0001558370-22-002543 | 10-K | XBRL Viewer | Rhythm Pharmaceuticals INC

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 59,248	$ 100,854
Short-term Investments	235,607	71,938
Accounts receivable	1,025
Prepaid expenses and other current assets	12,507	8,876
Total current assets	308,387	181,668
Property and equipment, net	2,813	3,195
Right-of-use asset	1,522	1,807
Intangible assets, net	4,658
Restricted cash	328	403
Other long-term assets	11,815
Total assets	329,523	187,073
Current liabilities:
Accounts payable	5,737	4,900
Accrued expenses and other current liabilities	30,084	12,559
Contract liability	7,000
Lease liability	606	535
Total current liabilities	43,427	17,994
Long-term liabilities:
Lease liability	1,945	2,551
Total liabilities	45,372	20,545
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.001 par value: 120,000,000 shares authorized; 50,283,574 and 44,235,903 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	50	44
Additional paid-in capital	813,041	625,762
Accumulated other comprehensive (loss) income	(1)	49
Accumulated deficit	(528,939)	(459,327)
Total stockholders' equity	284,151	166,528
Total liabilities and stockholders' equity	$ 329,523	$ 187,073

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
CONSOLIDATED BALANCE SHEETS
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	50,283,574	44,235,903
Common stock, outstanding	50,283,574	44,235,903

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Product revenue, net	$ 3,154
Costs and expenses:
Cost of sales	599
Research and development	104,128	$ 90,450	$ 109,450
Selling, general, and administrative	68,486	46,125	36,550
Total costs and expenses	173,213	136,575	146,000
Loss from operations	(170,059)	(136,575)	(146,000)
Other income:
Other income	100,000
Interest income, net	447	2,579	5,271
Total other income, net	100,447	2,579	5,271
Net loss	$ (69,612)	$ (133,996)	$ (140,729)
Net loss per share, Basic (in dollars per share)	$ (1.40)	$ (3.04)	$ (3.86)
Net loss per share, Diluted (in dollars per share)	$ (1.40)	$ (3.04)	$ (3.86)
Weighted average common shares outstanding, Basic (in shares)	49,600,294	44,127,220	36,422,450
Weighted average common shares outstanding, Diluted (in shares)	49,600,294	44,127,220	36,422,450
Other comprehensive loss:
Net loss	$ (69,612)	$ (133,996)	$ (140,729)
Unrealized (loss) gain on marketable securities	(1)	49	144
Comprehensive loss	$ (69,613)	$ (133,947)	$ (140,585)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2018	$ 34	$ 430,824		$ (184,602)	$ 246,256
Beginning balance (in shares) at Dec. 31, 2018	34,410,725
Increase (Decrease) in Stockholders' Equity
Stock compensation expense		11,875			11,875
Issuance of common stock in connection with ESPP		558			558
Issuance of common stock in connection with ESPP (in shares)	25,871
Issuance of common stock in connection with exercise of stock options	$ 1	1,563			1,564
Issuance of common stock in connection with exercise of stock options (in shares)	235,833
Issuance of common stock upon completion of public offering, net of offering costs	$ 9	161,343			161,352
Issuance of common stock upon completion of public offering, net of offering costs (in shares)	9,324,324
Change in unrealized gain (loss) on marketable securities		144			144
Net loss				(140,729)	(140,729)
Ending balance at Dec. 31, 2019	$ 44	606,307		(325,331)	281,020
Ending balance (in shares) at Dec. 31, 2019	43,996,753
Increase (Decrease) in Stockholders' Equity
Stock compensation expense		17,455			17,455
Issuance of common stock in connection with ESPP		522			522
Issuance of common stock in connection with ESPP (in shares)	30,052
Issuance of common stock in connection with exercise of stock options		1,478			1,478
Issuance of common stock in connection with exercise of stock options (in shares)	209,098
Change in unrealized gain (loss) on marketable securities			$ 49		49
Net loss				(133,996)	(133,996)
Ending balance at Dec. 31, 2020	$ 44	625,762	49	(459,327)	166,528
Ending balance (in shares) at Dec. 31, 2020	44,235,903
Increase (Decrease) in Stockholders' Equity
Stock compensation expense		20,804			20,804
Issuance of common stock in connection with ESPP		621			621
Issuance of common stock in connection with ESPP (in shares)	38,051
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units		4,134			4,134
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares)	259,620
Unrealized gain on marketable securities			(50)		(50)
Issuance of common stock upon completion of public offering, net of offering costs	$ 6	161,720			161,726
Issuance of common stock upon completion of public offering, net of offering costs (in shares)	5,750,000
Net loss				(69,612)	(69,612)
Ending balance at Dec. 31, 2021	$ 50	$ 813,041	$ (1)	$ (528,939)	$ 284,151
Ending balance (in shares) at Dec. 31, 2021	50,283,574

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Operating activities
Net loss	$ (69,612)	$ (133,996)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	20,804	17,455
Gain on sale of priority review voucher	(100,000)
Depreciation and amortization	1,158	690
Non-cash rent expense	(250)	(234)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(4,600)	551
Other long-term assets	(11,815)
Accounts payable, accrued expenses and other current liabilities	18,312	(6,446)
Net cash used in operating activities	(146,003)	(121,980)
Investing activities
Purchases of short-term investments	(524,972)	(86,869)
Maturities of short-term investments	361,247	245,614
Proceeds from sale of priority review voucher	100,000
Proceeds from out-license agreement	7,000
Milestone obligation under license agreement	(5,000)
Purchases of property and equipment	(434)	(214)
Net cash (used in) provided by investing activities	(62,159)	158,531
Financing activities
Net proceeds from issuance of common stock	161,726
Proceeds from the exercise of stock options	4,134	1,487
Proceeds from issuance of common stock from ESPP	621	522
Net cash provided by financing activities	166,481	2,009
Net (decrease) increase in cash, cash equivalents and restricted cash	(41,681)	38,560
Cash, cash equivalents and restricted cash at beginning of period	101,257	62,697
Cash, cash equivalents and restricted cash at end of period	$ 59,576	$ 101,257

Nature of Business

12 Months Ended

Dec. 31, 2021

Nature of Business

Nature of Business

1. Nature of Business

Rhythm Pharmaceuticals, Inc. (the “Company” or “we”) is a global, commercial-stage biopharmaceutical company focused on changing the paradigm for the treatment of rare genetic diseases of obesity, which are characterized by early-onset, severe obesity and hyperphagia, a pathological and insatiable hunger. While obesity affects hundreds of millions of people worldwide, we are advancing IMCIVREE™ (setmelanotide) as a precision medicine strategy for a subset of individuals who have severe obesity due to genetic variants that impair the melanocortin-4 receptor (MC4R) pathway, a 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 ultra-rare genetic diseases of obesity that is approved or authorized in the United States, European Union (EU) or Great Britain. We made IMCIVREE commercially available in the United States for patients 6 years and older with obesity due to proopiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency in early 2021, and we are working to achieve market access in several European countries in 2022. In addition to initial commercial efforts, we are preparing to bring IMCIVREE to additional populations in 2022 and beyond. We are advancing a broad clinical development program for setmelanotide in patients with additional rare genetic diseases of obesity in an effort to expand the approved indications in the United States and Europe.

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 Kindgdom and the Netherlands.

The Company is subject to risks and uncertainties common to late-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 revenue from product sales.

There are many uncertainties regarding the COVID-19 pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how the pandemic will impact its patients, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company's financial results and business operations for the twelve months ended December 31, 2021, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results in future periods due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.

Liquidity

The Company has incurred operating losses and negative cash flows from operations since inception. As of December 31, 2021, the Company had an accumulated deficit of $528,939. The Company has primarily funded these

losses through the proceeds from the sales of common and preferred stock, asset sales, outlicensing the rights to IMCIVREE in certain markets, as well as capital contributions received from the former parent company, Rhythm Holdings LLC. To date, the Company has minimal 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 of research and development, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property, pre-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.

In February 2021, the Company completed the sale of a Rare Pediatric Disease Priority Review Voucher, or PRV, that it received in connection with the approval of IMCIVREE for $100,000. As the PRV did not have a carrying value, the gain recognized within Other income (loss) was equal to the gross proceeds received, with costs related to the sale of the voucher recorded within selling, general and administrative expenses. Additionally in February 2021, the Company completed a public offering of 5,750,000 shares of common stock at an offering price of $30.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 750,000 additional shares of common stock. The Company received approximately $161,550 in net proceeds after deducting underwriting discounts, commissions and offering expenses. The net proceeds from the sale of the PRV Transfer and this offering, or the February 2021 public offering, were approximately $260,050 after deducting underwriting discounts and commissions and estimated offering expenses.

In November 2021, the Company entered into a sales agreement, or the Sales Agreement, with Cowen and Company LLC, or Cowen, as sales agent, pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $100 million in "at-the-market" offerings, or the ATM, under our Registration Statement on Form S-3 (File No. 333-260689) filed with the SEC on November 2, 2021. Sales of common stock, if any, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through The Nasdaq Global Market or on any other existing trading market for our common stock. During the year ended December 31, 2021, the Company did not sell any shares of common stock under the Sales Agreement. As of December 31, 2021, there was $100.0 million of common stock remaining available for sale under the ATM.

In December 2021, the Company entered into an exclusive License Agreement and a Share Purchase Agreement (the “Agreement”) for the development and commercialization of IMCIVREE (Setmelanotide) in China with RareStone Group Ltd. and received cash proceeds of $7,000.

At December 31, 2021, the Company had $294,855 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, 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 Annual Report on Form 10-K with the SEC.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). 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”).

Dividend Policy

We have never paid a cash dividend on shares of our stock. We currently do not anticipate paying any cash dividends on our stock in the foreseeable future.

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 accruals related to research and development expenses, assumptions used to record stock-based compensation expense 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 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 currently operates in one business segment, which is the development and commercialization of therapies for patients with rare diseases. A single management team that reports to the Chief Executive Officer comprehensively manages the entire business. The Company does not operate separate lines of business with respect to its product or product candidates. Accordingly, the Company has one reportable segment.

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. At December 31, 2021, all of the Company’s revenue was generated from a single customer in the United States.

The Company relies on third-party manufacturers and suppliers for manufacturing 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with remaining maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents includes bank demand deposits, U.S. treasury bills and money market funds that invest primarily in U.S. government treasuries.

Short-term Investments

Short-term investments consist of investments with maturities greater than 90 days, as of the date of purchase. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio available-for-sale. Accordingly, these investments are recorded at fair value, which is based on quoted market prices. Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. To the extent the amortized cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss; however, management considers the risk of credit loss to be minimized by the Company's policy of investing in financial instruments issued by highly-rated financial institutions. When assessing the risk of credit loss, management considers factors such as the severity and the reason of the decline in value (i.e., any changes to the rating of the security by a rating agency or other adverse conditions specifically related to the security) and management's intended holding period and time horizon for selling. During the years ended December 31, 2021, 2020, and 2019, the Company did not recognize any credit losses related to its available-for-sale debt securities. Further, as of December 31, 2021 and 2020, the Company did not record an allowance for credit losses related to its available-for-sale debt securities.

Restricted Cash

Restricted cash consists of security deposits in the form of letters of credit placed in separate restricted bank accounts as required under the terms of the Company’s lease arrangement for its corporate office in Boston, Massachusetts and the Company’s corporate travel credit card.

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 contract with its customer has standard payment terms that generally require payment within 45 days. The Company analyzes amounts that are past due for collectability, and periodically evaluates the creditworthiness of its customer. At December 31, 2021, the Company determined an allowance for doubtful account was not required based upon our review of contractual payments and our customer 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

Subsequent to its regulatory approval in the U.S. on November 25, 2020, the Company began to sell IMCIVREE in the U.S. in March, 2021. The product is distributed through an exclusive third-party logistics, or 3PL, distribution agent that does not take title to the product. Once the product is delivered to the Company’s exclusive specialty pharmacy provider, our sole customer in the U.S., the customer (or “wholesaler”) takes title to the product. The wholesaler then distributes the product to health care providers and patients. In our exclusive distribution agreement with the 3PL

company, the Company acts as principal because we retain control of the product. The Company generally does not offer returns of product sold to the customer.

Revenue from product sales are 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 customer 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. 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 forty-five days, the Company conclude 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, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between us and our customer, 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 customer. The government and other entities charge us for the difference between what they pay for the product and the selling price to our customer. The Company records reserves for these chargebacks related to product sold to our customer during the reporting period, as well as our estimate of product that remains in the distribution channel at the end of the reporting period that we expect will be sold to qualified healthcare providers and patients in future periods.

Government rebates: The Company is subject to discount obligations under government programs, including Medicaid programs, Medicare and Tricare in the United States. 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 on our consolidated balance sheet. For Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. 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 our U.S. customer 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 customer in the distribution channel. For services that are either not distinct from the sale of our product or for which we cannot reasonably estimate the fair value, such fees are classified as a reduction of product revenue.

Product Returns: Our customer has 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 and the price of 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.

For the year ended December 31, 2021, we recorded product revenue, net, of $3,154. The table that summarizes balances and activity in each of the product revenue allowance and reserve categories has not been included due to the immateriality of the revenue recognized during the period.

Cost of Product Sales

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. Subsequent to receiving FDA approval in November 2020, the Company has capitalized a nominal amount of inventory related costs that were incurred subsequent to FDA approval. At December 31, 2021, the Company had $111 of inventory recorded as a component of other current assets on the consolidated balance sheet.

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 a comparison of 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 years ended December 31, 2021, 2020 and 2019.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Prepaid expenses and other current assets consists of the following:


	December 31,
	2021		2020
Prepaid research and development costs	$	8,404	$	5,828
Other current assets		4,103		3,048
Prepaid expenses and other current assets	$	12,507	$	8,876

Property and Equipment

Property and equipment consists of the following:


	Useful	December 31,
	Life	2021		2020
Leasehold improvements	*	$	2,705	$	2,705
Office equipment	5 years		107		70
Computers and software	3 years		1,010		625
Furniture, fixtures and equipment	5 years		1,249		1,237
			5,071		4,637
Less accumulated depreciation and amortization			(2,258)		(1,442)
Property and equipment, net		$	2,813	$	3,195

*Shorter of asset life or lease term.

Depreciation and amortization expense related to property and equipment for the years ended December 31, 2021, 2020 and 2019 was $816, $690, and $834, respectively.

Property and equipment are recorded at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets. Upon disposal, retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred.

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 at December 31, 2021 and 2020 were carried at fair value, determined according to the fair value hierarchy. See Note 4 for further discussion.

The carrying amounts reflected in the consolidated balance sheets for accounts payable and accrued expenses approximate their fair values due to their short-term maturities at December 31, 2021 and 2020, respectively.

Research and Development Expenses

Costs incurred in the research and development of the Company’s products are expensed to operations as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services and other outside costs. The value of goods and services received from contract research organizations, or CROs, or contract manufacturing organizations, or CMOs, in the reporting period are estimated based on the level of services performed and progress in the period for which the Company has not yet received an invoice from the supplier. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, and expensed as the related goods are delivered or the services are performed.

Income Taxes

The Company is taxed as a C corporation for federal income tax purposes. Income taxes for the Company are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. Income taxes have been calculated on a separate tax return basis.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. As of December 31, 2021 and 2020, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per 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, restricted stock units and performance 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 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 due to their anti-dilutive effect, for the periods indicated:


	Year Ended
	December 31,
	2021		2020		2019
Stock options		5,737,599		5,199,235		3,428,497
Restricted stock units		435,589		176,537		—
Performance stock units		956,145		—		—
Potential common shares		7,129,333		5,375,772		3,428,497

Comprehensive Loss

Comprehensive loss represents the net change in stockholders’ equity during a period from sources other than transactions with shareholders. As reflected in the accompanying consolidated statements of operations and comprehensive loss, our comprehensive loss is comprised of net losses and unrealized gains and losses on marketable debt securities. These changes in equity are reflected net of tax.

Patent Costs

Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expenses. Patent costs were $332, $524 and $472 for the years ended December 31, 2021, 2020 and 2019, respectively.

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 June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments, which has been subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-03, or ASU 2016-13. The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Since the Company ceased to be an emerging growth company as of December 31, 2020, the Company adopted the standard during the fourth quarter of 2020 and applied the modified retrospective method of adoption to the Company’s financial statements as of January 1, 2020. Based on the composition of the investment portfolio as of

the adoption date, the adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows for the year ended December 31 2020 and no adjustment was required to be recorded to the opening retained earnings balance as of January 1, 2020.

In December 2019, the FASB issued ASU 2019-12, Income Taxes-Simplifying the Accounting for Income Taxes, or ASU 2019-12. ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. We have adopted ASU 2019-12 as of January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

Accrued Expenses

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Accrued Expenses

3. Accrued Expenses

Accrued expenses consists of the following:


	December 31,		December 31,
	2021		2020
Research and development costs	$	17,480	$	5,815
Professional fees		2,163		648
Payroll related		8,371		5,916
Other		2,070		180
Accrued expenses	$	30,084	$	12,559

Fair Value of Financial Assets

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Assets

Fair Value of Financial Assets

4. Fair Value of Financial Assets

As of December 31, 2021 and 2020, the carrying amount of cash and cash equivalents and short-term investments was $294,855 and $172,792, 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 values:


	Fair value Measurements as of
	December 31, 2021 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Commercial Paper	$	—	$	—	$	—	$	—
Money Market Funds		48,297		—		—		48,297
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		235,607		—		235,607
Total	$	48,297	$	235,607	$	—	$	283,904


	Fair value Measurements as of
	December 31, 2020 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	36,242	$	—	$	36,242
Money Market Funds		63,182		—		—		63,182
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		71,938		—		71,938
Total	$	63,182	$	108,180	$	—	$	171,362

Marketable Securities

The following tables summarize the Company's marketable securities:


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	235,608	$	50	$	(51)	$	235,607
	$	235,608	$	50	$	(51)	$	235,607


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	71,895	$	43	$	—	$	71,938
	$	71,895	$	43	$	—	$	71,938

- 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

Right of Use Asset and Lease Liability

12 Months Ended

Dec. 31, 2021

Right Of Use Asset and Lease Liability

Right Of Use Asset and Lease Liability

5. Right Of Use Asset and Lease Liability

The Company has a material operating lease for its head office facility and other immaterial operating leases for certain equipment. The Company’s office lease has a remaining lease term of 3.6 years. The Company measured the lease liability associated with the office lease using a discount rate of 10% at inception. The Company estimated the incremental borrowing rate 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 December 31, 2021, the Company has not entered into any lease arrangements classified as a finance lease.

Under FASB ASC Topic 842, Leases, the Company determines, at the inception of the contract, whether the contract is or contains a lease based on whether the contract provides the Company the right to control the use of a physically distinct asset or substantially all of the capacity of an asset. Leases with an initial noncancelable term of twelve months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are classified as short-term leases. The Company has elected as an accounting policy to exclude from the consolidated balance sheets a right of use asset and lease liability for short-term leases.

Upon adoption of ASC 842, the Company elected the transition relief package, permitted within the standard, pursuant to which the Company did not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and whether existing leases have any initial direct costs. The Company also elected the practical expedient of not separating lease components from non-lease components for all leases. There was no cumulative-effective adjustment to the opening balance of retained earnings. The Company reviews all material contracts for embedded leases to determine if they have a right-of-use asset.

The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvement are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both an operating lease right-of-use asset of $3,265 and a lease liability of $3,636. The standard did not materially impact the consolidated statements of cash flows and had no impact on the consolidated statements of operations.

The Company’s office lease includes both lease and non-lease components. Non-lease components relate to real estate taxes, insurance, operating expenses and common area maintenance, which are usually billed at actual amounts incurred proportionate to the Company’s rented square feet of the building. These non-lease components are expensed by the Company as they are incurred and are not included in the measurement of the lease liability.

The Company’s corporate headquarters is located in Boston, Massachusetts. This facility houses the Company’s research, clinical, regulatory, commercial and administrative personnel. The Company’s lease agreement commenced May 2019 and has a term of six years with a five-year renewal option to extend the lease. As of January 1, 2019, the Company did not included the five-year renewal option to extend the lease in its measurement of the ROU asset or lease liability. Rent expense, or operating lease costs, for the years ended December 31, 2021, 2020 and 2019 were $551, $551 and $629, respectively.

Supplemental cash flow information related to the Company’s lease for the years ended December 31, 2021 and 2020, includes cash payments of $802 and $786, respectively used in the measurement of its operating lease liability.

The following table presents the maturities of the Company’s operating lease liability related to office space as of December 31, 2021, all of which is under a non-cancellable operating lease:


	Operating Lease
2022	$	818
2023		834
2024		851
2025		502
Thereafter		—
Total operating lease payments		3,005
Less: imputed interest		454
Total operating lease liability	$	2,551

Intangible Assets, Net

12 Months Ended

Dec. 31, 2021

Intangible Assets, Net

Intangible Assets, Net

6. Intangible Assets, Net

As of December 31, 2021, the Company’s definite-lived intangible assets, which totaled $4,658, 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.

As of December 31, 2021, amortization expense for the next five years and beyond is summarized as follows:


2022	$	455
2023		455
2024		455
2025		455
2026		455
Thereafter		2,383
Total	$	4,658

The Company began amortizing its finite-lived intangible assets in April 2021 over an 11 year period based on IMCIVREE’s expected patent exclusivity period. Amortization expense totaled $342 for the year ended

December 31, 2021. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss.

Common Stock

12 Months Ended

Dec. 31, 2021

Common Stock.

Common Stock

7. Common Stock

Common Stock

On February 9, 2021 the Company completed a public offering of 5,750,000 shares of common stock at an offering price of $30.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 750,000 additional shares of common stock. The Company received approximately $161,550 in net proceeds after deducting underwriting discounts, commissions and estimated offering expenses.

On October 18, 2019 the Company completed a public offering of 9,324,324 shares of common stock at an offering price of $18.50 per share, which included the exercise in full by the underwriters of their option to purchase up to 1,216,216 additional shares of common stock. The Company received net proceeds of $161,352 after deducting underwriting discounts, commissions and offering expenses.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 13
-Subparagraph (b)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section 50
-Paragraph 18
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
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+ Details

Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Stock-based Compensation

Stock-based Compensation

8. Stock-based Compensation

2017 Equity Incentive Plan

The Rhythm Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 Pan”) provides for the grant of incentive and non-qualified stock options, stock appreciation rights, performance units, restricted stock, restricted stock units and stock grants to employees, consultants, advisors and directors of us or our affiliates, as determined by the board of directors. The number of shares authorized under the 2017 Plan will be increased each January 1, commencing on January 1, 2018 and ending on (and including) January 1, 2027, by an amount equal to 4% of the outstanding shares of stock outstanding as of the end of the immediately preceding fiscal year. On January 1, 2022, 2021 and 2020, 2,011,343, 1,769,436 and 1,759,870 shares, respectively, were added to the 2017 Plan. Notwithstanding the foregoing, the board of directors may act prior to January 1 for a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 Plan for such year, or that the increase in the number of shares authorized under the 2017 Plan for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. Shares of common stock issued upon exercise of stock options are generally issued from new shares of the Company. The 2017 Plan provides that the exercise price of incentive stock options cannot be less than 100% of the fair market value of the common stock on the date of the award for participants who own less than 10% of the total combined voting power of stock of the Company, and not less than 110% for participants who own more than 10% of the Company's voting power. Awards granted under the 2017 Plan will vest over periods as determined by the Company's board of directors. For options granted to date, the exercise price equaled the fair value of the common stock as determined by the board of directors on the date of grant.

As of December 31, 2021, an aggregate of 8,994,352 shares of common stock were authorized for issuance under the 2017 Plan, of which a total of approximately 1,865,019 shares of common stock remained available for future awards. In addition, a total of 7,129,333 shares of common stock reserved for issuance were subject to currently outstanding stock options, performance share units and restricted stock units granted under the Plan.

The Company estimates the fair value of stock option awards to employees and non-employees using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including (a) the expected volatility of the underlying common stock, (b) the expected term of the award, (c) the risk-free interest rate, and (d) expected dividends. Due to the lack of a public market for the trading of its common stock and a lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of companies in the pharmaceutical and biotechnology industries in a similar stage of development as the Company that are publicly traded. For these analyses, the Company selected companies with comparable characteristics to its own including enterprise value, risk profiles and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of its stock-based awards. During 2020, the Company began to estimate its volatility by using a blend of its stock price history for the length of time it has market data for its stock and the historical volatility of similar public companies for the expected term of each grant. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

The Company estimated the expected life of its employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option. The risk-free interest rates for periods within the expected life of the option are based on the U.S. Treasury yield curve in effect during the period the options were granted. We have elected to account for forfeitures as they occur.

The grant date fair value of awards subject to service-based vesting is recognized ratably over the requisite service period, which is generally the vesting period of the respective awards. The Company's stock option awards typically vest over a service period that ranges from one to four years and includes awards with one year cliff vesting followed by ratable monthly and quarterly vesting thereafter and ratable monthly and quarterly vesting beginning on the grant date.

During the years ended December 31, 2021, 2020 and 2019, the Company granted 1,678,230, 2,546,075 and 1,445,200 stock option awards to certain directors, employees and non-employees, respectively. Using the Black-Scholes option pricing model, the weighted-average grant date fair value relating to outstanding stock options granted under the Company’s stock option plan during the years ended December 31, 2021, 2020 and 2019 was $15.69, $13.25 and $17.19, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $2,688, $2,661 and $3,844, respectively.

The fair value of stock options granted to employees and directors was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	Year ended
	December 31,
	2021		2020		2019
Risk‑free interest rate	0.79	%	0.76	%	2.40	%
Expected term (in years)	6.11		6.08		6.07
Expected volatility	69.80	%	70.67	%	66.03	%
Expected dividend yield	—		—		—

A summary of the Company's stock option activity for the year ended December 31, 2021 is as follows:


				Weighted‑
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Options	Price		Term		Value
Outstanding as of December 31, 2020	5,199,235	$	21.30	7.57	$	45,233
Granted	1,678,230		25.24	—		—
Exercised	(232,037)		17.81	—		2,688
Cancelled	(907,829)		26.04	—		—
Outstanding as of December 31, 2021	5,737,599	$	21.84	6.73	$	3,214
Options exercisable at December 31, 2021	2,861,174	$	20.24	5.09	$	3,178

The Company may grant Restricted Stock Units (RSUs) to employees and nonemployee directors. Each RSU represents a right to receive one share of the Company's common stock upon the completion of a specific period of continued service. RSU awards granted are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair values of these RSUs on a straight-line basis over the requisite service period of these awards.

A summary of the Company's restricted stock unit activity for the year ended December 31, 2021 is as follows:




		Weighted-
		Average
	Number of	Grant Date
	RSUs	Fair Value
Unvested as of December 31, 2020	176,537	$	19.50
Granted	403,465		21.97
Vested	(27,583)		17.87
Cancelled	(116,830)		24.67
Unvested as of December 31, 2021	435,589	$	15.74

As of December 31, 2021, the aggregate intrinsic value of non-vested RSUs was $4,347.

In November 2021, the Company granted up to a maximum of 956,145 Performance Stock Units (PSUs) to employees. Each PSU represents a right to receive one share of the Company's common stock upon vesting. The performance-based stock units granted in 2021 will vest on December 31, 2023 based upon i) continued service and ii) the achievement of specific clinical development and regulatory performance events, as approved by the compensation committee. PSU awards granted are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair value of these PSUs for the awards that are probable of vesting over the service period. During each financial period, management estimates the probable number of PSU’s that would vest until the ultimate achievement of the performance goal is known. At December 31, 2021, the Company estimates that 51.6% of the PSUs granted in November 2021 will be eligible to vest.

A summary of the Company's performance stock unit activity for the year ended December 31, 2021 is as follows:




		Weighted-
		Average
	Number of	Grant Date
	PSUs	Fair Value
Unvested as of December 31, 2020	—	$	—
Granted	956,145		13.24
Vested	—		—
Cancelled	—		—
Unvested as of December 31, 2021	956,145	$	13.24

The following table summarizes the classification of the Company's stock-based compensation expenses related to stock options, restricted stock units and the employee stock purchase plan recognized in the Company's consolidated statements of operations and comprehensive loss.



	Year Ended
	December 31,
	2021		2020		2019
Research and development	$	7,687	$	6,055	$	5,163
Selling, general, and administrative		13,117		11,400		6,712
Total	$	20,804	$	17,455	$	11,875

Stock-based compensation expense by award type recognized during the years ended December 31, 2021, 2020 and 2019 was as follows:



	Year Ended
	December 31,
	2021		2020		2019
Stock options	$	17,988	$	15,915	$	11,667
Employees stock purchase plan		310		180		208
Restricted stock units		1,924		1,360		—
Performance stock units		582		—		—
Total	$	20,804	$	17,455	$	11,875

During 2021, 2020 and 2019, there were certain awards subject to modification accounting. Per terms of separation with a former employee, the employee’s stock option awards were amended to provide for accelerated vesting and extended time to exercise vested options. As a result, the Company recognized incremental expense for the stock option awards of $141, $2,880 and $56, respectively.

As of December 31, 2021, the Company has unrecognized compensation cost of $35,694 related to non-vested employee, non-employee and director stock option awards that is expected to be recognized over a weighted-average period of 2.57 years. The Company has unrecognized compensation cost of $14,838 related to non-vested employee restricted stock unit and performance stock unit awards that is expected to be recognized over a weighted-average period of 2.30 years.

2017 Employee Stock Purchase Plan

The Company has a 2017 Employee Stock Purchase Plan, or the 2017 ESPP, which became effective in connection with the completion of the Company’s IPO in October 2017. As of December 31, 2021, a total of 962,942 shares of common stock were reserved for issuance under the 2017 ESPP. In addition, the number of shares authorized under the 2017 ESPP will be increased each January 1, commencing on January 1, 2019 and ending on (and including) January 1, 2027, by an amount equal to the lesser of 1% of outstanding shares as of the end of the immediately preceding fiscal year. On January 1, 2021, 2020 and 2019, zero, 439,968 and 344,107 shares, respectively, were added to the 2017 ESPP. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 ESPP for such year, or that the increase in the number of shares authorized under the 2017 ESPP for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. The board of directors elected not to increase the pool on January 1, 2021. During the year ended December 31, 2021, 38,051 shares were issued under this plan.

The purchase price of common stock under our ESPP is equal to 85.0% of the lower of (i) the market value per share of the common stock on the first business day of an offering period or (ii) the market value per share of the common stock on the purchase date. The fair value of the discounted purchases made under our ESPP is calculated using the Black-Scholes model. The fair value of the look-back provision plus the 15.0% discount is recognized as compensation expense over the 6 month purchase period.

Significant Agreements

12 Months Ended

Dec. 31, 2021

Significant Agreements

Significant Agreements

9. Significant Agreements

License Agreements

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 proopiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1) or leptin receptor (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 five independent sub-studies in patients with obesity due to a heterozygous variant of POMC/PCSK1 or LEPR; certain variants of the SRC1 gene, certain variants of the SH2B1 gene, or PCSK1 N221D deletions within the MC4R pathway. According to the terms of the RareStone License, RareStone made an upfront payment to Rhythm of $7,000 and issued $5,000 in equity to the Company. Rhythm will be eligible to receive development and commercialization milestones of up to $62,500, as well as tiered royalty payments on annual net sales of IMCIVREE. As of December 31, 2021, the Company received the upfront payment of $7,000, however the Company has not fulfilled its obligations related to the transfer of know how related to the license, and as such, the upfront payment was recorded as a contract liability on the consolidated balance sheet as of December 31, 2021. The $5,000 of RareStone equity was issued to Rhythm subsequent to December 31, 2021.

Ipsen Pharma S.A.S.

Pursuant to a license agreement with Ipsen Pharma, S.A.S., or Ipsen, the Company has an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to research, develop, and commercialize compounds that were discovered or researched by Ipsen in the course of conducting its MC4R program or that otherwise were covered by the licensed patents. 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.

The Company capitalized a $5,000 commercial milestone as a finite-lived intangible asset, as a result of the first commercial sale of IMCIVREE in the U.S. during March 2021. The Company recorded milestone expenses related to this license agreement of $3,000 during the year ended December 31, 2020. The expenses were recorded as research and development expenses when the milestone criteria were met in full during 2020. There are no research and development expenses related to milestones recorded in 2021 or 2019.

Camurus

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. 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.

Takeda

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.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies

Commitments and Contingencies

10. 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 that may be met in subsequent periods, or royalties on future sales of specified products. See Note 9 for discussion of these arrangements. 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 December 31, 2021, potential payments due to third parties during the next 12 months from the filing of this Annual Report on Form 10-K are estimated be approximately $5,000 in commercial and development milestones, in connection with our license agreements. These milestones generally become due and payable upon achievement of such milestones or sales and achievement of development milestones. When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in the Company’s consolidated financial statements.

Related-Party Transactions

12 Months Ended

Dec. 31, 2021

Related-Party Transactions

Related-Party Transactions

11. Related-Party Transactions

Amounts paid directly to consultants and vendors considered to be related parties amounted to $1,961, $3,221, and $2,489 for the years ended December 31, 2021, 2020 and 2019, respectively. Outstanding payments due to these related parties as of December 31, 2021 and 2020 were $50 and $187, respectively, and were included within accounts payable on the consolidated balance sheets.

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

12. Income Tax

For the years ended December 31, 2021, 2020 and 2019 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.

A reconciliation of the income tax benefit at the federal statutory tax rate to the Company's effective income tax rate is as follows:


	As of
	December 31,
	2021		2020		2019
Statutory tax rate	21.00	%	21.00	%	21.00	%
State tax, net of federal benefit	7.45	%	6.32	%	6.75	%
Research and development credit	2.94	%	1.46	%	2.49	%
Orphan drug credit	7.58	%	2.40	%	1.85	%
Tax law change	—	%	—	%	—	%
Stock compensation	(1.05)	%	(0.53)	%	(0.10)	%
Investor instrument revaluation	—	%	—	%	—	%
Other	(0.47)	%	(0.30)	%	0.20	%
Change in valuation allowance	(37.45)	%	(30.35)	%	(32.19)	%
Effective tax rate	—	%	—	%	—	%

The principal components of the Company's deferred tax assets and liabilities are as follows:


	As of
	December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	113,098	$	102,367
Research and development credits		13,477		10,347
Orphan drug credit		15,385		10,110
Capitalized license fee		2,651		2,492
Stock-based compensation		9,150		6,621
Deferred revenue		1,901		—
Other		2,976		2,267
Total deferred tax assets		158,638		134,204
Valuation allowance		(158,211)		(133,596)
Net deferred tax assets		427		608
Deferred tax liabilities:
Operating lease right-of-use asset and other		(427)		(608)
Total deferred tax liabilities	$	(427)	$	(608)

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2021 and 2020, because the Company's management has determined that is it more likely than not that these assets will not be realized. The increase in the valuation allowance of $24,615 in 2021 and $40,653 in 2020 primarily relates to the net loss incurred by the Company during each period.

As of December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately $422,328 and $385,092, respectively, which are available to reduce future taxable income. The net operating loss carryforwards expire at various times beginning in 2033 for federal and state purposes. Of the federal net operating loss carryforwards at December 31, 2021, $349,162 can be carried forward indefinitely.

As of December 31, 2021, the Company had federal and state research tax credits of approximately $10,161 and $4,197, respectively, which may be used to offset future tax liabilities. Additionally, as of 2021, the Company had a federal orphan drug credit related to qualifying research of $15,385. These tax credit carryforwards will begin to expire at various times beginning in 2033 for federal purposes and 2028 for state purposes.

The net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the Internal Revenue Code. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

The Company has not recorded any reserves for uncertain tax positions as of December 31, 2021 and 2020. The Company has not, as yet, conducted a study of research and development credit carryforwards. This study may result in an adjustment to the Company's research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company's research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations and comprehensive loss if an adjustment were required.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act, the CARES Act, was signed into law. The CARES Act includes provisions relating to several aspects of corporate income taxes. The CARES Act did not have a significant impact on the Company’s provision for income taxes.

Interest and penalty charges, if any, related to unrecognized tax benefits will be classified as income tax expense in the accompanying statements of operations and comprehensive loss. As of December 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company is subject to examination by the U.S. federal, state and local income tax authorities for tax years 2013 forward. The Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for any tax years.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Retirement Plan

12 Months Ended

Dec. 31, 2021

Retirement Plan

Retirement Plan

13. Retirement Plan

The Company has a 401(k) defined contribution plan for the benefit for all US employees and permits voluntary contributions by employees subject to IRS-imposed limitations. Beginning in 2021, the Company matched 100% of eligible employee contributions on the first 4% of employee salary (up to the IRS maximum). Contributions for the years ended December 31, 2021, 2020 and 2019 were $886, $321 and $0, respectively.

Subsequent Events

12 Months Ended

Dec. 31, 2021

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. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than as disclosed with the above notes to these consolidated financial statements.

2022 Employment Inducement Plan

On February 9, 2022, the Company’s board of directors adopted the Rhythm Pharmaceuticals, Inc. 2022 Employment Inducement Plan (the “Inducement Plan”) without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules (“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 will continue to grant awards under the 2017 Plan pursuant to the terms thereof.

The exercise price of stock options granted under the Inducement Plan will not be 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 March 1, 2022, no stock option awards have been issued under the Inducement Plan. As of March 1, 2022, no restricted stock unit awards have been granted under the Inducement Plan. As of March 1, 2022, 1,000,000 shares of common stock are available for future grant under the Inducement Plan

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Basis of Presentation

Dividend Policy

We have never paid a cash dividend on shares of our stock. We currently do not anticipate paying any cash dividends on our stock in the foreseeable future.

Use of Estimates

Principles of Consolidation

Segment Information

Off-Balance Sheet Risk and Concentrations of Credit Risk

Cash and Cash Equivalents

Short-term Investments

Restricted Cash

Accounts Receivable, Net

Accounts Receivable, net

Revenue Recognition

Product Revenue, Net

company, the Company acts as principal because we retain control of the product. The Company generally does not offer returns of product sold to the customer.

Reserves for Variable Consideration

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

Cost of Product Sales

Intangible Assets, net

Impairment of Long-Lived Assets

Prepaid Expenses and Other Current Assets


	December 31,
	2021		2020
Prepaid research and development costs	$	8,404	$	5,828
Other current assets		4,103		3,048
Prepaid expenses and other current assets	$	12,507	$	8,876

Property and Equipment

Property and equipment consists of the following:


	Useful	December 31,
	Life	2021		2020
Leasehold improvements	*	$	2,705	$	2,705
Office equipment	5 years		107		70
Computers and software	3 years		1,010		625
Furniture, fixtures and equipment	5 years		1,249		1,237
			5,071		4,637
Less accumulated depreciation and amortization			(2,258)		(1,442)
Property and equipment, net		$	2,813	$	3,195

*Shorter of asset life or lease term.

Depreciation and amortization expense related to property and equipment for the years ended December 31, 2021, 2020 and 2019 was $816, $690, and $834, respectively.

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.

Research and Development Expenses

Income Taxes

Net Loss Per Share


	Year Ended
	December 31,
	2021		2020		2019
Stock options		5,737,599		5,199,235		3,428,497
Restricted stock units		435,589		176,537		—
Performance stock units		956,145		—		—
Potential common shares		7,129,333		5,375,772		3,428,497

Comprehensive Income (Loss)

Comprehensive Loss

Patent Costs

Subsequent Events

Application of New or Revised Accounting Standards

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Schedule of prepaid expenses and other current assets


	December 31,
	2021		2020
Prepaid research and development costs	$	8,404	$	5,828
Other current assets		4,103		3,048
Prepaid expenses and other current assets	$	12,507	$	8,876

Schedule of property, plant and equipment


	Useful	December 31,
	Life	2021		2020
Leasehold improvements	*	$	2,705	$	2,705
Office equipment	5 years		107		70
Computers and software	3 years		1,010		625
Furniture, fixtures and equipment	5 years		1,249		1,237
			5,071		4,637
Less accumulated depreciation and amortization			(2,258)		(1,442)
Property and equipment, net		$	2,813	$	3,195

*Shorter of asset life or lease term.

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


	Year Ended
	December 31,
	2021		2020		2019
Stock options		5,737,599		5,199,235		3,428,497
Restricted stock units		435,589		176,537		—
Performance stock units		956,145		—		—
Potential common shares		7,129,333		5,375,772		3,428,497

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Schedule of accrued expenses


	December 31,		December 31,
	2021		2020
Research and development costs	$	17,480	$	5,815
Professional fees		2,163		648
Payroll related		8,371		5,916
Other		2,070		180
Accrued expenses	$	30,084	$	12,559

Fair Value of Financial Assets (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Assets

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


	Fair value Measurements as of
	December 31, 2021 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Commercial Paper	$	—	$	—	$	—	$	—
Money Market Funds		48,297		—		—		48,297
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		235,607		—		235,607
Total	$	48,297	$	235,607	$	—	$	283,904


	Fair value Measurements as of
	December 31, 2020 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	36,242	$	—	$	36,242
Money Market Funds		63,182		—		—		63,182
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		71,938		—		71,938
Total	$	63,182	$	108,180	$	—	$	171,362

Schedule of marketable securities


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	235,608	$	50	$	(51)	$	235,607
	$	235,608	$	50	$	(51)	$	235,607


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	71,895	$	43	$	—	$	71,938
	$	71,895	$	43	$	—	$	71,938

Right of Use Asset and Lease Liability (Tables)

12 Months Ended

Dec. 31, 2021

Right Of Use Asset and Lease Liability

Schedule of operating lease maturities


	Operating Lease
2022	$	818
2023		834
2024		851
2025		502
Thereafter		—
Total operating lease payments		3,005
Less: imputed interest		454
Total operating lease liability	$	2,551

Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2021

Intangible Assets, Net

Schedule of finite-lived intangible assets


2022	$	455
2023		455
2024		455
2025		455
2026		455
Thereafter		2,383
Total	$	4,658

Stock-based Compensation (Tables) - 2017 Equity Incentive Plan

12 Months Ended

Dec. 31, 2021

Stock-based Compensation

Summary of common stock option activity


				Weighted‑
		Weighted-		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Options	Price		Term		Value
Outstanding as of December 31, 2020	5,199,235	$	21.30	7.57	$	45,233
Granted	1,678,230		25.24	—		—
Exercised	(232,037)		17.81	—		2,688
Cancelled	(907,829)		26.04	—		—
Outstanding as of December 31, 2021	5,737,599	$	21.84	6.73	$	3,214
Options exercisable at December 31, 2021	2,861,174	$	20.24	5.09	$	3,178

Summary of restricted stock unit activity




		Weighted-
		Average
	Number of	Grant Date
	RSUs	Fair Value
Unvested as of December 31, 2020	176,537	$	19.50
Granted	403,465		21.97
Vested	(27,583)		17.87
Cancelled	(116,830)		24.67
Unvested as of December 31, 2021	435,589	$	15.74

Summary of performance stock unit activity




		Weighted-
		Average
	Number of	Grant Date
	PSUs	Fair Value
Unvested as of December 31, 2020	—	$	—
Granted	956,145		13.24
Vested	—		—
Cancelled	—		—
Unvested as of December 31, 2021	956,145	$	13.24

Summary of stock-based compensation expense



	Year Ended
	December 31,
	2021		2020		2019
Research and development	$	7,687	$	6,055	$	5,163
Selling, general, and administrative		13,117		11,400		6,712
Total	$	20,804	$	17,455	$	11,875

Summary of stock-based compensation expense by award type



	Year Ended
	December 31,
	2021		2020		2019
Stock options	$	17,988	$	15,915	$	11,667
Employees stock purchase plan		310		180		208
Restricted stock units		1,924		1,360		—
Performance stock units		582		—		—
Total	$	20,804	$	17,455	$	11,875

Employees and Directors

Stock-based Compensation

Schedule of significant assumptions used to compute the fair values of employee and director stock options awarded


	Year ended
	December 31,
	2021		2020		2019
Risk‑free interest rate	0.79	%	0.76	%	2.40	%
Expected term (in years)	6.11		6.08		6.07
Expected volatility	69.80	%	70.67	%	66.03	%
Expected dividend yield	—		—		—

Income Tax (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

Schedule of reconciliation of the income tax benefit at the federal statutory tax rate to effective income tax rate


	As of
	December 31,
	2021		2020		2019
Statutory tax rate	21.00	%	21.00	%	21.00	%
State tax, net of federal benefit	7.45	%	6.32	%	6.75	%
Research and development credit	2.94	%	1.46	%	2.49	%
Orphan drug credit	7.58	%	2.40	%	1.85	%
Tax law change	—	%	—	%	—	%
Stock compensation	(1.05)	%	(0.53)	%	(0.10)	%
Investor instrument revaluation	—	%	—	%	—	%
Other	(0.47)	%	(0.30)	%	0.20	%
Change in valuation allowance	(37.45)	%	(30.35)	%	(32.19)	%
Effective tax rate	—	%	—	%	—	%

Schedule of principal components of deferred tax assets


	As of
	December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	113,098	$	102,367
Research and development credits		13,477		10,347
Orphan drug credit		15,385		10,110
Capitalized license fee		2,651		2,492
Stock-based compensation		9,150		6,621
Deferred revenue		1,901		—
Other		2,976		2,267
Total deferred tax assets		158,638		134,204
Valuation allowance		(158,211)		(133,596)
Net deferred tax assets		427		608
Deferred tax liabilities:
Operating lease right-of-use asset and other		(427)		(608)
Total deferred tax liabilities	$	(427)	$	(608)

Nature of Business (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended			12 Months Ended
	Feb. 21, 2021	Oct. 18, 2019	Dec. 31, 2021	Nov. 30, 2021	Feb. 28, 2021	Dec. 31, 2021	Dec. 31, 2020
Accumulated deficit			$ 528,939			$ 528,939	$ 459,327
Proceeds from sale of priority review voucher					$ 100,000	100,000
Issuance of common stock upon completion of public offering, net of offering costs (in shares)	5,750,000	9,324,324			5,750,000
Price per share	$ 30.00	$ 18.50			$ 30.00
Additional shares					750,000
Net proceeds from issuance of common stock	$ 161,550	$ 161,352			$ 161,550	161,726
Product revenue, net						3,154
Carrying amount of cash and cash equivalents and short term investments			294,855			294,855	$ 172,792
Net proceeds from sale			$ 7,000		$ 260,050
At-the-market offerings
Aggregate proceeds						$ 100,000
Underwriter option to purchase
Issuance of common stock upon completion of public offering, net of offering costs (in shares)	750,000	1,216,216
Maximum \| At-the-market offerings
Aggregate proceeds				$ 100,000

Summary of Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) Institution segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Off Balance Sheet Risk and Concentrations of Credit Risk
Number of federally insured financial institutions \| Institution	2
Segment Information
Number of operating segments \| segment	1
Number of reporting segments \| segment	1
Revenue Recognition
Payment terms	45 days
Product revenue, net	$ 3,154
Inventory
Inventory	111
Impairment of Long-Lived Assets
Tangible asset impairment charges	0	$ 0	$ 0
Prepaid Expenses and Other Current Assets
Prepaid research and development costs	8,404	5,828
Other current assets	4,103	3,048
Prepaid expenses and other current assets	$ 12,507	$ 8,876

Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment
Property, Plant and Equipment, gross	$ 5,071	$ 4,637
Less accumulated depreciation and amortization	(2,258)	(1,442)
Property, Plant and Equipment, net	2,813	3,195
Depreciation and amortization	816	690	$ 834
Leasehold improvements
Property, Plant and Equipment
Property, Plant and Equipment, gross	$ 2,705	2,705
Office equipment
Property, Plant and Equipment
Useful Life	5 years
Property, Plant and Equipment, gross	$ 107	70
Computers and software
Property, Plant and Equipment
Useful Life	3 years
Property, Plant and Equipment, gross	$ 1,010	625
Furniture, fixtures and equipment
Property, Plant and Equipment
Useful Life	5 years
Property, Plant and Equipment, gross	$ 1,249	$ 1,237

Summary of Significant Accounting Policies - Government Grants (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Summary of Significant Accounting Policies
Accrued interest or penalties	$ 0	$ 0

Summary of Significant Accounting Policies - Shares Excluded For EPS (Details) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Shares excluded from the computation of diluted net loss per share
Shares excluded from the computation of diluted net loss per share	7,129,333	5,375,772	3,428,497
Stock options
Shares excluded from the computation of diluted net loss per share
Shares excluded from the computation of diluted net loss per share	5,737,599	5,199,235	3,428,497
Restricted stock units
Shares excluded from the computation of diluted net loss per share
Shares excluded from the computation of diluted net loss per share	435,589	176,537
Performance stock units
Shares excluded from the computation of diluted net loss per share
Shares excluded from the computation of diluted net loss per share	956,145

Summary of Significant Accounting Policies - Net Loss Per Share and Patent Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Costs to secure and defend patents	$ 68,486	$ 46,125	$ 36,550
Patent Costs
Costs to secure and defend patents	$ 332	$ 524	$ 472

Summary of Significant Accounting Policies - Application of New or Revised Accounting Standards (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2018
Summary of Significant Accounting Policies
Right-of-use asset	$ 1,522	$ 1,807	$ 3,265
Operating Lease, Liability	$ 2,551		$ 3,636

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accrued Expenses
Research and development costs	$ 17,480	$ 5,815
Professional fees	2,163	648
Payroll related	8,371	5,916
Other	2,070	180
Accrued expenses	$ 30,084	$ 12,559

Fair Value of Financial Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value of Financial Assets and Liabilities
Carrying amount of cash and cash equivalents and short term investments	$ 294,855	$ 172,792
Fair value of financial assets and liabilities
Marketable Securities	235,607	71,938
Corporate Debt Securities and Commercial Paper
Fair value of financial assets and liabilities
Marketable Securities	235,607	71,938
Recurring \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	283,904	171,362
Recurring \| Corporate Debt Securities and Commercial Paper \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents		36,242
Marketable Securities		71,938
Recurring \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents	48,297	63,182
Recurring \| Level 1 \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	48,297	63,182
Recurring \| Level 1 \| Money Market Funds \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents	48,297	63,182
Recurring \| Level 2 \| Estimated fair value
Fair value of financial assets and liabilities
Fair value of assets	$ 235,607	108,180
Recurring \| Level 2 \| Corporate Debt Securities and Commercial Paper \| Estimated fair value
Fair value of financial assets and liabilities
Cash Equivalents		36,242
Marketable Securities		$ 71,938

Fair Value of Financial Assets - Marketable Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value of Financial Assets and Liabilities
Amortized Cost	$ 235,608	$ 71,895
Gross Unrealized Gains	50	43
Gross Unrealized Losses	(51)
Fair Value	235,607	71,938
Corporate Debt Securities and Commercial Paper
Fair Value of Financial Assets and Liabilities
Amortized Cost	235,608	71,895
Gross Unrealized Gains	50	43
Gross Unrealized Losses	(51)
Fair Value	235,607	71,938
Recurring \| Estimated fair value \| Corporate Debt Securities and Commercial Paper
Fair Value of Financial Assets and Liabilities
Amortized Cost	235,607
Fair Value		71,938
Recurring \| Level 2 \| Estimated fair value \| Corporate Debt Securities and Commercial Paper
Fair Value of Financial Assets and Liabilities
Amortized Cost	$ 235,607
Fair Value		$ 71,938

Fair Value of Financial Assets - Financial Liabilities (Details) - $ / shares	Feb. 28, 2021	Feb. 21, 2021	Oct. 18, 2019
Assumption used to estimate the fair value of asset and liability by utilizing the Black-Scholes option pricing model
Fair Value	$ 30.00	$ 30.00	$ 18.50

Right of Use Asset and Lease Liability (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	May 31, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Right Of Use Asset and Lease Liability
Remaining term of operating lease (in years)		3 years 7 months 6 days
Operating lease discount rate		10.00%
Transition relief package				true
Right-of-use asset		$ 1,522	$ 1,807		$ 3,265
Operating Lease, Liability		2,551			$ 3,636
Lease term (in years)	6 years
Lease renewal term (in years)	5 years				5 years
Option to extend	true
Rent expense, or operating lease costs		551	551	$ 629
Cash payments in the measurement of operating lease liability		$ 802	$ 786

Right of Use Asset and Lease Liability - Operating Lease Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2018
Right Of Use Asset and Lease Liability
2022	$ 818
2023	834
2024	851
2025	502
Total operating lease payments	3,005
Less: imputed interest	454
Total operating lease liability	$ 2,551	$ 3,636

Intangible Assets, Net (Details) $ in Thousands	12 Months Ended
Intangible Assets, Net (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2022	$ 455
2023	455
2024	455
2025	455
2026	455
Thereafter	2,383
Total acquired lease intangible assets, net	$ 4,658
Amortization period	11 years
Amortization of Intangible Assets	$ 342

Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	12 Months Ended
	Feb. 21, 2021	Oct. 18, 2019	Feb. 28, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jan. 01, 2022	Jan. 01, 2021	Jan. 01, 2020
Common Stock
Common stock, authorized				120,000,000	120,000,000
Price per share	$ 30.00	$ 18.50	$ 30.00
Issuance of stock (in shares)	5,750,000	9,324,324	5,750,000
Net proceeds from issuance of common stock	$ 161,550	$ 161,352	$ 161,550	$ 161,726
Additional shares			750,000
Underwriter option to purchase
Common Stock
Issuance of stock (in shares)	750,000	1,216,216
2017 Employee Stock Purchase Plan
Common Stock
Common stock reserved for issuance				962,942
Number of common stock options granted				38,051
2017 Equity Incentive Plan
Common Stock
Common stock reserved for issuance				7,129,333			2,011,343	1,769,436	1,759,870
Shares available for future grant				1,865,019
Number of common stock options granted				1,678,230	2,546,075	1,445,200

Stock-based Compensation - 2017 Equity Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Jan. 01, 2020	Jan. 01, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jan. 01, 2022	Jan. 01, 2021
Stock-based Compensation
Stock options total intrinsic value of stock options					$ 3,844
2017 Equity Incentive Plan
Stock-based Compensation
Common stock reserved for issuance	1,759,870		7,129,333			2,011,343	1,769,436
Percentage increase in authorized shares under the plan			4.00%
Stock options total intrinsic value of stock options			$ 2,688	$ 2,661
Authorized shares			8,994,352
Shares available for future grant			1,865,019
Common stock reserved for issuance	1,759,870		7,129,333			2,011,343	1,769,436
Grant cliff vesting period			1 year
Number of common stock options granted			1,678,230	2,546,075	1,445,200
Weighted average grant date fair value relating to outstanding stock options			$ 15.69	$ 13.25	$ 17.19
2017 Equity Incentive Plan \| Exercise Price Not Less Than 100% Of Fair Market Value
Stock-based Compensation
Exercise price of incentive stock options over fair market value of the common stock			100.00%
2017 Equity Incentive Plan \| Exercise Price Not Less Than 110% Of Fair Market Value
Stock-based Compensation
Exercise price of incentive stock options over fair market value of the common stock			110.00%
2017 Equity Incentive Plan \| Employees and Directors
Stock-based compensation
Risk-free interest rate			0.79%	0.76%	2.40%
Expected term (in years)			6 years 1 month 9 days	6 years 29 days	6 years 25 days
Expected volatility			69.80%	70.67%	66.03%
2017 Employee Stock Purchase Plan
Stock-based Compensation
Common stock reserved for issuance			962,942
Number of additional shares added	439,968	344,107
Percentage increase in authorized shares under the plan			1.00%
Exercise price of incentive stock options over fair market value of the common stock			85.00%
Discount recognized as compensation expense			15.00%
Common stock reserved for issuance			962,942
Number of common stock options granted			38,051
Stock-based compensation
Expected term (in years)			6 months
Maximum \| 2017 Equity Incentive Plan
Stock-based Compensation
Vesting period of stock option awards			4 years
Maximum \| 2017 Equity Incentive Plan \| Exercise Price Not Less Than 110% Of Fair Market Value
Stock-based Compensation
Voting power of stock			10.00%
Minimum \| 2017 Equity Incentive Plan
Stock-based Compensation
Vesting period of stock option awards			1 year
Minimum \| 2017 Equity Incentive Plan \| Exercise Price Not Less Than 100% Of Fair Market Value
Stock-based Compensation
Voting power of stock			10.00%

Stock-based Compensation - Common stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Aggregate Intrinsic Value
Exercised			$ 3,844
2017 Equity Incentive Plan
Number of Units
Outstanding at beginning of the period	5,199,235
Granted	1,678,230	2,546,075	1,445,200
Exercised	(232,037)
Cancelled	(907,829)
Outstanding at end of the period	5,737,599	5,199,235
Options exercisable at end of the period	2,861,174
Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value relating to outstanding stock options	$ 15.69	$ 13.25	$ 17.19
Weighted Average Exercise Price
Outstanding at beginning of the period	21.30
Granted	25.24
Exercised	17.81
Cancelled	26.04
Outstanding at end of the period	21.84	$ 21.30
Options exercisable at end of the period	$ 20.24
Weighted Average Remaining Contractual Term
Outstanding at end of the period	6 years 8 months 23 days	7 years 6 months 25 days
Options exercisable at end of the period	5 years 1 month 2 days
Aggregate Intrinsic Value
Outstanding balance	$ 3,214	$ 45,233
Exercised	2,688	$ 2,661
Options exercisable	$ 3,178

Stock-based Compensation - RSU and PSU activity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Nov. 30, 2021	Dec. 31, 2021
Restricted Stock Units
Number of Units
Outstanding unvested at beginning of the period		176,537
Granted		403,465
Vested		(27,583)
Cancelled		(116,830)
Outstanding unvested at end of the period		435,589
Weighted Average Grant Date Fair Value
Outstanding unvested at beginning of the period		$ 19.50
Granted		21.97
Vested		17.87
Cancelled		24.67
Outstanding unvested at end of the period		$ 15.74
2017 Equity Incentive Plan \| Restricted Stock Units
Weighted Average Grant Date Fair Value
Aggregate intrinsic value		$ 4,347
2017 Equity Incentive Plan \| Performance Shares [Member]
Number of Units
Granted	956,145	956,145
Outstanding unvested at end of the period		956,145
Weighted Average Grant Date Fair Value
Granted		$ 13.24
Outstanding unvested at end of the period		$ 13.24

Stock-based Compensation - Compensation expense (Details)	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
2017 Equity Incentive Plan
Stock-based Compensation
Stock based compensation expense	$ 20,804,000	$ 17,455,000	$ 11,875,000
Incremental expenses	141,000	2,880,000	56,000
2017 Equity Incentive Plan \| Research and development
Stock-based Compensation
Stock based compensation expense	7,687,000	6,055,000	5,163,000
2017 Equity Incentive Plan \| Selling, general and administrative
Stock-based Compensation
Stock based compensation expense	13,117,000	11,400,000	6,712,000
2017 Equity Incentive Plan \| Nonemployees
Stock-based Compensation
Unrecognized compensation expense related to non-vested portion of awards	$ 35,694,000
Weighted average period for recognition of unrecognized compensation expense	2 years 6 months 25 days
2017 Equity Incentive Plan \| Employees and Directors
Stock-based Compensation
Unrecognized compensation expense related to non-vested portion of awards	$ 14,838,000
Weighted average period for recognition of unrecognized compensation expense	2 years 3 months 18 days
Stock options. \| 2017 Equity Incentive Plan
Stock-based Compensation
Stock based compensation expense	$ 17,988,000	15,915,000	11,667,000
Stock options \| 2017 Equity Incentive Plan
Stock-based Compensation
Stock based compensation expense	$ 310,000	180,000	$ 208,000
Restricted Stock Units
Stock-based Compensation
Number shares of common stock upon the completion of a specific period of continued service	1
Restricted Stock Units \| 2017 Equity Incentive Plan
Stock-based Compensation
Stock based compensation expense	$ 1,924,000	$ 1,360,000
Performance Shares [Member]
Stock-based Compensation
Number of shares of common stock shares issued upon vesting	1
Estimated percentage of payment awards granted eligible to vest	51.60%
Performance Shares [Member] \| 2017 Equity Incentive Plan
Stock-based Compensation
Stock based compensation expense	$ 582,000

Significant Agreements (Details) - USD ($) $ in Thousands			1 Months Ended		12 Months Ended
Significant Agreements (Details) - USD ($) $ in Thousands	Jan. 03, 2022	Apr. 03, 2018	Dec. 31, 2021	Jan. 31, 2016	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2021	Feb. 26, 2010
Significant Agreements
Upfront payment					$ 7,000
RareStone Group Ltd.
Significant Agreements
Upfront payment			$ 7,000
Equity issued in conjunction with license agreement	$ 5,000		5,000
Shares issued for license agreement	$ 5,000		5,000
RareStone Group Ltd. \| Maximum
Significant Agreements
Aggregate payment upon achievement of development and commercial milestones			$ 62,500		62,500
Ipsen
Significant Agreements
Milestone expenses					$ 0	$ 3,000	$ 0
Ipsen \| License agreement
Significant Agreements
Amount of commercial milestone capitalized								$ 5,000
Ipsen \| License agreement \| Maximum
Significant Agreements
Aggregate payment upon achievement of development and commercial milestones									$ 40,000
Ipsen \| Sublicense agreement \| Minimum
Significant Agreements
Payment based on revenue received, as percentage									10.00%
Ipsen \| Sublicense agreement \| Maximum
Significant Agreements
Payment based on revenue received, as percentage									20.00%
Camurus \| License agreement
Significant Agreements
Non-refundable and non-creditable signing fee				$ 500
Royalty payment period				10 years
Camurus \| License agreement \| Maximum
Significant Agreements
One-time non-refundable development milestone payment				$ 7,750
One-time non-refundable non-creditable sales milestone payment				$ 57,000
Takeda
Significant Agreements
Equity issued in conjunction with license agreement		$ 4,448
Shares issued for license agreement		$ 4,448
Shares issued for license agreement (in 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

Commitments and Contingencies (Details) $ in Thousands	12 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Commitments and Contingencies
Potential Milestone Payment	$ 5,000

Related-Party Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounts Payable
Related Party Transaction
Outstanding payments due to consultants	$ 50	$ 187
Consultant
Related Party Transaction
Net costs	$ 1,961	$ 3,221	$ 2,489

- Definition

Carrying amount as of the balance sheet date of obligations due all related parties.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(k)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.17)
-URI http://asc.fasb.org/extlink&oid=120400017&loc=d3e572229-122910

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442526-122756

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.15(3),(4))
-URI http://asc.fasb.org/extlink&oid=120398452&loc=d3e534808-122878

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

+ Details

Income Tax - Reconciliation of income tax rate (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Reconciliation of the income tax benefit
Statutory tax rate	21.00%	21.00%	21.00%
State tax, net of federal benefit	7.45%	6.32%	6.75%
Research and development credit	2.94%	1.46%	2.49%
Orphan drug credit	7.58%	2.40%	1.85%
Stock compensation	(1.05%)	(0.53%)	(0.10%)
Other	(0.47%)	(0.30%)	0.20%
Change in valuation allowance	(37.45%)	(30.35%)	(32.19%)

Income Tax - Deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets:
Net operating loss carryforwards	$ 113,098	$ 102,367
Research and development credits	13,477	10,347
Orphan drug credit	15,385	10,110
Capitalized license fee	2,651	2,492
Stock-based compensation	9,150	6,621
Deferred revenue	1,901
Other	2,976	2,267
Gross deferred tax assets	158,638	134,204
Valuation allowance	(158,211)	(133,596)
Net deferred tax assets	427	608
Deferred Tax Liabilities:
Operating lease right-of-use asset and other	(427)	(608)
Total deferred tax liabilities:	$ (427)	$ (608)

Income Tax - Operating loss carryforward (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Operating loss carryforwards
Increase decrease in valuation allowance	$ 24,615	$ 40,653
Federal net operating loss carryforwards	422,328
State net operating loss carryforwards	385,092
Federal orphan drug credit related to qualifying research	15,385
Accrued interest or penalties related to uncertain tax positions	0	$ 0
Net operating loss indefinite carryforwards	349,162
Research tax credits \| Federal
Operating loss carryforwards
Research tax credits	10,161
Research tax credits \| State
Operating loss carryforwards
Research tax credits	$ 4,197

Retirement Plan (Details) - USD ($) $ in Thousands	12 Months Ended
Retirement Plan (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Retirement Plan
Percentage Company matches of eligible employee contributions	100.00%
Percentage of employee contributions matched by company	4.00%
Company contributions to retirement plan	$ 886	$ 321	$ 0

Subsequent Events (Details) - shares					1 Months Ended
Subsequent Events (Details) - shares	Mar. 01, 2022	Feb. 09, 2022	Feb. 21, 2021	Oct. 18, 2019	Feb. 28, 2021
Subsequent events
Issuance of stock (in shares)			5,750,000	9,324,324	5,750,000
Subsequent event \| 2022 Employment Inducement Plan
Subsequent events
Common stock reserved for issuance	1,000,000	1,000,000
Vesting period of stock option awards		4 years
Expiration period		10 years
Subsequent event \| 2022 Employment Inducement Plan \| Stock options
Subsequent events
Issuance of stock (in shares)	0
Subsequent event \| 2022 Employment Inducement Plan \| Restricted stock units
Subsequent events
Issuance of stock (in shares)	0