0001558370-24-014532 | 10-Q | XBRL Viewer | Rhythm Pharmaceuticals INC

Intangible Assets

9 Months Ended

Sep. 30, 2024

8. Intangible Assets


		As of September 30, 2024						As of December 31, 2023
	Estimated life (years)	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net

Capitalized Milestones	11	$	9,000	$	(2,612)	$	6,388	$	9,000	$	(1,972)	$	7,028

As of September 30, 2024, the Company’s finite-lived net intangible assets, which totaled $6,388 resulted from the capitalization of certain milestone payments made to Ipsen Pharma, S.A.S., or Ipsen, in accordance with the terms of the Company’s license agreement with Ipsen, in connection with the Company’s first commercial sale of IMCIVREE in the U.S. in March 2021 and in France in March 2022.

As of September 30, 2024, amortization expense for the next five years and beyond is summarized as follows:


2024	$	214
2025		854
2026		855
2027		854
2028		855
Thereafter		2,756
Total	$	6,388

Amortization expense totaled $214, $641, $214, and $641 for the three and nine months ended September 30, 2024 and 2023, respectively. Amortization expense is included in cost of sales in the condensed consolidated statements of operations and comprehensive loss.

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024 shares
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Jospeh Shulman
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On August 8, 2024, Jospeh Shulman, the Company’s Chief Technical Officer, adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 73,203 shares of the Company’s common stock until November 5, 2025.
Name	Jospeh Shulman
Title	Chief Technical Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 8, 2024
Expiration Date	November 5, 2025
Aggregate Available	73,203
Jennifer Kayden Lee
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On August 8, 2024, Jennifer Kayden Lee, the Company’s EVP, Head of North America, adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 71,050 shares of the Company’s common stock until September 1, 2025.
Name	Jennifer Kayden Lee
Title	EVP, Head of North America
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 8, 2024
Expiration Date	September 1, 2025
Aggregate Available	71,050

Condensed Consolidated Statements of Convertible Preferred Stock & Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands		3 Months Ended
	Apr. 01, 2024	Jun. 30, 2024
Common stock reserved for the conversion of Series A convertible preferred stock
Issuance costs	$ 2,250	$ 2,250

Subsequent Events	9 Months Ended
Sep. 30, 2024
Subsequent Events
Subsequent Events	14. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. No events or transactions occurred subsequent to the balance sheet date that require disclosure.

Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events

Subsequent Events

14. Subsequent Events

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. No events or transactions occurred subsequent to the balance sheet date that require disclosure.

Summary of Significant Accounting Policies - Geographic Data (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment and Geographic Information
Total revenues	$ 33,251	$ 22,504	$ 88,296	$ 53,194
US
Segment and Geographic Information
Total revenues	23,302	17,939	64,437	44,088
Germany
Segment and Geographic Information
Total revenues	3,618	1,910	8,459	3,281
Other
Segment and Geographic Information
Total revenues	$ 6,331	$ 2,655	$ 15,400	$ 5,825

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Common Stock

9 Months Ended

Sep. 30, 2024

Common Stock.

Common Stock

11. Common Stock

As of September 30, 2024, an aggregate of 15,407,579 shares of common stock were reserved for issuance under the Company’s stock plans, which number includes stock options, restricted stock units, and performance stock units that have been granted covering 8,844,685 shares of common stock, 150,000 shares of Convertible Preferred Stock potentially convertible into 3,125,000 shares of common stock, and 1,872,738 shares of common stock that remain available for future grants under the Company’s 2017 Equity Incentive Plan (the “2017 Plan”), 2017 Employee Stock Purchase Plan and 2022 Employment Inducement Plan (the “Inducement Plan”).

On November 2, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”), pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $100.0 million, from time to time through an “at the market” equity offering program under which Cowen acts as sales agent (the “ATM Program”). Between August 10, 2023 and August 21, 2023, the Company sold approximately two million shares of its common stock in the ATM Program for net proceeds of approximately $48.9 million. The Company intends to use the net proceeds from the ATM Program to support its global commercialization efforts for IMCIVREE clinical development programs in hypothalamic obesity and other rare MC4R pathway diseases.

On February 29, 2024, the Company and Cowen entered into Amendment No. 1 to Sales Agreement (the “Amendment”) to increase the aggregate offering price of the shares of common stock that may be issued and sold pursuant to the Sales Agreement to $200,000,000 (excluding the aggregate offering price of shares of common stock issued and sold pursuant to the Sales Agreement prior to February 29, 2024). In connection with the Amendment, on February 29, 2024, the Company filed with the SEC a prospectus supplement, dated February 29, 2024, which, combined with the Base Prospectus (together, the “New Prospectus”), amended the Prior Prospectus in its entirety. The issuances and sales under the Sales Agreement, as amended by the Amendment, will be made pursuant to the Registration Statement and the New Prospectus.

On January 4, 2024, the Company issued 432,143 shares of common stock as partial consideration for its acquisition of the worldwide rights to LGC’s proprietary compound bivamelagon (LB54640).

On February 9, 2022, the Company’s board of directors adopted the Inducement Plan, without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules or Rule 5635(c)(4). In accordance with Rule 5635(c)(4), awards under the Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona

fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. An aggregate of 1,000,000 shares of the Company’s common stock have been reserved for issuance under the Inducement Plan. The Company continues to grant awards under the 2017 Plan pursuant to the terms thereof.

The exercise price of stock options granted under the Inducement Plan is not less than the fair market value of a share of the Company’s common stock on the grant date. Other terms of awards, including vesting requirements, are determined by the Company’s board of directors and are subject to the provisions of the Inducement Plan. Stock options granted to employees generally vest over a four-year period but may be granted with different vesting terms. Certain options may provide for accelerated vesting in the event of a change in control. Stock options granted under the Inducement Plan expire no more than 10 years from the date of grant. As of September 30, 2024, 570,603 stock option awards and 386,535 restricted stock unit awards have been granted under the Inducement Plan. As of September 30, 2024, 42,862 shares of common stock are available for future grant under the Inducement Plan.

- Definition

The entire disclosure for equity.

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+ Details

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value of Financial Liabilities
Carrying amount of cash and cash equivalents and short term investments	$ 298,390	$ 275,846
Fair value of financial assets and liabilities
Marketable Securities	250,869	215,765
Derivative liability		1,150
Corporate Debt Securities and Commercial Paper
Fair value of financial assets and liabilities
Marketable Securities	201,214	215,765
US Treasury Securities
Fair value of financial assets and liabilities
Marketable Securities	49,655
Recurring \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	288,699	261,612
Derivative asset	150
Derivative liability		1,150
Recurring \| Derivative on Royalty Financing \| Estimated fair value
Fair value of financial assets and liabilities
Derivative liability		1,150
Recurring \| Corporate Debt Securities and Commercial Paper \| Estimated fair value
Fair value of financial assets and liabilities
Marketable Securities	201,214	215,765
Recurring \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents	37,680	45,847
Recurring \| US Treasury Securities \| Estimated fair value
Fair value of financial assets and liabilities
Marketable Securities	49,655
Recurring \| Level 1 \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	87,335	40,868
Recurring \| Level 1 \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents	37,680	40,868
Recurring \| Level 1 \| US Treasury Securities \| Estimated fair value
Fair value of financial assets and liabilities
Marketable Securities	49,655
Recurring \| Level 2 \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	201,214	220,744
Recurring \| Level 2 \| Corporate Debt Securities and Commercial Paper \| Estimated fair value
Fair value of financial assets and liabilities
Marketable Securities	201,214	215,765
Recurring \| Level 2 \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents		4,979
Recurring \| Level 3 \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	150
Derivative asset	$ 150
Derivative liability		1,150
Recurring \| Level 3 \| Derivative on Royalty Financing \| Estimated fair value
Fair value of financial assets and liabilities
Derivative liability		$ 1,150

Right of Use Asset and Lease Liability

9 Months Ended

Sep. 30, 2024

Right of Use Asset and Lease Liability

Right of Use Asset and Lease Liability

7. Right of Use Asset and Lease Liability

The Company has a material operating lease for its head office facility located in Boston, Massachusetts and other immaterial operating leases for certain equipment. On May 2, 2024, the Company entered into an agreement to amend the current operating lease agreement for its head office facility. Under the amendment, the current lease was extended for five years through July 31, 2030, with $5.7 million committed to future lease payments. The Company acquired Right of Use Assets of $3.1 million under the amended operating lease.

The Company measured the lease liability associated with the office lease modification using an incremental borrowing rate (“IBR”) of 13%. The Company estimated the IBR for the leased asset based on a range of comparable interest rates the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. As of September 30, 2024, the Company has not entered into any lease arrangements classified as a finance lease.

Rent expense, or operating lease costs, was $302, $908, $280 and $867, for the three and nine month periods ended September 30, 2024 and 2023.

Supplemental cash flow information related to the Company’s lease for the nine months ended September 30, 2024 and 2023, includes cash payments of $636 and $623, respectively, used in the measurement of its operating lease liability. As of September 30, 2024, the Company’s operating lease liability has a weighted average remaining lease term of approximately five years.

The following table presents the maturities of the Company’s operating lease liability related to office space as of September 30, 2024, all of which is under a non-cancellable operating lease:


	Operating Lease
2024	$	215
2025		456
2026		1,103
2027		1,125
2028		1,148
2029		1,171
2030		691
Total operating lease payments		5,909
Less: imputed interest		(1,879)
Total operating lease liability	$	4,030

Commitments and Contingencies (Details)	9 Months Ended
Commitments and Contingencies (Details)	Sep. 30, 2024
Commitments and Contingencies.
Duration of time milestone payments are not expected to be paid to third parties	12 months

Right of Use Asset and Lease Liability (Tables)

9 Months Ended

Sep. 30, 2024

Right of Use Asset and Lease Liability

Schedule of operating lease maturities


	Operating Lease
2024	$	215
2025		456
2026		1,103
2027		1,125
2028		1,148
2029		1,171
2030		691
Total operating lease payments		5,909
Less: imputed interest		(1,879)
Total operating lease liability	$	4,030

Inventory (Tables)

9 Months Ended

Sep. 30, 2024

Inventory

Schedule of inventory


	September 30,		December 31,
	2024		2023
Raw Materials	$	5,020	$	4,625
WIP		840		1,104
Finished Goods		8,035		2,895
Total Inventory	$	13,895	$	8,624

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or GAAP, and the applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification, or ASC, and Accounting Standards Updates, or ASU, of the Financial Accounting Standards Board, or FASB. As permitted under these rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted.

The accompanying condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of convertible preferred stock and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 and the related footnote disclosures are unaudited. In management's opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2023 and include all adjustments, which are all normal recurring adjustments, necessary for the fair presentation of the interim financial statements. The results for the nine months ended September 30, 2024 are not necessarily indicative of the results expected for the full fiscal year, any other interim periods, or any future year or period.

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited condensed consolidated financial statements. As of September 30, 2024, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates relied upon in preparing these financial statements include estimates related to determining our net product revenue, accruals related to research and development expenses, assumptions used to record stock-based compensation

expense, interest expense on our deferred royalty obligation, and the valuation allowance on the Company's deferred tax assets. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Rhythm Pharmaceuticals, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segment and Geographic Information

Disclosure requirements about segments of an enterprise and related information establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in interim financial reports issued to shareholders. Operating segments are defined as components of an enterprise about which separate discrete financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company and the chief executive officer view the Company’s operations and manage its business as one operating segment.

Geographic Data

The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of its customers. Total revenue by geographic area was as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2024			2023	2024			2023
US	$	23,302	$	17,939	$	64,437	$	44,088
Germany		3,618		1,910		8,459		3,281
Other		6,331		2,655		15,400		5,825
Total revenues	$	33,251	$	22,504	$	88,296	$	53,194

As of September 30, 2024 and December 31, 2023, long-lived assets at locations outside the United States was not material.

Off-Balance Sheet Risk and Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and short-term investments, which are maintained at two federally insured financial institutions. The deposits held at these two institutions are in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. For the three months ended September 30, 2024 and 2023, approximately 68% and 80% of all of the Company’s revenue was generated from a single customer in the United States. For the nine months ended September 30, 2024 and 2023, approximately 73% and 84% of all of the Company’s revenue was generated from a single customer in the United States. As of September 30, 2024 and December 31, 2023, approximately 65% and 73%, respectively, of the Company’s accounts receivable was outstanding from a single customer in the United States.

The Company relies on third-party manufacturers and suppliers for the manufacture and supply of its product. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results.

The Company relies on separate third parties to perform genetic testing in the United States and Europe, respectively. The inability of the vendors to fulfill testing services for the Company could materially impact future operating results and adversely impact our ability to further develop setmelanotide. A change in the relationship with the genetic testing service providers, or an adverse change in their business, could materially impact future operating results.

Accounts Receivable, net

Accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts and any estimated expected credit losses. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. To date, the Company has not experienced any credit losses. The Company's contracts with its customers have customary payment terms that generally require payment within 90 days. The Company analyzes amounts that are past due for collectability, and periodically evaluates the creditworthiness of its customers. As of September 30, 2024 and December 31, 2023, the Company determined an allowance for doubtful accounts was not required based upon our review of contractual payments and our customers’ circumstances.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, or ASC 606. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

Product Revenue, net

In the United States (the “U.S.”), which accounts for the largest portion of our total revenues, the Company sells its product to one specialty pharmacy. The product is distributed through third-party logistics, or 3PL, distribution agent that does not take title to the product. Once the product is delivered to the Company’s specialty pharmacy provider, our customer in the U.S., the customer (or “wholesaler”) takes title to the product. The wholesaler then distributes the product to patients. In our distribution agreement with the 3PL company, the Company acts as principal because we retain control of the product. Internationally, we make sales primarily to specialty distributors and retail pharmacy chains, as well as hospitals, many of which are government-owned or supported. The Company offers returns of product sold to the customer on a limited basis, however, no material returns have been recognized to date.

Revenue from product sales is recognized when the customer obtains control of our product, which occurs at a point in time, upon transfer of title to the customer because at that point in time we have no ongoing obligations to the customer. There are no other performance obligations besides the sale of product. We classify payments to our customers or other parties in the distribution channel for services that are distinct and priced at fair value as selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss. Otherwise, payments to a customer or other parties in the distribution channel that do not meet those criteria are classified as a reduction of revenue, as discussed further below. Taxes collected from the customer relating to product sales and remitted to governmental authorities are excluded from revenue. Because our payment terms are generally ninety days or less, the Company concluded there is not a significant financing component because the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. The Company expenses incremental costs of obtaining a contract as and when incurred since the expected amortization period of the asset that we would have recognized is one year or less.

Reserves for Variable Consideration

Revenues from product sales are recorded at the net sales price, or the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, rebates, and co-pay assistance that are offered within contracts between us and our customers, health care providers and other indirect customers relating to the sale of IMCIVREE. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

The following are the components of variable consideration related to product revenue:

Chargebacks: The Company estimates obligations resulting from contractual commitments with the government and other entities to sell products to qualified healthcare providers and patients at prices lower than the list prices charged to our customers. The government and other entities charge us for the difference between what they pay for the product and the selling price to our customers.

Government rebates: The Company is subject to discount obligations under government programs, including Medicaid programs, Medicare and Tricare in the United States as well as certain government rebates and pricing adjustments in certain international markets that we operate. We estimate Medicaid, Medicare and Tricare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payer mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability that is included in accrued expenses and other current liabilities on our condensed consolidated balance sheets. On a quarterly basis, we update our estimates and record any adjustments in the period that we identify the adjustments.

Trade discounts and allowances: The Company provides customary invoice discounts on IMCIVREE sales to certain of our customers for prompt payment that are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive and pay for various distribution services from our customers in the distribution channel. For services that are not distinct from the sale of our product, such fees are classified as a reduction of product revenue.

Product returns: Our customers have limited return rights related to the product’s damage or defect. The Company estimates the amount of product sales that may be returned and records the estimate as a reduction of revenue and a refund liability in the period the related product revenue is recognized. Based on the distribution model for IMCIVREE, the Company believes there will be minimal returns.

Other incentives: Other incentives include co-payment assistance the Company provides to patients with commercial insurance that have coverage and reside in states that allow co-payment assistance. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue. The estimate is recorded as a reduction of revenue in the same period the related revenue is recognized.

Provisions for trade discounts, chargebacks and allowances are recorded as reductions to accounts receivable, and returns, government rebates, and other incentives are recorded as a component of accrued expenses.

License Agreements

LG Chem

In January 2024, we entered into a license agreement and share issuance agreement with LG Chem, Ltd. (“LGC”). Under the terms of the license agreement, we obtained worldwide rights to develop LGC’s proprietary compound bivamelagon (LB54640) and assumed sponsorship of two ongoing LGC Phase 2 studies designed to evaluate safety, tolerability, pharmacokinetics and weight loss efficacy of bivamelagon (LB54640). The SIGNAL trial is a randomized, placebo-controlled, double-blind study designed to enroll and evaluate approximately 28 patients with acquired hypothalamic obesity. On July 23, 2024, the Company announced that the first patients have been dosed and participants in the SIGNAL trial will receive one of three doses of bivamelagon (LB54640) or placebo by oral administration once daily for 14 weeks (patients may continue on open-label therapy for up to 52 weeks), and the primary endpoint of the study is the change from baseline in body mass index after 14 weeks of treatment. The open-label, single-arm, 16-week ROUTE trial is designed to enroll five patients with POMC or LEPR deficiency obesity.

We paid LGC $40.0 million in cash and issued shares of our common stock with an aggregate fair value of $18.7 million. The shares were issued at a per share price equal to the ten-day volume weighted-average closing price for our common stock, calculated as of the trading day immediately prior to January 4, 2024. We also agreed to make an additional $40.0 million payment in cash 18 months after the effective date of the license agreement. This payment has been recorded in research and development expense at its present value and reflected in other long-term liabilities on our unaudited condensed consolidated balance sheet.

In addition, under the terms of the license agreement, we agreed to pay LGC up to $205 million in cash upon achieving various regulatory and sales milestones based on net sales of bivamelagon (LB54640). Subject to the completion of Phase 2 development of bivamelagon (LB54640), the Company also has agreed to pay LGC royalties of between low-to-mid single digit percent of net revenues from its MC4R portfolio, including bivamelagon (LB54640), commencing in 2029 and dependent upon achievement of various regulatory and indication approvals, and subject to customary deductions and anti-stacking. Royalties may further increase to a low double digit percent royalty, though such royalty would only be applicable on net sales of bivamelagon (LB54640) in a region if bivamelagon (LB54640) is covered by a composition of matter or method of use patent controlled by LGC in such region and the Company’s MC4R portfolio is not covered by any composition of matter or method of use patents controlled by the Company in such region. Such increased rate would only apply on net sales of bivamelagon (LB54640) for the limited remainder of the royalty term in the relevant region.

RareStone Group Ltd.

In December 2021, the Company entered into an Exclusive License Agreement with RareStone Group Ltd., or the RareStone License. Pursuant to the RareStone License, we granted to RareStone an exclusive, sublicensable, royalty-bearing license under certain patent rights and know-how to develop, manufacture, commercialize and otherwise exploit any pharmaceutical product that contains setmelanotide in the diagnosis, treatment or prevention of conditions and diseases in humans in China, including mainland China, Hong Kong and Macao. RareStone has a right of first negotiation in the event that the Company chooses to grant a license to develop or commercialize the licensed product in Taiwan. The arrangement includes a license and an additional performance obligation to supply product upon the request of RareStone.

According to the terms of the RareStone License, RareStone has agreed to seek local approvals to commercialize IMCIVREE for the treatment of obesity and hyperphagia due to biallelic POMC, PCSK1 or LEPR deficiency, as well as Bardet-Biedl and Alström syndromes. Additionally, RareStone has agreed to fund efforts to identify and enroll patients from China in the Company’s global EMANATE trial, a Phase 3, randomized, double-blind, placebo-controlled trial to evaluate setmelanotide in four independent sub-studies in patients with obesity due to a heterozygous variant of POMC/PCSK1 or LEPR; certain variants of the SRCI gene, and certain variants of the SH2B1 gene. In accordance with the terms of the RareStone License, RareStone made an upfront payment to Rhythm of $7,000 and issued Rhythm 1,077,586 ordinary shares. The Company is eligible to receive development and commercialization milestones of up to $62,500, as well as tiered royalty payments on annual net sales of IMCIVREE.

The Company initially estimated the fair value of the RareStone equity to be $2,440 based on a preliminary valuation during the first quarter of 2022. Upon completion of the valuation procedures during the second quarter of 2022, the Company concluded the initial fair value of the RareStone equity to be $1,040. During the third quarter of 2022, the Company estimated the fair value of the RareStone equity to be de minimis based upon the results of an updated valuation and recorded an other-than-temporary impairment of $1,040 related to the decline in fair value as a component of other expense in our consolidated statements of operations and other comprehensive loss for the year ended December 31, 2022. The other-than-temporary impairment of $1,040 included the reclassification of a $300 unrealized loss previously recorded as a component of accumulated other comprehensive income (loss) in our condensed consolidated statement of stockholders’ equity during the second quarter of 2022.

The Company received total upfront consideration of $8,040 comprised of an upfront payment of $7,000, and the estimated fair value of the RareStone equity of $1,040. The Company determined that the RareStone License contains two performance obligations, the delivery of the license and the supply of clinical and commercial product. The Company further determined the supply of commercial product to RareStone contains a significant future discount and estimates the discount to be $1,286, which is recorded as a component of deferred revenue on the consolidated balance sheet at September 30, 2024 and December 31, 2023.

No license revenue was recognized during three and six months ended September 30, 2024 and 2023, respectively.

On October 28, 2022, we delivered written notice, or the October Notice, to RareStone that we have terminated the RareStone License for cause. In accordance with the Notice, we maintain that RareStone has materially breached its obligations under the RareStone License to fund, perform or seek certain key clinical studies and waivers, including with respect to our global EMANATE trial, among other obligations. On December 21, 2022, RareStone provided written notice to us that it objects to the claims in the Notice, including our termination of the RareStone License for cause. On March 16, 2023, we provided written notice, or the March Notice, to RareStone reaffirming our position that RareStone has materially breached its obligations under the RareStone License and that we have terminated the RareStone License for cause, and also requested documentation supporting RareStone’s purported dispute notice objecting to the claims in the Notice.

On May 10, 2023, RareStone provided written notice to the Company reaffirming its objections to the claims in our October Notice and March Notice, including to the Company’s termination of the RareStone License for cause. On November 29, 2023, RareStone wrote to us seeking to negotiate and execute a commercial supply agreement as contemplated under the Exclusive License Agreement, and on January 19, 2024, we responded in writing again reaffirming our position that RareStone has materially breached its obligations under the RareStone License and that we have terminated the RareStone License for cause.

Deferred Royalty Obligation

The Company treats the debt obligation to HealthCare Royalty Management, LLC as discussed further in Note 13, “Long-Term Obligations”, as a deferred royalty obligation, amortized using the effective interest rate method over the estimated life of the revenue streams. The Company recognizes interest expense thereon using the effective rate, which is based on our current estimates of future revenues over the life of the arrangement. In connection therewith, the Company periodically assesses its expected revenues using internal projections, imputes interest on the carrying value of the deferred royalty obligation, and records interest expense using the imputed effective interest rate. To the extent the Company’s estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, the Company will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation. The assumptions used in determining the expected repayment term of the deferred royalty obligation and amortization period of the issuance costs requires the Company to make estimates that could impact the classification of such costs, as well as the period over which such costs will be amortized.

Inventory

Prior to receiving approval from the FDA in November 2020 to sell IMCIVREE in the United States, the Company expensed all costs incurred related to the manufacture of IMCIVREE as research and development expense because of the inherent risks associated with the development of a drug candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates. The Company values inventories at the lower of cost or estimated net realizable value. The Company determines the cost of inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods include packaged and labelled products. Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for research and development, it is expensed as research and development once that determination is made.

Cost of Product Sales

Cost of product sales consists of manufacturing costs, transportation and freight, amortization of capitalized intangibles, royalty payments and indirect overhead costs associated with the manufacturing and distribution of IMCIVREE. Cost of product sales may also include periodic costs related to certain manufacturing services and inventory adjustment charges. Finally, cost of sales may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances.

Intangible Assets, Net

Definite-lived intangible assets related to capitalized milestones under license agreements are amortized on a straight-line basis over their remaining useful lives, which are estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then a shorter period is used. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets, which consist primarily of property and equipment and finite lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the Company measures the impairment to be recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, less the cost to sell. No events or changes in circumstances existed to require an impairment assessment during the three and nine months ended September 30, 2024 and 2023, respectively.

Acquired IPR&D and Milestone Expenses

In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process research and development projects are expensed as acquired IPR&D and recorded as a component of research and development expense in the condensed consolidated statements of operations and comprehensive net loss unless the project has an alternative future use. These costs include upfront and development milestone payments related to licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products. Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the achievement of the underlying milestone becomes probable. Regulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product.

Foreign Currency Translation

The majority of the Company’s operations occurs in subsidiaries that have the U.S. dollar denominated as its functional currency. The assets and liabilities of the Company’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenue and expense amounts for these subsidiaries are translated using the average exchange rates for the period. Changes resulting from foreign currency translation are included in accumulated other comprehensive income (loss) on the Company’s consolidated statement of stockholders’ equity. Net foreign currency exchange transaction gains (losses), which are included in other (expense) income, net on our consolidated statements of operations, were immaterial for the three and nine months ended September 30, 2024 and 2023.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1 — Quoted market prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash equivalents and marketable securities and derivative liability at September 30, 2024 and December 31, 2023 were carried at fair value, determined according to the fair value hierarchy. See Note 6 for further discussion.

The carrying amounts reflected in the condensed consolidated balance sheets for accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term maturities at September 30, 2024 and December 31, 2023, respectively.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per common share is computed by adjusting the weighted average shares outstanding for the potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method. For purposes of the diluted net loss per share calculation, stock options, performance stock units and restricted stock units are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share is the same for all periods presented.

The following table includes the potential common shares that were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Stock options		6,783,859		6,881,198		6,783,859		6,881,198
Restricted stock units		1,811,504		1,081,619		1,811,504		1,081,619
Performance stock units		249,322		582,319		249,322		582,319
Common stock reserved for the conversion of Series A convertible preferred stock		3,125,000		—		3,125,000		—
Potential common shares		11,969,685		8,545,136		11,969,685		8,545,136

Subsequent Events

Application of New or Revised Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard requires disclosure of incremental segment information on an annual and interim basis and allows for multiple measures of a segment’s profit or loss provided that one of those measures is consistent with GAAP. The amendments in this update do not change how a public company identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments, but rather requires public entities to provide in interim periods all disclosures about a reporting segment’s profit or loss and assets that are currently required annually. ASU 2023-07 becomes effective for the annual period starting on January 1, 2024, and for interim periods starting on January 1, 2025. Early adoption is permitted. The Company is currently evaluating the disclosure requirements related to the new standard but does not anticipate a material impact to its net financial position.

Fair Value of Financial Assets and Liabilities - Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value of Financial Liabilities
Amortized Cost	$ 250,348	$ 215,490
Gross Unrealized Gains	553	282
Gross Unrealized Losses	(32)	(7)
Fair Value	250,869	215,765
Corporate Debt Securities and Commercial Paper
Fair Value of Financial Liabilities
Amortized Cost	200,864	215,490
Gross Unrealized Gains	379	282
Gross Unrealized Losses	(29)	(7)
Fair Value	201,214	$ 215,765
US Treasury Securities
Fair Value of Financial Liabilities
Amortized Cost	49,484
Gross Unrealized Gains	174
Gross Unrealized Losses	(3)
Fair Value	$ 49,655

- Definition

Amount of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

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+ Details

Summary of Significant Accounting Policies - License Agreements - LG Chem (Details) $ in Thousands		1 Months Ended	3 Months Ended
	Jan. 04, 2024 USD ($)	Jan. 31, 2024 USD ($) item person	Mar. 31, 2024 USD ($)
Significant Agreements
Issuance of common stock as consideration for LGC license			$ 18,716
L G Chem Ltd
Significant Agreements
Issuance of common stock as consideration for LGC license	$ 18,700
License agreement consideration payment	$ 40,000
Effective date of the license agreement	18 months
Aggregate payment upon achievement of development and commercial milestones	$ 205,000
License agreement \| L G Chem Ltd
Significant Agreements
Number of patients \| person		28
Number of doses participants \| item		1
Period to check the primary end point of the treatment		98 days
Period of oral administration		364 days
Period of route trial		112 days
Number of enrolled patients \| person		5
Cash payment		$ 40,000
Issuance of common stock as consideration for LGC license		18,700
License agreement consideration payment		$ 40,000
Effective date of the license agreement		18 months
Aggregate payment upon achievement of development and commercial milestones		$ 205,000
Maximum number of doses participants \| item		3

Fair Value of Financial Assets and Liabilities - Series A Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	Apr. 15, 2024	Apr. 01, 2024	Mar. 02, 2023	Dec. 31, 2023
Series A Convertible Preferred Stock
Derivative liability				$ 1,150
Common stock reserved for the conversion of Series A convertible preferred stock
Series A Convertible Preferred Stock
Issuance and sale of shares of a new series	150,000	150,000	3,124,995
Per share or per unit amount of temporary equity issued	$ 48.00
Term to maturity per share or per unit amount of temporary equity issued	P20Y
Common stock reserved for the conversion of Series A convertible preferred stock \| Forward Contracts
Series A Convertible Preferred Stock
Derivative liability	$ 8,900	$ 0

- Definition

Fair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes liabilities not subject to a master netting arrangement and not elected to be offset.

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+ Details

Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2024

Accrued Expenses and Other Current Liabilities

Schedule of accrued expenses


	September 30,		December 31,
	2024		2023
Research and development costs	$	14,810	$	12,925
Professional fees		5,760		3,833
Payroll related		12,952		15,439
Royalties		1,662		1,180
Sales allowances		15,299		9,475
Other		4,314		5,410
Accrued expenses and other current liabilities	$	54,797	$	48,262

Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2024

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	September 30,		December 31,
	2024		2023
Research and development costs	$	14,810	$	12,925
Professional fees		5,760		3,833
Payroll related		12,952		15,439
Royalties		1,662		1,180
Sales allowances		15,299		9,475
Other		4,314		5,410
Accrued expenses and other current liabilities	$	54,797	$	48,262

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Intangible Assets

Schedule of finite-lived intangible assets


		As of September 30, 2024						As of December 31, 2023
	Estimated life (years)	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net

Capitalized Milestones	11	$	9,000	$	(2,612)	$	6,388	$	9,000	$	(1,972)	$	7,028

Schedule of amortization expense


2024	$	214
2025		854
2026		855
2027		854
2028		855
Thereafter		2,756
Total	$	6,388

Intangible Assets - Amortization expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Definite-lived intangible assets
2024	$ 214		$ 214
2025	854		854
2026	855		855
2027	854		854
2028	855		855
Thereafter	2,756		2,756
Total	6,388		6,388		$ 7,028
Cost of sales
Definite-lived intangible assets
Amortization expense	$ 214	$ 214	$ 641	$ 641

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies.

Commitments and Contingencies

15. Commitments and Contingencies

Legal Proceedings

The Company, from time to time, may be party to various litigation arising in the ordinary course of business. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results.

Other

The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones whose achievement may become probable in subsequent periods, or royalties on future sales of specified products. Additionally, the Company is party to various contracts with CROs and CMOs that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

Based on the Company’s current development plans as of September 30, 2024, the Company does not expect to make milestone payments due to third parties during the next 12 months from the filing of this Form 10-Q, in connection with our license agreements. These milestones are generally recognized in the period in which the achievement of the underlying milestones becomes probable. When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in the Company’s consolidated financial statements.

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Preferred stock par value per share	$ 0.001	$ 0.001
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, authorized	120,000,000	120,000,000
Common stock, issued	61,436,251	59,426,559
Common stock, outstanding	61,436,251	59,426,559
Common stock reserved for the conversion of Series A convertible preferred stock
Convertible preferred stock, par value	$ 0.001
Convertible preferred stock, authorized	150,000
Convertible preferred stock, issued	150,000	0
Convertible preferred stock, outstanding	150,000	0
Liquidation preference	$ 150,000

Common Stock (Details) - USD ($)									3 Months Ended	9 Months Ended
Common Stock (Details) - USD ($)	Apr. 15, 2024	Apr. 01, 2024	Feb. 29, 2024	Jan. 04, 2024	Aug. 21, 2023	Mar. 02, 2023	Feb. 09, 2022	Nov. 02, 2021	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jun. 30, 2024	Dec. 31, 2023
Stock
Issuance of stock									$ 48,875,000
Net proceeds from issuance of common stock											$ 48,875,000
2017 Equity Incentive Plan
Stock
Shares available for future grant										3,125,000
2022 Employment Inducement Plan
Stock
Common stock reserved for issuance							1,000,000
Vesting period							4 years
Expiration period							10 years
Shares available for future grant										42,862
2017 equity incentive plan and the 2022 employment inducement plan in aggregate
Stock
Common stock reserved for issuance										15,407,579
Shares available for future grant										1,872,738
Common stock reserved for the conversion of Series A convertible preferred stock
Stock
Convertible Preferred Stock	150,000	150,000				3,124,995
Price per share		$ 1,000
Temporary equity, par value per share		$ 0.001								$ 0.001
Convertible preferred stock, outstanding										150,000		150,000	0
Aggregate purchase price		$ 147,750,000
Conversion price	$ 48.00
Common stock \| At-the-market offering
Stock
Issuance of stock (in shares)					2,000,000
Issuance of stock					$ 48,900,000
Equity Option \| 2017 equity incentive plan and the 2022 employment inducement plan in aggregate
Stock
Common stock reserved for issuance										8,844,685
Maximum \| Common stock \| At-the-market offering
Stock
Aggregate proceeds			$ 200,000,000					$ 100,000,000.0
L G Chem Ltd
Stock
Issuance of stock				$ 20,000,000.0
Rights of compound L B 54640 \| L G Chem Ltd \| Common stock
Stock
Issuance of stock (in shares)				432,143
Employee Stock Option \| 2022 Employment Inducement Plan
Stock
Issuance of stock (in shares)										570,603
Restricted stock units \| 2022 Employment Inducement Plan
Stock
Issuance of stock (in shares)										386,535

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Total revenues	$ 33,251	$ 22,504	$ 88,296	$ 53,194
Costs and expenses:
Cost of sales	3,828	2,412	9,581	6,069
Research and development	37,931	33,570	196,789	105,059
Selling, general, and administrative	35,377	30,475	106,174	85,158
Total costs and expenses	77,136	66,457	312,544	196,286
Loss from operations	(43,885)	(43,953)	(224,248)	(143,092)
Other income (expense):
Other income (expense), net	1,088	(159)	2,434	(369)
Gain on settlement of forward contract			8,900
Interest expense	(5,242)	(3,149)	(15,156)	(9,342)
Interest income	4,054	3,466	11,196	10,126
Total other income (expense), net	(100)	158	7,374	415
Loss before income taxes	(43,985)	(43,795)	(216,874)	(142,677)
Provision (benefit) for income taxes	(344)	368	436	368
Net loss	(43,641)	(44,163)	(217,310)	(143,045)
Accrued dividends on convertible preferred stock	(1,329)		(2,631)
Net loss attributable to common stockholders	$ (44,970)	$ (44,163)	$ (219,941)	$ (143,045)
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (0.73)	$ (0.76)	$ (3.62)	$ (2.50)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (0.73)	$ (0.76)	$ (3.62)	$ (2.50)
Weighted-average common shares outstanding, basic (in shares)	61,219,918	57,874,960	60,793,329	57,154,803
Weighted-average common shares outstanding, diluted (in shares)	61,219,918	57,874,960	60,793,329	57,154,803
Other comprehensive loss:
Net loss attributable to common stockholders	$ (44,970)	$ (44,163)	$ (219,941)	$ (143,045)
Foreign currency translation adjustment	(602)	76	(975)	49
Unrealized (loss) gain, net on marketable securities, net of tax	615	(175)	237	(70)
Comprehensive loss	$ (44,957)	$ (44,262)	$ (220,679)	$ (143,066)

Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets
Total	$ 6,388	$ 7,028
Capitalized Milestones
Finite-Lived Intangible Assets
Estimated life (years)	11 years
Cost	$ 9,000	9,000
Accumulated Amortization	(2,612)	(1,972)
Total	$ 6,388	$ 7,028

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Nature of Business (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Apr. 15, 2024	Apr. 01, 2024	Mar. 02, 2023	Jun. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Liquidity
Accumulated deficit						$ 1,112,010	$ 894,736
Carrying amount of cash and cash equivalents and short term investments						$ 298,390	$ 275,846
Preferred stock par value per share						$ 0.001	$ 0.001
Issuance of stock					$ 48,875
Common stock reserved for the conversion of Series A convertible preferred stock
Liquidity
Issuance of temporary preferred stock (in shares)	150,000	150,000	3,124,995
Temporary equity, par value per share		$ 0.001				$ 0.001
Aggregate purchase price		$ 147,750
Issuance costs		$ 2,250		$ 2,250
Price per share		$ 1,000

Summary of Significant Accounting Policies - Net loss per share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Shares excluded from the computation of diluted net loss per share
Potential common shares	11,969,685	8,545,136	11,969,685	8,545,136
Employee Stock Option
Shares excluded from the computation of diluted net loss per share
Potential common shares	6,783,859	6,881,198	6,783,859	6,881,198
Restricted stock units
Shares excluded from the computation of diluted net loss per share
Potential common shares	1,811,504	1,081,619	1,811,504	1,081,619
Performance stock units
Shares excluded from the computation of diluted net loss per share
Potential common shares	249,322	582,319	249,322	582,319
Common stock reserved for the conversion of Series A convertible preferred stock
Shares excluded from the computation of diluted net loss per share
Potential common shares	3,125,000		3,125,000

Series A Convertible Preferred Stock (Details) $ / shares in Units, $ in Thousands					3 Months Ended		9 Months Ended
	May 07, 2024 $ / shares shares	Apr. 15, 2024 USD ($) $ / shares shares	Apr. 01, 2024 USD ($) $ / shares shares	Mar. 02, 2023 shares	Sep. 30, 2024 USD ($) $ / shares	Jun. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) $ / shares	Dec. 31, 2023 USD ($)
Series A Convertible Preferred Stock
Derivative liability								$ 1,150
Accrued dividends on convertible preferred stock					$ 1,329		$ 2,631
Carrying value of convertible preferred stock					$ 141,481		$ 141,481
Common stock reserved for the conversion of Series A convertible preferred stock
Series A Convertible Preferred Stock
Issuance and sale of shares of a new series \| shares		150,000	150,000	3,124,995
Temporary equity, par value per share \| $ / shares			$ 0.001		$ 0.001		$ 0.001
Aggregate purchase price			$ 147,750
Per share or per unit amount of temporary equity issued \| $ / shares		$ 48.00
Term to maturity per share or per unit amount of temporary equity issued		P20Y
Fair value of convertible preferred stock		$ 141,100
Issuance costs			$ 2,250			$ 2,250
Price per share \| $ / shares			$ 1,000
Multiplier factor to liquidation preference per share		1.75
Initial Liquidation Preference of per share \| $ / shares	$ 1,000	$ 1,000
Annual rate of convertible preferred stock		6.00%
Accrued dividends on convertible preferred stock					$ 1,329	1,302
Carrying value of convertible preferred stock					$ 141,481	$ 140,152	$ 141,481
Conversion price \| $ / shares		$ 48.00
Shares issued upon conversion \| shares		20.8333
Limited voting rights of convertible preferred stock to common stock shares \| shares	24.9438
Step up interest rate	1.00%
Common stock reserved for the conversion of Series A convertible preferred stock \| One holder of Series A convertible preferred stock
Series A Convertible Preferred Stock
Percentage ownership after conversion of preferred stock		4.99%
Common stock reserved for the conversion of Series A convertible preferred stock \| Separate holder of Series A convertible preferred stock
Series A Convertible Preferred Stock
Percentage ownership after conversion of preferred stock		9.99%
Common stock reserved for the conversion of Series A convertible preferred stock \| Forward Contracts
Series A Convertible Preferred Stock
Derivative liability		$ 8,900	$ 0

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Nov. 03, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Securities Act File Number	001-38223
Entity Registrant Name	RHYTHM PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-2159271
Entity Address, Address Line One	222 Berkeley Street
Entity Address, Address Line Two	12th Floor
Entity Address, City or Town	Boston
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02116
City Area Code	857
Local Phone Number	264-4280
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	RYTM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		61,457,069
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001649904
Amendment Flag	false

Long-Term Obligations

9 Months Ended

Sep. 30, 2024

Long-Term Obligations

Long-Term Obligations

13. Long-Term Obligations

On June 16, 2022, we entered into a RIFA with entities managed by HealthCare Royalty Management, LLC, collectively referred to as the Investors. Pursuant to the RIFA and subject to customary closing conditions, the Investors have agreed to pay the Company an aggregate investment amount of up to $100,000, or the Investment Amount. Under the terms of the RIFA, we received $37,500 on June 29, 2022 upon FDA approval of IMCIVREE in BBS, referred to as the Initial Investment Amount, and we received an additional $37,500 on September 29, 2022 of the Investment Amount upon EMA approval for BBS. On September 12, 2023, we received the remaining $24,370 of the Investment Amount, net of debt issuance costs, following the achievement of a specified amount of cumulative net sales of IMCIVREE between July 1, 2022 and September 30, 2023.

As consideration for the Investment Amount and pursuant to the RIFA, we agreed to pay the Investors a tiered royalty on our annual net revenues, or Revenue Interest, including worldwide net product sales and upfront payments and milestones. The applicable tiered percentage will initially be 11.5% on annual net revenues up to $125,000, 7.5% on annual net revenues of between $125,000 and $300,000 and 2.5% on annual net revenues exceeding $300,000. If the Investors have not received cumulative minimum payments equal to 60% of the amount funded by the Investors to date by March 31, 2027, or 120% of the amount funded by the Investors to date by March 31, 2029, we must make a cash payment immediately following each applicable date to the Investors sufficient to gross the Investors up to such minimum amounts after giving full consideration of the cumulative amounts paid by us to the Investors through each date, referred to as the Under Performance Payment. As the repayment of the funded amount is contingent upon worldwide net product sales and upfront payments, milestones, and royalties, the repayment term may be shortened or extended depending on actual worldwide net product sales and upfront payments, milestones, and royalties. We made repayments of $9,092 in the nine months ended September 30, 2024. As of September 30, 2024 we have made cumulative payments of $16,622.

The Investors’ rights to receive the Revenue Interests will terminate on the date on which the Investors have received payments equal to a certain percentage of the funded portion of the Investment Amount including the aggregate of all payments made to the Investors as of such date, each percentage tier referred to as the Hard Cap, unless the RIFA is earlier terminated. The total Revenue Interests payable by us to the Investors is capped between 185% and 250% of the Investment Amount paid, dependent on the aggregate royalty paid between 2028 and 2032. If a change of control of occurs, the Investors may accelerate payments due under the RIFA up to the Hard Cap plus any other obligations payable under the RIFA.

The repayment period commenced on July 8, 2022 for the Initial Investment Amount, and expires on the earlier of (i) the date at which the Investors received cash payments totaling an aggregate of a Hard Cap ranging from 185% to 250% of the Initial Investment Amount or (ii) the legal maturity date of July 8, 2034. If the Investors have not received

payments equal to 250% of the Investment Amount by the twelve-year anniversary of the initial closing date, we will be required to pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously received by Investors. In the event of a change of control, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time, ranging from 185% to 250% plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to Investors under the deferred royalty obligation, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of IMCIVREE in the U.S. or our breach of any covenant contained in the RIFA and our failure to cure the breach within the prescribed time frame, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time of default ranging from 185% to 250% plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon an event of default, Investors may exercise all other rights and remedies available under the RIFA, including foreclosing on the collateral that was pledged to Investors, which consists of all of our present and future assets relating to IMCIVREE.

We have evaluated the terms of the RIFA and concluded that the features are similar to those of a debt instrument. Accordingly, we have accounted for the transaction as long-term debt and presented it as a deferred royalty obligation on our condensed consolidated balance sheets. We have further evaluated the terms of the RIFA and determined that the repayment of the Hard Cap in effect at the time which ranges from 185% to 250% of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition. We determined the fair value of the derivative using an option pricing Monte Carlo simulation model taking into account the probability of change of control occurring and potential repayment amounts and timing of such payments that would result under various scenarios, as further described in Note 2, “Summary of Significant Accounting Policies” to our condensed consolidated financial statements. The aggregate fair value of the embedded derivative asset (liability) was $150 and ($1,150) as of September 30, 2024 and December 31, 2023, respectively. We will remeasure the embedded derivative to fair value each reporting period until the time the features lapse and/or termination of the deferred royalty obligation. For the three and nine months ended September 30, 2024 and 2023, we recognized other income of $510, $1,300, $130 and $150, respectively, due to the remeasurement of the embedded derivative liability.

The carrying value of the deferred royalty obligation as of September 30, 2024 was $109,241 based on $100,000 of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the RIFA, and debt issuance costs incurred. The carrying value of the deferred royalty obligation approximated fair value as of September 30, 2024 and December 31, 2023. The effective interest rate as of September 30, 2024 was 15.47%. In connection with the deferred royalty obligation, we incurred debt issuance costs totaling $3,287. Debt issuance costs have been netted against the debt and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs. The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make estimates that could impact the short and long-term classification of these costs, as well as the period over which these costs will be amortized.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

9. Income Taxes

The Company recorded an income tax (benefit) provision of approximately ($344), $436, $368, and $368 for the three and nine months ended September 30, 2024 and 2023, respectively. The income tax provision is a result of taxable income from the Company’s foreign jurisdictions. The Company expects to maintain a full valuation allowance against its net deferred tax assets for the year ended December 31, 2024.

- Definition

The entire disclosure for income tax.

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+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (43,641)	$ (32,261)	$ (141,372)	$ (44,163)	$ (46,703)	$ (52,179)	$ (217,310)	$ (143,045)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Reference 30: http://www.xbrl.org/2003/role/disclosureRef
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-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480097/470-10-S99-1B

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
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-URI https://asc.fasb.org/1943274/2147480097/470-10-S99-1B

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 60B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482689/260-10-45-60B

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 7
-Publisher FASB
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-Name Accounting Standards Codification
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-Publisher FASB
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Reference 35: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Subparagraph (a)
-Publisher FASB
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Reference 36: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1B

Reference 37: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
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-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478524/942-220-S99-1

+ Details

Condensed Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Operating activities
Net loss	$ (217,310)	$ (143,045)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	29,126	23,879
Depreciation and amortization	1,180	1,341
Non-cash accretion of other current liability	2,966
Non-cash interest expense	12,190	9,342
Non-cash accretion & amortization of short-term investments	(6,027)
Non-cash rent expense	289	294
Change in fair value of embedded derivative liability	(1,300)	(150)
Gain on settlement of forward contract	(8,900)
Acquired IPR&D assets classified as investing activities	92,385	5,667
Changes in operating assets and liabilities:
Accounts receivable	(4,439)	(8,317)
Inventory	(5,271)	(4,845)
Prepaid expenses and other current assets	181	(2,367)
Deferred revenue		(148)
Other long-term assets, net	3,157	1,660
Accounts payable, accrued expenses and other liabilities	6,739	9,915
Net cash used in operating activities	(95,034)	(106,774)
Investing activities
Purchases of short-term investments	(201,935)	(314,265)
Maturities of short-term investments	173,105	291,675
Acquisition of IPR&D assets	(40,500)	(5,667)
Purchases of property and equipment		(48)
Net cash used in investing activities	(69,330)	(28,305)
Financing activities
Repayment of deferred royalty obligation	(9,092)	(4,824)
Proceeds from the exercise of stock options	12,986	2,471
Proceeds from issuance of common stock from ESPP	1,270	1,053
Net proceeds from issuance of common stock		48,875
Proceeds from royalty financing agreement, net of issuance costs		24,370
Gain on settlement of forward contract	8,900
Proceeds from Series A Preferred Stock, net of issuance costs	138,850
Net cash provided by (used in) financing activities	152,914	71,945
Effect of exchange rates on cash	(975)	50
Net increase (decrease) in cash, cash equivalents and restricted cash	(12,426)	(63,084)
Cash, cash equivalents and restricted cash at beginning of period	60,409	128,005
Cash, cash equivalents and restricted cash at end of period	47,983	$ 64,921
Supplemental disclosure of non-cash investing and financing activities:
Non-current liability issued in exchange for the acquisition of IPR&D	$ 33,669
Issuance of common stock in exchange for IPR&D	18,716
Accretion of preferred stock dividends	$ 2,631

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Taxes
Foreign income tax provision (benefit)	$ 344	$ 368	$ 436	$ 368

Right of Use Asset and Lease Liability (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Right of Use Asset and Lease Liability
Amount committed to future lease payments	$ 5,700		$ 5,700
Lease renewal term (in years)	5 years		5 years
Right of Use Assets under the amended operating lease			$ 3,100
Operating lease discount rate	13.00%		13.00%
Rent expense, or operating lease costs	$ 302	$ 280	$ 908	$ 867
Cash payments in the measurement of operating lease liability			$ 636	$ 623
Weighted average remaining lease term	5 years		5 years

Summary of Significant Accounting Policies - License Agreements - RareStone (Details)	1 Months Ended	3 Months Ended					9 Months Ended		12 Months Ended
	Dec. 31, 2021 USD ($) item	Sep. 30, 2024 USD ($)	Mar. 31, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2021 USD ($) item	Mar. 31, 2022 USD ($)
Significant Agreements
Equity issued in conjunction with license agreement			$ 18,716,000
RareStone Group Ltd. \| License agreement
Significant Agreements
Number of performance obligations \| item										2
License agreement commercial manufacturing supply discount							$ 1,286,000		$ 1,286,000
Realized loss on RareStone equity					$ 1,040,000	$ 1,040,000
Loss on RareStone equity investment						300,000
Upfront consideration										$ 8,040,000
Contract with customer liability revenue recognized		$ 0		$ 0			$ 0	$ 0
Number of independent sub studies in patients \| item	4
Upfront payment	$ 7,000,000									7,000,000
Equity issued in conjunction with license agreement	1,077,586
Equity recorded at fair value						$ 1,040,000					$ 2,440,000
Aggregate payment upon achievement of development and commercial milestones	$ 62,500,000									$ 62,500,000

Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) item Institution segment	Sep. 30, 2023 USD ($)	Dec. 31, 2023
Segment Information
Number of operating segments \| segment			1
Off Balance Sheet Risk and Concentrations of Credit Risk
Number of federally insured financial institutions \| Institution			2
Number of pharmacies to which the company sells product \| item			1
Impairment of Long-Lived Assets
Tangible asset impairment charges \| $	$ 0	$ 0	$ 0	$ 0
Customer concentration risk \| Customer one \| Revenue benchmark
Off Balance Sheet Risk and Concentrations of Credit Risk
Concentration risk percentage	68.00%	80.00%	73.00%	84.00%
Customer concentration risk \| Customer one \| Accounts receivable
Off Balance Sheet Risk and Concentrations of Credit Risk
Concentration risk percentage			65.00%		73.00%

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 47,521	$ 60,081
Short-term investments	250,869	215,765
Accounts receivable, net	19,306	14,867
Inventory	13,895	8,624
Prepaid expenses and other current assets	8,750	8,931
Total current assets	340,341	308,268
Property and equipment, net	801	1,341
Right-of-use asset	3,588	781
Intangible assets, net	6,388	7,028
Restricted cash	462	328
Other long-term assets	11,992	14,999
Total assets	363,572	332,745
Current liabilities:
Accounts payable	4,887	4,885
Accrued expenses and other current liabilities	54,797	48,262
Other current liability - LG Chem	36,635
Deferred revenue	1,286	1,286
Lease liability		770
Total current liabilities	97,605	55,203
Long-term liabilities:
Deferred royalty obligation	109,241	106,143
Lease liability, non-current	4,030	490
Derivative liability		1,150
Total liabilities	210,876	162,986
Commitments and contingencies (Note 15)
Series A convertible preferred stock, $0.001 par value: 150,000 shares authorized; 150,000 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively. Liquidation preference of $150,000 as of September 30, 2024.	141,481
Stockholders' equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023
Common stock, $0.001 par value: 120,000,000 shares authorized; 61,436,251 and 59,426,559 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	61	59
Additional paid-in capital	1,123,768	1,064,302
Accumulated other comprehensive (loss) income	(604)	134
Accumulated deficit	(1,112,010)	(894,736)
Total stockholders' equity	11,215	169,759
Total liabilities, convertible preferred stock and stockholders' equity	$ 363,572	$ 332,745

Fair Value of Financial Assets and Liabilities - Changes in Level 3 Securities (Details) - Level 3 - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Fair Value of Financial Liabilities
Beginning aggregate estimated fair value of Level 3 liabilities (assets)	$ 1,150	$ 1,340
Change in fair value of embedded derivative	1,300	150
Fair value of forward contract - Series A Convertible Preferred Stock	8,900
Settlement of forward contract	(8,900)
Ending aggregate estimated fair value of Level 3 liabilities (assets)	$ (150)	$ 1,190

Asset Acquisitions (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended	12 Months Ended
Asset Acquisitions (Details) - USD ($) $ in Thousands	Jan. 04, 2024	Feb. 27, 2023	Mar. 31, 2024	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Asset Acquisition
Issuance of stock				$ 48,875
Issuance of common stock as consideration for LGC license			$ 18,716
L G Chem Ltd
Asset Acquisition
Aggregate payment upon achievement of development and commercial milestones	$ 205,000
Purchase consideration	92,400
Cash consideration	40,000
Issuance of stock	20,000
Issuance of common stock as consideration for LGC license	18,700
License agreement consideration payment	$ 40,000
Effective date of the license agreement	18 months
License fee payable	$ 33,700				$ 36,600
L G Chem Ltd \| Research and development
Asset Acquisition
Purchase consideration					$ 92,400
L G Chem Ltd \| Selling, general and administrative
Asset Acquisition
Acquisition related costs	$ 800
Xinvento B.V.
Asset Acquisition
Aggregate payment upon achievement of development and commercial milestones		$ 206,000
Clinical development milestone payments		6,000
Regulatory approval and commercial milestones milestone payments		125,000
Sales milestone payments		75,000
Purchase consideration		5,667
Cash consideration		4,520
Holdback, payable on the one-year anniversary of the acquisition		500
Acquisition related costs		$ 647
Xinvento B.V. \| Research and development
Asset Acquisition
Purchase consideration						$ 5,667

Right of Use Asset and Lease Liability - Operating Lease Maturities (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Right of Use Asset and Lease Liability
2024	$ 215
2025	456
2026	1,103
2027	1,125
2028	1,148
2029	1,171
2030	691
Total operating lease payments	5,909
Less: imputed interest	(1,879)
Total operating lease liability	$ 4,030

Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2024

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

6. Fair Value of Financial Assets and Liabilities

As of September 30, 2024 and December 31, 2023, the carrying amount of cash and cash equivalents and short-term investments was $298,390 and $275,846 respectively, which approximates fair value. Cash and cash equivalents and short-term investments includes investments in U.S. treasury securities and money market funds that invest in U.S. government securities that are valued using quoted market prices. Accordingly, money market funds and government funds are categorized as Level 1. The financial assets valued based on Level 2 inputs consist of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations.

The following tables present information about the Company's financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair value:


	Fair Value Measurements as of
	September 30, 2024 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	37,680	$	—	$	—	$	37,680
Marketable securities:
US treasury securities		49,655		—		—		49,655
Corporate debt securities and commercial paper		—		201,214		—		201,214
Derivative asset:		—		—		150		150
Total	$	87,335	$	201,214	$	150	$	288,699


	Fair Value Measurements as of
	December 31, 2023 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds		40,868		4,979		—		45,847
Marketable securities:
Corporate debt securities and commercial paper		—		215,765		—		215,765
Total	$	40,868	$	220,744	$	—	$	261,612
Liabilities:
Derivative liability	$	—	$	—	$	1,150	$	1,150
Total	$	—	$	—	$	1,150	$	1,150

The estimated fair value of the derivative liability relates to our Royalty Interest Financing Agreement (RIFA) with HealthCare Royalty Partners was determined using Level 3 inputs. The fair value measurement of the derivative liability is sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument.

The embedded derivative liability associated with our deferred royalty obligation, as discussed further in Note 13, “Long-Term Obligations”, is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the deferred royalty obligation on the condensed consolidated balance sheets. The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other (expense) income, net. The assumptions used in the option pricing Monte Carlo simulation model include: (1) our estimates of the probability and timing of related events; (2) the probability-weighted net sales of IMCIVREE, including worldwide net product sales, upfront payments, milestones and royalties; (3) our risk-adjusted discount rate that includes a company specific risk premium; (4) our cost of debt; (5) volatility; and (6) the probability of a change in control occurring during the term of the instrument.

The forward contract associated with our Series A Convertible Preferred Stock, as discussed further in Note 10, “Series A Preferred Stock”, is measured at fair value. In order to value the forward contract, a binomial lattice model was used to determine the fair value of the Series A Preferred Stock. The fair value of the forward contract was measured as the difference between the consideration payable of $150,000 and the fair value of the Series A Preferred Stock. The fair value of the forward contract was determined to be $0 at initial issuance and the change in the fair value from initial issuance to settlement of $8,900 was recognized as other income in the condensed consolidated statements of operation for the nine months ended September 30, 2024. The assumptions used in the binomial lattice model include: (1) the Company’s common stock price on the issuance and settlement dates; (2) the Conversion Price as of $48.00 as per the Agreement; (3) a 20-year term to maturity; (4) an estimate of the Company’s credit risk-adjusted discount rate; and (5) volatility.


	Nine months ended
	September 30,
	2024		2023
Beginning aggregate estimated fair value of Level 3 liabilities (assets)	$	1,150	$	1,340
Change in fair value of embedded derivative		(1,300)		(150)
Fair value of forward contract - Series A Convertible Preferred Stock		8,900		—
Settlement of forward contract		(8,900)		—
Ending aggregate estimated fair value of Level 3 liabilities (assets)	$	(150)	$	1,190

Marketable Securities

The following tables summarize the Company's marketable securities:


	September 30, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	200,864	$	379	$	(29)	$	201,214
U.S. Treasury Securities (due within 1 year)		49,484		174		(3)		49,655
	$	250,348	$	553	$	(32)	$	250,869


	December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	215,490	$	282	$	(7)	$	215,765
	$	215,490	$	282	$	(7)	$	215,765

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 107
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-107

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
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-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (a)
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-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Name Accounting Standards Codification
-Section 50
-Paragraph 2E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Paragraph 6A
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-Topic 820
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-Name Accounting Standards Codification
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-Paragraph 6A
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-Topic 820
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Publisher FASB
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
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-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478119/940-820-50-1

+ Details

Long-Term Obligations (Details) - USD ($) $ in Thousands					3 Months Ended		9 Months Ended
Long-Term Obligations (Details) - USD ($) $ in Thousands	Sep. 12, 2023	Sep. 29, 2022	Jun. 29, 2022	Jun. 16, 2022	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Long-Term Obligations
Deferred royalty obligation					$ 109,241		$ 109,241		$ 106,143
Royalty Interest Financing Agreement
Long-Term Obligations
Remaining Investment Amount	$ 24,370	$ 37,500	$ 37,500				100,000
Repayment of debt							9,092
Cumulative repayment of debt							16,622
Revenue interest payment period				12 years
Fair value of embedded derivative asset (liability)					150		150		$ (1,150)
Remeasurement of the embedded derivative liability					(510)	$ 130	1,300	$ (150)
Deferred royalty obligation					$ 109,241		$ 109,241
Effective interest rate					15.47%		15.47%
Debt issuance costs					$ 3,287		$ 3,287
Royalty Interest Financing Agreement \| Annual net revenues up to 125 million
Long-Term Obligations
Royalty interest (as a percent)				11.50%
Threshold annual net revenues				$ 125,000
Royalty Interest Financing Agreement \| Annual net revenues between 125 million and 300 million
Long-Term Obligations
Royalty interest (as a percent)				7.50%
Royalty Interest Financing Agreement \| Annual net revenues exceeding 300 million
Long-Term Obligations
Royalty interest (as a percent)				2.50%
Threshold annual net revenues				$ 300,000
Royalty Interest Financing Agreement \| March 31, 2027
Long-Term Obligations
Threshold cumulative minimum payments (as a percent)				60.00%
Royalty Interest Financing Agreement \| March 31, 2029
Long-Term Obligations
Threshold cumulative minimum payments (as a percent)				120.00%
Royalty Interest Financing Agreement \| Minimum
Long-Term Obligations
Revenue interest cap (as a percent)				185.00%
Royalty Interest Financing Agreement \| Minimum \| Annual net revenues between 125 million and 300 million
Long-Term Obligations
Threshold annual net revenues				$ 125,000
Royalty Interest Financing Agreement \| Maximum
Long-Term Obligations
Aggregate investment amount				$ 100,000
Revenue interest cap (as a percent)				250.00%
Royalty Interest Financing Agreement \| Maximum \| Annual net revenues between 125 million and 300 million
Long-Term Obligations
Threshold annual net revenues				$ 300,000

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Schedule of potential common shares, presented based on amounts outstanding at each period end, excluded from computation of diluted net loss per share attributable to common stockholders


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Stock options		6,783,859		6,881,198		6,783,859		6,881,198
Restricted stock units		1,811,504		1,081,619		1,811,504		1,081,619
Performance stock units		249,322		582,319		249,322		582,319
Common stock reserved for the conversion of Series A convertible preferred stock		3,125,000		—		3,125,000		—
Potential common shares		11,969,685		8,545,136		11,969,685		8,545,136

Schedule of total revenue by geographic area


	Three Months Ended September 30				Nine Months Ended September 30
	2024			2023	2024			2023
US	$	23,302	$	17,939	$	64,437	$	44,088
Germany		3,618		1,910		8,459		3,281
Other		6,331		2,655		15,400		5,825
Total revenues	$	33,251	$	22,504	$	88,296	$	53,194

Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Inventory
Raw Materials	$ 5,020	$ 4,625
WIP	840	1,104
Finished Goods	8,035	2,895
Total Inventory	$ 13,895	$ 8,624

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accrued Expenses and Other Current Liabilities
Research and development costs	$ 14,810	$ 12,925
Professional fees	5,760	3,833
Payroll related	12,952	15,439
Royalties	1,662	1,180
Sales allowances	15,299	9,475
Other	4,314	5,410
Accrued expenses and other current liabilities	$ 54,797	$ 48,262

Nature of Business

9 Months Ended

Sep. 30, 2024

Nature of Business

Nature of Business

1. Nature of Business

Rhythm Pharmaceuticals, Inc. (the “Company” or “we”) is a global, commercial-stage biopharmaceutical company dedicated to transforming the lives of patients living with rare neuroendocrine diseases. We are focused on advancing our melanocortin-4 (MC4R) receptor agonists, including our lead asset, IMCIVREE^® (setmelanotide), as a precision medicine designed to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases. While obesity affects hundreds of millions of people worldwide, we are developing therapies for a subset of individuals who have hyperphagia, a pathological hunger that leads to abnormal food-seeking behaviors, and severe obesity due to impaired MC4R pathway signaling, which may be caused by genetic variants or injury to the hypothalamic region. The MC4R pathway is an endocrine pathway in the brain that is responsible for regulating hunger, caloric intake and energy expenditure, which consequently affect body weight. IMCIVREE, an MC4R agonist for which we hold worldwide rights, is the first-ever therapy developed for patients with certain rare diseases that is approved or authorized in the United States, European Union, and Great Britain, Canada, and other countries and regions.

The Company is a Delaware corporation organized in February 2013 under the name Rhythm Metabolic, Inc., and as of October 2015, under the name Rhythm Pharmaceuticals, Inc. The Company has wholly owned subsidiaries in the US, Ireland, the United Kingdom, the Netherlands, France, Germany, Italy, Spain and Canada.

The Company is subject to risks and uncertainties common to commercial-stage companies in the biotechnology industry, including but not limited to, risks associated with the commercialization of approved products, completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Commercialization of approved products will require significant resources and in order to market IMCIVREE, the Company must continue to build its sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even though the Company has an approved product, and even if the Company’s further product development efforts are successful, it is uncertain when, if ever, the Company will realize sufficient revenue from product sales to fund operations.

Liquidity

The Company has incurred operating losses and negative cash flows from operations since inception. As of September 30, 2024, the Company had an accumulated deficit of $1.1 billion. The Company has primarily funded these losses through the proceeds from the sales of common and preferred stock, asset sales, royalty financing, out-license arrangements, as well as capital contributions received from the former parent company, Rhythm Holdings LLC. While the Company is generating product revenue, management expects operating losses to continue for the foreseeable future. The Company has devoted substantially all of its resources to its drug development efforts, comprised of research and development, the acquisition of in process research and development assets, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property, commercialization activities and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations.

At September 30, 2024, the Company had $298,390 of cash and cash equivalents and short-term investments on hand. On April 1, 2024, the Company entered into an Investment Agreement (the “Investment Agreement”) with certain affiliates of Perceptive Advisors LLC (“Perceptive”) and a life sciences focused institutional investor (each, an “Investor”

and collectively, the “Investors”), relating to the issuance and sale of 150,000 shares of a new series of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share, titled the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”), for an aggregate purchase price of $147,750, net of issuance costs of $2,250, or $1,000 per share (the “Issuance”). The Issuance closed on April 15, 2024.

In the future, the Company will be dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale of equity, proceeds from out license arrangements, product sales and funded research and development programs to maintain the Company's operations and meet the Company's obligations. There is no guarantee that additional equity or other financings will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back, terminate its operations or seek to merge with or be acquired by another company. Management believes that the Company's existing cash resources will be sufficient to fund the Company’s operations through at least the next twelve months from the filing of this Quarterly Report on Form 10-Q with the SEC.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Basis of Presentation

Use of Estimates

Principles of Consolidation

Segment and Geographic Information

Geographic Data

The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of its customers. Total revenue by geographic area was as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2024			2023	2024			2023
US	$	23,302	$	17,939	$	64,437	$	44,088
Germany		3,618		1,910		8,459		3,281
Other		6,331		2,655		15,400		5,825
Total revenues	$	33,251	$	22,504	$	88,296	$	53,194

As of September 30, 2024 and December 31, 2023, long-lived assets at locations outside the United States was not material.

Off-Balance Sheet Risk and Concentrations of Credit Risk

Accounts Receivable, net

Revenue Recognition

Product Revenue, net

Reserves for Variable Consideration

The following are the components of variable consideration related to product revenue:

License Agreements

LG Chem

RareStone Group Ltd.

No license revenue was recognized during three and six months ended September 30, 2024 and 2023, respectively.

Deferred Royalty Obligation

Inventory

Cost of Product Sales

Intangible Assets, Net

Impairment of Long-Lived Assets

Acquired IPR&D and Milestones Expenses

Acquired IPR&D and Milestone Expenses

Foreign Currency Translation

Fair Value Measurements

Level 1 — Quoted market prices in active markets for identical assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Net Loss Per Share

The following table includes the potential common shares that were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Stock options		6,783,859		6,881,198		6,783,859		6,881,198
Restricted stock units		1,811,504		1,081,619		1,811,504		1,081,619
Performance stock units		249,322		582,319		249,322		582,319
Common stock reserved for the conversion of Series A convertible preferred stock		3,125,000		—		3,125,000		—
Potential common shares		11,969,685		8,545,136		11,969,685		8,545,136

Subsequent Events

Application of New or Revised Accounting Standards

Related-Party Transactions

9 Months Ended

Sep. 30, 2024

Related-Party Transactions

Related-Party Transactions

12. Related-Party Transactions

Expenses paid directly to related parties for the three and nine months ended September 30, 2024 and 2023, were immaterial. Outstanding payments due to related parties as of September 30, 2024 and December 31, 2023 were immaterial.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

+ Details

Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value of Financial Assets and Liabilities

Schedule of financial assets and liabilities measured at fair value on a recurring basis


	Fair Value Measurements as of
	September 30, 2024 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	37,680	$	—	$	—	$	37,680
Marketable securities:
US treasury securities		49,655		—		—		49,655
Corporate debt securities and commercial paper		—		201,214		—		201,214
Derivative asset:		—		—		150		150
Total	$	87,335	$	201,214	$	150	$	288,699


	Fair Value Measurements as of
	December 31, 2023 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds		40,868		4,979		—		45,847
Marketable securities:
Corporate debt securities and commercial paper		—		215,765		—		215,765
Total	$	40,868	$	220,744	$	—	$	261,612
Liabilities:
Derivative liability	$	—	$	—	$	1,150	$	1,150
Total	$	—	$	—	$	1,150	$	1,150

Schedule of changes in the estimated fair value of Level 3 securities


	Nine months ended
	September 30,
	2024		2023
Beginning aggregate estimated fair value of Level 3 liabilities (assets)	$	1,150	$	1,340
Change in fair value of embedded derivative		(1,300)		(150)
Fair value of forward contract - Series A Convertible Preferred Stock		8,900		—
Settlement of forward contract		(8,900)		—
Ending aggregate estimated fair value of Level 3 liabilities (assets)	$	(150)	$	1,190

Schedule of marketable securities


	September 30, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	200,864	$	379	$	(29)	$	201,214
U.S. Treasury Securities (due within 1 year)		49,484		174		(3)		49,655
	$	250,348	$	553	$	(32)	$	250,869


	December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	215,490	$	282	$	(7)	$	215,765
	$	215,490	$	282	$	(7)	$	215,765

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

Condensed Consolidated Statements of Convertible Preferred Stock & Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Common stock reserved for the conversion of Series A convertible preferred stock	Total
Beginning balance at Dec. 31, 2022	$ 56	$ 974,356	$ (92)	$ (710,058)		$ 264,262
Beginning balance (in shares) at Dec. 31, 2022	56,612,429
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		6,376				6,376
Issuance of common stock in connection with ESPP		665				665
Issuance of common stock in connection with ESPP (in shares)	32,169
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units		553				553
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	207,806
Foreign currency translation adjustment			21			21
Net unrealized losses on short-term investments			65			65
Net loss				(52,179)		(52,179)
Ending balance at Mar. 31, 2023	$ 56	981,950	(6)	(762,237)		219,763
Ending balance (in shares) at Mar. 31, 2023	56,852,404
Beginning balance at Dec. 31, 2022	$ 56	974,356	(92)	(710,058)		264,262
Beginning balance (in shares) at Dec. 31, 2022	56,612,429
Increase (Decrease) in Stockholders' Equity
Foreign currency translation adjustment						49
Net loss						(143,045)
Ending balance at Sep. 30, 2023	$ 59	1,050,631	(113)	(853,103)		197,474
Ending balance (in shares) at Sep. 30, 2023	59,089,352
Beginning balance at Mar. 31, 2023	$ 56	981,950	(6)	(762,237)		219,763
Beginning balance (in shares) at Mar. 31, 2023	56,852,404
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		8,891				8,891
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	$ 1	341				342
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	43,664
Foreign currency translation adjustment			(48)			(48)
Net unrealized losses on short-term investments			40			40
Net loss				(46,703)		(46,703)
Ending balance at Jun. 30, 2023	$ 57	991,182	(14)	(808,940)		182,285
Ending balance (in shares) at Jun. 30, 2023	56,896,068
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		8,612				8,612
Issuance of common stock in connection with ESPP		388				388
Issuance of common stock in connection with ESPP (in shares)	17,650
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units		1,576				1,576
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	156,389
Issuance of common stock upon completion of public offering, net of offering costs	$ 2	48,873				48,875
Issuance of common stock upon completion of public offering, net of offering costs (in shares)	2,019,245
Foreign currency translation adjustment			76			76
Net unrealized losses on short-term investments			(175)			(175)
Net loss				(44,163)		(44,163)
Ending balance at Sep. 30, 2023	$ 59	1,050,631	(113)	(853,103)		197,474
Ending balance (in shares) at Sep. 30, 2023	59,089,352
Temporary Equity
Issuance of Series A Preferred Stock, net of $2,250 of issuance costs (in shares)					0
Beginning balance (in shares) at Dec. 31, 2023					0
Beginning balance at Dec. 31, 2023	$ 59	1,064,302	134	(894,736)		169,759
Beginning balance (in shares) at Dec. 31, 2023	59,426,559
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		7,767				7,767
Issuance of common stock in connection with ESPP		673				673
Issuance of common stock in connection with ESPP (in shares)	28,495
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	$ 1	6,352				6,353
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	1,077,271
Issuance of common stock as consideration for LGC license		18,716				18,716
Issuance of common stock as consideration for LGC license (in shares)	432,143
Foreign currency translation adjustment			(71)			(71)
Unrealized loss on marketable securities			(244)			(244)
Net loss				(141,372)		(141,372)
Ending balance at Mar. 31, 2024	$ 60	1,097,810	(181)	(1,036,108)		61,581
Ending balance (in shares) at Mar. 31, 2024	60,964,468
Beginning balance (in shares) at Dec. 31, 2023					0
Temporary Equity
Accrued dividends on convertible preferred stock						2,631
Ending balance at Sep. 30, 2024					$ 141,481	141,481
Ending balance (in shares) at Sep. 30, 2024					150,000
Beginning balance at Dec. 31, 2023	$ 59	1,064,302	134	(894,736)		169,759
Beginning balance (in shares) at Dec. 31, 2023	59,426,559
Increase (Decrease) in Stockholders' Equity
Foreign currency translation adjustment						(975)
Net loss						(217,310)
Ending balance at Sep. 30, 2024	$ 61	1,123,768	(604)	(1,112,010)		11,215
Ending balance (in shares) at Sep. 30, 2024	61,436,251
Temporary Equity
Issuance of Series A Preferred Stock, net of $2,250 of issuance costs					$ 138,850
Accrued dividends on convertible preferred stock					1,302
Ending balance at Jun. 30, 2024					$ 140,152
Ending balance (in shares) at Jun. 30, 2024					150,000
Beginning balance at Mar. 31, 2024	$ 60	1,097,810	(181)	(1,036,108)		61,581
Beginning balance (in shares) at Mar. 31, 2024	60,964,468
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		10,358				10,358
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units		1,403				1,403
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	131,481
Accretion of preferred stock dividends		(1,302)				(1,302)
Foreign currency translation adjustment			(302)			(302)
Unrealized loss on marketable securities			(134)			(134)
Net loss				(32,261)		(32,261)
Ending balance at Jun. 30, 2024	$ 60	1,108,269	(617)	(1,068,369)		39,343
Ending balance (in shares) at Jun. 30, 2024	61,095,949
Temporary Equity
Issuance of Series A Preferred Stock, net of $2,250 of issuance costs (in shares)					150,000
Accrued dividends on convertible preferred stock					$ 1,329	1,329
Ending balance at Sep. 30, 2024					$ 141,481	141,481
Ending balance (in shares) at Sep. 30, 2024					150,000
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		11,001				11,001
Issuance of common stock in connection with ESPP		597				597
Issuance of common stock in connection with ESPP (in shares)	16,059
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	$ 1	5,230				5,231
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	324,243
Accretion of preferred stock dividends		(1,329)				(1,329)
Foreign currency translation adjustment			(602)			(602)
Net unrealized losses on short-term investments			615			615
Net loss				(43,641)		(43,641)
Ending balance at Sep. 30, 2024	$ 61	$ 1,123,768	$ (604)	$ (1,112,010)		$ 11,215
Ending balance (in shares) at Sep. 30, 2024	61,436,251
Temporary Equity
Issuance of Series A Preferred Stock, net of $2,250 of issuance costs (in shares)					150,000

Asset Acquisitions

9 Months Ended

Sep. 30, 2024

Asset Acquisitions

Asset Acquisitions

3. Asset Acquisitions

LG Chem, Ltd.

On January 4, 2024, the Company entered into a license agreement and share issuance agreement with LG Chem, Ltd. (“LGC”). Under the terms of the license agreement, the Company obtained worldwide rights to LGC’s proprietary compound bivamelagon (LB54640) and assumed sponsorship of two ongoing LGC Phase 2 studies designed to evaluate safety, tolerability, pharmacokinetics and weight loss efficacy of bivamelagon (LB54640).

The total purchase consideration of $92.4 million was composed of $40.0 million of cash paid at closing and issued shares of the Company’s common stock with an aggregate value of $20.0 million. The shares were issued at a per share price equal to the ten-day volume weighted average closing price for our common stock, calculated as of the trading day immediately prior to January 4, 2024. As of January 4, 2024, the fair value of common stock issued was $18.7 million. The total purchase consideration also includes an additional $40.0 million license fee payable in 18 months, whose present value at closing was $33.7 million, and $0.8 million of transaction costs which are recorded as selling, general and administrative expenses. The carrying value of the license fee payable is $36.6 million as of September 30, 2024.

In addition, under the terms of the license agreement, we agreed to pay LGC up to $205 million in cash upon achieving various regulatory and sales milestones based on net sales of bivamelagon (LB54640). In addition and subject to the completion of Phase 2 development of bivamelagon (LB54640), the Company has agreed to pay LGC royalties of between low-to-mid single digit percent of net revenues from its MC4R portfolio, including bivamelagon (LB54640), commencing in 2029 and dependent upon achievement of various regulatory and indication approvals, and subject to customary deductions and anti-stacking. Royalties may further increase to a low double digit percent royalty, though such royalty would only be applicable on net sales of bivamelagon (LB54640) in a region if bivamelagon (LB54640) is covered by a composition of matter or method of use patent controlled by LGC in such region and the Company’s MC4R portfolio is not covered by any composition of matter or method of use patents controlled by the Company in such region. Such increased rate would only apply on net sales of bivamelagon (LB54640) for the limited remainder of the royalty term in the relevant region.

The assets acquired were In-Process Research and Development (“IPR&D”) assets. However, since the IPR&D assets were determined to have no alternative future use, the Company recognized the $92.4 million of purchase consideration as research and development expense in the nine months ended September 30, 2024.

The Company determined that the additional contingent consideration did not meet the definition of a derivative as of the acquisition date. Therefore, the Company did not record a contingent consideration liability on the acquisition date. The Company will recognize any future contingent consideration payments related to the LGC transaction in the period in which the achievement of the underlying milestones becomes probable.

Xinvento B.V.

On February 27, 2023, the Company, through its wholly-owned Dutch subsidiary, Rhythm Pharmaceuticals Netherlands B.V., a Dutch private limited liability company (“Rhythm BV”), entered into a Share Purchase Agreement (the “Purchase Agreement”) with Xinvento B.V., a Dutch private limited liability company based in the Netherlands (“Xinvento”), and the other parties named therein, pursuant to which, and concurrently with the execution thereof, Rhythm BV acquired all of the issued and outstanding shares of Xinvento. The aggregate consideration at closing was approximately $5,667, inclusive of transaction costs, as adjusted pursuant to the terms of the Purchase Agreement and subject to the distribution and payment terms set forth therein (the “Closing Purchase Price”).

In addition to the Closing Purchase Price, the Purchase Agreement provides for the payment of additional contingent consideration totaling up to $206,000 upon achievement of certain development, regulatory and commercial milestones by Xinvento, as follows: (i) up to an aggregate of $6,000 in clinical development milestones; (ii) up to an aggregate of $125,000 in regulatory approval and commercial milestones; and (iii) up to an aggregate of $75,000 in sales milestones in the event a second molecule is selected, developed and approved.

The total purchase consideration of $5,667 was composed of $4,520 of cash paid at closing, a $500 holdback, paid in the three months ended March 31, 2024, and $647 of acquisition-related costs. The Company determined that substantially all of the value as of acquisition date related to Xinvento’s IPR&D. As a result, the Company determined this transaction should be accounted for as an asset acquisition.

The assets acquired were IPR&D assets. However, since the IPR&D assets were determined to have no alternative future use, the Company recognized the $5,667 of purchase consideration as research and development expense in the year ended December 31, 2023.

The Company determined that the additional contingent consideration did not meet the definition of a derivative as of the acquisition date. Therefore, the Company did not record a contingent consideration liability on the acquisition date. The Company will recognize any future contingent consideration payments related to the Xinvento transaction in the period in which the achievement of the underlying milestones becomes probable.

Series A Convertible Preferred Stock

9 Months Ended

Sep. 30, 2024

Series A Convertible Preferred Stock

Series A Convertible Preferred Stock

10. Series A Convertible Preferred Stock

On April 1, 2024, the Company entered into an Investment Agreement (the “Investment Agreement”) with certain affiliates of Perceptive Advisors LLC (“Perceptive”) and certain other investors (each, an “Investor” and collectively, the “Investors”), relating to the issuance and sale of 150,000 shares of a new series of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share, titled the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”), for an aggregate purchase price of $147,750, net of $2,250 of issuance costs, or $1,000 per share (the “Issuance”). The Issuance closed on April 15, 2024.

The Company determined the obligation to issue 150,000 shares of Convertible Preferred Stock to Perceptive and Investors in the future at a set price represented a forward contract which was required to be accounted for at fair value. The fair value of the forward contract was measured as the difference between the fair value of the Series A Preferred Stock, as determined using a binomial lattice valuation model, and the consideration payable to the Company. The assumptions used in the binomial lattice model include: (1) the Company’s common stock price on the issuance and settlement dates; (2) the Conversion Price as of $48.00 as per the Agreement; (3) a 20-year term to maturity; (4) an estimate of the Company’s credit risk-adjusted discount rate; and (5) volatility. The fair value of the forward contract upon issuance was determined to be $0. Upon closing, the value of the forward contract was determined to be $8,900 and the fair value of the Convertible Preferred Stock was determined to be $141,100. The Convertible Preferred Stock was recorded at its fair value on the Issuance and the change in fair value of the forward contract was recorded as other income in its consolidated statement of operations for the nine months ended September 30, 2024. Issuance costs of $2,250 were incurred and recorded as a reduction in the carrying value of the Convertible Preferred Stock in the three months ended June 30, 2024.

The Company classifies its Series A Convertible Preferred Stock outside of stockholders’ equity as the redemption of such shares is outside the Company’s control. The Company did not adjust the carrying values of the Series A Convertible Preferred Stock to redemption value as the shares are not probable of becoming redeemable as of September 30, 2024.

The Convertible Preferred Stock has the following rights and privileges:

Liquidation:

The Series A Preferred Stock will rank senior to the Company’s common stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (“Liquidation”), each holder of Convertible Preferred Stock shall be entitled to receive payment for the greater of (i) 1.75 multiplied by the sum of the Liquidation Preference (i.e., Initial Liquidation Preference of $1,000 per share plus Paid-in-Kind (“PIK”) Dividends) plus unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference) or (ii) the amount such holder would have received if the Series A Preferred Stock were fully converted to common stock. If the assets available for distribution are not sufficient to pay the holders of the Convertible Preferred Stock pursuant to the preceding sentence, the assets will be distributed ratably to the holders of the Convertible Preferred Stock.

Voting:

Holders of the Convertible Preferred Stock have the right to vote with the holders of common stock on each matter submitted for a vote on an as-converted basis, subject to the terms of the Convertible Preferred Stock as specified in the Amended and Restated Certificate of Designations.

The holders of the Convertible Preferred Stock shall also have certain protective voting rights. Specifically, as long as the Series A Preferred Stock are outstanding, each of the following events require at least a two thirds affirmative

vote of the Series A Preferred Stock holders: (a) any amendment or modification of the Certificate of Incorporation to authorize or create, or to increase the authorized number of shares of, any class or series of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock, (b) any amendment, modification, repeal or waiver of any provision of the Certificate of Incorporation or the Amended and Restated Certificate of Designations that adversely affects the rights, preferences, privileges or powers of the Convertible Preferred Stock, (c) increase or decrease the number of authorized shares of Convertible Preferred Stock or issue additional shares of Convertible Preferred Stock, (d) the Company’s consolidation or combination with, or merger with or into, another Person, or any binding or statutory share exchange or involving the Convertible Preferred Stock, in each case unless: (i) the Convertible Preferred Stock either (x) remains outstanding after such consolidation, combination, merger, share exchange or reclassification; or (y) is converted or reclassified into, or is exchanged for, or represents solely the right to receive, preference securities of the continuing, resulting or surviving Person of such consolidation, combination, merger, share exchange or reclassification, or the parent thereof; (ii) the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, have rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the Holders or the holders thereof, as applicable, than the rights, preferences and voting powers, taken as a whole, of the Convertible Preferred Stock immediately before the consummation of such consolidation, combination, merger, share exchange or reclassification; and (iii) the issuer of the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, is a corporation duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that, if not the Company, will succeed to the Company under the Amended and Restated Certificate of Designations and the Convertible Preferred Stock.

Redemption:

The Company has the right to redeem all Convertible Preferred Stock after the Redemption Trigger Date, which is the fifth anniversary of the Initial Issue Date of April 15, 2024. The amount payable on the redemption date is equal to the Liquidation Preference (i.e., Initial Liquidation Preference of $1,000 per share plus PIK Dividends) plus any unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).

If a change of control occurs, each holder shall have the right to require the Company to repurchase all, or any whole number of shares that is less than all, of the holder’s Series A Preferred Stock at an amount equal to 1.75 multiplied by the sum of the Liquidation Preference (i.e., Initial Liquidation Preference of $1,000 per share plus PIK Dividends) plus any unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference). As of September 30, 2024, the Company did not adjust the carrying value of the Series A Preferred Stock to its redemption value, since a change of control was determined to not be probable.

Dividends:

After the second anniversary, dividends on the Convertible Preferred Stock accrue quarterly, at a 6% annual rate, and if not paid out in cash before the quarter end, will become PIK Dividends and added to the liquidation preference, or original issue price plus PIK Dividends. Since dividends do not commence until the second anniversary of the Issuance, the Convertible Preferred Stock is considered increasing rate preferred stock. Accordingly, the Company accretes the dividends, using the effective interest method, from Issuance to the first contractual call date, April 15, 2029. The Company accrued dividends of $1,329 for the three months ended September 30, 2024, as a reduction to Additional Paid-In Capital and an increase to the carrying value of Convertible Preferred Stock. The carrying value of Convertible Preferred Stock as of September 30, 2024 is $141,481.

Conversions:

Holders of Convertible Preferred Stock have the option to convert any number of whole shares at any time. The conversion is based on the sum of the Liquidation Preference plus unpaid Dividends divided by the $48.00 Conversion Price. Given the Initial Liquidation Preference of $1,000, each share of Convertible Preferred Stock would be convertible into 20.8333 shares of common stock, prior to any adjustments such as PIK Dividends, unpaid Dividends, stock splits, or voluntary conversion rate increases. Upon conversion, cash will be paid in lieu of any fractional share of common stock. However, based on certain restrictions on the conversion of the Convertible Preferred Stock specified in

the Amended and Restated Certificate of Designations, a holder of Convertible Preferred Stock is not entitled to effect a conversion of any portion of its shares of Convertible Preferred Stock, or to vote in its capacity as a holder of shares of Convertible Preferred Stock with respect to matters submitted to holders of the common stock if, after giving effect to such conversion, that holder would beneficially own in excess of 4.99%, in the case of one holder, or 9.99%, in the case of the other holder, of the number of shares of common stock outstanding immediately after giving effect to such exercise.

On May 7, 2024, the Company filed an Amended and Restated Certificate of Designations in respect of the Convertible Preferred Stock containing certain technical amendments to the terms of the Convertible Preferred Stock. The amendments contained in the Amended and Restated Certificate of Designations (x) limited the voting rights of the Convertible Preferred Stock to 24.9438 shares of the Company’s common stock per $1,000 liquidation preference of Convertible Preferred Stock and (y) eliminated a 1% step up in the interest rate that otherwise would have applied in the unlikely event that the Company was required to obtain and failed to obtain stockholder approval for certain conversion shares underlying the Convertible Preferred Stock.

On July 10, 2024, the Company filed with the Securities Exchange Commission (the “SEC”) a prospectus supplement to the prospectus included in the Company’s registration statement on Form S-3ASR filed with the SEC on March 2, 2023, covering the resale from time to time by the Investors of up to an aggregate of 3,124,995 shares of common stock, to satisfy registration rights that the Company granted to such stockholders in connection with the Issuance.

Inventory

9 Months Ended

Sep. 30, 2024

Inventory

Inventory

4. Inventory

Inventory consists of the following:


	September 30,		December 31,
	2024		2023
Raw Materials	$	5,020	$	4,625
WIP		840		1,104
Finished Goods		8,035		2,895
Total Inventory	$	13,895	$	8,624