A peek inside the mind of a pharmaceutical CFO

Weight loss drugs have seen a surge in use and popularity since GLP-1 receptor agonists like Ozempic were approved for weight loss in 2021. Rhythm Pharmaceuticals produces the drug Imcivree, a medication that helps genetically predisposed obesity patients with certain conditions lose weight.

However, Imcivree is not a semaglutide like Ozempic but a setmelanotide, a drug that acts on the hypothalamus, a part of the brain that regulates hormones and balance. Yeah, we know, it’s confusing.

CFO of Rhythm Pharmaceuticals Hunter Smith felt it was his role to help clear up that confusion to his own investors.

“There was a perception that all of the patients would respond to GLP-1s, and that has not proven to be true,” he told CFO Brew.

As CFO, he worked to explain that there can be many mechanisms of action to treat a single disease.

CFO Brew recently spoke with Smith to understand a bit more about his role as translator for investors, and some of the other hats he wears at Rhythm.

How do you see your role as the CFO, bridging that gap between investor confusion and what the company is doing?

The CFO has to be able to, as effectively as the CEO, articulate the value proposition of the company. And has to be able to tell the story. And tell the story in a way that a well-informed and also a generalist investor can understand it.

How is being the CFO of a small company different from your roles at other large corporations?

It’s a dramatically different experience, because there’s no department for 90% of the things you need to do. One day, you’re deciding whether a clinical trial goes forward or not, and the next day you’re saying, “How do I get a corporate credit card program in place?” You have to wear a lot of hats. You have to do the very strategic and the very mundane.

Trump recently announced possible tariffs on foreign pharmaceuticals. Is this something that is going to impact your business?

We’re fortunate in that our cost of goods is very low relative to the price at which we sell. So even if we are subject to it, and that remains TBD, it won’t affect our economics in a very significant way.

All of our intellectual property is in the United States, so there’s no purchasing of the product from an affiliate at a higher price to reflect the licensing of that IP. As a result, the price at which we bring it into the US is meaningfully below the price at which we sell it in the US. At present—this will change over time—we manufacture everything in Europe. And so in theory, that would affect a company like us, but the cost is just not that significant.

Is there anything about being a pharma CFO that is uniquely different from being a CFO in any other industry?

Pharma regulations are extremely specific. So the regulatory environment has a huge impact on the financial prospects of the company. That regulatory environment does not exist in any other business. That’s item one. Item two is…every time you make a sale in pharmaceuticals, it turns into cash [because the insurers] will reimburse the product. That’s not true in a lot of industries.

If you weren’t a CFO, what would you be?

I think I would probably work in public policy in some form. I’ve always had an interest in international affairs and foreign policy.