Rhythm Pharmaceuticals, Inc 10-Q for FY2024 Q3

Rhythm Pharmaceuticals, Inc. (RYTM)

10-Q 2024-11-06 For: 2024-09-30

Added on April 08, 2026

About this 10-Q

Rhythm Pharmaceuticals, Inc filed this 10-Q on November 6, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $33.25M; up 47.8% from $22.5M a year earlier
Net loss: $43.64M; compared with a net loss of $44.16M a year earlier
Diluted EPS: -$0.73; compared with -$0.76 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 Convertible Preferred Stock and 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	28

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	41

	Item 4. Controls and Procedures	41

PART II	OTHER INFORMATION

	Item 1. Legal Proceedings	43

	Item 1A. Risk Factors	43

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	105

	Item 3. Defaults Upon Senior Securities	106

	Item 4. Mine Safety Disclosure	106

	Item 5. Other Information	106

	Item 6. Exhibits	106

SIGNATURES		107


	September 30,		December 31,
	2024		2023

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



	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenues:
Product revenue, net	$	33,251	$	22,504	$	88,296	$	53,194
Total revenues		33,251		22,504		88,296		53,194
Costs and expenses:
Cost of sales		3,828		2,412		9,581		6,069
Research and development		37,931		33,570		196,789		105,059
Selling, general, and administrative		35,377		30,475		106,174		85,158
Total costs and expenses		77,136		66,457		312,544		196,286
Loss from operations		(43,885)		(43,953)		(224,248)		(143,092)
Other income (expense):
Other income (expense), net		1,088		(159)		2,434		(369)
Gain on settlement of forward contract		—		—		8,900		—
Interest expense		(5,242)		(3,149)		(15,156)		(9,342)
Interest income		4,054		3,466		11,196		10,126
Total other income (expense), net		(100)		158		7,374		415
Loss before income taxes		(43,985)		(43,795)		(216,874)		(142,677)
Provision (benefit) for income taxes		(344)		368		436		368
Net loss	$	(43,641)	$	(44,163)	$	(217,310)	$	(143,045)
Accrued dividends on convertible preferred stock		(1,329)		—		(2,631)		—
Net loss attributable to common stockholders	$	(44,970)	$	(44,163)	$	(219,941)	$	(143,045)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.73)	$	(0.76)	$	(3.62)	$	(2.50)

Weighted-average common shares outstanding, basic and diluted		61,219,918		57,874,960		60,793,329		57,154,803

Other comprehensive loss:
Net loss attributable to common stockholders	$	(44,970)	$	(44,163)	$	(219,941)	$	(143,045)
Foreign currency translation adjustment		(602)		76		(975)		49
Unrealized (loss) gain, net on marketable securities, net of tax		615		(175)		237		(70)
Comprehensive loss	$	(44,957)	$	(44,262)	$	(220,679)	$	(143,066)


									Accumulated
	Series A Convertible						Additional		Other				Total
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance at December 31, 2023	—		—	59,426,559	$	59	$	1,064,302	$	134	$	(894,736)	$	169,759
Stock-based compensation expense	—		—	—		—		7,767		—		—		7,767
Issuance of common stock in connection with ESPP	—		—	28,495		—		673		—		—		673
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	1,077,271		1		6,352		—		—		6,353
Issuance of common stock as consideration for LGC license	—		—	432,143		—		18,716		—		—		18,716
Foreign currency translation adjustment	—		—	—		—		—		(71)		—		(71)
Unrealized loss on marketable securities	—		—	—		—		—		(244)		—		(244)
Net loss	—		—	—		—		—		—		(141,372)		(141,372)
Balance at March 31, 2024	—	$	—	60,964,468	$	60	$	1,097,810	$	(181)	$	(1,036,108)	$	61,581
Issuance of Series A Preferred Stock, net of $2,250 of issuance costs	150,000		138,850	—		—		—		—		—		—
Stock-based compensation expense	—		—	—		—		10,358		—		—		10,358
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	131,481		—		1,403		—		—		1,403
Accretion of preferred stock dividends	—		1,302	—		—		(1,302)		—		—		(1,302)
Foreign currency translation adjustment	—		—	—		—		—		(302)		—		(302)
Unrealized loss on marketable securities	—		—	—		—		—		(134)		—		(134)
Net loss	—		—	—		—		—		—		(32,261)		(32,261)
Balance at June 30, 2024	150,000	$	140,152	61,095,949	$	60	$	1,108,269	$	(617)	$	(1,068,369)	$	39,343
Stock-based compensation expense				—		—		11,001		—		—		11,001
Issuance of common stock in connection with ESPP	—		—	16,059		—		597		—		—		597
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	324,243		1		5,230		—		—		5,231
Accretion of preferred stock dividends	—		1,329	—		—		(1,329)		—		—		(1,329)
Foreign currency translation adjustment	—		—	—		—		—		(602)		—		(602)
Unrealized gain on marketable securities	—		—	—		—		—		615		—		615
Net loss	—		—	—		—		—		—		(43,641)		(43,641)
Balance at September 30, 2024	150,000	$	141,481	61,436,251	$	61	$	1,123,768	$	(604)	$	(1,112,010)	$	11,215

Balance at December 31, 2022	—		—	56,612,429		56		974,356		(92)		(710,058)		264,262
Stock-based compensation expense	—		—	—		—		6,376		—		—		6,376
Issuance of common stock in connection with ESPP	—		—	32,169		—		665		—		—		665
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	207,806		—		553		—		—		553
Foreign currency translation adjustment	—		—	—		—		—		21		—		21
Net unrealized gains on short-term investments	—		—	—		—		—		65		—		65
Net loss	—		—	—		—		—		—		(52,179)		(52,179)
Balance at March 31, 2023	—	$	—	56,852,404	$	56	$	981,950	$	(6)	$	(762,237)	$	219,763
Stock-based compensation expense	—		—	—		—		8,891		—		—		8,891
Issuance of common stock in connection with ESPP	—		—			—		—		—		—		—
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	43,664		1		341		—		—		342
Issuance of common stock upon completion of public offering, net of offering costs	—		—											—
Foreign currency translation adjustment	—		—	—		—		—		(48)		—		(48)
Net unrealized gains on short-term investments	—		—	—		—		—		40		—		40
Net loss	—		—	—		—		—		—		(46,703)		(46,703)
Balance at June 30, 2023	—	$	—	56,896,068	$	57	$	991,182	$	(14)	$	(808,940)	$	182,285
Stock-based compensation expense	—		—	—		—		8,612		—		—		8,612
Issuance of common stock in connection with ESPP	—		—	17,650		—		388		—		—		388
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	—		—	156,389		—		1,576		—		—		1,576
Issuance of common stock upon completion of ATM equity offering, net of offering costs	—		—	2,019,245		2		48,873		—		—		48,875
Foreign currency translation adjustment	—		—	—		—		—		76		—		76
Net unrealized losses on short-term investments	—		—	—		—		—		(175)		—		(175)
Net loss	—		—	—		—		—		—		(44,163)		(44,163)
Balance at September 30, 2023	—	$	—	59,089,352	$	59	$	1,050,631	$	(113)	$	(853,103)	$	197,474


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


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


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


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


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


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


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


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

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


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


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


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


	Three Months Ended
	September 30,				Change
	2024		2023		$		%

	(in thousands)
Statement of Operations Data:
Product revenue, net	$	33,251	$	22,504	$	10,747	48	%
Costs and expenses:
Cost of sales		3,828		2,412		1,416	59	%
Research and development		37,931		33,570		4,361	13	%
Selling, general, and administrative		35,377		30,475		4,902	16	%
Total costs and expenses		77,136		66,457		10,679	16	%
Loss from operations		(43,885)		(43,953)		68	(0)	%
Other income (expense), net		(100)		158		(258)	(164)	%
Loss before income taxes		(43,985)		(43,795)		(190)	0	%
Provision for income taxes		(344)		368		(712)	(193)	%
Net loss	$	(43,641)	$	(44,163)	$	522	(1)	%


		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.	8-K	12/18/2023	3.1
3.3	Certificate of Designations	8-K	04/16/2024	3.1
3.4	Amended and Restated Certificate of Designations	10-Q	05/07/2024	3.4
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).
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	RHYTHM PHARMACEUTICALS, INC.

Dated: November 6, 2024	By:	/s/ David P. Meeker, M.D.
		Name: David P. Meeker, M.D.
		Title: President and Chief Executive Officer
		(Principal Executive Officer)

Dated: November 6, 2024	By:	/s/ Hunter C. Smith
		Name: Hunter C. Smith
		Title: Chief Financial Officer and Treasurer
		(Principal Financial Officer)


Date: November 6, 2024

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

ov
Date: November 6, 2024

/s/ Hunter C. Smith
Name: Hunter C. Smith Title: Chief Financial Officer and Treasurer (Principal Financial Officer)

eith
/s/ David P. Meeker, M.D.
Name: David P. Meeker, M.D.
Title: President and Chief Executive Officer (Principal Executive Officer)

November 6, 2024