorization stage and over 80% of approvals have come within 60 days of receiving the start form.

We are encouraged with the strong progress in securing positive payer policies. As of the end of Q3, we have IMCIVREE policies in place for our acquired HO that affect approximately 60% of Medicaid covered lives and approximately 75% of commercial covered lives, and we expect that ongoing policies are going to be put into place throughout the end of the year. Importantly, these advances in payer coverage are resulting in positive access experiences for physicians and patients early in launch.

On to Slide 14. Lastly for me, a brief update on BBS. We continue to grow the BBS business during the third quarter through the efforts of our dedicated team of territory managers now exclusively focused on BBS. BBS remains an important contributor to Rhythm's success.

Now let me hand it over to Yann.

Yann Mazabraud

Sorry. Thank you, Jennifer. I will begin on Slide 16. We are very pleased to have launched IMCIVREE for acquired HO in Japan on October 14, following approval by the Ministry of Health, Labor and Welfare or MHLW, and inclusion on Japan's National Health Insurance Drug Price List.

This launch represents an important milestone for patients and families in Japan. IMCIVREE is the very first approved therapy specifically for acquired HO, a serious disease for which there were previously no approved treatment options. It is also an important milestone for Rhythm, and reflects several years of intense and focused work. We made the decision to establish a presence in Japan because we saw significant unmet medical need with an estimated patient population of 5,000 to 8,000 patients and a specialist community that was highly engaged and focused on improving the diagnosis and treatment of acquired HO.

Our first discussions with the Japanese regulatory authorities began in 2023. 12 Japanese patients participated in the TRANSCEND clinical trial and through close collaboration across our global and Japanese teams, we were able to move efficiently from clinical development through regulatory review, pricing, and now commercial launch.

The MHLW approval for IMCIVREE came less than 6 months after the approval in the United States, 5 months and 5 days to be more precise. Our commitment to pursuing approval to benefit the lives of patients living with acquired HO in Japan is a point of pride for Rhythm and very much appreciated in Japan, especially by the healthcare authorities. We are excited to provide further details today as this is a meaningful and durable long term opportunity for Rhythm.

Slide 17. A successful rare disease launch is focused on disease awareness, medical education, and scientific engagement. We believe this foundation is developing very well in Japan. In September, the Japanese Endocrine Society and an MHLW-funded research group published official guidelines for the diagnosis and treatment of acquired HO. These guidelines are important because they describe the significant burden of acquired HO, recognize that conventional approaches to obesity are generally inadequate for these patients and provide a more consistent clinical framework for disease recognition, diagnosis, and treatment.

Also, in October, the Japan Endocrine Society, the Japanese Society for Pediatric Endocrinology and the Japanese Society for Hypothalamic and Pituitary Tumors, issued a joint statement on the safe and appropriate use of setmelanotide for acquired HO.

The TRANSCEND publication in the New England Journal of Medicine, which included 4 Japanese authors, further supports awareness of both the disease and the clinical evidence among Japanese physicians. These data were presented and very well received in June, in Kyoto, at the Annual Meeting of the Japan Endocrine Society.

The approval and the launch, combined with these new treatment guidelines, support from leading medical societies, and growing clinical experience in Japan, provide a substantially stronger foundation for identifying and treating patients with acquired HO.

Moving to slide 18. We began building our Japanese organization in April 2025, because we believed success in this market would require deep local capabilities and sustained engagement with physicians and patients. Today, we have more than 50 employees in Japan. This includes 16 hospital affairs leads, a position similar to the territory managers in the U.S., and 6 scientific affairs managers supporting medical education and scientific community engagement. This is a very experienced team with deep rare disease background and a strong understanding of the Japanese healthcare system.

Our targeting strategy reflects the way patients with acquired HO move through the healthcare system. We have identified and targeted 350 priority hospitals, where a significant majority of patients with brain tumors are treated, and by extension, where patients with acquired HO are.

This concentration allows us to take a disciplined, high-touch approach. Our teams are focused on increasing disease awareness and helping institutions build the processes required to initiate and maintain treatment. At the same time, we are working to ensure physicians and institutions have the knowledge and support required to identify the appropriate patients and provide a high-quality treatment experience.

Slide 19. Japan represents a large, accessible, and durable rare disease opportunity, and our significant pre-launch physician engagement and patient identification work give us a strong starting point. To-date, our field teams have engaged with 300 of the 350 priority hospitals, and through this work, we have already identified more than 1,000 patients who may be eligible for IMCIVREE.

Rhythm is forging new ground in Japan, introducing a new disease to the market. With an integrated medical and commercial model initially focused on high-volume brain tumor centers, we have built a scalable approach to expand patient identification and treatment access across Japan.

Our approach begins with intensive high-touch engagement in these priority centers, with the goal of replicating successful practices throughout Japan. While confident in the long-term opportunity, there are structural features of the Japanese market that we expect will influence the early launch trajectory. During the first year of a new drug launch, prescriptions are limited to a 2-week supply. This means patients must return to the hospital to consult with their physicians every 2 weeks to continue receiving treatment.

This requirement applies during the first year of the product's launch in Japan. We expect the restriction to be lifted in November 2027, after which eligible patients may receive prescription supply for up to 3 months. We anticipate a greater commercial contribution from Japan in the second and third years of launch. The first year will be focused on building institutional experience, supporting patient identification, and establishing accessible treatment pathways. As physicians gain experience and the prescription supply restriction is lifted, we expect the launch to accelerate in years 2 and 3 and continue building over time.

Lastly, on Slide 20, I will provide a brief update on Europe. We estimate that there are approximately 10,000 patients with acquired HO in Europe. With paid early access programs, physicians in France and Italy have treated well over 100 patients with HO, generating positive experience and real-world evidence.

Following European Commission authorization earlier this year, we have continued to advance the country-level market access processes required for launch. In Germany, the G-BA process, which is our final step prior to launch, is nearing completion. We have also submitted reimbursement dossiers in France, Italy, the United Kingdom, Spain, and the Netherlands.

Our experience commercializing IMCIVREE for BBS and other rare MC4R pathway diseases provides a strong foundation for these discussions. Payers and many national experts are already familiar with setmelanotide, the MC4R pathway, and Rhythm's rare disease approach. We continue to expect country-level launches for acquired HO in Europe during 2027, beginning with Germany, and with the timing in each of the additional markets dependent on the reimbursement process.

With the launch now underway in Japan and market access activities advancing well in Europe, we are establishing the next phase of IMCIVREE's international growth and expanding our ability to bring this therapy to patients living with acquired HO around the world.

With that, I will turn the call over to Hunter.

Hunter Smith

Thank you, Yann. Rhythm exited the third quarter in a strong financial position and encouraged by the early U.S. launch execution of acquired HO. The success of the launch is reflected in our quarterly revenue performance and underscores the quality of our business execution and increases our confidence in Rhythm's potential sustainable long-term value creation.

I'll provide more details on our quarterly performance shortly, but I'll start with the details on the bivamelagon license amendment and our financing.

On Slide 22, our amended license agreement for biva represents a significant investment in Rhythm's MC4R agonist franchise. The original license with LG Chem completed in 2024, has been a tremendous success. The data generated in the Phase II trial in acquired HO deepened our conviction in bivamelagon's value potential and reinforced our belief that it can serve as a foundational asset in our MC4R agonism franchise.

With this amendment, we are investing additional cash to increase our stake in bivamelagon, and hence our entire MC4R portfolio. We project that our cross-portfolio royalty obligations could have been 5% to 7% under the previous agreement, pending future indication approvals for bivamelagon.

We are buying down this royalty obligation to 1% flat, assuming U.S. approval for bivamelagon. In exchange for this reduced royalty, we will pay LG $350 million in installments over the next 4 years. Separately, in addition to the $205 million in development and commercial milestones due to LG Chem under the original agreement, under the amended agreement, those are now payable on MC4R portfolio sales, and LG Chem will receive an additional commercial milestone of $200 million if we achieve $3 billion in sales in a calendar year. When it comes time to pay that milestone, we would be happy to make that payment.

Fixed payments totaling $350 million to LG Chem begin with the first payment of $70 million due 15 days from closing. Three additional payments will follow: $100 million in September 2027, $100 million in September 2028, and $80 million in September 2029. While the payments will be made in the annual installments, as I've described, the present value of the aggregate amount will be recognized in the fourth quarter as research and development expenses. Please note that for your models.

Next year at this time, we anticipate 2 global pivotal trials evaluating bivamelagon, one in HO and one in PWS, will be well underway. This transaction represents a strategic investment in our core business and our growing confidence in its potential.

On Slide 23, to finance this investment and strengthen our balance sheet, we entered into a 5-year term loan facility, providing Rhythm access to as much as $750 million. We are pleased to continue and expand our partnership with HealthCare Royalty Partners, which dates back to the first half of 2022, when setmelanotide was approved for BBS, and before we read out positive data from the Phase II trial of setmelanotide in HO.

Also, we are now pleased to partner with Blackstone, a top-tier global investor, whose insights and collaboration were critical to catalyzing this transaction. We believe the terms of this loan facility are competitive. The term loan commitment totals $500 million, with an additional $250 million available by mutual option. The structure gives us access to capital without requiring us to draw the full amount, so we can match future borrowing decisions to funding requirements and continued development of the business. We will draw $250 million initially.

Borrowings carry interest at SOFR plus 4.6%. The facility has a 5-year term, no scheduled principal amortization before maturity, no equity component, and no exit fee. Funded amounts are subject to a 1% original issue discount and market standard non-call and prepayment penalty provisions.

As part of this transaction, we also amended our existing revenue interest financing agreement with HealthCare Royalty. These amendments remove certain debt-like covenants and default provisions, limit HCR's lien to backup security interests, and modify the agreement's material adverse event provisions. We are a far different company today than we were in 2022, and these changes reflect that improvement. Taken together, the amended license agreement and financing strengthen our ability to invest in biva, that support our global commercial execution, and continue to advance the broader MC4R portfolio in our pipeline. This transaction represents a bullish investment in bivamelagon and in Rhythm's future.

On Slide 24, we continue to be well-capitalized with significant financial flexibility. We finished the quarter with approximately $321 million in cash equivalents and short-term investments. This quarter closed cash on hand does not include any of the proceeds from the term loan, nor the initial payment of $70 million to be paid to LG this quarter. As we've been saying for some time, we expect this cash amount to be sufficient to fund planned operations for at least 24 months.

On Slide 25, we saw continued strength in our global commercial business during Q3. Global net product sales of IMCIVREE totaled $92.1 million, which represents 29% sequential growth over the second quarter. Patient demand remained strong during the third quarter, with the global number patients -- of reimbursed patients on therapy globally increasing by 20%. During the third quarter, $67.5 million, or 73% of product revenue, was generated in the United States. The U.S. HO launch was the primary driver of sequentially quarterly revenue growth and accounted for the significant majority of the increase in reimbursed patients.

On Slide 26, I will walk you through the components of the sequential quarter-over-quarter revenue change. Global net revenue increased from $71.3 million in the second quarter to $92.1 million in the third quarter. We saw $15.1 million in revenue growth attributable to increased product demand in the U.S. More than 90% of that growth was attributable to the strong demand from patients with acquired HO. The growing demand for IMCIVREE product shipments to Rhythm's specialty pharmacy outpaced patient dispenses by $4.5 million, resulting in a $1.3 million inventory effect on second-quarter revenue.

Inventory on hand at the specialty pharmacy increased from 20 to 21 days. U.S. gross-to-net during the quarter was 86%, in line with Q2. International revenue increased $4.4 million sequentially to $24.7 million in the third quarter. Majority increase was attributable to the absence of $3.8 million retroactive charge associated with the French contribution mechanism recognized during the second quarter. Excluding this item, the underlying international business increased quarter-over-quarter, with growth from patient demand offset by the inherent variability of shipments to named patient sales markets. Our international business remains strong, as evidenced by continued growth of almost 10% in patients on reimbursed therapy during the third quarter.

On Slide 27 is a financial snapshot of the third quarter compared to the third quarter of 2025. Cost of goods sold was 13.2% of product revenue, primarily driven by cost of materials and royalty payments. R&D expenses were $52.5 million for the third quarter compared to $46 million the same period last year. Sequentially, the increase was $9.1 million versus the second quarter. The increase was primarily driven by increased personnel costs, development costs for bivamelagon studies, and a development milestone associated with our CHI program.

SG&A expenses were $66.8 million for the third quarter. Sequentially, SG&A expenses decreased slightly by approximately 1% compared to the second quarter, largely reflecting timing around certain activities related to the U.S. and global HO launches.

Weighted-average common shares outstanding were approximately 69 million for the third quarter. GAAP EPS was a net loss per basic and diluted share of $0.61, including $0.01 per share from accrued dividends on convertible stock of $1.0 million. Cash used in operations was approximately $3 million during the quarter. We ended the third quarter with $320 million in cash equivalents, and short-term investments, as I mentioned previously.

Looking ahead to Slide 28, for the second -- final quarter of this year, we are updating our annual OpEx guidance. We now anticipate approximately $360 million to $380 million in non-GAAP operating expenses for 2026, with comprised of non-GAAP R&D of $165 million to $175 million and non-GAAP SG&A of $195 million to $205 million. SG&A guidance has changed very little. The midpoint of R&D has been reduced by $15 million due to research and formulation development activities planned to take place in late 2026, now likely occurring in early 2027.

As a reminder, non-GAAP operating expenses exclude stock-based comp and milestone payments associated with licensing agreements. Therefore, our guidance will not be affected by the recognition of the upfront payments due to LG Chem.

With that, I will turn the call back over to David.

David Meeker

Thank you, Hunter. So hopefully you have heard again this morning. Really excited about where we are. Confirming, I think, after 2 quarters of launch, the potential of aHO. I think we made great progress there and expect that to continue, and very much looking forward to accelerating development of our next-generation assets, and as I said in my comments, updating you about future developments in the pipeline in 2027.

So with that, we will open it up for questions.

Operator

[Operator Instructions] Our first question comes from Phil Nadeau with TD Cowen.

질의응답

Philip Nadeau

Congrats on a really strong quarter. Our question, I think, is the obvious one on what you are expecting for patient dynamics over the next quarter or two. It does seem like you are adding about 100 PSFs per month. Is that sustainable? Where do you think you are in patient recruitment at this point in the launch?

Jennifer Chien

So thanks for the question. I think overall, I would just say that we're still early in the launch, and there's so much opportunity that remains. I was happy to see that overall, in terms of what we reported out Q2 versus Q3, that volume in terms of RXs has not slowed down, and that remains the case even early into Q4.

There's still, in terms of opportunities, I would say probably the lowest hanging fruit is physicians who have a diagnosed patient. This is the quickest to convert, especially if they already have experience treating this patient with other therapies and they realize that they need something more, just in terms of IMCIVREE treatment. We have educated a lot of physicians along the way who have identified a potential aHO patient that they suspected, and so they need to go through that validation process as that patient comes in for the next visit, and then ultimately have that discussion around IMCIVREE treatment.

We also have physicians who are used to and already have patients who are on another therapy, and this was probably because IMCIVREE wasn't available at that time, and they want to wait and see how the patient does before they think about RX-ing for IMCIVREE specifically, as well as a lot of other physicians that are still on our list that we need to educate.

So all of this is going to take time to unlock, with some opportunities quicker than others. But I feel very confident in terms of our ability to continue on with that disease as well as product education moving forward.

Operator

The next question is going to come from Derek Archila with Wells Fargo.

Derek Archila

And congrats on the progress here. So beyond the reimbursed patients, it seems like they increased 20% quarter-over-quarter. It does seem access has improved materially with two-thirds of patients essentially getting reimbursed or paid for by 60 days. So I guess, how does that continue to trend from start form to paid patient conversion, and ultimately, how should we be thinking about that in 2027?

Jennifer Chien

So from an access perspective, we are very happy. I think, once again, all of that groundwork done to educate the payers to differentiate our patient population, that just flowed through in terms of what we're seeing on the access side for aHO, and potentially for any future approvals as well. I would say that the speed in terms of the approvals from RX to actually getting payer approval has been quicker than what we saw during the BBS launch for that reason.

However, I will say that where we are, even though the percentage of covered lives is still a work in progress throughout the rest of this year as P&T meetings happen, we're already at a similar pace of approval times that we are with BBS. So I don't expect that time line in terms of approvals to dramatically increase as we increase the number of aHO-specific policies that we have in place. We've had the ability to get approvals even without a policy in place specific for aHO because of all that, once again, background work. So I would say that the pace would stay the same just in terms of RX to approvals moving forward.

David Meeker

Next question?

Operator

The next question comes from Tazeen Ahmad with Bank of America.

Tazeen Ahmad

How should we be thinking about the, I guess, the slope of the launch, given all the dynamics that you've mentioned? You've been careful to say that you should -- we should expect to see steady uptake, but once it becomes easier to get insurance payments, once those turnaround times normalize to where you expect it to be, and once more physicians are educated on the drug itself, should we expect to see any acceleration from the rate that we're seeing right now?

Jennifer Chien

Yes. So I think that the reality is just what it looks like just in terms of a lot of different rare diseases and the different states in terms of where those physicians are. It just takes time to go from even suspecting, and then diagnosing, and ultimately, especially in a realm where they may have been used to prescribing another drug because IMCIVREE wasn't available, making that turn in terms of their actual experience with our drug and that process changing.

The other reality is that these physicians are extremely busy. Their practices are so busy, and just in terms of that ability to go through those steps, through the busy practice of that patient coming in iteratively, will also take some time. So that's why we outline just in terms of that steady pace. But once again, confidence just in terms of what this launch will look like, as we're just very early.

David Meeker

Yes. And just to build a little bit on what Jennifer said, the steadiness, and I think the key part of her answer is, there's elements of a rare disease launch in this, which is patient by patient. There's individual factors which may impact how quickly an individual patient is able to get to a diagnosis, get seen by their physician, and get on treatment.

What is strikingly different and why the opportunity here is so much different than BBS is that the epi is fundamentally different, and the concentration of patients is fundamentally different. So steady as it goes, but with a very different potential, longer-term potentially.

Next question?

Operator

The next question comes from Mike Ulz with Morgan Stanley.

Michael Ulz

And congrats on the strong quarter as well. Maybe just another follow-up on the HO launch. Can you talk about the level of awareness you're seeing among the endocrinologists, sort of since the launch, you're a little bit, 2 quarters over into the launch, and just want to get a sense of where that is and how that could evolve going forward.

Jennifer Chien

I will say that when we started our education, our disease education efforts, which started even before our approval, there was a strikingly large opportunity to actually educate the physicians on what acquired HO actually was. And so that still remains the case, just in terms of that ability to differentiate and outline that the weight gain in this patient population is not attributable just due to things around other hormones being administered to these patients, differences in lifestyle just because of a surgical procedure, et cetera, et cetera.

I think we have made progress for sure in terms of our efforts across our teams through different forums, in addition to the 101s, but there's a lot more physicians for us to educate to, once again, make them understand that, similar to other hormone deficiencies, the cause of HO is based off of the injury that is caused through that procedure and management of the tumor. So more opportunity to continue on, though very happy at least with the progress that we've made today.

David Meeker

And Mike, I would contrast this again with Prader-Willi, where it is a genetic diagnosis. There is no challenge in a sense of getting to a diagnosis in almost all patients, whereas this is a clinical diagnosis. And as Jennifer said, some of these features can be seen in other settings, other diseases, and so getting to a diagnosis is different. And that is the work that's done, and that's the rare disease effort. And so, tremendous opportunity to continue to increase awareness, as she said.

Operator

The next question is going to come from Paul Matteis with Stifel.

Matthew Ryan Tan

This is Matthew on for Paul. Thank you so much for taking our question. I guess I wanted to dig into, for the acquired HO population, what has the retention rate on drug been, and how does that compare relative to your early BBS launch?

Jennifer Chien

Yes. So the retention of our HO patients, it is early in the launch. We expect that the patients that are probably the most motivated may start early on. The retention has been strong to date, and the vast majority have remained on drug. I will say that our confidence in this particular patient population is a bit different in terms of that retention piece of what we expect compared to BBS, primarily because, one, this perceived lack of efficacy is a bit different because of the strength in terms of that BMI reduction that we saw in our clinical study in this particular patient population, for example.

Other factors may include the fear or the burden of injections, and this patient population is more used to having injectable therapies due to their other hormone deficiencies. So there are differences, I would say, holistically in terms of this particular population, where we feel that their retention may be a bit different than BBS. But it's early and it's something that we're going to continue to monitor as we move forward.

David Meeker

Next question.

Operator

Our next question will come from Priyanka Grover with JPMorgan.

Priyanka Grover

Congrats on the quarter. So one thing you mentioned in the beginning of the call is, Japan may be the second-largest market for you guys. Considering EU has an estimated 10,000 patients for acquired HO, can you provide more color on the major confidence in the Japanese market?

David Meeker

Yes. Yann?

Yann Mazabraud

Yes, for sure. So first, as you just said, the prevalence is meaningful. Two, we have in Japan a very well-organized healthcare system. Three, we have a national coverage with a good price. And those are extremely positive aspects, especially for a rare disease where patients sometimes are difficult to find. And I think that the 1,000 patients that we have already identified tells our efforts are paying and how many patients are there.

David Meeker

And Priyanka, the -- and Europe obviously, to Yann's point about a single country, that 10,000 in Europe is spread across countries with very different dynamics. So the accessibility of a slightly smaller epi 5,000 to 8,000, as opposed to the accessibility of the full 10,000 in Europe is just fundamentally different. So all those reasons would say, yes, Japan's a tremendous opportunity for us.

Operator

The next question is going to come from Whitney Ijem with Canaccord.

Whitney Ijem

My congrats on the quarter. Another one on Japan -- and sorry if I missed this. But can you talk about where you landed on price, and I guess the trajectory, or how we should be thinking about the trajectory of price over time in Japan? Is it more similar to U.S. or Europe as we think about kind of annual price changes?

And then just the second part of that question, do you plan to provide any patient start form or any other of those types of metrics as we watch the Japanese launch?

David Meeker

Yes. Yann, you want to...

Yann Mazabraud

Yes. First of all, we are pleased with the price we achieved. One, it is consistent with the rare disease prices, and also it is consistent with what we were expecting and what we have forecasted. The price is public and it's $2,200 per vials, which is 60% to the U.S. WAC, which is also very good compared to the U.S. rare disease drugs.

And the second questions, or the related questions in terms of long-term price, it is a price which is set for the next 10 years. Of course, there are some capping processes, as you can imagine, but we are also here very comfortable with where we are with MHLW estimated peak and how this price should be maintained in the upcoming years.

Operator

Our next question will come from Samantha Semenkow with Citi.

Samantha Semenkow

Congratulations on the quarter, and thanks for taking the question. I have one on Prader-Willi. I am wondering if you could just talk a bit about the decision to run a 6-month hyperphagia-focused study. Will you include BMI changes in this initial study, or will that be a separate BMI-focused study? And I'm wondering what you think you need from both an FDA approval perspective, but also a payer utilization perspective in terms of hyperphagia versus BMI, or both for utilization.

David Meeker

Yes. Thanks, Samantha. So let me try to fill in a little bit on the Prader-Willi here. So we will run a 6-month hyperphagia study, as I said in my initial comments. That is based on, one, we see that change. It is a very important part of this disease. It fits with the mechanism of our drug. We do satiety signal patients get reduced hyperphagia, and that translates into changes in the HQ-CT, as we have seen in the 6-month data we presented, number one. Two, when Soleno, now Neurocrine, when their drug, VYKAT, was approved by the FDA, as is often the case with first approvals, they set a bit of a precedent and a template for others to follow. And I think we have heard indirectly that that probably is a reasonable assumption to make, that a 6-month hyperphagia study is acceptable and, if positive, is approvable.

So BMI changes, weight, we know from our other development efforts in the MC4R pathway diseases, those are 12 months. The regulators want to see sustainability of that BMI change over 12 months. So if that was the primary, the expectation is that would have been at 12 months. So from a very practical standpoint, this is a shorter and more direct route for approval.

Your second question was, will we collect BMI in this? Absolutely. Will BMI change in 6 months? Yes. We have seen that already in the 6 month, and so we would expect those positive results to be reflected in the label. Now, it will not be in a primary indication, but it will, like I said, we do expect that to be in the label. And from a payer standpoint, again, I think VYKAT's a good example, in rare diseases, payers tend to be very -- they stick to the label, right? They do not tend to interpret. You do not tend to get step edits for unapproved therapies and the like. And so if you get an approved drug in Prader-Willi, again, we can expect that it will be used, and they would not differentiate on whether hyperphagia was our primary endpoint or BMI, is my opinion.

Operator

The next question will come from Seamus Fernandez with Guggenheim.

Seamus Fernandez

So David, on the PWS side of things, it does seem like your conviction is quite a bit higher for the overall portfolio opportunity, but interested to just better understand, maybe from you and Hunter, the buy-down opportunity that you saw with the royalty, and what the drivers of your expectations are for what looks like a very robust assumption for peak sales potential. How much did PWS weigh into that or was this kind of primarily your views of the global aHO market opportunity, and sort of the switch opportunity that you see moving from setmelanotide over to the new portfolio of assets?

David Meeker

Yes. Thanks, Seamus. It was really, as I said in my comments, the two major drivers here were, #1, as you know, we are running the Phase III biva in HO. It will be the first next-generation product approved in HO. It does not have hyperpigmentation. It is an oral, lots of advantages. We think it will drive an incremental opportunity in the HO space, which we already think is large. And so, that just economically said, if we can lower our royalty burden overall in that context, that made sense.

But the second factor -- back to your question of strategy and how do we think about developing it. The original agreement did have a part of it which said if we develop bivamelagon in new indications, there is an incremental royalty associated with that decision. So for example, Prader-Willi, if we were to develop it in Prader-Willi, then yes, that would have carried a higher burden, and we didn't want to be constrained by that. We're starting with biva because it's available, and as I said, supply issues are driving that near-term decision. But we very much like having both next-generation assets available, particularly for our two major options, but in general, to be able to make decisions around the portfolio totally driven by the science.

So I'll turn it over to Hunter for thoughts on...

Hunter Smith

Yes. I'll just add one thing, Seamus, which is we did multiple scenarios to analyze the economics of this deal and the opportunity here, and we based our analysis on essentially the potential reduction in royalties against the risk-adjusted sell-side consensus. So we were comfortable doing the transaction on that basis. If we were to outperform that consensus, either because probability of success goes up or the top line unadjusted revenue goes up, that represents greater upside to the transaction.

We think we're shaving about 5%. You have to make a couple of assumptions on what was going to be approved, but 5% against sell-side consumptions yields to a pretty good payback relatively quickly.

Seamus Fernandez

Great. And if you don't mind my just a quick follow-up on that, was this initiated by Rhythm, or was this kind of a competitive buy-down situation just because we know there are other royalty players out there?

Hunter Smith

It was initiated by Rhythm.

Operator

Our next question is going to come from Basma Radwan with Leerink.

Basma Radwan Ibrahim

And congrats on the quarter. One question on aHO. Were you able to identify more patients with suspected aHO diagnosis than the 2,000 identified earlier in the launch? And how does Rhythm help with this process and the conversion from suspected to confirmed diagnosis? Do you guys provide help with the brain scans, like the way you did with genetic testing for kids for BBS and the monogenic indication?

Jennifer Chien

Yes. So we continue to -- the more we are out there, the more physicians we educate, the more physicians are suspecting and getting patients to an aHO diagnosis. So that number has continued to rise since we released that back in September, over a year ago. So and in terms of the -- and we are using more different metrics now post-launch relating to RX volume and such, just to be more holistic in terms of patients identified and ultimately getting to an RX, and that will be the metric that we use moving forward.

In terms of our help, I would say that it's just education. It's not necessarily -- these patients do not have a genetic testing that can be supported through our URO program, but it is the combination of do they have an injury? And once again, we were really happy that our label is broader than just tumors. So do they have an injury that resulted in hypothalamic dysfunctions, which can be measured by the need for different hormonal treatments? And do they have weight gain because of this and associated with that timing? So there are just a couple of different pieces of education to make that physician put those pieces together for that particular patient to get to that diagnosis.

David Meeker

And it's fundamentally very different, obviously, from BBS. And I think when Jennifer's teams are out there talking to physicians who might potentially see a BBS patient, I mean, just given the epidemiology and the nature of that rare disease opportunity, the odds are each individual patient, the probability they may see a BBS patient is low. When we're talking to endocrinologists, the teams that are out there, the probability, A, is high, and B, the clinical diagnosis, the clinical phenotype that drives that diagnosis, as Jennifer just described, is highly recognizable. This isn't one where they have to stretch to try to remember or do a special test to figure out if that disease is present. These are very obvious parts of the presentation. So the diagnosis is readily made once you know what you're looking for. Next question?

Operator

The next question is going to come from Lisa Walter with RBC Capital.

Lisa Walter

Given that this is the second full quarter of the HO launch, just curious if you can share which payer group most patients are coming from, whether that be Medicare or the commercial population. And could we also expect any seasonality in the first quarter, as some patients may change insurers or care providers in the new year? Any color here would be helpful.

Jennifer Chien

Sure. So just in terms of the payer background, I would say that where we are right now in terms of percentage of RXs that come from commercial and Medicaid payers is very much similar to the BBS, with the majority of those being commercial and Medicaid. I think what is interesting, and a positive, is that there are a bit more commercial payers on the HO side versus Medicaid payers. But we expect that there are going to be a lot of things that evolve over time, perhaps potentially the age mix of patients, which also may impact the payer mix and such, and it's one thing that we will continue to monitor moving forward.

From an insurance perspective, this is a dynamic that happens every single year, just in terms of for any drug out there, they may be impacted as patients are going through an insurance change. And we have experienced in the beginning of the first quarter or in the first quarter, a bit of a bump up in terms of our patients on our bridge or free drug program, as we may have to temporarily bridge them onto this free drug therapy until we're able to get reimbursement on their new insurance plan. So that's a dynamic that has happened year-over-year, and I imagine is the same for any drug as well.

David Meeker

Next question?

Operator

The next question's going to come from John Wolleben with Citizens.

Catherine Okoukoni

This is Catherine on for John. I just want to follow-up on the PWS. And can you just discuss a little bit about differentiation on hyperphagia of bivamelagon versus other programs, and any learnings from earlier programs as far as what we can expect as far as the placebo rate, and what the placebo -- what is clinically meaningful as far as benefit over placebo?

David Meeker

Sure. Prader-Willi, again, I do not need to remind all of you, it's just an incredibly challenging disease, and there is a reason almost all therapies, with the exception of VYKAT, and there have been many multiple attempts, have failed to date. So we are very respectful of that, #1. #2, the placebo rate, there is a placebo rate for hyperphagia, absolutely, but -- and part of the reason we will be running a 6-month trial, although a shorter trial might be acceptable from a regulatory standpoint, is to make sure that we move well beyond that period of time, which might be, I would say, once you get out beyond 3-4 months, that placebo effect should absolutely have worn off.

So I think a 6-month trial, we feel confident that will show that. The magnitude of the difference, that threshold has been set, again, by the VYKAT approval. That was on the order of 5 points or less. So obviously, we have not engaged with regulators yet, and that could evolve. I expect them to more or less follow precedent there, and that would be our threshold of what we would be looking to achieve. Next question?

Operator

Our next question comes from Kalpit Patel with Wolfe Research.

Kalpit Patel

For the launch, can you break down the new aHO start forms by month for the third quarter and sort of characterize how that pace has been heading into October and November? And then second, for the PWS study for the Phase III, have you finalized what the restriction or the minimum baseline HQ-CT score might be for that Phase III?

David Meeker

Yes. We don't break out by month. So I think the quarter in a rare disease, particularly early in launch, I think is a very high-level discrimination. What Jennifer said is going into the fourth quarter, yes, the pace seems to be very much holding up. And so we're seeing no slowdown as we go into the fourth quarter, but we won't break out by month.

Sorry, on the Prader-Willi, question was -- I thought I lost it. Was it...

Kalpit Patel

Yes. What the baseline HQ-CT score might be for that Phase III?

David Meeker

Baseline, sorry. Yes. Yes, thanks. Yes, I mean, historically, companies have used an HQ-CT of 13. I'm not sure. We haven't engaged with regulators yet and we haven't made a final decision internally, but I would say in general, we're not going to try to create new ground here. We're going to follow established precedent in terms of trial designs that have at least structurally been performed previously, so.

Operator

The next question will come from Joseph Stringer with Needham.

Edward Marks

This is Eddie on for Joey. Thanks for taking our question. Just another one on the start forms. Just wondering if the delta between the patient start forms and initiation of therapy of the 60 days, if that's something kind of a baseline we should expect going forward? And how has this changed since the launch has been progressing, and how might this be the same or different for other geographies? Appreciating that the launch is still pretty early in Japan and Europe.

David Meeker

So maybe just on those metrics are very U.S.-specific. There is a completely different dynamic in obviously Japan, you get one payer, and then Europe, country by country. But I think, Jennifer, maybe just comment on our average and how does that distribution work for the different patient groups?

Jennifer Chien

Yes. So I would say that overall, just in terms of the pace of approvals, I don't expect that to dramatically increase. As I outlined, it is a pretty similar timeframe as what we are seeing also on the BBS side. So from that perspective, I feel very good that we are already at that pace. And we also have others that are continuing on just in terms of the pending, and we are still working through to get to approvals overall. So I don't expect that to change.

I do expect, and there is no reason to believe that we will not be at a similar percentage of covered lives with IMCIVREE policies as we are right now with BBS. So that piece will continue to evolve as the P&T meetings ultimately happen at various different payers and we get those in place for HO.

David Meeker

And mind you, these rare disease therapies almost always have a prior auth. Now we are happy to have a number of situations where they do not require a prior auth, but in general, it requires a prior auth. So there is a built-in inherent delay from the time the script gets written until patient gets on therapy. And as Jennifer said, if you end up in a multiple appeals process, then obviously you stay in the queue and that time line extends over. So your average is longer than 60 days perhaps, but what's really rewarding and promising about this is that we very quickly got to a point where we are getting relatively rapid approvals.

Operator

I would now like to turn the call back over to David Meeker, for closing remarks.

David Meeker

Thank you. So again, thanks all for tuning in. We continue, as I said in my opening, to make great progress and are really excited about what's going to come up in 2027. Next time we'll talk, we will be well into the first quarter there. So thanks again.

Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect.