Rhythm Pharmaceuticals, Inc 10-Q for FY2024 Q2

Rhythm Pharmaceuticals, Inc. (RYTM)

10-Q 2024-08-06 For: 2024-06-30

Added on April 08, 2026

About this 10-Q

Rhythm Pharmaceuticals, Inc filed this 10-Q on August 6, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

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

Revenue: $29.08M; up 51.3% from $19.22M a year earlier
Net loss: $32.26M; compared with a net loss of $46.7M a year earlier
Diluted EPS: -$0.55; compared with -$0.82 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	26

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	39

	Item 4. Controls and Procedures	39

PART II	OTHER INFORMATION

	Item 1. Legal Proceedings	41

	Item 1A. Risk Factors	41

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	103

	Item 3. Defaults Upon Senior Securities	103

	Item 4. Mine Safety Disclosure	103

	Item 5. Other Information	103

	Item 6. Exhibits	104

SIGNATURES		105


	June 30,		December 31,
	2024		2023

Assets
Current assets:
Cash and cash equivalents	$	161,669	$	60,081
Short-term investments		157,461		215,765
Accounts receivable, net		17,598		14,867
Inventory		11,994		8,624
Prepaid expenses and other current assets		8,644		8,931
Total current assets		357,366		308,268
Property and equipment, net		973		1,341
Right-of-use asset		3,696		781
Intangible assets, net		6,601		7,028
Restricted cash		460		328
Other long-term assets		12,750		14,999
Total assets	$	381,846	$	332,745
Liabilities, Convertible Preferred Stock and Stockholders’ equity
Current liabilities:
Accounts payable	$	4,543	$	4,885
Accrued expenses and other current liabilities		48,077		48,262
Deferred revenue		1,286		1,286
Lease liability		816		770
Total current liabilities		54,722		55,203
Long-term liabilities:
Deferred royalty obligation		108,372		106,143
Lease liability, non-current		3,301		490
Derivative liability		360		1,150
Other long-term liabilities		35,596		—
Total liabilities		202,351		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 June 30, 2024 and December 31, 2023, respectively. Liquidation preference of $150,000 as of June 30, 2024.		140,152		—
Stockholders’ equity:
Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2024 and December 31, 2023		—		—
Common stock, $0.001 par value: 120,000,000 shares authorized; 61,095,949 and 59,426,559 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		60		59
Additional paid-in capital		1,108,269		1,064,302
Accumulated other comprehensive (loss) income		(617)		134
Accumulated deficit		(1,068,369)		(894,736)
Total stockholders’ equity		39,343		169,759
Total liabilities, convertible preferred stock and stockholders’ equity	$	381,846	$	332,745



	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Revenues:
Product revenue, net	$	29,078	$	19,221	$	55,045	$	30,691
Total revenues		29,078		19,221		55,045		30,691
Costs and expenses:
Cost of sales		2,947		2,236		5,753		3,657
Research and development		30,194		33,543		158,858		71,487
Selling, general, and administrative		36,415		30,046		70,797		54,674
Total costs and expenses		69,556		65,825		235,408		129,818
Loss from operations		(40,478)		(46,604)		(180,363)		(99,127)
Other income (expense):
Other income (expense), net		302		(17)		824		34
Gain on settlement of forward contract		8,900		—		8,900		—
Interest expense		(4,603)		(3,303)		(9,358)		(6,449)
Interest income		4,097		3,221		7,143		6,660
Total other income (expense), net		8,696		(99)		7,509		245
Loss before income taxes		(31,782)		(46,703)		(172,854)		(98,882)
Provision for income taxes		479		—		779		—
Net loss	$	(32,261)	$	(46,703)	$	(173,633)	$	(98,882)
Accrued dividends on convertible preferred stock		(1,302)		—		(1,302)		—
Net loss attributable to common stockholders	$	(33,563)	$	(46,703)	$	(174,935)	$	(98,882)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.55)	$	(0.82)	$	(2.89)	$	(1.74)

Weighted-average common shares outstanding, basic and diluted		61,011,824		56,867,662		60,577,691		56,788,757

Other comprehensive loss:
Net loss attributable to common stockholders	$	(33,563)	$	(46,703)	$	(174,935)	$	(98,882)
Foreign currency translation adjustment		(302)		(48)		(373)		(27)
Unrealized (loss) gain, net on marketable securities, net of tax		(134)		40		(378)		105
Comprehensive loss	$	(33,999)	$	(46,711)	$	(175,686)	$	(98,804)


									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

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Stock options		7,044,823		6,992,200		7,044,823		6,992,200
Restricted stock units		2,036,409		1,131,632		2,036,409		1,131,632
Performance stock units		—		599,720		—		599,720
Common stock reserved for the conversion of Series A convertible preferred stock		3,125,000		—		3,125,000		—
Potential common shares		12,206,232		8,723,552		12,206,232		8,723,552


	Fair Value Measurements as of
	June 30, 2024 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Commercial Paper	$	—	$	51,230	$	—	$	51,230
Money market funds	$	98,254	$	—	$	—	$	98,254
Marketable securities:
Corporate debt securities and commercial paper		—		157,461		—		157,461
Total	$	98,254	$	208,691	$	—	$	306,945
Liabilities:
Derivative liability	$	—	$	—	$	360	$	360
Total	$	—	$	—	$	360	$	360


	Fair Value Measurements as of
	December 31, 2023 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Commercial paper	$	—	$	—	$	—	$	—
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


	June 30, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	157,565	$	10	$	(115)	$	157,460
	$	157,565	$	10	$	(115)	$	157,460


	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	$	429
2025		456
2026		1,103
2027		1,125
2028		1,148
2029		1,171
2030		691
Total operating lease payments		6,123
Less: imputed interest		(2,006)
Total operating lease liability	$	4,117


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

Capitalized Milestones	11	$	9,000	$	(2,399)	$	6,601	$	9,000	$	(1,972)	$	7,028


	Three Months Ended
	June 30,				Change
	2024		2023		$		%

	(in thousands)
Statement of Operations Data:
Product revenue, net	$	29,078	$	19,221	$	9,857	51	%
Costs and expenses:
Cost of sales		2,947		2,236		711	32	%
Research and development		30,194		33,543		(3,349)	(10)	%
Selling, general, and administrative		36,415		30,046		6,369	21	%
Total costs and expenses		69,556		65,825		3,731	6	%
Loss from operations		(40,478)		(46,604)		6,126	(13)	%
Other income (expense), net		8,696		(99)		8,795	(8,884)	%
Loss before income taxes		(31,782)		(46,703)		14,921	(32)	%
Provision for income taxes		479		—		479	100	%
Net loss	$	(32,261)	$	(46,703)	$	14,442	(31)	%


	June 30,		December 31,
	2024		2023
Raw Materials	$	4,145	$	4,625
WIP		1,986		1,104
Finished Goods		5,863		2,895
Total Inventory	$	11,994	$	8,624


2024	$	427
2025		855
2026		855
2027		855
2028		855
Thereafter		2,754
Total	$	6,601


		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
10.1*	Non-Employee Director Compensation Program.
10.2	Investment Agreement dated April 1, 2024, by and between Rhythm Pharmaceuticals, Inc., certain affiliates of Perceptive Advisors LLC, and certain other investors	8-K	04/01/2024	10.1
10.3	Rhythm Pharmaceuticals, Inc. 2017 Equity Incentive Plan Performance Unit Agreement	10-Q	05/07/2024	10.4
10.4	Third Amendment to Lease, dated May 2, 2024, by and between the Registrant and 500 Boylston & 222 Berkeley Owner (DE) LLC.	10-Q	05/07/2024	10.5
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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101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
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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).


	RHYTHM PHARMACEUTICALS, INC.

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


Date: August 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: August 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)

August 6, 2024