Rhythm Pharmaceuticals, Inc 10-Q for FY2022 Q3

Rhythm Pharmaceuticals, Inc. (RYTM)

10-Q 2022-11-08 For: 2022-09-30

Added on April 08, 2026

About this 10-Q

Rhythm Pharmaceuticals, Inc filed this 10-Q on November 8, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $40.86M; compared with a net loss of $35.11M a year earlier
Diluted EPS: -$0.79; compared with -$0.70 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	21

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4. Controls and Procedures	35

PART II	OTHER INFORMATION	35

	Item 1. Legal Proceedings	35

	Item 1A. Risk Factors	36

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	94

	Item 3. Defaults Upon Senior Securities	94

	Item 4. Mine Safety Disclosure	94

	Item 5. Other Information	94

	Item 6. Exhibits	95

SIGNATURES		96



	September 30,		December 31,
	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	185,087	$	59,248
Short-term investments		162,708		235,607
Accounts receivable, net		3,328		1,025
Prepaid expenses and other current assets		10,751		12,507
Total current assets		361,874		308,387
Property and equipment, net		2,426		2,813
Right-of-use asset		1,273		1,522
Intangible assets, net		8,097		4,658
Restricted cash		328		328
Other long-term assets		15,616		11,815
Total assets	$	389,614	$	329,523
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,933	$	5,737
Accrued expenses and other current liabilities		25,741		30,084
Deferred revenue		1,760		7,000
Lease liability		664		606
Total current liabilities		33,098		43,427
Long-term liabilities:
Deferred royalty obligation		72,961		—
Lease liability		1,440		1,945
Derivative liability		920		—
Total liabilities		108,419		45,372
Stockholders’ equity:
Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021		—		—
Common stock, $0.001 par value: 120,000,000 shares authorized; 55,756,256 and 50,283,574 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		56		50
Additional paid-in capital		949,043		813,041
Accumulated other comprehensive loss		(339)		(1)
Accumulated deficit		(667,565)		(528,939)
Total stockholders’ equity		281,195		284,151
Total liabilities and stockholders’ equity	$	389,614	$	329,523



	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Product revenue, net	$	4,284	$	1,028	$	8,094	$	1,337
License revenue		—		—		6,754		—
Costs and expenses:
Cost of sales		497		222		1,105		363
Research and development		21,116		27,539		85,082		72,554
Selling, general, and administrative		21,938		17,507		65,715		47,490
Total costs and expenses		43,551		45,268		151,902		120,407
Loss from operations		(39,267)		(44,240)		(137,054)		(119,070)
Other income:
Other expense		(370)		—		(370)		100,000
Interest expense		(2,144)		—		(2,190)		—
Interest income		920		138		988		313
Total other (expense) income, net		(1,594)		138		(1,572)		100,313
Loss before taxes		(40,861)		(44,102)		(138,626)		(18,757)
(Benefit from) provision for income taxes		—		(8,995)		—		7,989
Net loss	$	(40,861)	$	(35,107)	$	(138,626)	$	(26,746)
Net loss per share, basic and diluted	$	(0.79)	$	(0.70)	$	(2.73)	$	(0.54)
Weighted-average common shares outstanding, basic and diluted		51,400,922		50,246,303		50,712,452		49,374,336

Other comprehensive loss:
Net loss	$	(40,861)	$	(35,107)	$	(138,626)	$	(26,746)
Reclassification of losses on RareStone equity into net loss		300		—		—		—
Unrealized gain (loss), net on marketable securities		267		—		(338)		(107)
Comprehensive loss	$	(40,294)	$	(35,107)	$	(138,964)	$	(26,853)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance at December 31, 2021	50,283,574	$	50	$	813,041	$	(1)	$	(528,939)	$	284,151
Stock-based compensation expense	—		—		4,611		—		—		4,611
Issuance of common stock in connection with ESPP	61,518		—		399		—		—		399
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	48,639		—		—		—		—		—
Unrealized loss on marketable securities	—		—		—		(628)		—		(628)
Net loss	—		—		—		—		(52,764)		(52,764)
Balance at March 31, 2022	50,393,731		50		818,051		(629)		(581,703)		235,769
Stock-based compensation expense	—		—		5,137		—		—		5,137
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	60,439		—		—		—		—		—
Unrealized gain on marketable securities	—		—		—		23		—		23
Unrealized loss on RareStone equity	—		—		—		(300)		—		(300)
Net loss	—		—		—		—		(45,001)		(45,001)
Balance at June 30, 2022	50,454,170		50		823,188		(906)		(626,704)		195,628
Stock compensation expense	—		—		4,796		—		—		4,796
Issuance of common stock in connection with ESPP	31,414		—		227		—		—		227
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	470,672		1		3,863		—		—		3,864
Issuance of common stock upon completion of public offering, net of offering costs	4,800,000		5		116,969		—		—		116,974
Unrealized gain on marketable securities	—		—		—		267		—		267
Reclassification of losses on RareStone equity into net loss	—		—		—		300		—		300
Net loss	—		—		—		—		(40,861)		(40,861)
Balance at September 30, 2022	55,756,256	$	56	$	949,043	$	(339)	$	(667,565)	$	281,195

Balance at December 31, 2020	44,235,903	$	44	$	625,762	$	49	$	(459,327)	$	166,528
Stock-based compensation expense	—		—		5,191		—		—		5,191
Issuance of common stock in connection with ESPP	17,000		—		388		—		—		388
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units	198,855		—		3,466		—		—		3,466
Issuance of common stock upon completion of public offering, net of offering costs	5,750,000		6		161,725		—		—		161,731
Unrealized loss on marketable securities	—		—		—		(107)		—		(107)
Net income	—		—		—		—		43,750		43,750
Balance at March 31, 2021	50,201,758		50		796,532		(58)		(415,577)		380,947
Stock compensation expense	—		—		5,669		—		—		5,669
Issuance of common stock in connection with exercise of stock options	24,981		—		383		—		—		383
Unrealized gain on marketable securities	—		—		—		79		—		79
Net loss	—		—		—		—		(35,389)		(35,389)
Balance at June 30, 2021	50,226,739		50		802,584		21		(450,966)		351,689
Stock compensation expense	—		—		5,268		—		—		5,268
Issuance of common stock in connection with ESPP	21,051				233						233
Issuance of common stock in connection with exercise of stock options	20,522		—		180		—		—		180
Net loss	—		—		—		—		(35,107)		(35,107)
Balance at September 30, 2021	50,268,312	$	50	$	808,265	$	21	$	(486,073)	$	322,263


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Stock options		6,584,725		5,966,664		6,584,725		5,966,664
Restricted stock units		726,080		439,957		726,080		439,957
Performance stock units		811,128		—		811,128		—
Potential common shares		8,121,933		6,406,621		8,121,933		6,406,621


	Fair value Measurements as of
	September 30, 2022 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Commercial Paper	$	—	$	34,028	$	—	$	34,028
Money Market Funds		115,208		—		—		115,208
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		162,708		—		162,708
Total	$	115,208	$	196,736	$	—	$	311,944
Liabilities:
Derivative on Royalty Financing	$	—	$	—	$	920	$	920
Total	$	—	$	—	$	920	$	920


	Fair value Measurements as of
	December 31, 2021 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Corporate Debt Securities and 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


	September 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	163,047	$	—	$	(339)	$	162,708
	$	163,047	$	—	$	(339)	$	162,708


	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


	Operating Lease
2022	$	207
2023		834
2024		851
2025		502
Thereafter		—
Total operating lease payments		2,394
Less: imputed interest		290
Total operating lease liability	$	2,104


	Three Months Ended
	September 30,				Change
	2022		2021		$		%

	(in thousands)
Statement of Operations Data:
Product revenue, net	$	4,284	$	1,028	$	3,256	317	%
Costs and expenses:
Cost of sales		497		222		275	124	%
Research and development		21,116		27,539		(6,423)	(23)	%
Selling, general, and administrative		21,938		17,507		4,431	25	%
Total costs and expenses		43,551		45,268		(1,717)	(4)	%
Loss from operations		(39,267)		(44,240)		4,973	(11)	%
Other (expense) income, net		(1,594)		138		(1,732)	(1,255)	%
Loss before taxes		(40,861)		(44,102)		3,241	(7)	%
Benefit from income taxes		—		(8,995)		8,995	(100)	%
Net loss	$	(40,861)	$	(35,107)	$	(5,754)	16	%


		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	12/11/2020	3.1

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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2022	$	214
2023		855
2024		855
2025		855
2026		855
Thereafter		4,463
Total	$	8,097


	RHYTHM PHARMACEUTICALS, INC.

Dated: November 8, 2022	By:	/s/ David P. Meeker, M.D.
		Name: David P. Meeker, M.D.
		Title: President and Chief Executive Officer
		(Principal Executive Officer)

Dated: November 8, 2022	By:	/s/ Hunter C. Smith
		Name: Hunter C. Smith
		Title: Chief Financial Officer and Treasurer
		(Principal Financial Officer)


Date: November 8, 2022

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

ov
Date: November 8, 2022

/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 8, 2022