Rhythm Pharmaceuticals, Inc 10-Q for FY2022 Q2

Rhythm Pharmaceuticals, Inc. (RYTM)

10-Q 2022-08-03 For: 2022-06-30

Added on April 08, 2026

About this 10-Q

Rhythm Pharmaceuticals, Inc filed this 10-Q on August 3, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

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

Net loss: $45M; compared with a net loss of $35.39M a year earlier
Diluted EPS: -$0.89; 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	34

	Item 4. Controls and Procedures	34

PART II	OTHER INFORMATION	35

	Item 1. Legal Proceedings	35

	Item 1A. Risk Factors	35

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	92

	Item 3. Defaults Upon Senior Securities	92

	Item 4. Mine Safety Disclosure	92

	Item 5. Other Information	92

	Item 6. Exhibits	93

SIGNATURES		94



	June 30,		December 31,
	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	113,207	$	59,248
Short-term investments		122,389		235,607
Accounts receivable, net		1,707		1,025
Prepaid expenses and other current assets		12,029		12,507
Total current assets		249,332		308,387
Property and equipment, net		2,559		2,813
Right-of-use asset		1,359		1,522
Intangible assets, net		8,311		4,658
Restricted cash		328		328
Other long-term assets		15,786		11,815
Total assets	$	277,675	$	329,523
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,012	$	5,737
Accrued expenses and other current liabilities		35,605		30,084
Deferred revenue		2,309		7,000
Lease liability		644		606
Total current liabilities		44,570		43,427
Long-term liabilities:
Deferred royalty obligation		34,273		—
Lease liability		1,614		1,945
Derivative liability		1,590		—
Total liabilities		82,047		45,372
Stockholders’ equity:
Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Common stock, $0.001 par value: 120,000,000 shares authorized; 50,454,170 and 50,283,574 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		50		50
Additional paid-in capital		823,188		813,041
Accumulated other comprehensive loss		(906)		(1)
Accumulated deficit		(626,704)		(528,939)
Total stockholders’ equity		195,628		284,151
Total liabilities and stockholders’ equity	$	277,675	$	329,523



	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Product revenue, net	$	2,312	$	274	$	3,810	$	309
License revenue		6,754		—		6,754		—
Costs and expenses:
Cost of sales		378		137		608		141
Research and development		31,456		25,104		63,966		45,015
Selling, general, and administrative		22,328		15,465		43,777		29,983
Total costs and expenses		54,162		40,706		108,351		75,139
Loss from operations		(45,096)		(40,432)		(97,787)		(74,830)
Other income:
Other income		—		—		—		100,000
Interest income, net		95		21		22		175
Total other income, net		95		21		22		100,175
(Loss) income before taxes		(45,001)		(40,411)		(97,765)		25,345
(Benefit from) provision for income taxes		—		(5,022)		—		16,984
Net (loss) income	$	(45,001)	$	(35,389)	$	(97,765)	$	8,361
Net (loss) income per share
Basic	$	(0.89)	$	(0.70)	$	(1.94)	$	0.17
Diluted	$	(0.89)	$	(0.70)	$	(1.94)	$	0.17
Weighted-average common shares outstanding
Basic		50,398,003		50,209,484		50,362,512		48,931,127
Diluted		50,398,003		50,209,484		50,362,512		49,644,704

Other comprehensive (loss) income:
Net (loss) income	$	(45,001)	$	(35,389)	$	(97,765)	$	8,361
Unrealized (loss) income on marketable securities and other long-term assets		(277)		79		(905)		(28)
Comprehensive (loss) income	$	(45,278)	$	(35,310)	$	(98,670)	$	8,333


						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

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock options		7,176,554		5,151,118		7,176,554		4,691,373
Restricted stock units		718,107		185,176		718,107		133,286
Performance stock units		840,564		—		840,564		—
Potential common shares		8,735,225		5,336,294		8,735,225		4,824,659


	Fair value Measurements as of
	June 30, 2022 using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash Equivalents:
Commercial Paper	$	—	$	9,993	$	—	$	9,993
Money Market Funds		61,167		—		—		61,167
Marketable Securities:
Corporate Debt Securities and Commercial Paper		—		122,389		—		122,389
Other Long-term Assets:
RareStone Common Stock		—		—		740		740
Total	$	61,167	$	132,382	$	2,140	$	195,689
Liabilities:
Derivative on Royalty Financing	$	—	$	—	$	1,590	$	1,590
Total	$	—	$	—	$	1,590	$	1,590


	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


	June 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Assets
Corporate debt securities and commercial paper (due within 1 year)	$	122,994	$	—	$	(605)	$	122,389
	$	122,994	$	—	$	(605)	$	122,389


	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	$	412
2023		834
2024		851
2025		502
Thereafter		—
Total operating lease payments		2,599
Less: imputed interest		341
Total operating lease liability	$	2,258


	Three Months Ended
	June 30,				Change
	2022		2021		$		%

	(in thousands)
Statement of Operations Data:
Product revenue, net	$	2,312	$	274	$	2,038	NM
License revenue		6,754		—		6,754	NM
Costs and expenses:
Cost of sales		378		137		241	NM
Research and development		31,456		25,104		6,352	25	%
Selling, general, and administrative		22,328		15,465		6,863	44	%
Total costs and expenses		54,162		40,706		13,456	33	%
Loss from operations		(45,096)		(40,432)		(4,664)	12	%
Other income, net		95		21		74	352	%
Loss before taxes		(45,001)		(40,411)		(4,590)	11	%
Benefit from income taxes		—		(5,022)		5,022	(100)	%
Net loss	$	(45,001)	$	(35,389)	$	(9,612)	27	%


		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
10.1*†	Revenue Interest Financing Agreement, dated June 16, 2022, by and between the Company and entities managed by HealthCare Royalty Management, LLC
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).


2022	$	425
2023		855
2024		855
2025		855
2026		855
Thereafter		4,466
Total	$	8,311


	RHYTHM PHARMACEUTICALS, INC.

Dated: August 3, 2022	By:	/s/ David P. Meeker, M.D.
		Name: David P. Meeker, M.D.
		Title: President and Chief Executive Officer
		(Principal Executive Officer)

Dated: August 3, 2022	By:	/s/ Hunter C. Smith
		Name: Hunter C. Smith
		Title: Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Payment Tiers based on Annual Net Revenues	Applicable Tiered Percentage
A. Portion of Annual Net Revenues less than or equal to $125,000,000	11.5%
B. Portion of Annual Net Revenues exceeding $125,000,000 and less than or equal to $300,000,000	7.5%
C. Portion of Annual Net Revenues in excess of $300,000,000	2.5%

A. Minimum Multiple	B. Reference Date
0.60x	March 31, 2027
1.20x	March 31, 2029


Date: August 3, 2022

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

ov
Date: August 3, 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)

August 3, 2022