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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	May 11, 2018
Document and Entity Information
Entity Registrant Name	RHYTHM PHARMACEUTICALS, INC.
Entity Central Index Key	0001649904
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		27,530,184
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 43,167	$ 34,236
Short-term investments	93,286	113,846
Prepaid expenses and other current assets	1,961	2,589
Total current assets	138,414	150,671
Property, plant and equipment, net	779	840
Restricted cash	250	225
Total assets	139,443	151,736
Current liabilities:
Accounts payable	2,456	2,427
Deferred rent	85	83
Accrued expenses and other current liabilities	3,038	4,210
Total current liabilities	5,579	6,720
Long-term liabilities:
Deferred rent	206	228
Total liabilities	5,785	6,948
Commitments and contingencies
Preferred stock:
Convertible Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
Stockholders’ equity:
Common stock, $0.001 par value: 120,000,000 shares authorized; 27,284,140 shares issued and outstanding March 31, 2018 and December 31, 2017, respectively	27	27
Additional paid-in capital	260,342	255,013
Accumulated deficit	(126,711)	(110,252)
Total stockholders’ equity	133,658	144,788
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$ 139,443	$ 151,736

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS
Temporary equity, par value per share	$ 0.001	$ 0.001
Temporary equity, shares authorized	10,000,000	10,000,000
Temporary equity, shares issued	0	0
Temporary equity, shares 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	27,284,140	27,284,140
Common stock, outstanding	27,284,140	27,284,140

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating expenses:
Research and development	$ 12,286	$ 4,873
Selling, general, and administrative	4,715	1,516
Total operating expenses	17,001	6,389
Loss from operations	(17,001)	(6,389)
Other income (expense):
Interest income, net	542	29
Total other income (expense):	542	29
Net loss and comprehensive loss	(16,459)	(6,360)
Net loss attributable to common stockholders	$ (16,459)	$ (7,526)
Net loss attributable to common stockholders per common share, basic and diluted	$ (0.60)	$ (0.74)
Weighted average common shares outstanding, basic and diluted	27,284,140	10,196,292

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net loss	$ (16,459)	$ (6,360)
Adjustments to reconcile net loss to cash used in operating activities:
Non-cash research and development license expense	4,448
Stock-based compensation expense	958	264
Depreciation and amortization	61	54
Non-cash rent expense	(20)	(18)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	581	(305)
Deferred issuance costs		(82)
Accounts payable, accrued expenses and other current liabilities	(1,220)	(464)
Due to related parties		(105)
Net cash used in operating activities	(11,651)	(7,016)
Investing activities
Purchases of short-term investments	(2,023)	(12,009)
Maturities of short-term investments	22,630	3,990
Net cash provided by (used in) investing activities	20,607	(8,019)
Financing activities
Net proceeds from issuance of Series A Convertible Preferred Stock		20,377
Net cash provided by financing activities		20,377
Net increase (decrease) in cash, cash equivalents and restricted cash	8,956	5,342
Cash, cash equivalents and restricted cash at beginning of year	34,461	6,765
Cash, cash equivalents and restricted cash at end of year	$ 43,417	$ 12,107

Nature of Business	3 Months Ended
Nature of Business	Mar. 31, 2018
Nature of Business
Nature of Business	1. Nature of Business Rhythm Pharmaceuticals, Inc. (the “Company”), is a biopharmaceutical company focused on the development and commercialization of peptide therapeutics for the treatment of genetic deficiencies that result in life‑threatening metabolic disorders. The Company's lead product candidate is setmelanotide (“RM‑493”), which is a potent, first‑in‑class, melanocortin‑4, or MC4, receptor, agonist for the treatment of rare genetic disorders of obesity caused by MC4 pathway deficiencies. The Company is currently evaluating setmelanotide for the treatment of six genetic disorders of obesity: pro‑opiomelanocortin, or POMC, leptin receptor, or LepR, Bardet‑Biedl syndrome, Alström syndrome, POMC heterozygous, and POMC epigenetic disorders. In March 2018 the Company acquired exclusive, worldwide rights from Takeda Pharmaceutical Company Limited (“Takeda”) to develop and commercialize T-3525770 (now “RM-853”). RM-853 is a potent, orally available ghrelin o-acyltransferase (“GOAT”) inhibitor currently in preclinical development for Prader-Willi Syndrome (“PWS”). PWS is a rare genetic disorder that results in hyperphagia and early-onset, life-threatening obesity, for which there are no approved therapeutic options. Corporate Reorganization The Company is a Delaware corporation organized in February 2013 under the name Rhythm Metabolic, Inc. Prior to the Company's organization and the Corporate Reorganization referred to below, the Company was part of Rhythm Pharmaceuticals, Inc. (the “Predecessor Company”), a Delaware corporation which was organized in November 2008 and which commenced active operations in 2010. In March 2013, the Predecessor Company underwent a corporate reorganization, (the “Corporate Reorganization”), pursuant to which all of the outstanding equity securities of the Predecessor Company were exchanged for units of Rhythm Holding Company, LLC, a newly‑organized limited liability company (the “LLC entity”). After the consummation of this exchange and as part of the Corporate Reorganization, the Predecessor Company contributed setmelanotide and the MC4R agonist program to the Company and distributed to the LLC entity all of the then issued and outstanding shares of the Company's stock. The result of the Corporate Reorganization was that the Company and the Predecessor Company became wholly‑owned subsidiaries of the LLC entity and the two product candidates and related programs that were originally held by the Predecessor Company were separated, with relamorelin and the ghrelin agonist program being retained by the Predecessor Company and setmelanotide and the MC4R agonist program being held by the Company. The Predecessor Company, after consummation of the Corporate Reorganization, is referred to within these Notes to Financial Statements as the Relamorelin Company and/or Motus. On October 13, 2015, the Relamorelin Company changed its name to Motus Therapeutics, Inc. (“Motus”) and the Company changed its name to Rhythm Pharmaceuticals, Inc. On December 15, 2016, Motus was sold to a large pharmaceutical company. On August 21, 2017, the LLC entity distributed to its members all of its shares of the Company (see Note 5 for further discussion). Liquidity The Company has incurred operating losses and negative cash flows from operations since inception. As of March 31, 2018, the Company had an accumulated deficit of $126,711. The Company has primarily funded these losses through capital contributions received from the LLC entity and the sale of preferred and common stock to outside investors. To date, the Company has no product revenue and management expects operating losses to continue for the foreseeable future. The Company has devoted substantially all of its resources to its drug development efforts, comprising research and development, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property 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 March 31, 2018, the Company had $136,453 of cash and cash equivalents and short‑term investments on hand. 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, 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 operating plan into the second half of 2019.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

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 (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“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 (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“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 interim balance sheet as of March 31, 2018, the statements of operations and comprehensive loss for the three months ended March 31, 2018 and 2017, the statement of cash flows for the three months ended March 31, 2018 and 2017 and the related footnote disclosures are unaudited. In management's opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include all normal recurring adjustments necessary for the fair presentation of the interim financial statements. The results for the three months ended March 31, 2018 are not necessarily indicative of the results expected for the full fiscal year.

The Company has historically existed and functioned as part of the consolidated businesses of the Predecessor Company. As noted above, the Predecessor Company's setmelanotide and the MC4R agonist program were transferred to the Company as part of the Corporate Reorganization on March 21, 2013. These financial statements include the results of operations of setmelanotide and the MC4R agonist program from its inception.

On September 22, 2017, the Company's board of directors approved a 1-for-9.17 reverse stock split of the Company's issued and outstanding shares of common stock. All share and per share amounts in the financial statements have been retrospectively adjusted for all periods presented to give effect of the reverse stock split.

On October 5, 2017, the Company filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to increase its authorized number of shares of common stock to 120,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share.

On October 10, 2017 the Company completed its initial public offering (“IPO”) of 8,107,500 shares of common stock at an offering price of $17.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 1,057,500 additional shares of common stock. The Company received gross proceeds of approximately $137,828 or net proceeds of $125,658 after deducting underwriting discounts, commissions and estimated offering expenses. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 17,406,338 shares of common stock.

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 accrued expenses, stock‑based compensation expense, the valuation allowance on the Company's deferred tax assets, and the fair value of the Series A Investor Instrument (see Note 4).

Principles of Consolidation

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

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.

Segment Information

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision‑making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment operating exclusively in the United States.

2017 Series A Investor Instrument

The Company has classified its 2017 Series A Investor Instrument (See Note 4) as a liability as it is a free‑standing financial instrument. The 2017 Series A Investor Instrument was recorded at fair value upon the issuance of the Company’s series A preferred stock in January 2017, and subsequently remeasured to fair value at each reporting period. Changes in fair value of the financial instrument is recognized as a component of other income (expense), net in the statement of operations and comprehensive loss. The Company estimated the fair value of the 2017 Series A Investor Right/Obligation as the probability‑weighted present value of the expected benefit of the investment.

The Company used the Black‑Scholes option‑pricing model, which incorporates assumptions and estimates, to value the 2017 Series A Investor Call Option and assessed these assumptions and estimates on a quarterly basis as additional information impacting the assumptions was obtained. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying series A preferred stock, the expected term of the Series A Investor Call Option, risk‑free interest rate, expected dividend yield and expected volatility of the price of the underlying preferred stock. The Company determined the fair value per share of the underlying preferred stock by taking into consideration the most recent sale of our convertible preferred stock and the investors' right to invest in a subsequent tranche. As the Company was a private company and lacked company‑specific historical and implied volatility information of its stock, it estimated its expected stock volatility based on the historical volatility of publicly traded peer companies for a term comparable to the estimated term of the Series A Investor Call Option. The risk‑free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the estimated term of the Series A Investor Call Option. A dividend yield of zero was assumed. The fair value of the Series A Investor Instrument is determined to be the sum of the fair values of the 2017 Series A Investor Right/Obligation and the 2017 Investor Call Option.

Net Loss Per Share Attributable to Common Shareholders

Basic net loss per share attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration for Common Stock equivalents. Net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for cumulative preferred stock dividends. During periods of income, the Company allocates participating securities a proportional share of income determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the “two class method”). The Company's convertible preferred stock participates in any dividends declared by the Company and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, the Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. Diluted net loss per share attributable to common stockholders is calculated by adjusting weighted average shares outstanding for the dilutive effect of Common Stock equivalents outstanding for the period, determined using the treasury‑stock and if‑converted methods. For purposes of the diluted net loss per share attributable to common stockholders calculation, convertible preferred stock and stock options are considered to be Common Stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti‑dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented.

The following table includes the potential common shares, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated:


	Three Months Ended
	March 31,
	2018		2017
Stock options		2,427,629		1,037,131
Series A convertible preferred shares		—		6,594,870
Total		2,427,629		7,632,001

Basic and diluted earnings per share is calculated as follows:


	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss	$	(16,459)	$	(6,360)
Cumulative dividends on convertible preferred shares		—		(1,166)
Loss attributable to common shares—basic and diluted	$	(16,459)	$	(7,526)
Denominator:
Weighted-average number of common shares—basic and diluted		27,284,140		10,196,292
Loss per common share—basic and diluted	$	(0.60)	$	(0.74)

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.

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 April 2012, the Jump‑Start Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an emerging growth company, the Company elected to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non‑emerging growth companies.

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842). ASU 2016‑02 requires lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous GAAP. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right‑of‑use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. ASU 2016‑02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016‑02 on its financial position and results of operations.

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) that changes the presentation of restricted cash and cash equivalents on the statement of cash flows. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning‑of‑period and end‑of‑period total amounts shown on the statement of cash flows. This amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this ASU did not have a material impact on the Company’s statements of cash flows.

In May 2017, the FASB issued ASU 2017‑09, Compensation‑Stock Compensation (Topic 718): Scope of Modification Accounting, (“ASU 2017-09”). ASU 2017‑09 provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, to a change to the terms or conditions of a share‑based payment award. The amendments in ASU 2017‑09 should be applied prospectively to an award modified on or after the adoption date. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company's financial position or results of operations.

Fair Value of Financial Assets and Liability

3 Months Ended

Mar. 31, 2018

Fair Value of Financial Assets and Liability

Fair Value of Financial Assets and Liability

4. Fair Value of Financial Assets and Liability

As of March 31, 2018 and December 31, 2017, the carrying amount of cash and cash equivalents and short‑term investments was $136,453 and $148,082, respectively, which approximates fair value. Cash and cash equivalents and short‑term investments includes investments in 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 and had a total balance of $51,742 and $34,698 as of March 31, 2018 and December 31, 2017, respectively. 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.

A financial liability was recognized by the Company during the three months ended March 31, 2017 related to the 2017 Series A Investor Instrument. The liability was valued based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. Upon the closing of the second tranche of the 2017 Series A preferred financing in August 2017, this liability was settled.

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 values:


	Fair value Measurements as of
	March 31, 2018 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	6,989	$	—	$	6,989
Money Market Funds		36,779		—		—		36,779
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		78,323		—		78,323
U.S. Treasury Securities		14,963		—		—		14,963
Total	$	51,742	$	85,312	$	—	$	137,054


	Fair value Measurements as of
	December 31, 2017 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities	$	—	$	15,104	$	—	$	15,104
Money Market Funds		17,753		—		—		17,753
Marketable Securities:
Corporate Debt Securities		—		96,901		—		96,901
U.S. Treasury Securities		16,945		—		—		16,945
Total	$	34,698	$	112,005	$	—	$	146,703

Marketable Securities

The following tables summarize the Company's marketable securities:


	March 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate Debt Securities and Commercial Paper (due within 1 year)	$	78,528	$	—	$	(205)	$	78,323
U.S. Treasury Securities (due within 1 year)		14,979		—		(16)		14,963
	$	93,507	$	—	$	(221)	$	93,286


	December 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate Debt Securities (due within 1 year)	$	97,029	$	—	$	(128)	$	96,901
U.S. Treasury Securities (due within 1 year)		16,958		—		(13)		16,945
	$	113,987	$	—	$	(141)	$	113,846

Below is a roll forward of the fair value of the 2017 Series A Investor Instrument for the three months ended March 31, 2017:


	2017 Series A Investor
	Instrument
Fair value at December 31, 2016	$	—
Fair value upon the January 2017 Initial Closing, net		328
Change in fair value		—
Fair value at March 31, 2017	$	328

The fair value of the Series A Investor Instrument is the sum of the probability‑weighted fair value of the 2017 Investor Right/Obligation and the 2017 Series A Call Option.

The following assumptions and inputs were used in determining the fair value of the 2017 Series A Investor Call Option valued using the Black‑ Scholes option pricing model:


	March 31, 2017
Series A Convertible Preferred Stock Exercise Price	$	1.00
Series A Convertible Preferred Stock Fair Value	$	1.39
Expected term		3.5 months
Expected volatility		82.0	%
Expected interest rate		0.76	%
Expected dividend yield		—

In August 2017, upon the closing of the second tranche of the series A preferred stock financing, the 2017 Series A Investor Call Option expired unexercised.

The Company estimated the fair value of the 2017 Series A Investor Right/Obligation as the probability‑weighted present value of the expected benefit of the investment. The expected benefit is the difference between the expected future value of shares issued upon the second tranche closing and the investment price for the second tranche closing. The expected future value is estimated as a weighted average of IPO and remain private scenarios, and the future value is converted to a present value assuming a closing date of October 15, 2017 and a nominal, risk‑free discount rate.

- 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 + Details

Significant Agreements	3 Months Ended
Significant Agreements	Mar. 31, 2018
Significant Agreements
Significant Agreements	6. Significant Agreements License Agreements The Predecessor Company entered into a license agreement on February 26, 2010 with Ipsen Pharma, S.A.S. (“Ipsen”) that granted full worldwide right for two programs that include the clinical candidates setmelanotide, which is in Phase 3 clinical trials, and relamorelin. As a result of the Corporate Reorganization described in Note 1, the Ipsen license was converted to separate license agreements for the setmelanotide program held by the Company and the relamorelin program held by the Relamorelin Company, respectively. Under the terms of the setmelanotide Ipsen license agreement, assuming that setmelanotide is successfully developed, receives regulatory approval and is commercialized, Ipsen may receive aggregate payments of up to $40,000 upon the achievement of certain development and commercial milestones and royalties on future product sales in the mid‑single digits. Substantially all of such aggregate payments of up to $40,000 are for milestones that may be achieved no earlier than first commercial sale of setmelanotide. In the event that the Company executes a sublicense agreement, it shall make payments to Ipsen, depending on the date of such sublicense agreement, ranging from 10% to 20% of all revenues actually received under such sublicense agreement. In July 2017, the Company made a prepayment on the first milestone event associated with this license agreement. The first milestone relates to the initiation of a Phase 3 study for setmelanotide in a pivotal multi-center human clinical trial in a large number of patients. The prepayment associated with this milestone was $1,000 and was recorded as research and development expenses during the three months ended March 31, 2018 when the milestone criteria was met in full. In January 2016, the Company entered into a license agreement with Camurus AB, or Camurus, for the use of Camurus’ drug delivery technology. The contract includes a non‑refundable and non‑creditable signing fee of $500, which was paid during January 2016. The Camurus agreement also includes up to $7,750 in one‑time, non‑refundable development milestones achievable upon certain regulatory successes. The Company is also required to pay to Camurus, mid to mid‑high single digit royalties, on a product‑by‑product and country‑by‑country basis of annual net sales, until the later of (i) 10 years after the date of first commercial sale of such product in such country; or (ii) the expiration of the last to expire valid claim of all licensed patent rights in such country covering such product. The Company is also required to pay one‑time, non‑refundable, non‑creditable sales milestones upon the achievement of certain sales levels for such product that cannot be in excess of $57,000. In March 2017, the Company achieved the first milestone event associated with this license agreement. The Company completed the first manufactured batch using the Camurus drug delivery technology and filed an investigational new drug application with the FDA. The fee associated with this milestone was $250. In December 2017, the Company achieved the second milestone event associated with this license agreement. The Company completed the Phase I proof of concept study using the Camurus drug delivery technology. The fee associated with this second milestone was $1,000 and was recorded as research and development expense. In March 2018, the Company entered into a license agreement with Takeda, for the rights of a program that includes the clinical candidate RM-853, which is a GOAT inhibitor, which is currently in preclinical development for PWS. Pursuant to the license agreement the Company was required to pay a non‑refundable and non‑creditable signing fee, which the Company settled by issuing on April 3, 2018, 223,544 shares of common stock valued at $4,448. Under the terms of the license agreement, assuming that RM-853 is successfully developed, receives regulatory approval and is commercialized, the Company is also required to pay up to $70,000 in one‑time, non‑refundable development milestone payments upon the achievement of certain clinical and regulatory milestones. The Company is also required to pay up to $70,000 in one‑time, non‑refundable, non‑creditable sales milestone payments upon the achievement of certain sales levels. The Company is also required to pay to Takeda, mid to mid‑high single digit royalties (subject to certain potential reductions over time), on a product‑by‑product and country‑by‑country basis of annual net sales, of each product in such country, beginning on the first commercial sale of a product in such country, and continuing until the latest of (i) 10 years after the date of first commercial sale of such product in such country; or (ii) the expiration of the last to expire valid claim of a Takeda patents covering the composition or use of such product in such country; or (iii) the expiration of all regulatory exclusivity for such product in such country. The Company recorded the fair value of the common stock to be issued to the licensors as research and development expense, as the license does not have a future alternative use, in accordance with ASC Topic 730, Research and Development. As the shares were not issued prior to the end of the period, the Company evaluated the forward contract and concluded that it met the criteria for equity classification and such amounts have been recorded within additional paid-in capital as of March 31, 2018.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Summary of Significant Accounting Policies

Basis of Presentation

Use of Estimates

Principles of Consolidation

Off-Balance Sheet Risk and Concentrations of Credit Risk

Off‑Balance Sheet Risk and Concentrations of Credit Risk

Segment Information

2017 Series A Investor Instrument

Net Loss Per Share Attributable to Common Shareholders


	Three Months Ended
	March 31,
	2018		2017
Stock options		2,427,629		1,037,131
Series A convertible preferred shares		—		6,594,870
Total		2,427,629		7,632,001

Basic and diluted earnings per share is calculated as follows:


	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss	$	(16,459)	$	(6,360)
Cumulative dividends on convertible preferred shares		—		(1,166)
Loss attributable to common shares—basic and diluted	$	(16,459)	$	(7,526)
Denominator:
Weighted-average number of common shares—basic and diluted		27,284,140		10,196,292
Loss per common share—basic and diluted	$	(0.60)	$	(0.74)

Subsequent Events

Application of New or Revised Accounting Standards

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

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
	March 31,
	2018		2017
Stock options		2,427,629		1,037,131
Series A convertible preferred shares		—		6,594,870
Total		2,427,629		7,632,001

Schedule of basic and diluted earnings per share


	Three Months Ended
	March 31,
	2018		2017
Numerator:
Net loss	$	(16,459)	$	(6,360)
Cumulative dividends on convertible preferred shares		—		(1,166)
Loss attributable to common shares—basic and diluted	$	(16,459)	$	(7,526)
Denominator:
Weighted-average number of common shares—basic and diluted		27,284,140		10,196,292
Loss per common share—basic and diluted	$	(0.60)	$	(0.74)

Fair Value of Financial Assets and Liability (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value of Financial Assets and Liability

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


	Fair value Measurements as of
	March 31, 2018 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	6,989	$	—	$	6,989
Money Market Funds		36,779		—		—		36,779
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		78,323		—		78,323
U.S. Treasury Securities		14,963		—		—		14,963
Total	$	51,742	$	85,312	$	—	$	137,054


	Fair value Measurements as of
	December 31, 2017 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities	$	—	$	15,104	$	—	$	15,104
Money Market Funds		17,753		—		—		17,753
Marketable Securities:
Corporate Debt Securities		—		96,901		—		96,901
U.S. Treasury Securities		16,945		—		—		16,945
Total	$	34,698	$	112,005	$	—	$	146,703

Schedule of marketable securities


	March 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate Debt Securities and Commercial Paper (due within 1 year)	$	78,528	$	—	$	(205)	$	78,323
U.S. Treasury Securities (due within 1 year)		14,979		—		(16)		14,963
	$	93,507	$	—	$	(221)	$	93,286


	December 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate Debt Securities (due within 1 year)	$	97,029	$	—	$	(128)	$	96,901
U.S. Treasury Securities (due within 1 year)		16,958		—		(13)		16,945
	$	113,987	$	—	$	(141)	$	113,846

2017 Series A Investor Instrument

Fair Value of Financial Assets and Liability

Schedule of the fair value of financial liabilities


	2017 Series A Investor
	Instrument
Fair value at December 31, 2016	$	—
Fair value upon the January 2017 Initial Closing, net		328
Change in fair value		—
Fair value at March 31, 2017	$	328

Schedule of assumptions and inputs were used in determining fair value using Black Scholes option pricing model


	March 31, 2017
Series A Convertible Preferred Stock Exercise Price	$	1.00
Series A Convertible Preferred Stock Fair Value	$	1.39
Expected term		3.5 months
Expected volatility		82.0	%
Expected interest rate		0.76	%
Expected dividend yield		—

Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands	Oct. 10, 2017	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2013
Common stock shares authorized		120,000,000	120,000,000
Common stock, par value per share		$ 0.001	$ 0.001	$ 0.001
Common stock, outstanding		27,284,140	27,284,140
Common stock \| IPO
Issuance of stock (in shares)	8,107,500
Minimum price per share	$ 17.00
Gross proceeds	$ 137,828
Net proceeds	$ 125,658
Conversion of Series A Convertible Preferred Stock and Series A-1 Junior Preferred Stock into common stock (in shares)	17,406,338
Common stock \| Underwriter option to purchase
Issuance of stock (in shares)	1,057,500

Fair Value of Financial Assets and Liability (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Fair Value of Financial Assets and Liability
Carrying amount of cash and cash equivalents and short term investments	$ 136,453		$ 148,082
Fair value of financial assets and liability
Marketable Securities:	93,286	$ 113,846
Corporate Debt Securities
Fair value of financial assets and liability
Marketable Securities:	78,323	96,901
Government Funds
Fair value of financial assets and liability
Marketable Securities:	14,963	16,945
Level 1 \| Money Market Funds and Government Funds in Aggregate
Fair value of financial assets and liability
Fair value of assets	51,742	34,698
Recurring \| Estimated fair value
Fair value of financial assets and liability
Fair value of assets	137,054	146,703
Recurring \| Corporate Debt Securities \| Estimated fair value
Fair value of financial assets and liability
Marketable Securities:	78,323	96,901
Recurring \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liability
Cash Equivalents:	36,779	17,753
Recurring \| Government Funds \| Estimated fair value
Fair value of financial assets and liability
Cash Equivalents:	6,989	15,104
Marketable Securities:	14,963	16,945
Recurring \| Level 1 \| Estimated fair value
Fair value of financial assets and liability
Fair value of assets	51,742	34,698
Recurring \| Level 1 \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liability
Cash Equivalents:	36,779	17,753
Recurring \| Level 1 \| Government Funds \| Estimated fair value
Fair value of financial assets and liability
Marketable Securities:	14,963	16,945
Recurring \| Level 2 \| Estimated fair value
Fair value of financial assets and liability
Fair value of assets	85,312	112,005
Recurring \| Level 2 \| Corporate Debt Securities \| Estimated fair value
Fair value of financial assets and liability
Marketable Securities:	78,323	96,901
Recurring \| Level 2 \| Government Funds \| Estimated fair value
Fair value of financial assets and liability
Cash Equivalents:	$ 6,989	$ 15,104

Fair Value of Financial Assets and Liability - Financial Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2018	Sep. 30, 2017
Assumption used to estimate the fair value of asset and liability by utilizing the Black-Scholes option pricing model
Expected dividend yield (as a percent)	0.00%
2017 Series A Investor Instrument
Roll forward of the fair value of financial liabilities
Fair value upon initial closing, net		$ 328
Fair value at the end of the period		$ 328
Assumption used to estimate the fair value of asset and liability by utilizing the Black-Scholes option pricing model
Exercise Price	$ 1.00
Fair Value	$ 1.39
Expected term		3 months 15 days
Expected volatility (as a percent)	82.00%
Expected interest rate (as a percent)	0.76%

Preferred and Common Stock (Details) $ / shares in Units, $ in Thousands					1 Months Ended
	Apr. 03, 2018 shares	Oct. 10, 2017 USD ($) $ / shares shares	Sep. 22, 2017	Aug. 21, 2017 shares	Oct. 31, 2017	Aug. 31, 2017 shares	Mar. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Mar. 31, 2013 $ / shares shares
Preferred Stock
Temporary equity, par value per share \| $ / shares							$ 0.001	$ 0.001
Common stock, issued							27,284,140	27,284,140	10,196,292
Purchase price per share \| $ / shares							$ 0.001	$ 0.001	$ 0.001
Stock split			0.109051
IPO
Preferred Stock
Number of shares issued on conversion						9.17
Common stock
Preferred Stock
Issuance of common stock on exchange of preferred stock				8,578,646
Issuance of common stock on exchange of common stock units				1,617,646
Common stock \| IPO
Preferred Stock
Issuance of stock (in shares)		8,107,500
Minimum price per share \| $ / shares		$ 17.00
Gross proceeds \| $		$ 137,828
Net proceeds \| $		$ 125,658
Conversion of Series A Convertible Preferred Stock and Series A-1 Junior Preferred Stock into common stock (in shares)		17,406,338
Common stock \| Underwriter option to purchase
Preferred Stock
Issuance of stock (in shares)		1,057,500
Series A‑1 Junior Preferred Stock
Preferred Stock
Issuance of common stock on exchange of preferred stock				78,666,209
Conversion ratio					9.17
License agreement \| Takeda
Preferred Stock
Issuance of stock (in shares)	223,544

Significant Agreements (Details) - License agreement $ in Thousands			1 Months Ended				3 Months Ended
	Apr. 03, 2018 USD ($) shares	Feb. 26, 2010 USD ($) item	Mar. 31, 2018	Dec. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Jan. 31, 2016 USD ($)	Mar. 31, 2018 USD ($)
Ipsen \| Predecessor
Significant Agreements
Number of programs \| item		2
Aggregate payment upon achievement of development and commercial milestones		$ 40,000
Milestone prepayment							$ 1,000
Ipsen \| Predecessor \| Minimum
Significant Agreements
Payment based on revenue received, as percentage		10.00%
Ipsen \| Predecessor \| Maximum
Significant Agreements
Payment based on revenue received, as percentage		20.00%
Camurus \| Predecessor
Significant Agreements
Non-refundable and non-creditable signing fee						$ 500
One-time non-refundable development milestone payment						$ 7,750
Royalty payment period						10 years
One-time non-refundable non-creditable sales milestone payment						$ 57
Milestone fee				$ 1,000	$ 250
Takeda
Significant Agreements
Issuance of stock (in shares) \| shares	223,544
One-time non-refundable development milestone payment	$ 70,000
One-time non-refundable non-creditable sales milestone payment	$ 70,000
Period after date of first commercial sale (in years)			10 years

Preferred and Common Stock	3 Months Ended
Preferred and Common Stock	Mar. 31, 2018
Preferred and Common Stock
Preferred and Common Stock	5. Preferred and Common Stock Preferred Stock Upon the closing of the IPO, the series A convertible preferred stock automatically converted into shares of common stock on a 9.17‑for‑1 basis. Common Stock In March 2013, the Company issued 10,196,292 shares of common stock at a purchase price of $0.001 per share. Prior to August, 2017, the LLC entity owned all of these shares. On August 21, 2017, the LLC entity exchanged 8,578,646 of its shares of the Company's common stock for 78,666,209 shares of the Company's series A‑1 junior preferred stock and the LLC entity distributed all of its shares of the Company's series A‑1 junior preferred stock to the holders of its preferred units and the remaining 1,617,646 shares of its common stock to the holders of its common units. Following this distribution, the LLC entity no longer owns any of the Company's shares. The series A‑1 junior preferred stock is not redeemable and does not have a stated dividend or liquidation preference. These shares converted to common stock on a 9.17‑to‑1 basis upon the closing of the IPO in October 2017. In September 2017, the Company's board of directors approved a 1-for-9.17 reverse stock split of the Company's issued and outstanding shares of common stock. All shares and per share amounts in the financial statements have been retrospectively adjusted for all periods presented to give effect of the reverse stock split. On October 10, 2017 the Company completed its IPO of 8,107,500 shares of common stock at an offering price of $17.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 1,057,500 additional shares of common stock. The Company received gross proceeds of approximately $137,828 or net proceeds of $125,658 after deducting underwriting discounts, commissions and estimated offering expenses. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 17,406,338 shares of common stock. On April 3, 2018, in association with the Takeda license agreement, the Company issued 223,544 shares of common stock. See Note 6 for further discussion.

Related-Party Transactions	3 Months Ended
Related-Party Transactions	Mar. 31, 2018
Related-Party Transactions
Related-Party Transactions	7. Related‑Party Transactions Expenses paid directly to consultants considered to be related parties amounted to $472 and $229 for the three months ended March 31, 2018 and 2017, respectively. Outstanding payments due to these related parties as of March 31, 2018 and December 31, 2017 were $102 and $112, respectively, and were included within accounts payable on the balance sheet.

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2018
Income Taxes
Income Taxes	8. Income Taxes For the year ended December 31, 2017, the Company did not have a current or deferred income tax expense or benefit as the entity has incurred losses since inception and has provided a full valuation allowance against its deferred tax assets.

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accrued Expenses
Research and development costs	$ 1,426	$ 2,771
Professional fees	1,137	327
Payroll related	462	1,094
Other	13	18
Accrued expenses	$ 3,038	$ 4,210

Related-Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Accounts Payable
Related Party Transaction
Outstanding payments due to consultants	$ 102		$ 112
Consultant
Related Party Transaction
Expenses paid to consultants	$ 472	$ 229

Nature of Business (Details) $ in Thousands	3 Months Ended
Nature of Business (Details) $ in Thousands	Mar. 31, 2018 USD ($) item	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Nature of Business
Number of product candidates \| item	2
Net loss	$ 16,459	$ 6,360
Accumulated deficit	126,711		$ 110,252
Carrying amount of cash and cash equivalents and short term investments	$ 136,453	$ 148,082

Summary of Significant Accounting Policies - Additional Information (Details)		3 Months Ended
	Sep. 22, 2017	Mar. 31, 2018 segment item $ / shares shares	Dec. 31, 2017 $ / shares shares	Mar. 31, 2013 $ / shares
Summary of Significant Accounting Policies
Stock split	0.109051
Common stock, authorized \| shares		120,000,000	120,000,000
Common stock, par value per share \| $ / shares		$ 0.001	$ 0.001	$ 0.001
Off Balance Sheet Risk and Concentrations of Credit Risk
Number of federally insured financial institutions \| item		2
Segment Information
Number of operating segments \| segment		1
Investor Instrument
Expected dividend yield (as a percent)		0.00%

Summary of Significant Accounting Policies - Shares Excluded For EPS (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Shares excluded from the computation of diluted net loss per share
Unvested shares from share-based compensation that were anti-dilutive	2,427,629	7,632,001
Stock options
Shares excluded from the computation of diluted net loss per share
Unvested shares from share-based compensation that were anti-dilutive	2,427,629	1,037,131
Series A convertible preferred shares
Shares excluded from the computation of diluted net loss per share
Unvested shares from share-based compensation that were anti-dilutive		6,594,870

Fair Value of Financial Assets and Liability - Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value of Financial Assets and Liability
Amortized Cost	$ 93,286	$ 113,846
Gross Unrealized Losses	(221)	(141)
Fair Value	93,507	113,987
Corporate Debt Securities
Fair Value of Financial Assets and Liability
Amortized Cost	78,323	96,901
Gross Unrealized Losses	(205)	(128)
Fair Value	78,528	97,029
Government Funds
Fair Value of Financial Assets and Liability
Amortized Cost	14,963	16,945
Gross Unrealized Losses	(16)	(13)
Fair Value	$ 14,979	$ 16,958

Income Taxes (Details) $ in Thousands	12 Months Ended
Income Taxes (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Income Taxes
Current income tax expense or benefit	$ 0
Deferred income tax expense or benefit	$ 0