Rhythm Pharmaceuticals, Inc 10-Q for FY2020 Q3

Rhythm Pharmaceuticals, Inc. (RYTM)

10-Q 2020-11-02 For: 2020-09-30

Added on April 08, 2026

About this 10-Q

Rhythm Pharmaceuticals, Inc filed this 10-Q on November 2, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $33.82M; compared with a net loss of $36M a year earlier

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Delaware	46-2159271
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	RYTM	The Nasdaq Stock Market LLC (Nasdaq Global Market)


Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☒


		Page No.
PART I	FINANCIAL INFORMATION

	Item 1. Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss	4


	Condensed Consolidated Statements of Stockholders’ Equity	5


	Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4. Controls and Procedures	24

PART II	OTHER INFORMATION	25

	Item 1. Legal Proceedings	25

	Item 1A. Risk Factors	25

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	87

	Item 3. Defaults Upon Senior Securities	87

	Item 4. Mine Safety Disclosure	87

	Item 5. Other Information	87

	Item 6. Exhibits	88

SIGNATURES		89



	September 30,		December 31,
	2020		2019

Assets
Current assets:
Cash and cash equivalents	$	67,670	$	62,294
Short-term investments		134,114		230,165
Prepaid expenses and other current assets		8,130		9,945
Total current assets		209,914		302,404
Property and equipment, net		3,289		3,671
Right-of-use asset		1,871		2,045
Restricted cash		403		403
Total assets	$	215,477	$	308,523
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,793	$	10,415
Accrued expenses and other current liabilities		11,536		13,530
Lease liability		519		472
Total current liabilities		15,848		24,417
Long-term liabilities:
Lease liability		2,692		3,086
Total liabilities		18,540		27,503
Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2020 and December 31, 2019		—		—
Common stock, $0.001 par value: 120,000,000 shares authorized; 44,204,745 and 43,996,753 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		44		44
Additional paid-in capital		621,085		606,307
Accumulated other comprehensive income		238		—
Accumulated deficit		(424,430)		(325,331)
Total stockholders’ equity		196,937		281,020
Total liabilities and stockholders’ equity	$	215,477	$	308,523



	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Operating expenses:
Research and development	$	22,995	$	26,572	$	68,496	$	84,641
Selling, general, and administrative		11,289		10,535		33,006		27,135
Total operating expenses		34,284		37,107		101,502		111,776
Loss from operations		(34,284)		(37,107)		(101,502)		(111,776)
Other income (expense):
Interest income, net		466		1,104		2,403		4,003
Total other income, net		466		1,104		2,403		4,003
Net loss	$	(33,818)	$	(36,003)	$	(99,099)	$	(107,773)
Net loss per share, basic and diluted	$	(0.77)	$	(1.04)	$	(2.25)	$	(3.13)
Weighted-average common shares outstanding, basic and diluted		44,142,334		34,541,765		44,097,178		34,470,995

Other comprehensive loss:
Net loss	$	(33,818)	$	(36,003)	$	(99,099)	$	(107,773)
Unrealized (loss) gain on marketable securities		(392)		—		238		—
Comprehensive loss	$	(34,210)	$	(36,003)	$	(98,861)	$	(107,773)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income		Deficit		Equity


Balance at December 31, 2019	43,996,753	$	44	$	606,307	$	—	$	(325,331)	$	281,020
Stock compensation expense	—		—		5,475		—		—		5,475
Issuance of common stock in connection with ESPP	18,673		—		324		—		—		324
Issuance of common stock in connection with exercise of stock options	72,964		—		383		—		—		383
Unrealized gain on marketable securities	—		—		—		63		—		63
Net loss	—		—		—		—		(34,164)		(34,164)
Balance at March 31, 2020	44,088,390		44		612,489		63		(359,495)		253,101
Stock compensation expense	—		—		3,028		—		—		3,028
Issuance of common stock in connection with exercise of stock options	27,222		—		174		—		—		174
Unrealized gain on marketable securities	—		—		—		567		—		567
Net loss	—		—		—		—		(31,117)		(31,117)
Balance at June 30, 2020	44,115,612		44		615,691		630		(390,612)		225,753
Stock compensation expense	—		—		4,695		—		—		4,695
Issuance of common stock in connection with ESPP	11,379		—		198		—		—		198
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	77,754		—		501		—		—		501
Unrealized loss on marketable securities	—		—		—		(392)		—		(392)
Net loss	—		—		—		—		(33,818)		(33,818)
Balance at September 30, 2020	44,204,745	$	44	$	621,085	$	238	$	(424,430)	$	196,937

Balance at December 31, 2018	34,410,725	$	34	$	430,824	$	—	$	(184,602)	$	246,256
Stock compensation expense	—		—		2,644		—		—		2,644
Issuance of common stock in connection with ESPP	12,105		—		295		—		—		295
Issuance of common stock in connection with exercise of stock options	7,811		—		54		—		—		54
Unrealized gain on marketable securities	—		—		214		—		—		214
Net loss	—		—		—		—		(28,974)		(28,974)
Balance at March 31, 2019	34,430,641		34		434,031		—		(213,576)		220,489
Stock compensation expense	—		—		3,272		—		—		3,272
Issuance of common stock in connection with exercise of stock options	66,901		—		465		—		—		465
Unrealized gain on marketable securities	—		—		37		—		—		37
Net loss	—		—		—		—		(42,796)		(42,796)
Balance at June 30, 2019	34,497,542		34		437,805		—		(256,372)		181,467
Stock compensation expense	—		—		3,035		—		—		3,035
Issuance of common stock in connection with ESPP	13,766		—		263		—		—		263
Issuance of common stock in connection with exercise of stock options	67,256		1		433		—		—		434
Unrealized loss on marketable securities	—		—		(81)		—		—		(81)
Net loss	—		—		—		—		(36,003)		(36,003)
Balance at September 30, 2019	34,578,564	$	35	$	441,455	$	—	$	(292,375)	$	149,115


	Fair value Measurements as of
	September 30, 2020 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	21,249	$	—	$	21,249
U.S. Treasury Securities and Money Market Funds	$	39,657	$	—	$	—	$	39,657
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		134,114		—		134,114
Total	$	39,657	$	155,363	$	—	$	195,020


	Fair value Measurements as of
	December 31, 2019 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and Commercial Paper	$	—	$	8,885	$	—	$	8,885
Money Market Funds		53,014		—		—		53,014
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		230,165		—		230,165
Total	$	53,014	$	239,050	$	—	$	292,064


	September 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	133,876	$	238	$	—	$	134,114
	$	133,876	$	238	$	—	$	134,114


	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	230,155	$	54	$	(44)	$	230,165
	$	230,155	$	54	$	(44)	$	230,165


	Operating Lease
Remainder of 2020	$	199
2021		802
2022		818
2023		834
2024		851
Thereafter		502
Total operating lease payments		4,006
Less: imputed interest		795
Total operating lease liability	$	3,211


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Research and development summary	2020		2019		2020		2019
Research and development expense	$	22,995	$	26,572	$	68,496	$	84,641


	Three Months Ended
	September 30,				Change
	2020		2019		$		%

	(in thousands)
Statement of Operations Data:
Operating Expenses:
Research and development	$	22,995	$	26,572	$	(3,577)	(13)	%
Selling, general, and administrative		11,289		10,535		754	7	%
Total operating expenses		34,284		37,107		(2,823)	(8)	%
Loss from operations		(34,284)		(37,107)		2,823	(8)	%
Other income, net		466		1,104		(638)	(58)	%
Net loss	$	(33,818)	$	(36,003)	$	2,185	(6)	%


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Number
3.1	Amended and Restated Certificate of Incorporation.	10-Q	05/04/2020	3.1
3.2	Amended and Restated Bylaws.	S-1/A	09/25/2017	3.5
10.1*	Offer Letter, dated September 4, 2020, and Indefinite Term Employment Contract, dated October 5, 2020, between Rhythm Pharmaceuticals, Inc. and Yann Mazabraud.
10.2*	Separation Agreement, dated September 30, 2020, between Rhythm Pharmaceuticals, Inc. and Nithya Desikan.
31.1*	Certification of the Principal Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2*	Certification of the Principal Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.1**	Certification of the Principal Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2**	Certification of the Principal Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
101.INS*	Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


Dated: November 2, 2020	By:	/s/ David P. Meeker, M.D.
		Name: David P. Meeker, M.D.
		Title: President and Chief Executive Officer
		(Principal Executive Officer)

Dated: November 2, 2020	By:	/s/ Hunter C. Smith
		Name: Hunter C. Smith
		Title: Chief Financial Officer, Treasurer and Secretary
		(Principal Financial and Accounting Officer)