Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 23, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity File Number | 001-38223 | ||
Entity Registrant Name | RHYTHM PHARMACEUTICALS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-2159271 | ||
Entity Address, Address Line One | 222 Berkeley Street | ||
Entity Address, Address Line Two | 12th Floor | ||
Entity Address, City or Town | Boston | ||
Entity Address, State or Province | MA | ||
Entity Address, Postal Zip Code | 02116 | ||
City Area Code | 857 | ||
Local Phone Number | 264-4280 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | RYTM | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 887 | ||
Entity Common Stock, Shares Outstanding | 60,140,495 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001649904 | ||
Amendment Flag | false | ||
Auditor Firm ID | 42 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | Boston, Massachusetts | ||
Document Financial Statement Error Correction [Flag] | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 60,081 | $ 127,677 |
Short-term investments | 215,765 | 205,611 |
Accounts receivable, net | 14,867 | 6,224 |
Inventory | 8,624 | 2,917 |
Prepaid expenses and other current assets | 8,931 | 11,807 |
Total current assets | 308,268 | 354,236 |
Property and equipment, net | 1,341 | 2,197 |
Right-of-use asset | 781 | 1,182 |
Intangible assets, net | 7,028 | 7,883 |
Restricted cash | 328 | 328 |
Other long-term assets | 14,999 | 16,655 |
Total assets | 332,745 | 382,481 |
Current liabilities: | ||
Accounts payable | 4,885 | 4,797 |
Accrued expenses and other current liabilities | 48,262 | 32,894 |
Deferred revenue | 1,286 | 1,434 |
Lease liability | 770 | 684 |
Total current liabilities | 55,203 | 39,809 |
Long-term liabilities: | ||
Deferred royalty obligation | 106,143 | 75,810 |
Lease liability, non-current | 490 | 1,260 |
Derivative liability | 1,150 | 1,340 |
Total liabilities | 162,986 | 118,219 |
Stockholders' equity: | ||
Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at December 31, 2023 and December 31, 2022 | ||
Common stock, $0.001 par value: 120,000,000 shares authorized; 59,426,559 and 56,612,429 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 59 | 56 |
Additional paid-in capital | 1,064,302 | 974,356 |
Accumulated other comprehensive income (loss) | 134 | (92) |
Accumulated deficit | (894,736) | (710,058) |
Total stockholders' equity | 169,759 | 264,262 |
Total liabilities and stockholders' equity | $ 332,745 | $ 382,481 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock par value per share | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, authorized | 120,000,000 | 120,000,000 |
Common stock, issued | 59,426,559 | 56,612,429 |
Common stock, outstanding | 59,426,559 | 56,612,429 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Total revenues | $ 77,428 | $ 23,638 | $ 3,154 |
Costs and expenses: | |||
Cost of sales | 9,302 | 2,133 | 599 |
Research and development | 134,951 | 108,630 | 104,128 |
Selling, general, and administrative | 117,532 | 92,032 | 68,486 |
Total costs and expenses | 261,785 | 202,795 | 173,213 |
Loss from operations | (184,357) | (179,157) | (170,059) |
Other income (expense): | |||
Other income (expense), net | 190 | (790) | 100,000 |
Interest expense | (13,892) | (5,201) | |
Interest income | 13,945 | 4,029 | 447 |
Total other income (expense), net | 243 | (1,962) | 100,447 |
Loss before taxes | (184,114) | (181,119) | (69,612) |
Provision for income taxes | 564 | ||
Net loss | $ (184,678) | $ (181,119) | $ (69,612) |
Net loss per share, basic (in dollars per share) | $ (3.20) | $ (3.47) | $ (1.40) |
Net loss per share, diluted (in dollars per share) | $ (3.20) | $ (3.47) | $ (1.40) |
Weighted-average common shares outstanding, basic (in shares) | 57,673,128 | 52,120,701 | 49,600,294 |
Weighted-average common shares outstanding, diluted (in shares) | 57,673,128 | 52,120,701 | 49,600,294 |
Other comprehensive loss: | |||
Net Income (Loss) | $ (184,678) | $ (181,119) | $ (69,612) |
Foreign currency translation adjustment | (140) | ||
Unrealized gain (loss), net on marketable securities | 366 | (91) | (1) |
Comprehensive loss | (184,452) | (181,210) | (69,613) |
Product revenue | |||
Total revenues | 77,428 | 16,884 | 3,154 |
License revenue | |||
Total revenues | $ 0 | $ 6,754 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock At-the-market offering | Common Stock | Additional Paid-In Capital At-the-market offering | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | At-the-market offering | Total |
Beginning balance at Dec. 31, 2020 | $ 44 | $ 625,762 | $ 49 | $ (459,327) | $ 166,528 | |||
Beginning balance (in shares) at Dec. 31, 2020 | 44,235,903 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 20,804 | 20,804 | ||||||
Issuance of common stock in connection with ESPP | 621 | 621 | ||||||
Issuance of common stock in connection with ESPP (in shares) | 38,051 | |||||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units | 4,134 | 4,134 | ||||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares) | 259,620 | |||||||
Issuance of common stock, net of offering costs | $ 6 | 161,720 | 161,726 | |||||
Issuance of common stock, net of offering costs (in shares) | 5,750,000 | |||||||
Net unrealized loss on marketable securities | (50) | (50) | ||||||
Net Income (Loss) | (69,612) | (69,612) | ||||||
Ending balance at Dec. 31, 2021 | $ 50 | 813,041 | (1) | (528,939) | 284,151 | |||
Ending balance (in shares) at Dec. 31, 2021 | 50,283,574 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 19,831 | 19,831 | ||||||
Issuance of common stock in connection with ESPP | 626 | 626 | ||||||
Issuance of common stock in connection with ESPP (in shares) | 92,932 | |||||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units | $ 1 | 9,751 | 9,752 | |||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares) | 855,923 | |||||||
Issuance of common stock, net of offering costs | $ 5 | 131,107 | 131,112 | |||||
Issuance of common stock, net of offering costs (in shares) | 5,380,000 | |||||||
Net unrealized loss on marketable securities | (91) | (91) | ||||||
Net Income (Loss) | (181,119) | (181,119) | ||||||
Ending balance at Dec. 31, 2022 | $ 56 | 974,356 | (92) | (710,058) | 264,262 | |||
Ending balance (in shares) at Dec. 31, 2022 | 56,612,429 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 32,553 | 32,553 | ||||||
Issuance of common stock in connection with ESPP | 1,053 | 1,053 | ||||||
Issuance of common stock in connection with ESPP (in shares) | 49,819 | |||||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units | $ 1 | 7,467 | 7,468 | |||||
Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units (in shares) | 745,066 | |||||||
Foreign currency translation adjustment | (140) | $ (140) | ||||||
Issuance of common stock in connection with exercise of stock options (in shares) | 529,854 | |||||||
Net unrealized gain on marketable securities | 366 | $ 366 | ||||||
Issuance of common stock, net of offering costs | $ 2 | $ 48,873 | $ 48,875 | |||||
Issuance of common stock, net of offering costs (in shares) | 2,019,245 | |||||||
Net Income (Loss) | (184,678) | (184,678) | ||||||
Ending balance at Dec. 31, 2023 | $ 59 | $ 1,064,302 | $ 134 | $ (894,736) | $ 169,759 | |||
Ending balance (in shares) at Dec. 31, 2023 | 59,426,559 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities | |||
Net loss | $ (184,678) | $ (181,119) | $ (69,612) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation expense | 32,553 | 19,831 | 20,804 |
Gain on sale of priority review voucher | (100,000) | ||
Depreciation and amortization | 1,758 | 1,672 | 1,158 |
Non-cash interest expense and amortization of debt issuance costs | 13,360 | 5,389 | |
Non-cash accretion & amortization of short-term investments | (9,835) | (2,314) | |
Non-cash rent expense | 401 | (267) | (250) |
Loss on RareStone equity investment | 1,040 | ||
Change in fair value of embedded derivative liability | (190) | (250) | |
Acquired IPR&D assets classified as investing activities | 5,667 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (8,643) | (5,199) | (1,250) |
Inventory | (5,707) | (2,806) | (11) |
Prepaid expenses and other current assets | 2,876 | 498 | (3,339) |
Deferred revenue | (148) | (6,606) | |
Other long-term assets, net | 1,656 | (4,840) | (11,815) |
Accounts payable, accrued expenses and other liabilities | 14,773 | 1,543 | 18,312 |
Net cash used in operating activities | (136,157) | (173,428) | (146,003) |
Investing activities | |||
Purchases of short-term investments | (354,918) | (251,937) | (524,972) |
Maturities of short-term investments | 354,967 | 284,247 | 361,247 |
Proceeds from sale of priority review voucher | 100,000 | ||
Proceeds from out-license agreement | 7,000 | ||
Payment of milestone obligation under license agreement | (4,000) | (5,000) | |
Acquisition of IPR&D assets, including transaction costs | (5,667) | ||
Purchases of property and equipment | (47) | (281) | (434) |
Net cash (used in) provided by investing activities | (5,665) | 28,029 | (62,159) |
Financing activities | |||
Repayment of deferred royalty obligation | (7,398) | ||
Net proceeds from issuance of common stock | 48,875 | 131,112 | 161,726 |
Proceeds from the exercise of stock options | 7,468 | 9,752 | 4,134 |
Proceeds from issuance of common stock from ESPP | 1,053 | 626 | 621 |
Proceeds from royalty financing agreement, net of issuance costs | 24,370 | 72,338 | |
Net cash provided by financing activities | 74,368 | 213,828 | 166,481 |
Effect of exchange rates on cash | (142) | ||
Net (decrease) increase in cash, cash equivalents and restricted cash | (67,596) | 68,429 | (41,681) |
Cash, cash equivalents and restricted cash at beginning of period | 128,005 | 59,576 | 101,257 |
Cash, cash equivalents and restricted cash at end of period | $ 60,409 | $ 128,005 | $ 59,576 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2023 | |
Nature of Business | |
Nature of Business | 1. Nature of Business Rhythm Pharmaceuticals, Inc. (the “Company” or “we”) is a global, commercial-stage biopharmaceutical company dedicated to transforming the lives of patients and their families living with rare neuroendocrine diseases. We are focused on advancing our melanocortin-4 receptor agonists, including our lead asset, IMCIVREE ® . The Company is a Delaware corporation organized in February 2013 under the name Rhythm Metabolic, Inc., and as of October 2015, under the name Rhythm Pharmaceuticals, Inc. The Company has wholly owned subsidiaries in the US, Ireland, the United Kingdom, the Netherlands, France, Germany, Italy, Spain and Canada. The Company is subject to risks and uncertainties common to commercial-stage companies in the biotechnology industry, including but not limited to, risks associated with the commercialization of approved products, completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Commercialization of approved products will require significant resources and in order to market IMCIVREE, the Company must continue to build its sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even though the Company has an approved product, and even if the Company’s further product development efforts are successful, it is uncertain when, if ever, the Company will realize sufficient revenue from product sales to fund operations. Liquidity The Company has incurred operating losses and negative cash flows from operations since inception. As of December 31, 2023, the Company had an accumulated deficit of $894,736. T he Company has primarily funded these losses through the proceeds from the sales of common and preferred stock, asset sales, royalty financing, out-license arrangements, as well as capital contributions received from the former parent company, Rhythm Holdings LLC. To date, the Company has minimal product revenue and management expects operating losses to continue for the foreseeable future. The Company has devoted substantially all of its resources to its drug development efforts, comprising of research and development, the acquisition of in process research and development assets, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property, commercialization activities and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations. At December 31, 2023, the Company had $275,846 of cash and cash equivalents and short-term investments on hand. In the future, the Company will be dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale of equity, proceeds from out license arrangements, product sales and funded research and development programs to maintain the Company's operations and meet the Company's obligations. There is no guarantee that additional equity or other financings will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back, terminate its operations or seek to merge with or be acquired by another company. Management believes that the Company's existing cash resources will be sufficient to fund the Company's operations through at least the next twelve months from the filing of this Annual Report on Form 10-K with the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates relied upon in preparing these financial statements include estimates related to determining our net product revenue, license revenue, accruals related to research and development expenses, assumptions used to record stock-based compensation expense, interest expense on our deferred royalty obligation, assumptions used to value the embedded derivative in our deferred royalty obligation, assumptions used to value the common stock received from RareStone Group Ltd., or RareStone, and the valuation allowance on the Company's deferred tax assets. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of Rhythm Pharmaceuticals, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations or cash flows. Specifically, in the consolidated statement of cash flows for the year ended December 31, 2022, the Company has reclassified $2,314 from changes in prepaid expenses and other current assets to non-cash accretion and amortization of short-term investments. Segment Information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company currently operates in one business segment, which is the development and commercialization of therapies for patients with rare diseases. A single management team that reports to the Chief Executive Officer comprehensively manages the entire business. The Company does not operate separate lines of business with respect to its product or product candidates. Accordingly, the Company has one reportable segment. Off-Balance Sheet Risk and Concentrations of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and short-term investments, which are maintained at two federally insured financial institutions. The deposits held at these two institutions are in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. For the years ended December 31, 2023 and 2022, approximately , respectively, of all of the Company’s revenue was generated from a single customer in the United States. As of December 31, 2023 and 2022, approximately 67% and 80% , respectively, of the Company’s accounts receivable was outstanding from a single customer in the United States. The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its product. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results. The Company relies on separate third parties to perform genetic testing in the United States and Europe, respectively. The inability of the vendor to fulfill testing services for the Company could materially impact future operating results and adversely impact our ability to further develop setmelanotide. A change in the relationship with the genetic testing service providers, or an adverse change in their business, could materially impact future operating results. Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents includes bank demand deposits, U.S. treasury bills and money market funds that invest primarily in U.S. government treasuries. Short-Term Investments Short-term investments consist of investments with maturities greater than 90 days, as of the date of purchase. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio available-for-sale. Accordingly, these investments are recorded at fair value, which is based on quoted market prices. Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. To the extent the amortized cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss; however, management considers the risk of credit loss to be minimized by the Company's policy of investing in financial instruments issued by highly-rated financial institutions. When assessing the risk of credit loss, management considers factors such as the severity and the reason of the decline in value (i.e., any changes to the rating of the security by a rating agency or other adverse conditions specifically related to the security) and management's intended holding period and time horizon for selling. During the years ended December 31, 2023, 2022, and 2021, the Company did not recognize any credit losses related to its available-for-sale debt securities. Further, as of December 31, 2023 and 2022, the Company did not record an allowance for credit losses related to its available-for-sale debt securities. Restricted Cash Restricted cash consists of security deposits in the form of letters of credit placed in separate restricted bank accounts as required under the terms of the Company’s lease arrangement for its corporate office in Boston, Massachusetts and the Company’s corporate travel credit card. Accounts Receivable, net Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers Product Revenue, Net In the United States (the “U.S.”), which accounts for the largest portion of our total revenues, the Company sells its product to a limited number of specialty pharmacies. The product is distributed through a third-party logistics, or 3PL, distribution agent that does not take title to the product. Once the product is delivered to the Company’s specialty pharmacy provider, our customer in the U.S., the customer (or “wholesaler”) takes title to the product. The wholesaler then distributes the product to patients. In our distribution agreement with the 3PL company, the Company acts as principal because we retain control of the product. Internationally, we make sales primarily to specialty distributors and retail pharmacy chains, as well as hospitals, many of which are government-owned or supported. The Company generally does not offer returns of product sold to the customer. Revenue from product sales is recognized when the customer obtains control of our product, which occurs at a point in time, upon transfer of title to the customer because at that point in time we have no ongoing obligations to the customer. There are no other performance obligations besides the sale of product. We classify payments to our customers or other parties in the distribution channel for services that are distinct and priced at fair value as selling, general and administrative expenses in our consolidated statements of operations and comprehensive (loss) income. Otherwise, payments to a customer or other parties in the distribution channel that do not meet those criteria are classified as a reduction of revenue, as discussed further below. Taxes collected from the customer relating to product sales and remitted to governmental authorities are excluded from revenue. Because our payment terms are generally ninety days or less, the Company concluded there is not a significant financing component because the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. The Company expenses incremental costs of obtaining a contract as and when incurred since the expected amortization period of the asset that we would have recognized is one year or less. Reserves for Variable Consideration Revenues from product sales are recorded at the net sales price, or the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between us and our customers, health care providers and other indirect customers relating to the sale of IMCIVREE. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following are the components of variable consideration related to product revenue: Chargebacks: Government rebates: Trade discounts and allowances: Product returns: Other incentives: The table below summarizes balances and activity in each of the product revenue allowance and reserve categories as follows: Provision for Cash Discounts Fees, Rebates and Other Incentives Total Beginning Balance at December 31, 2021 $ 21 $ 453 $ 474 Provision related to sales in the current year 367 3,299 3,666 Credit and payments made (289) (1,042) (1,331) Ending balance December 31, 2022 $ 99 $ 2,710 $ 2,809 Provision related to sales in the current year 1,672 17,351 19,023 Credit and payments made (1,572) (10,586) (12,158) Ending balance December 31, 2023 $ 199 $ 9,475 $ 9,674 Provision for cash discounts are recorded as reductions of accounts receivable, and fees, rebates, and other incentives are recorded as a component of accrued expenses. License Agreements We generate revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain of our products and product candidates. Such agreements may include the transfer of intellectual property rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and development services, and participation on certain committees with the counterparty. Payments made by the customers may include non-refundable upfront fees, payments upon the exercise of customer options, payments based upon the achievement of defined milestones, and royalties on sales of products and product candidates if they are approved and commercialized. If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize the transaction price allocated to the license as revenue upon transfer of control of the license. We evaluate all other promised goods or services in the agreement to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations. We utilize judgment to determine the transaction price. In connection therewith, we evaluate contingent milestones at contract inception to estimate the amount which is not probable of a material reversal to include in the transaction price using the most likely amount method. Milestone payments that are not within our control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, we re-evaluate the probability of achieving development milestone payments that may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment. We then determine whether the performance obligations or combined performance obligations are satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress, as applicable, for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded within deferred revenue. Contract liabilities within deferred revenue are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met. For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied). Refer to Note 10 “Significant Agreements”, for discussion related to the Company’s accounting for the RareStone Group, Ltd. agreement. Deferred Royalty Obligation We treat the debt obligation to HealthCare Royalty Management, LLC as discussed further in Note 11, “Long-term Obligations”, as a deferred royalty obligation, amortized using the effective interest rate method over the estimated life of the revenue streams. We recognize interest expense thereon using the effective rate, which is based on our current estimates of future revenues over the life of the arrangement. In connection therewith, we periodically assess our expected revenues using internal projections, impute interest on the carrying value of the deferred royalty obligation, and record interest expense using the imputed effective interest rate. To the extent our estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation. The assumptions used in determining the expected repayment term of the deferred royalty obligation and amortization period of the issuance costs requires that we make estimates that could impact the classification of such costs, as well as the period over which such costs will be amortized. Inventory Prior to receiving approval from the FDA in November 2020 to sell IMCIVREE in the United States, the Company expensed all costs incurred related to the manufacture of IMCIVREE as research and development expense because of the inherent risks associated with the development of a drug candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates. Subsequent to receiving FDA approval in November 2020, the Company has capitalized inventory related costs that were incurred subsequent to FDA approval. In connection therewith, the Company values inventories at the lower of cost or estimated net realizable value. The Company determines the cost of inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods include packaged and labelled products. Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for research and development, it is expensed as research and development once that determination is made. Inventory consists of the following: December 31, December 31, 2023 2022 Raw Materials $ 4,625 $ 2,722 WIP 1,104 — Finished Goods 2,895 195 Total Inventory $ 8,624 $ 2,917 Cost of Product Sales adjustment charges. Finally, cost of sales may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances. Intangible Assets, net Definite-lived intangible assets related to capitalized milestones under license agreements are amortized on a straight-line basis over their remaining useful lives, which are estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then a shorter period is used. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist primarily of property and equipment and finite lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the Company measures the impairment to be recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, less the cost to sell. No events or changes in circumstances existed to require an impairment assessment during the years ended December 31, 2023, 2022 and 2021. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Prepaid expenses and other current assets consists of the following: December 31, 2023 2022 Prepaid research and development costs $ 2,259 $ 4,392 Other current assets 6,672 7,415 Prepaid expenses and other current assets $ 8,931 $ 11,807 Other Long-Term Assets Other long-term assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Since the Company will not receive services within one year of the balance sheet date, these assets are considered long-term. Other long-term assets consists of the following: December 31, 2023 2022 Long-term research and development costs $ 12,594 $ 14,556 Other long-term assets 2,405 2,099 Other long-term assets $ 14,999 $ 16,655 Property and Equipment Property and equipment consists of the following: Useful December 31, Life 2023 2022 Leasehold improvements * $ 2,705 $ 2,705 Office equipment 5 years 155 107 Computers and software 3 years 1,291 1,291 Furniture, fixtures and equipment 5 years 1,249 1,249 5,400 5,352 Less accumulated depreciation and amortization (4,059) (3,155) Property and equipment, net $ 1,341 $ 2,197 * Depreciation and amortization expense related to property and equipment for the years ended December 31, 2023, 2022 and 2021 was $903, $896, and $816 respectively. Property and equipment are recorded at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets. Upon disposal, retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. Acquired IPR&D and Milestone Expense In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process research and development projects are expensed as acquired IPR&D and recorded as a component of research and development expense in the consolidated statements of operations and comprehensive net loss unless the project has an alternative future use. These costs include upfront and development milestone payments related to licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products. Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the milestone results are achieved. Regulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product. Foreign Currency Translation The majority of the Company’s operations occurs in subsidiaries that have the U.S. dollar denominated as its functional currency. The assets and liabilities of the Company’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenue and expense amounts for these subsidiaries are translated using the average exchange rates for the period. Changes resulting from foreign currency translation are included in accumulated other comprehensive income (loss) on the Company’s consolidated statement of stockholders’ equity. Net foreign currency exchange transaction gains (losses), which are included in other (expense) income, net on our consolidated statements of operations, were immaterial for the years ended December 31, 2023, 2022 and 2021. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 — Quoted market prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and marketable securities and derivative liability at December 31, 2023 and 2022 were carried at fair value, determined according to the fair value hierarchy. See Note 5 for further discussion. The carrying amounts reflected in the consolidated balance sheets for accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term maturities at December 31, 2023 and 2022, respectively. Research and Development Expenses Costs incurred in the research and development of the Company’s products are expensed to operations as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services and other outside costs. The value of goods and services received from contract research organizations, or CROs, or contract manufacturing organizations, or CMOs, in the reporting period are estimated based on the level of services performed and progress in the period for which the Company has not yet received an invoice from the supplier. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, and expensed as the related goods are delivered or the services are performed. Income Taxes The Company is taxed as a C corporation for federal income tax purposes. Income taxes for the Company are recorded in accordance with FASB ASC Topic 740, Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits as provision for income taxes in the accompanying consolidated statements of operations. As of December 31, 2023 and 2022, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets. Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by adjusting the weighted-average shares outstanding for the potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and performance stock units are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. The following table includes the potential common shares, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share due to their anti-dilutive effect, for the periods indicated: Year Ended December 31, 2023 2022 2021 Stock options 6,551,025 6,354,544 5,7 |
Asset Acquisition
Asset Acquisition | 12 Months Ended |
Dec. 31, 2023 | |
Asset Acquisition | |
Asset Acquisition | 3. Asset Acquisition Xinvento B.V. On February 27, 2023, the Company, through its wholly-owned Dutch subsidiary, Rhythm Pharmaceuticals Netherlands B.V., a Dutch private limited liability company (“Rhythm BV”), entered into a Share Purchase Agreement (the “Purchase Agreement”) with Xinvento B.V., a Dutch private limited liability company based in the Netherlands (“Xinvento”), and the other parties named therein, pursuant to which, and concurrently with the execution thereof, Rhythm BV acquired all of the issued and outstanding shares of Xinvento. The aggregate consideration at closing was approximately $5,667, inclusive of transaction costs, as adjusted pursuant to the terms of the Purchase Agreement and subject to the distribution and payment terms set forth therein (the “Closing Purchase Price”). In addition to the Closing Purchase Price, the Purchase Agreement provides for the payment of additional contingent consideration totaling up to $206,000 upon achievement of certain development, regulatory and commercial milestones by Xinvento, as follows: (i) up to an aggregate of $6,000 in clinical development milestones; (ii) up to an aggregate of $125,000 in regulatory approval and commercial milestones; and (iii) up to an aggregate of $75,000 in sales milestones in the event a second molecule is selected, developed and approved. The total purchase consideration of $5,667 was composed of $4,520 of cash paid at closing, a $500 holdback, payable on the one-year anniversary of the acquisition, and $647 of acquisition-related costs. The $500 holdback will be paid in the quarter ended March 31, 2024. The Company determined that substantially all of the value as of acquisition date related to Xinvento’s In-Process Research and Development. As a result, the Company determined this transaction should be accounted for as an asset acquisition. The assets acquired were In-Process Research and Development (IPR&D) assets. However, since the IPR&D assets were determined to have no alternative future use, the Company recognized the $5,667 of purchase consideration as research and development expense in the year ended December 31, 2023. The Company determined that the additional contingent consideration did not meet the definition of a derivative as of the acquisition date. Therefore, the Company did not record a contingent consideration liability on the acquisition date. The Company will recognize any future contingent consideration payments related to the Xinvento transaction in the period in which the achievement of the underlying milestones becomes probable. Xinvento's results of operations are included in the consolidated financial statements from the date of acquisition. For the year ended December 31, 2023, the net loss associated with the operations of Xinvento was de minimis in the Company’s consolidated statements of operations. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses | |
Accrued Expenses | 4. Accrued Expenses Accrued expenses consists of the following: December 31, December 31, 2023 2022 Research and development costs $ 12,925 $ 11,379 Professional fees 3,833 4,502 Payroll related 15,439 11,444 Royalties 1,180 440 Sales Allowances 9,475 2,710 Other 5,410 2,419 Accrued expenses and other current liabilities $ 48,262 $ 32,894 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Assets and Liabilities | |
Fair Value of Financial Assets and Liabilities | 5. Fair Value of Financial Assets and Liabilities The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values: 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 Fair Value Measurements as of December 31, 2022 using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Commercial paper $ — $ 8,484 $ — $ 8,484 Money market funds 99,962 — — 99,962 Marketable securities: Corporate debt securities and commercial paper — 205,611 — 205,611 Total $ 99,962 $ 214,095 $ — $ 314,057 Liabilities: Derivative liability $ — $ — $ 1,340 $ 1,340 Total $ — $ — $ 1,340 $ 1,340 As of December 31, 2023 and 2022, the carrying amount of cash and cash equivalents and short-term investments was $275,846 and $333,288, respectively, which approximates fair value. Cash and cash equivalents and short-term investments includes investments in U.S. treasury securities and money market funds that invest in U.S. government securities that are valued using quoted market prices. Accordingly, money market funds and government funds are categorized as Level 1. The financial assets valued based on Level 2 inputs consist of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations. The embedded derivative liability associated with our deferred royalty obligation, as discussed further in Note 11, “Long-Term Obligations”, is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the deferred royalty obligation. The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other (expense) income, net. The assumptions used in the option pricing Monte Carlo simulation model include: (1) our estimates of the probability and timing of related events; (2) the probability-weighted net sales of IMCIVREE, including worldwide net product sales, upfront payments, milestones and royalties; (3) our risk-adjusted discount rate that includes a company specific risk premium; (4) our cost of debt; (5) volatility; and (6) the probability of a change in control occurring during the term of the instrument. The RareStone equity was valued at a de minimis amount and as such written-off during the third quarter of 2022. The Company determined the estimated fair values using a discounted cash flow model under the income approach and an option pricing allocation model. Inherent in discounted cash flow and option pricing allocation models are assumptions related to the equity value of the entity, expected equity volatility, holding period, risk-free interest rate and discount for lack of marketability. The Company estimated equity volatility based on historical volatility of guideline public companies. The risk-free interest rate was based on the U.S. Treasury rates for a maturity similar to the expected holding period. The following tables set forth a summary of the changes in the estimated fair value of our embedded derivative liability and RareStone equity (in thousands): Year ended December 31, 2023 2022 Beginning aggregate estimated fair value of Level 3 liabilities $ 1,340 $ — Initial recording of embedded derivative — 1,590 Change in fair value of embedded derivative (190) (250) Ending aggregate estimated fair value of Level 3 liabilities $ 1,150 $ 1,340 Year ended December 31, 2023 2022 Beginning aggregate estimated fair value of Level 3 securities $ — $ — Initial recording of RareStone equity — 1,040 Realized loss included in other expense — (1,040) Ending aggregate estimated fair value of Level 3 securities $ — $ — The estimated fair value of the shares of RareStone equity as of our initial recording date and September 30, 2022, as well as the estimated fair value of the derivative liability related to our Royalty Interest Financing Agreement (RIFA) with HealthCare Royalty were determined using Level 3 inputs. The fair value measurement of the derivative liability and RareStone equity are sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument. Marketable Securities The following tables summarize the Company's marketable securities: December 31, 2023 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 215,491 $ 282 $ (7) $ 215,765 $ 215,491 $ 282 $ (7) $ 215,765 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 205,702 $ — $ (91) $ 205,611 $ 205,702 $ — $ (91) $ 205,611 |
Right of Use Asset and Lease Li
Right of Use Asset and Lease Liability | 12 Months Ended |
Dec. 31, 2023 | |
Right of Use Asset and Lease Liability | |
Right of Use Asset and Lease Liability | 6. Right Of Use Asset and Lease Liability The Company has a material operating lease for its head office facility and other immaterial operating leases for certain equipment. The Company’s office lease has a remaining lease term of 1.6 years. The Company measured the lease liability associated with the office lease using a discount rate of 10% at inception. The Company estimated the incremental borrowing rate for the leased asset based on a range of comparable interest rates the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. As of December 31, 2023, the Company has not entered into any lease arrangements classified as a finance lease. Under FASB ASC Topic 842, Leases Upon adoption of ASC 842, the Company elected the transition relief package, permitted within the standard, pursuant to which the Company did not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and whether existing leases have any initial direct costs. The Company also elected the practical expedient of not separating lease components from non-lease components for all leases. There was no cumulative-effective adjustment to the opening balance of retained earnings. The Company reviews all material contracts for embedded leases to determine if they have a right-of-use asset. The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvement are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s office lease includes both lease and non-lease components. Non-lease components relate to real estate taxes, insurance, operating expenses and common area maintenance, which are usually billed at actual amounts incurred proportionate to the Company’s rented square feet of the building. These non-lease components are expensed by the Company as they are incurred and are not included in the measurement of the lease liability. The Company’s corporate headquarters is located in Boston, Massachusetts. This facility houses the Company’s research, clinical, regulatory, commercial and administrative personnel. The Company’s lease agreement commenced May 2019 and has a term of six years with a five-year renewal option to extend Supplemental cash flow information related to the Company’s lease for the years ended December 31, 2023 and 2022, includes cash payments of $834, $818 and $802, respectively used in the measurement of its operating lease liability. The following table presents the maturities of the Company’s operating lease liability related to office space as of December 31, 2023, all of which is under a non-cancellable operating lease: Operating Lease 2024 851 2025 502 Total operating lease payments 1,353 Less: imputed interest (93) Total operating lease liability $ 1,260 |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net | |
Intangible Assets, Net | 7. Intangible Assets, Net As of December 31, 2023, the Company’s definite-lived intangible assets, which totaled $7,028, resulted from the capitalization of certain milestone payments made to Ipsen Pharma, S.A.S., or Ipsen, in accordance with the terms of the Company’s license agreement with Ipsen, in As of December 31, 2023, amortization expense for the next five years and beyond is summarized as follows: 2024 $ 855 2025 855 2026 855 2027 855 2028 855 Thereafter 2,753 Total $ 7,028 The Company began amortizing its finite-lived intangible assets in April 2021 over an and 2023, 2022 and 2021, respectively. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2023 | |
Common Stock. | |
Common Stock | 8. Common Stock Common Stock On September 19, 2022, the Company completed a public offering of 4,800,000 shares of common stock at a price to the public of $26.00 per share. The Company received $116,887 in net proceeds after deducting underwriting discounts, commissions and offering expenses. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 720,000 shares of its common stock at the price to the public, less underwriting discounts and commissions. On October 18, 2022, the Company completed the sale of an additional 580,000 shares of common stock at a price to the public of $26.00 per share pursuant to the partial exercise of the underwriters’ option to purchase additional shares, for aggregate net proceeds of approximately $14,175 , after deducting underwriting discounts, commissions and offering expenses. On November 2, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”), pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $100.0 million, from time to time through an “at the market” equity offering program under which Cowen acts as sales agent (the “ATM Program”). Between August 10, 2023 and August 21, 2023, the Company sold approximately two million shares of its common stock in the ATM Program for net proceeds of approximately $48.9 million. On February 9, 2021 the Company completed a public offering of 5,750,000 shares of common stock at an offering price of $30.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 750,000 additional shares of common stock. The Company received approximately $161,550 in net proceeds after deducting underwriting discounts, commissions and estimated offering expenses. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Stock-based Compensation | |
Stock-based Compensation | 9. Stock-based Compensation 2017 Equity Incentive Plan The Rhythm Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, performance units, restricted stock awards, restricted stock units and stock grants to employees, consultants, advisors and directors of us or our affiliates, as determined by the board of directors. The number of shares authorized under the 2017 Plan increases on the first day of each calendar year, commencing on January 1, 2018 and ending on (and including) January 1, 2027, by an amount equal to 4% of the outstanding shares of stock outstanding as of the end of the immediately preceding fiscal year. On January 1, 2024, 2023 and 2022, 2,377,062, 2,264,497, and 2,011,343 shares, respectively, were added to the 2017 Plan. Notwithstanding the foregoing, the board of directors may act prior to January 1 for a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 Plan for such year, or that the increase in the number of shares authorized under the 2017 Plan for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. Shares of common stock issued upon the exercise of stock options are generally issued from new shares of the Company. The 2017 Plan provides that the exercise price of incentive stock options cannot be less than 100% of the fair market value of the common stock on the date of the award for participants who own less than 10% of the total combined voting power of stock of the Company, and not less than 110% for participants who own more than 10% of the Company's voting power. Awards granted under the 2017 Plan will vest over periods as determined by the Company's board of directors. For options granted to date, the exercise price equaled the fair value of the common stock as determined by the board of directors on the date of grant. As of December 31, 2023, an aggregate of 11,729,382 2022 Inducement Plan On February 9, 2022, the Company’s board of directors adopted the Rhythm Pharmaceuticals, Inc. 2022 Employment Inducement Plan (the “2022 Inducement Plan”), which became effective on such date without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”). The 2022 Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, performance units, restricted stock awards, restricted stock units and stock grants. In accordance with Rule 5635(c)(4), awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. An aggregate of 1,000,000 shares of the Company’s common stock have been reserved for issuance under the 2022 Inducement Plan. The exercise price of stock options granted under the 2022 Inducement Plan will not be less than the fair market value of a share of the Company’s common stock on the grant date. Other terms of awards, including vesting requirements, are determined by the Company’s board of directors and are subject to the provisions of the 2022 Inducement Plan. Stock options granted to employees generally vest over a four-year period but may be granted with different vesting terms. Certain options may provide for accelerated vesting in the event of a change in control. Stock options granted under the 2022 Inducement Plan expire no more than 10 years from the date of grant. As of December 31, 2023, there were 526,177 stock option awards outstanding, 233,719 restricted stock unit awards outstanding and 179,925 shares of common stock available for future grant under the 2022 Inducement Plan. 2017 Employee Stock Purchase Plan The Company maintains the Rhythm Pharmaceuticals, Inc. 2017 Employee Stock Purchase Plan, (the “2017 ESPP”), which became effective in connection with the completion of the Company’s IPO in October 2017. As of December 31, 2023, a total of 1,323,026 shares of common stock were reserved for issuance under the 2017 ESPP. In addition, the number of shares authorized under the 2017 ESPP increases on the first day of each calendar year, commencing on January 1, 2019 and ending on (and including) January 1, 2027, by an amount equal to the lesser of 1% of outstanding shares as of the end of the immediately preceding fiscal year. On January 1, 2023, 2022 and 2021, 0, 502,835 and 0 shares, respectively, were added to the 2017 ESPP. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 ESPP for such year, or that the increase in the number of shares authorized under the 2017 ESPP for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. The board of directors elected not to increase the number of shares available under the 2017 ESPP on January 1, 2024 and 2023. During the years ended December 31, 2023, 2022 and 2021, shares of 49,819, 92,932, and 38,051 The purchase price of common stock under our ESPP is equal to 85.0% of the lower of (i) the market value per share of the common stock on the first business day of an offering period or (ii) the market value per share of the common stock on the purchase date. The fair value of the discounted purchases made under our ESPP is calculated using the Black-Scholes model. The fair value of the look-back provision plus the 15.0% discount is recognized as compensation expense over the 6 month purchase period. Stock Options The Company estimates the fair value of stock option awards to employees and non-employees using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including (a) the expected volatility of the underlying common stock, (b) the expected term of the award, (c) the risk-free interest rate, and (d) expected dividends. The Company bases its estimate of expected volatility using a blend of its stock price history for the length of time it has market data for its stock and using the historical volatility of a group of companies in the pharmaceutical and biotechnology industries in a similar stage of development as the Company that are publicly traded. For these analyses, the Company selected companies with comparable characteristics to its own including enterprise value, risk profiles and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of its stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. The Company estimated the expected life of its employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option. The risk-free interest rates for periods within the expected life of the option are based on the U.S. Treasury yield curve in effect during the period the options were granted. We have elected to account for forfeitures as they occur. The grant date fair value of awards subject to service-based vesting is recognized ratably over the requisite service period, which is generally the vesting period of the respective awards. The Company's stock option awards typically vest over a service period that ranges from one During the years ended December 31, 2023, 2022 and 2021, the Company granted 842,528, 1,929,345, and 1,678,230 stock option awards pursuant to the 2017 Plan to certain directors, employees and non-employees, respectively. Using the Black-Scholes option pricing model, the weighted-average grant date fair value relating to outstanding stock options granted under the 2017 Plan during the years ended December 31, 2023, 2022 and 2021 was $17.72, $4.14, and $15.69, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company granted 229,360, 347,985, and 0 stock option awards pursuant to the 2022 Inducement Plan. Using the Black-Scholes option pricing model, the weighted-average grant date fair value relating to outstanding stock options granted under the Company’s stock option plan during the years ended December 31, 2023, 2022 and 2021 was $15.30, $13.05, and $0, respectively. The fair value of stock options granted to employees and directors was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended December 31, 2023 2022 2021 Risk‑free interest rate 2.35 % 2.19 % 0.79 % Expected term (in years) 6.11 6.11 6.11 Expected volatility 76.11 % 69.16 % 69.80 % Expected dividend yield — — — A summary of the Company's stock option activity for the year ended December 31, 2023 is as follows: Weighted ‑ Weighted- Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value Outstanding as of December 31, 2022 6,374,544 $ 17.85 7.73 $ 73,994 Granted 1,053,888 $ 25.42 — $ — Exercised (529,854) $ 14.09 — $ 9,225 Cancelled (347,553) $ 21.23 — $ — Outstanding as of December 31, 2023 6,551,025 $ 19.19 7.23 $ 175,419 Options exercisable at December 31, 2023 3,936,040 $ 19.77 6.54 $ 103,122 Restricted Stock Units The Company may grant restricted stock units (“RSUs”) to employees and nonemployee directors under the 2017 Plan and to employees under the 2022 Inducement Plan. Each RSU represents a right to receive one share of the Company's common stock upon the completion of a specific period of continued service. RSU awards granted are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair values of these RSUs on a straight-line basis over the requisite service period of these awards. A summary of the Company's restricted stock unit activity for the year ended December 31, 2023 is as follows: Weighted- Average Number of Grant Date RSUs Fair Value Unvested as of December 31, 2022 774,166 $ 12.18 Granted 643,028 24.97 Vested (214,837) 14.30 Cancelled (97,750) 15.61 Unvested as of December 31, 2023 1,104,607 $ 17.44 As of December 31, 2023, the aggregate intrinsic value of unvested RSUs was $50,779. Performance Stock Units In November 2021, the Company granted up to a maximum of performance stock units (“PSUs”) to employees under the 2017 Plan. Each PSU represents a right to receive one share of the Company's common stock upon vesting. The performance-based stock units granted in 2021 will vest on December 31, 2023 based upon i) continued service through the vesting date and (ii) the achievement of specific clinical development and regulatory performance events, as approved by the compensation committee. PSU awards granted are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair value of these PSUs for the awards that are probable of vesting over the service period. During each financial period, management estimates the probable number of PSU’s that would vest until the ultimate achievement of the performance goal is known. At December 31, 2023, the Company estimates that % of the PSUs granted will be eligible to vest in the quarter ended March 31, 2024. A summary of the Company's performance stock unit activity for the year ended December 31, 2023 is as follows: Weighted- Average Number of Grant Date PSUs Fair Value Unvested as of December 31, 2022 804,797 $ 13.24 Granted — — Vested — — Cancelled (223,451) 13.24 Unvested as of December 31, 2023 581,346 $ 13.24 The following table summarizes the classification of the Company's stock-based compensation expenses related to stock options, restricted stock units, performance stock units and the employee stock purchase plan recognized in the Company's consolidated statements of operations and comprehensive loss. Year Ended December 31, 2023 2022 2021 Research and development $ 8,449 $ 5,814 $ 7,687 Selling, general, and administrative 24,104 14,017 13,117 Total $ 32,553 $ 19,831 $ 20,804 Stock-based compensation expense by award type recognized during the years ended December 31, 2023, 2022 and 2021 was as follows: Year Ended December 31, 2023 2022 2021 Stock options $ 17,671 $ 15,477 $ 17,988 Employees stock purchase plan 581 408 310 Restricted stock units 5,998 2,918 1,924 Performance stock units 8,303 1,028 582 Total $ 32,553 $ 19,831 $ 20,804 As of December 31, 2023, the Company has unrecognized compensation cost of $27,322 related to non-vested employee, non-employee and director stock option awards under all equity plans that are expected to be recognized over a weighted-average period of 2.07 years. The Company has unrecognized compensation cost of $16,880 related to non-vested employee restricted stock unit and performance stock unit awards under all equity plans that are expected to be recognized over a weighted-average period of 2.63 years. |
Significant Agreements
Significant Agreements | 12 Months Ended |
Dec. 31, 2023 | |
Significant Agreements | |
Significant Agreements | 10. Significant Agreements License Agreements RareStone Group Ltd. In December 2021, the Company entered into an Exclusive License Agreement with RareStone Group Ltd., or the RareStone License. Pursuant to the RareStone License, we granted to RareStone an exclusive, sublicensable, royalty-bearing license under certain patent rights and know-how to develop, manufacture, commercialize and otherwise exploit any pharmaceutical product that contains setmelanotide in the diagnosis, treatment or prevention of conditions and diseases in humans in China, including mainland China, Hong Kong and Macao. RareStone has a right of first negotiation in the event that the Company chooses to grant a license to develop or commercialize the licensed product in Taiwan. The arrangement includes a license and an additional performance obligation to supply product upon the request of RareStone. According to the terms of the , RareStone has agreed to seek local approvals to commercialize IMCIVREE for the treatment of obesity and hyperphagia due to biallelic POMC, PCSK1 or LEPR deficiency, as well as Bardet-Biedl and Alström syndromes. Additionally, RareStone has agreed to fund efforts to identify and enroll patients from China in the Company’s global EMANATE trial, a Phase 3, randomized, double-blind, placebo-controlled trial to evaluate setmelanotide in four independent sub-studies in patients with obesity due to a heterozygous variant of POMC/PCSK1 or LEPR; certain variants of the SRCI gene, and certain variants of the SH2B1 gene. In accordance with the terms of the , RareStone made an upfront payment to Rhythm of $7,000 and issued Rhythm 1,077,586 ordinary shares. The Company is eligible to receive development and commercialization milestones of up to $62,500 , as well as tiered royalty payments on annual net sales of IMCIVREE. The Company initially estimated the fair value of the RareStone equity to be $2,440 based on a preliminary valuation during the first quarter of 2022. Upon completion of the valuation procedures during the second quarter of 2022, the Company concluded the initial fair value of the RareStone equity to be $1,040 . During the third quarter of 2022, the Company estimated the fair value of the RareStone equity to be de minimis based upon the results of an updated valuation and recorded an other-than-temporary impairment of $1,040 related to the decline in fair value as a component of other expense in our consolidated statements of operations and other comprehensive loss for the year ended December 31, 2022. The other-than-temporary impairment of $1,040 included the reclassification of a $300 unrealized loss previously recorded as a component of accumulated other comprehensive income (loss) in our consolidated statement of stockholders’ equity during the second quarter of 2022. The Company received total upfront consideration of $8,040 comprised of an upfront payment of $7,000 , and the estimated fair value of the RareStone equity of $1,040 . The Company determined that the RareStone License contains two performance obligations, the delivery of the license and the supply of clinical and commercial product. The Company further determined the supply of commercial product to RareStone contains a significant future discount and estimates the discount to be $1,286 , which is recorded as a component of deferred revenue on the consolidated balance sheet at December 31, 2022. Based on a relative fair-value allocation between the license and the manufacture of clinical and commercial product, the The discount related to commercial manufacturing supply will be deferred and recognized over the commercial supply period or upon termination of the agreement. On October 28, 2022, we delivered written notice, or the October Notice, to RareStone that we have terminated the RareStone License for cause. In accordance with the Notice, we maintain that RareStone has materially breached its obligations under the RareStone License to fund, perform or seek certain key clinical studies and waivers, including with respect to our global EMANATE trial, among other obligations. On December 21, 2022, RareStone provided written notice to us that it objects to the claims in the Notice, including our termination of the RareStone License for cause. On March 16, 2023, we provided written notice, or the March Notice, to RareStone reaffirming our position that RareStone has materially breached its obligations under the RareStone License and that we have terminated the RareStone License for cause, and also requested documentation supporting RareStone’s purported dispute notice objecting to the claims in the Notice. On May 10, 2023, RareStone provided written notice to the Company reaffirming its objections to the claims in our October Notice and March Notice, including to the Company’s termination of the RareStone License for cause. Ipsen Pharma S.A.S. Pursuant to a license agreement with Ipsen Pharma, S.A.S., or Ipsen, the Company has an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to research, develop, and commercialize compounds that were discovered or researched by Ipsen in the course of conducting its MC4R program or that otherwise were covered by the licensed patents. Under the terms of the setmelanotide Ipsen license agreement, assuming that setmelanotide is successfully developed, receives regulatory approval and is commercialized, Ipsen may receive aggregate payments of up to $40,000 upon the achievement of certain development and commercial milestones and royalties on future product sales in the mid-single digits. Substantially all of such aggregate payments of up to $40,000 are for milestones that may be achieved no earlier than first commercial sale of setmelanotide. In the event that the Company executes a sublicense agreement, it shall make payments to Ipsen, depending on the date of such sublicense agreement, ranging from 10% to 20% of all revenues actually received under such sublicense agreement. The Company capitalized a $5,000 and $4,000 commercial milestone as a finite-lived intangible asset, as a result of the first commercial sales of IMCIVREE in the U.S. and Europe during March 2021 and March 2022, respectively. There were Camurus In January 2016, the Company entered into a license agreement with Camurus AB, or Camurus, for the use of Camurus' drug delivery technology. The contract includes a non-refundable and non-creditable signing fee of $500. The Camurus agreement also includes up to $7,750 in one-time, non-refundable development milestones achievable upon certain regulatory successes. The Company is also required to pay to Camurus, mid to mid-high single digit royalties, on a product-by-product and country-by-country basis of annual net sales, until the later of (i) 10 years after the date of first commercial sale of such product in such country; or (ii) the expiration of the last to expire valid claim of all licensed patent rights in such country covering such product. The Company is also required to pay one-time, non-refundable, non-creditable sales milestones upon the achievement of certain sales levels for such product that cannot be in excess of $57,000. The Company recorded development milestone expenses related to this license agreement of $1,000 during the year ended December 31, 2022. The expenses were recorded as research and development expenses when the milestone criteria were met in full during 2022. There are no research and development expenses related to milestones recorded in 2023 or 2021. Takeda In March 2018, the Company entered into a license agreement with Takeda, for the rights of a program that includes the clinical candidate RM-853, which is a GOAT inhibitor, which is currently in preclinical development for PWS. Pursuant to the license agreement the Company was required to pay a non-refundable and non-creditable signing fee, which the Company settled by issuing on April 3, 2018, 223,544 shares of common stock valued at $4,448. Under the terms of the license agreement, assuming that RM-853 is successfully developed, receives regulatory approval and is commercialized, the Company is also required to pay up to $70,000 in one-time, non-refundable development milestone payments upon the achievement of certain clinical and regulatory milestones. The Company is also required to pay up to $70,000 in one-time, non-refundable, non-creditable sales milestone payments upon the achievement of certain sales levels. The Company is also required to pay to Takeda, mid to mid-high single digit royalties (subject to certain potential reductions over time), on a product-by-product and country-by-country basis of annual net sales, of each product in such country, beginning on the first commercial sale of a product in such country, and continuing until the latest of (i) 10 years after the date of first commercial sale of such product in such country; or (ii) the expiration of the last to expire valid claim of a Takeda patents covering the composition or use of such product in such country; or (iii) the expiration of all regulatory exclusivity for such product in such country. The Company recorded the fair value of the common stock to be issued to the licensors as research and development expense, as the license does not have a future alternative use, in accordance with ASC Topic 730, Research and Development. There were no milestone expenses related to this license for the years ended December 31, 2023, 2022 and 2021, respectively. We have notified Takeda that the Company has halted development activities related to RM-853. |
Long-Term Obligations
Long-Term Obligations | 12 Months Ended |
Dec. 31, 2023 | |
Long-Term Obligations | |
Long-Term Obligations | 11. Long-Term Obligations On June 16, 2022, we entered into a RIFA with entities managed by HealthCare Royalty Management, LLC, collectively referred to as the Investors. Pursuant to the RIFA and subject to customary closing conditions, the Investors have agreed to pay the Company an aggregate investment amount of up to $100,000, or the Investment Amount. Under the terms of the RIFA, we received $37,500 on June 29, 2022 upon FDA approval of IMCIVREE in BBS, referred to as the Initial Investment Amount, and we received an additional $37,500 on September 29, 2022 of the Investment Amount upon EMA approval for BBS. On September 12, 2023, we received the remaining $24,370 of the Investment Amount, net of debt issuance costs, following the achievement of a specified amount of cumulative net sales of IMCIVREE between July 1, 2022 and September 30, 2023. As consideration for the Investment Amount and pursuant to the RIFA, we agreed to pay the Investors a tiered royalty on our annual net revenues, or Revenue Interest, including worldwide net product sales and upfront payments and milestones. The applicable tiered percentage will initially be 11.5% on annual net revenues up to $125,000, 7.5% on annual net revenues of between $125,000 and $300,000 and 2.5% on annual net revenues exceeding $300,000. If the Investors have not received cumulative minimum payments equal to 60% of the amount funded by the Investors to date by March 31, 2027, or 120% of the amount funded by the Investors to date by March 31, 2029, we must make a cash payment immediately following each applicable date to the Investors sufficient to gross the Investors up to such minimum amounts after giving full consideration of the cumulative amounts paid by us to the Investors through each date, referred to as the Under Performance Payment. As the repayment of the funded amount is contingent upon worldwide net product sales and upfront payments, milestones, and royalties, the repayment term may be shortened or extended depending on actual worldwide net product sales and upfront payments, milestones, and royalties. As of December 31, 2023 we have made $7,398 of payments. The Investors’ rights to receive the Revenue Interests will terminate on the date on which the Investors have received payments equal to a certain percentage of the funded portion of the Investment Amount including the aggregate of all payments made to the Investors as of such date, each percentage tier referred to as the Hard Cap, unless the RIFA is earlier terminated. The total Revenue Interests payable by us to the Investors is capped between 185% and 250% of the Investment Amount paid, dependent on the aggregate royalty paid between 2028 and 2032. If a change of control of occurs, the Investors may accelerate payments due under the RIFA up to the Hard Cap plus any other obligations payable under the RIFA. The repayment period commenced on July 8, 2022 for the Initial Investment Amount, and expires on the earlier of (i) the date at which the Investors received cash payments totaling an aggregate of a Hard Cap ranging from 185% to 250% of the Initial Investment Amount or (ii) the legal maturity date of July 8, 2034. If the Investors have not received payments equal to 250% of the Investment Amount by the twelve-year anniversary of the initial closing date, we will be required to pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously received by Investors. In the event of a change of control, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time, ranging from 185% to 250% plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to Investors under the deferred royalty obligation, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of IMCIVREE in the U.S. or our breach of any covenant contained in the RIFA and our failure to cure the breach within the prescribed time frame, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time of default ranging from 185% to 250% plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon an event of default, Investors may exercise all other rights and remedies available under the RIFA, including foreclosing on the collateral that was pledged to Investors, which consists of all of our present and future assets relating to IMCIVREE. We have evaluated the terms of the RIFA and concluded that the features are similar to those of a debt instrument. Accordingly, we have accounted for the transaction as long-term debt and presented it as a deferred royalty obligation on our consolidated balance sheets. We have further evaluated the terms of the RIFA and determined that the repayment of the Hard Cap in effect at the time which ranges from 185% to 250% of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition. We determined the fair value of the derivative using an option pricing Monte Carlo simulation model taking into account the probability of change of control occurring and potential repayment amounts and timing of such payments that would result under various scenarios, as further described in Note 5, “Fair Value of Financial Instruments” to our consolidated financial statements. During the second quarter of 2022, the Company recorded $1,590 for the initial fair value of the embedded derivative liability. The fair value of the embedded derivative liability was $1,150 and $1,340 as of December 31, 2023 and December 31, 2022, respectively. We will remeasure the embedded derivative to fair value each reporting period until the time the features lapse and/or termination of the deferred royalty obligation. For the years ended December 31, 2023 and December 31, 2022, we recognized other income in the amount of $190 and $250, due to the remeasurement of the embedded derivative liability. The carrying value of the deferred royalty obligation at December 31, 2023 was $106,143 based on $100,000 of proceeds, net of the initial fair value of the bifurcated embedded derivative liability upon execution of the RIFA, and debt issuance costs incurred. The carrying value of the deferred royalty obligation approximated fair value at December 31, 2023. The effective interest rate as of December 31, 2023 was 15.12%. In connection with the deferred royalty obligation, we incurred debt issuance costs totaling $3,287. Debt issuance costs have been netted against the debt and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs. The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make estimates that could impact the classification of these costs, as well as the period over which these costs will be amortized. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Legal Proceedings The Company, from time to time, may be party to various litigation arising in the ordinary course of business. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. Other The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones that may be met in subsequent periods, or royalties on future sales of specified products. See Note 10 for discussion of these arrangements. Additionally, the Company is party to various contracts with CROs and CMOs that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement. Based on the Company’s current development plans as of December 31, 2023, the Company does not expect to make milestone payments due to third parties during the next 12 months from the filing of this Annual Report on Form 10-K, in connection with our license agreements. These milestones generally become due and payable upon achievement of such milestones or sales and achievement of development milestones. When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in the Company’s consolidated financial statements. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related-Party Transactions | |
Related-Party Transactions | 13. Related-Party Transactions Amounts paid directly to consultants and vendors considered to be related parties amounted to $1,141, $1,868, and $1,961 for the years ended December 31, 2023, 2022 and 2021, respectively. Outstanding payments due to these related parties as of December 31, 2023 and 2022 were $1 and $13, respectively, and were included within accounts payable on the consolidated balance sheets. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | 14. Income Taxes The components of loss before income taxes are as follows: Year Ended December 31, 2023 2022 2021 United States $ (178,669) $ (181,119) $ (69,612) Foreign (5,445) — — Loss before income taxes $ (184,114) $ (181,119) $ (69,612) Components of provision for income taxes are as follows: Year Ended December 31, Current: 2023 2022 2021 U.S. Federal $ — $ — $ — U.S. State and Local 1 — — Foreign 563 — — Total Current Expense $ 564 $ — $ — Deferred: U.S. Federal $ — $ — $ — U.S. State and Local — — — Foreign — — — Total Deferred Expense $ — $ — $ — A reconciliation of the income tax benefit at the federal statutory tax rate to the Company's effective income tax rate is as follows: As of December 31, 2023 2022 2021 Statutory tax rate 21.00 % 21.00 % 21.00 % State tax, net of federal benefit 10.24 9.83 7.45 Research and development credit 0.65 0.78 2.94 Orphan drug credit 3.37 2.15 7.58 Stock compensation (1.37) (0.29) (1.05) Other (0.48) (0.04) (0.47) Rate changes (6.52) — Change in valuation allowance (27.10) (33.44) (37.45) Effective tax rate (0.21) % — % — % The principal components of the Company's deferred tax assets and liabilities are as follows: As of December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 153,685 $ 135,470 Research and development credits 16,139 14,380 Orphan drug credit 25,484 19,281 Capitalized license fee 2,311 2,776 Stock-based compensation 13,159 11,074 Section 174 Costs 50,688 29,663 Deferred revenue 350 438 Accrued Expenses & Other 5,680 4,536 Total deferred tax assets 267,496 217,618 Valuation allowance (267,158) (217,257) Net deferred tax assets 338 361 Deferred tax liabilities: Operating lease right-of-use asset and other (338) (361) Total deferred tax liabilities $ (338) $ (361) ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2023 and 2022, because the Company's management has determined that is it more likely than not that these assets will not be realized. The increase in the valuation allowance of $49,901 in 2023 and $59,046 in 2022 primarily relates to the net loss incurred by the Company during each period. As of December 31, 2023, the Company had federal and state net operating loss carryforwards of approximately $555,563 and $597,952, respectively, which are available to reduce future taxable income. The net operating loss carryforwards expire at various times beginning in 2033 for federal and state purposes. Of the federal net operating loss carryforwards at December 31, 2023, $482,396 can be carried forward indefinitely. As of December 31, 2023, the Company had gross foreign net operating loss carryforwards of approximately $1,342 which have an indefinite carryforward period. As of December 31, 2023, the Company had federal and state research tax credits of approximately $13,142 and $3,794, respectively, which may be used to offset future tax liabilities. Additionally, as of 2023, the Company had a federal orphan drug credit related to qualifying research of $25,484. These tax credit carryforwards will begin to expire at various times beginning in 2033 for federal purposes and 2028 for state purposes. The net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the Internal Revenue Code. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries of approximately $730 as such amounts are considered to be indefinitely reinvested in these jurisdictions. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as its subsidiaries continue to expand their operations and to fund future foreign acquisitions. The amount of any unrecognized deferred tax liability related to undistributed foreign earnings is immaterial. The Company has not recorded any reserves for uncertain tax positions as of December 31, 2023 and 2022. The Company has not, as yet, conducted a study of research and development credit carryforwards. This study may result in an adjustment to the Company's research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company's research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations and comprehensive loss if an adjustment were required. Interest and penalty charges, if any, related to unrecognized tax benefits will be classified as provision for income taxes in the accompanying statements of operations and comprehensive loss. As of December 31, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions. The Company is subject to examination by the U.S. federal, state and local income tax authorities for tax years 2013 forward. The Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for any tax years. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Plan | |
Retirement Plan | 15. Retirement Plan The Company has a 401(k) defined contribution plan for the benefit for all US employees and permits voluntary contributions by employees subject to IRS-imposed limitations. Beginning in 2021, the Company matched 100% of eligible employee contributions on the first 4% of employee salary (up to the IRS maximum). Contributions for the years ended December 31, 2023, 2022 and 2021 were $1,460, $1,195 and $886, respectively. |
Segment and Geographic
Segment and Geographic | 12 Months Ended |
Dec. 31, 2023 | |
Segment and Geographic Information | |
Segment and Geographic Information | 16. Segment and Geographic Information Disclosure requirements about segments of an enterprise and related information establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in interim financial reports issued to shareholders. Operating segments are defined as components of an enterprise about which separate discrete financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company and the chief executive officer view the Company’s operations and manage its business as one operating segment. Geographic Data The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of its customers. Total revenue by geographic area was as follows: December 31, 2023 2022 2021 United States $ 62,425 $ 21,078 $ 3,154 Germany 6,075 954 — Other 8,928 1,606 — Total revenues $ 77,428 $ 23,638 $ 3,154 As of December 31, 2023 and 2022, long-lived assets at locations outside the United States was not material. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 17. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than as disclosed within the above notes to these consolidated financial statements, and except as described below. License Agreement On January 4, 2024, the Comapny entered into a license agreement and share issuance agreement with LG Chem, Ltd. (“LGC”). Under the terms of the license agreement, the Company obtained worldwide rights to LGC’s proprietary compound LB54640 and will assume sponsorship of two ongoing LGC Phase 2 studies designed to evaluate safety, tolerability, pharmacokinetics and weight loss efficacy of LB54640. At closing, we paid LGC $40 million in cash and issued shares of our common stock with an aggregate value of $20 million. The shares were issued at a per share price equal to the ten -day volume weighted average closing price for our common stock, calculated as of the trading day immediately prior to January 4, 2024. We also agreed to make a In addition, under the terms of the license agreement, we agreed to pay LGC up to $205 million in cash upon achieving various regulatory and sales milestones based on net sales of LB54640. In addition and subject to the completion of Phase 2 development of LB54640, the Company has agreed to pay LGC royalties of between low-to-mid single digit percent of net revenues from its MC4R portfolio, including LB54640, commencing in 2029 and dependent upon achievement of various regulatory and indication approvals, and subject to customary deductions and anti-stacking. Royalties may further increase to a low double digit percent royalty, though such royalty would only be applicable on net sales of LB54640 in a region if LB54640 is covered by a composition of matter or method of use patent controlled by LGC in such region and the Company’s MC4R portfolio is not covered by any composition of matter or method of use patents controlled by the Company in such region. Such increased rate would only apply on net sales of LB54640 for the limited remainder of the royalty term in the relevant region. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates relied upon in preparing these financial statements include estimates related to determining our net product revenue, license revenue, accruals related to research and development expenses, assumptions used to record stock-based compensation expense, interest expense on our deferred royalty obligation, assumptions used to value the embedded derivative in our deferred royalty obligation, assumptions used to value the common stock received from RareStone Group Ltd., or RareStone, and the valuation allowance on the Company's deferred tax assets. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Rhythm Pharmaceuticals, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications |
Segment Information | Segment Information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company currently operates in one business segment, which is the development and commercialization of therapies for patients with rare diseases. A single management team that reports to the Chief Executive Officer comprehensively manages the entire business. The Company does not operate separate lines of business with respect to its product or product candidates. Accordingly, the Company has one reportable segment. |
Off-Balance Sheet Risk and Concentrations of Credit Risk | Off-Balance Sheet Risk and Concentrations of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and short-term investments, which are maintained at two federally insured financial institutions. The deposits held at these two institutions are in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. For the years ended December 31, 2023 and 2022, approximately , respectively, of all of the Company’s revenue was generated from a single customer in the United States. As of December 31, 2023 and 2022, approximately 67% and 80% , respectively, of the Company’s accounts receivable was outstanding from a single customer in the United States. The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its product. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results. The Company relies on separate third parties to perform genetic testing in the United States and Europe, respectively. The inability of the vendor to fulfill testing services for the Company could materially impact future operating results and adversely impact our ability to further develop setmelanotide. A change in the relationship with the genetic testing service providers, or an adverse change in their business, could materially impact future operating results. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents includes bank demand deposits, U.S. treasury bills and money market funds that invest primarily in U.S. government treasuries. |
Short-Term Investments | Short-Term Investments Short-term investments consist of investments with maturities greater than 90 days, as of the date of purchase. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio available-for-sale. Accordingly, these investments are recorded at fair value, which is based on quoted market prices. Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. To the extent the amortized cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss; however, management considers the risk of credit loss to be minimized by the Company's policy of investing in financial instruments issued by highly-rated financial institutions. When assessing the risk of credit loss, management considers factors such as the severity and the reason of the decline in value (i.e., any changes to the rating of the security by a rating agency or other adverse conditions specifically related to the security) and management's intended holding period and time horizon for selling. During the years ended December 31, 2023, 2022, and 2021, the Company did not recognize any credit losses related to its available-for-sale debt securities. Further, as of December 31, 2023 and 2022, the Company did not record an allowance for credit losses related to its available-for-sale debt securities. |
Restricted Cash | Restricted Cash Restricted cash consists of security deposits in the form of letters of credit placed in separate restricted bank accounts as required under the terms of the Company’s lease arrangement for its corporate office in Boston, Massachusetts and the Company’s corporate travel credit card. |
Accounts Receivable, net | Accounts Receivable, net |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers Product Revenue, Net In the United States (the “U.S.”), which accounts for the largest portion of our total revenues, the Company sells its product to a limited number of specialty pharmacies. The product is distributed through a third-party logistics, or 3PL, distribution agent that does not take title to the product. Once the product is delivered to the Company’s specialty pharmacy provider, our customer in the U.S., the customer (or “wholesaler”) takes title to the product. The wholesaler then distributes the product to patients. In our distribution agreement with the 3PL company, the Company acts as principal because we retain control of the product. Internationally, we make sales primarily to specialty distributors and retail pharmacy chains, as well as hospitals, many of which are government-owned or supported. The Company generally does not offer returns of product sold to the customer. Revenue from product sales is recognized when the customer obtains control of our product, which occurs at a point in time, upon transfer of title to the customer because at that point in time we have no ongoing obligations to the customer. There are no other performance obligations besides the sale of product. We classify payments to our customers or other parties in the distribution channel for services that are distinct and priced at fair value as selling, general and administrative expenses in our consolidated statements of operations and comprehensive (loss) income. Otherwise, payments to a customer or other parties in the distribution channel that do not meet those criteria are classified as a reduction of revenue, as discussed further below. Taxes collected from the customer relating to product sales and remitted to governmental authorities are excluded from revenue. Because our payment terms are generally ninety days or less, the Company concluded there is not a significant financing component because the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. The Company expenses incremental costs of obtaining a contract as and when incurred since the expected amortization period of the asset that we would have recognized is one year or less. Reserves for Variable Consideration Revenues from product sales are recorded at the net sales price, or the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between us and our customers, health care providers and other indirect customers relating to the sale of IMCIVREE. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following are the components of variable consideration related to product revenue: Chargebacks: Government rebates: Trade discounts and allowances: Product returns: Other incentives: The table below summarizes balances and activity in each of the product revenue allowance and reserve categories as follows: Provision for Cash Discounts Fees, Rebates and Other Incentives Total Beginning Balance at December 31, 2021 $ 21 $ 453 $ 474 Provision related to sales in the current year 367 3,299 3,666 Credit and payments made (289) (1,042) (1,331) Ending balance December 31, 2022 $ 99 $ 2,710 $ 2,809 Provision related to sales in the current year 1,672 17,351 19,023 Credit and payments made (1,572) (10,586) (12,158) Ending balance December 31, 2023 $ 199 $ 9,475 $ 9,674 Provision for cash discounts are recorded as reductions of accounts receivable, and fees, rebates, and other incentives are recorded as a component of accrued expenses. |
License Agreements | License Agreements We generate revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain of our products and product candidates. Such agreements may include the transfer of intellectual property rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and development services, and participation on certain committees with the counterparty. Payments made by the customers may include non-refundable upfront fees, payments upon the exercise of customer options, payments based upon the achievement of defined milestones, and royalties on sales of products and product candidates if they are approved and commercialized. If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize the transaction price allocated to the license as revenue upon transfer of control of the license. We evaluate all other promised goods or services in the agreement to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations. We utilize judgment to determine the transaction price. In connection therewith, we evaluate contingent milestones at contract inception to estimate the amount which is not probable of a material reversal to include in the transaction price using the most likely amount method. Milestone payments that are not within our control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, we re-evaluate the probability of achieving development milestone payments that may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment. We then determine whether the performance obligations or combined performance obligations are satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress, as applicable, for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded within deferred revenue. Contract liabilities within deferred revenue are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met. For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied). Refer to Note 10 “Significant Agreements”, for discussion related to the Company’s accounting for the RareStone Group, Ltd. agreement. |
Deferred Royalty Obligation | Deferred Royalty Obligation We treat the debt obligation to HealthCare Royalty Management, LLC as discussed further in Note 11, “Long-term Obligations”, as a deferred royalty obligation, amortized using the effective interest rate method over the estimated life of the revenue streams. We recognize interest expense thereon using the effective rate, which is based on our current estimates of future revenues over the life of the arrangement. In connection therewith, we periodically assess our expected revenues using internal projections, impute interest on the carrying value of the deferred royalty obligation, and record interest expense using the imputed effective interest rate. To the extent our estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation. The assumptions used in determining the expected repayment term of the deferred royalty obligation and amortization period of the issuance costs requires that we make estimates that could impact the classification of such costs, as well as the period over which such costs will be amortized. |
Inventory | Inventory Prior to receiving approval from the FDA in November 2020 to sell IMCIVREE in the United States, the Company expensed all costs incurred related to the manufacture of IMCIVREE as research and development expense because of the inherent risks associated with the development of a drug candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates. Subsequent to receiving FDA approval in November 2020, the Company has capitalized inventory related costs that were incurred subsequent to FDA approval. In connection therewith, the Company values inventories at the lower of cost or estimated net realizable value. The Company determines the cost of inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods include packaged and labelled products. Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for research and development, it is expensed as research and development once that determination is made. Inventory consists of the following: December 31, December 31, 2023 2022 Raw Materials $ 4,625 $ 2,722 WIP 1,104 — Finished Goods 2,895 195 Total Inventory $ 8,624 $ 2,917 |
Cost of Product Sales | Cost of Product Sales adjustment charges. Finally, cost of sales may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances. |
Intangible Assets, net | Intangible Assets, net Definite-lived intangible assets related to capitalized milestones under license agreements are amortized on a straight-line basis over their remaining useful lives, which are estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then a shorter period is used. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist primarily of property and equipment and finite lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the Company measures the impairment to be recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, less the cost to sell. No events or changes in circumstances existed to require an impairment assessment during the years ended December 31, 2023, 2022 and 2021. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Prepaid expenses and other current assets consists of the following: December 31, 2023 2022 Prepaid research and development costs $ 2,259 $ 4,392 Other current assets 6,672 7,415 Prepaid expenses and other current assets $ 8,931 $ 11,807 |
Other Long-Term Assets | Other Long-Term Assets Other long-term assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Since the Company will not receive services within one year of the balance sheet date, these assets are considered long-term. Other long-term assets consists of the following: December 31, 2023 2022 Long-term research and development costs $ 12,594 $ 14,556 Other long-term assets 2,405 2,099 Other long-term assets $ 14,999 $ 16,655 |
Property and Equipment | Property and Equipment Property and equipment consists of the following: Useful December 31, Life 2023 2022 Leasehold improvements * $ 2,705 $ 2,705 Office equipment 5 years 155 107 Computers and software 3 years 1,291 1,291 Furniture, fixtures and equipment 5 years 1,249 1,249 5,400 5,352 Less accumulated depreciation and amortization (4,059) (3,155) Property and equipment, net $ 1,341 $ 2,197 * Depreciation and amortization expense related to property and equipment for the years ended December 31, 2023, 2022 and 2021 was $903, $896, and $816 respectively. Property and equipment are recorded at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets. Upon disposal, retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. |
Acquired IPR&D and Milestones Expenses | Acquired IPR&D and Milestone Expense In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process research and development projects are expensed as acquired IPR&D and recorded as a component of research and development expense in the consolidated statements of operations and comprehensive net loss unless the project has an alternative future use. These costs include upfront and development milestone payments related to licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products. Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the milestone results are achieved. Regulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product. |
Foreign Currency Translation | Foreign Currency Translation The majority of the Company’s operations occurs in subsidiaries that have the U.S. dollar denominated as its functional currency. The assets and liabilities of the Company’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenue and expense amounts for these subsidiaries are translated using the average exchange rates for the period. Changes resulting from foreign currency translation are included in accumulated other comprehensive income (loss) on the Company’s consolidated statement of stockholders’ equity. Net foreign currency exchange transaction gains (losses), which are included in other (expense) income, net on our consolidated statements of operations, were immaterial for the years ended December 31, 2023, 2022 and 2021. |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 — Quoted market prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and marketable securities and derivative liability at December 31, 2023 and 2022 were carried at fair value, determined according to the fair value hierarchy. See Note 5 for further discussion. The carrying amounts reflected in the consolidated balance sheets for accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term maturities at December 31, 2023 and 2022, respectively. |
Research and Development Expenses | Research and Development Expenses Costs incurred in the research and development of the Company’s products are expensed to operations as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services and other outside costs. The value of goods and services received from contract research organizations, or CROs, or contract manufacturing organizations, or CMOs, in the reporting period are estimated based on the level of services performed and progress in the period for which the Company has not yet received an invoice from the supplier. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, and expensed as the related goods are delivered or the services are performed. |
Income Taxes | Income Taxes The Company is taxed as a C corporation for federal income tax purposes. Income taxes for the Company are recorded in accordance with FASB ASC Topic 740, Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits as provision for income taxes in the accompanying consolidated statements of operations. As of December 31, 2023 and 2022, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by adjusting the weighted-average shares outstanding for the potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and performance stock units are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. The following table includes the potential common shares, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share due to their anti-dilutive effect, for the periods indicated: Year Ended December 31, 2023 2022 2021 Stock options 6,551,025 6,354,544 5,737,599 Restricted stock units 1,079,382 774,166 435,589 Performance stock units 581,246 804,797 956,145 Potential common shares 8,211,653 7,933,507 7,129,333 |
Comprehensive Loss | Comprehensive Loss Comprehensive loss represents the net change in stockholders’ equity during a period from sources other than transactions with shareholders. As reflected in the accompanying consolidated statements of operations and comprehensive loss, our comprehensive loss is comprised of net losses and unrealized gains and losses on marketable debt securities. These changes in equity are reflected net of tax. |
Patent Costs | Patent Costs Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expenses. Patent costs were $555, $406 and $332 for the years ended December 31, 2023, 2022 and 2021, respectively. |
Subsequent Events | Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. See Note 17. |
Application of New or Revised Accounting Standards | Application of New or Revised Accounting Standards From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of product revenue allowance and reserve categories | Provision for Cash Discounts Fees, Rebates and Other Incentives Total Beginning Balance at December 31, 2021 $ 21 $ 453 $ 474 Provision related to sales in the current year 367 3,299 3,666 Credit and payments made (289) (1,042) (1,331) Ending balance December 31, 2022 $ 99 $ 2,710 $ 2,809 Provision related to sales in the current year 1,672 17,351 19,023 Credit and payments made (1,572) (10,586) (12,158) Ending balance December 31, 2023 $ 199 $ 9,475 $ 9,674 |
Schedule of inventory | December 31, December 31, 2023 2022 Raw Materials $ 4,625 $ 2,722 WIP 1,104 — Finished Goods 2,895 195 Total Inventory $ 8,624 $ 2,917 |
Schedule of prepaid expenses and other current assets | December 31, 2023 2022 Prepaid research and development costs $ 2,259 $ 4,392 Other current assets 6,672 7,415 Prepaid expenses and other current assets $ 8,931 $ 11,807 |
Schedule of property, plant and equipment | Useful December 31, Life 2023 2022 Leasehold improvements * $ 2,705 $ 2,705 Office equipment 5 years 155 107 Computers and software 3 years 1,291 1,291 Furniture, fixtures and equipment 5 years 1,249 1,249 5,400 5,352 Less accumulated depreciation and amortization (4,059) (3,155) Property and equipment, net $ 1,341 $ 2,197 * |
Schedule of potential common shares, presented based on amounts outstanding at each period end, excluded from computation of diluted net loss per share attributable to common stockholders | Year Ended December 31, 2023 2022 2021 Stock options 6,551,025 6,354,544 5,737,599 Restricted stock units 1,079,382 774,166 435,589 Performance stock units 581,246 804,797 956,145 Potential common shares 8,211,653 7,933,507 7,129,333 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, December 31, 2023 2022 Research and development costs $ 12,925 $ 11,379 Professional fees 3,833 4,502 Payroll related 15,439 11,444 Royalties 1,180 440 Sales Allowances 9,475 2,710 Other 5,410 2,419 Accrued expenses and other current liabilities $ 48,262 $ 32,894 |
Fair Value of Financial Asset_2
Fair Value of Financial Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value of Financial Assets and Liabilities | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | 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 Fair Value Measurements as of December 31, 2022 using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Commercial paper $ — $ 8,484 $ — $ 8,484 Money market funds 99,962 — — 99,962 Marketable securities: Corporate debt securities and commercial paper — 205,611 — 205,611 Total $ 99,962 $ 214,095 $ — $ 314,057 Liabilities: Derivative liability $ — $ — $ 1,340 $ 1,340 Total $ — $ — $ 1,340 $ 1,340 |
Schedule of estimated fair value of embedded derivative liability | Year ended December 31, 2023 2022 Beginning aggregate estimated fair value of Level 3 liabilities $ 1,340 $ — Initial recording of embedded derivative — 1,590 Change in fair value of embedded derivative (190) (250) Ending aggregate estimated fair value of Level 3 liabilities $ 1,150 $ 1,340 Year ended December 31, 2023 2022 Beginning aggregate estimated fair value of Level 3 securities $ — $ — Initial recording of RareStone equity — 1,040 Realized loss included in other expense — (1,040) Ending aggregate estimated fair value of Level 3 securities $ — $ — |
Schedule of marketable securities | December 31, 2023 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 215,491 $ 282 $ (7) $ 215,765 $ 215,491 $ 282 $ (7) $ 215,765 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 205,702 $ — $ (91) $ 205,611 $ 205,702 $ — $ (91) $ 205,611 |
Right of Use Asset and Lease _2
Right of Use Asset and Lease Liability (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Right of Use Asset and Lease Liability | |
Schedule of operating lease maturities | Operating Lease 2024 851 2025 502 Total operating lease payments 1,353 Less: imputed interest (93) Total operating lease liability $ 1,260 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net | |
Schedule of finite-lived intangible assets | 2024 $ 855 2025 855 2026 855 2027 855 2028 855 Thereafter 2,753 Total $ 7,028 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stock-based Compensation | |
Schedule of significant assumptions used to compute the fair values of employee and director stock options awarded | Year ended December 31, 2023 2022 2021 Risk‑free interest rate 2.35 % 2.19 % 0.79 % Expected term (in years) 6.11 6.11 6.11 Expected volatility 76.11 % 69.16 % 69.80 % Expected dividend yield — — — |
Summary of common stock option activity | Weighted ‑ Weighted- Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value Outstanding as of December 31, 2022 6,374,544 $ 17.85 7.73 $ 73,994 Granted 1,053,888 $ 25.42 — $ — Exercised (529,854) $ 14.09 — $ 9,225 Cancelled (347,553) $ 21.23 — $ — Outstanding as of December 31, 2023 6,551,025 $ 19.19 7.23 $ 175,419 Options exercisable at December 31, 2023 3,936,040 $ 19.77 6.54 $ 103,122 |
Summary of restricted stock unit activity | Weighted- Average Number of Grant Date RSUs Fair Value Unvested as of December 31, 2022 774,166 $ 12.18 Granted 643,028 24.97 Vested (214,837) 14.30 Cancelled (97,750) 15.61 Unvested as of December 31, 2023 1,104,607 $ 17.44 |
Summary of performance stock unit activity | Weighted- Average Number of Grant Date PSUs Fair Value Unvested as of December 31, 2022 804,797 $ 13.24 Granted — — Vested — — Cancelled (223,451) 13.24 Unvested as of December 31, 2023 581,346 $ 13.24 |
Summary of stock-based compensation expense | Year Ended December 31, 2023 2022 2021 Research and development $ 8,449 $ 5,814 $ 7,687 Selling, general, and administrative 24,104 14,017 13,117 Total $ 32,553 $ 19,831 $ 20,804 |
Summary of stock-based compensation expense by award type | Year Ended December 31, 2023 2022 2021 Stock options $ 17,671 $ 15,477 $ 17,988 Employees stock purchase plan 581 408 310 Restricted stock units 5,998 2,918 1,924 Performance stock units 8,303 1,028 582 Total $ 32,553 $ 19,831 $ 20,804 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of reconciliation of the income tax benefit at the federal statutory tax rate to effective income tax rate | As of December 31, 2023 2022 2021 Statutory tax rate 21.00 % 21.00 % 21.00 % State tax, net of federal benefit 10.24 9.83 7.45 Research and development credit 0.65 0.78 2.94 Orphan drug credit 3.37 2.15 7.58 Stock compensation (1.37) (0.29) (1.05) Other (0.48) (0.04) (0.47) Rate changes (6.52) — Change in valuation allowance (27.10) (33.44) (37.45) Effective tax rate (0.21) % — % — % |
Schedule of principal components of deferred tax assets | As of December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 153,685 $ 135,470 Research and development credits 16,139 14,380 Orphan drug credit 25,484 19,281 Capitalized license fee 2,311 2,776 Stock-based compensation 13,159 11,074 Section 174 Costs 50,688 29,663 Deferred revenue 350 438 Accrued Expenses & Other 5,680 4,536 Total deferred tax assets 267,496 217,618 Valuation allowance (267,158) (217,257) Net deferred tax assets 338 361 Deferred tax liabilities: Operating lease right-of-use asset and other (338) (361) Total deferred tax liabilities $ (338) $ (361) |
Nature of Business - Liquidity
Nature of Business - Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||||
Oct. 18, 2022 | Sep. 19, 2022 | Nov. 02, 2021 | Feb. 09, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Liquidity | |||||||
Accumulated deficit | $ 894,736 | $ 710,058 | |||||
Issuance of stock (in shares) | 580,000 | 4,800,000 | 5,750,000 | ||||
Price per share | $ 26 | $ 26 | $ 30 | ||||
Net proceeds from issuance of common stock | $ 14,175 | $ 116,887 | $ 161,550 | 48,875 | 131,112 | $ 161,726 | |
Period for option to purchase additional shares by underwriter | 30 days | ||||||
Carrying amount of cash and cash equivalents and short term investments | $ 275,846 | $ 333,288 | |||||
Underwriter option to purchase | |||||||
Liquidity | |||||||
Issuance of stock (in shares) | 720,000 | ||||||
Maximum | At-the-market offering | |||||||
Liquidity | |||||||
Aggregate proceeds | $ 100,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) Institution segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Summary of Significant Accounting Policies | |||
Reclassification of prior year balances | $ 2,314,000 | ||
Segment Information | |||
Number of operating segments | segment | 1 | ||
Number of reporting segments | segment | 1 | ||
Off Balance Sheet Risk and Concentrations of Credit Risk | |||
Number of federally insured financial institutions | Institution | 2 | ||
Income Taxes | |||
Accrued interest or penalties | $ 0 | 0 | |
Patent Costs | |||
Patent costs | 117,532,000 | 92,032,000 | $ 68,486,000 |
Accounts Receivable, net | |||
Revenue | 77,428,000 | 23,638,000 | 3,154,000 |
Patents | |||
Patent Costs | |||
Patent costs | $ 555,000 | $ 406,000 | 332,000 |
Customer concentration risk | Customer one | Revenue benchmark | |||
Off Balance Sheet Risk and Concentrations of Credit Risk | |||
Percentage of revenue generated from customer | 77% | 85% | |
Accounts Receivable, net | |||
Accounts receivables | $ 67 | $ 80 | |
Product revenue | |||
Accounts Receivable, net | |||
Revenue | $ 77,428,000 | $ 16,884,000 | $ 3,154,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Product revenue allowance and reserve categories (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Product revenue allowance and reserve categories | ||
Beginning Balance | $ 2,809 | $ 474 |
Provision related to sales in the current year | 19,023 | 3,666 |
Credit and payments made | (12,158) | (1,331) |
Ending balance | 9,674 | 2,809 |
Provision for Cash Discounts | ||
Product revenue allowance and reserve categories | ||
Beginning Balance | 99 | 21 |
Provision related to sales in the current year | 1,672 | 367 |
Credit and payments made | (1,572) | (289) |
Ending balance | 199 | 99 |
Fees, Rebates and Other Incentives | ||
Product revenue allowance and reserve categories | ||
Beginning Balance | 2,710 | 453 |
Provision related to sales in the current year | 17,351 | 3,299 |
Credit and payments made | (10,586) | (1,042) |
Ending balance | $ 9,475 | $ 2,710 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Raw Materials | $ 4,625 | $ 2,722 |
WIP | 1,104 | |
Finished Goods | 2,895 | 195 |
Total Inventory | $ 8,624 | $ 2,917 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Prepaid expenses and other current assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Prepaid research and development costs | $ 2,259 | $ 4,392 |
Other current assets | 6,672 | 7,415 |
Prepaid expenses and other current assets | $ 8,931 | $ 11,807 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Other Long-Term Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Long-term research and development costs | $ 12,594 | $ 14,556 |
Other long-term assets | 2,405 | 2,099 |
Other long-term assets | $ 14,999 | $ 16,655 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Property and equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property and equipment | |||
Property and equipment, gross | $ 5,400 | $ 5,352 | |
Less accumulated depreciation and amortization | (4,059) | (3,155) | |
Property and equipment, net | 1,341 | 2,197 | |
Depreciation and amortization expense | 903 | 896 | $ 816 |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | $ 2,705 | 2,705 | |
Office equipment | |||
Property and equipment | |||
Useful Life | 5 years | ||
Property and equipment, gross | $ 155 | 107 | |
Computer and software | |||
Property and equipment | |||
Useful Life | 3 years | ||
Property and equipment, gross | $ 1,291 | 1,291 | |
Furniture, fixtures and equipment | |||
Property and equipment | |||
Useful Life | 5 years | ||
Property and equipment, gross | $ 1,249 | $ 1,249 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Net loss per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shares excluded from the computation of diluted net loss per share | |||
Potential common shares | 8,211,653 | 7,933,507 | 7,129,333 |
Employee Stock Option | |||
Shares excluded from the computation of diluted net loss per share | |||
Potential common shares | 6,551,025 | 6,354,544 | 5,737,599 |
Restricted stock units | |||
Shares excluded from the computation of diluted net loss per share | |||
Potential common shares | 1,079,382 | 774,166 | 435,589 |
Performance stock units | |||
Shares excluded from the computation of diluted net loss per share | |||
Potential common shares | 581,246 | 804,797 | 956,145 |
Asset Acquisition (Details)
Asset Acquisition (Details) - Xinvento B.V. - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 27, 2023 | Dec. 31, 2023 | Mar. 31, 2024 | |
Asset Acquisition | |||
Aggregate Payment Upon Achievement Of Development And Commercial Milestones | $ 206,000 | ||
Clinical development milestone payments | 6,000 | ||
Regulatory approval and commercial milestones milestone payments | 125,000 | ||
Sales milestone payments | 75,000 | ||
Purchase consideration | 5,667 | ||
Cash consideration | 4,520 | ||
Holdback, payable on the one-year anniversary of the acquisition | $ 500 | ||
Acquisition related costs | $ 647 | ||
Research and development | |||
Asset Acquisition | |||
Purchase consideration | $ 5,667 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses | ||
Research and development costs | $ 12,925 | $ 11,379 |
Professional fees | 3,833 | 4,502 |
Payroll related | 15,439 | 11,444 |
Royalties | 1,180 | 440 |
Sales Allowances | 9,475 | 2,710 |
Other | 5,410 | 2,419 |
Accrued expenses and other current liabilities | $ 48,262 | $ 32,894 |
Fair Value of Financial Asset_3
Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value of Financial Assets | ||
Carrying amount of cash and cash equivalents and short term investments | $ 275,846 | $ 333,288 |
Fair value of financial assets and liabilities | ||
Marketable Securities | 215,765 | 205,611 |
Derivative liability | 1,150 | 1,340 |
Corporate Debt Securities and Commercial Paper | ||
Fair value of financial assets and liabilities | ||
Marketable Securities | 215,765 | 205,611 |
Recurring | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Fair value of assets | 261,612 | 314,057 |
Derivative liability | 1,150 | 1,340 |
Recurring | Corporate Debt Securities and Commercial Paper | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Cash Equivalents | 8,484 | |
Marketable Securities | 215,765 | 205,611 |
Recurring | Money Market Funds | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Cash Equivalents | 45,847 | 99,962 |
Recurring | Level 1 | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Fair value of assets | 40,868 | 99,962 |
Recurring | Level 1 | Money Market Funds | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Cash Equivalents | 40,868 | 99,962 |
Recurring | Level 2 | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Fair value of assets | 220,744 | 214,095 |
Recurring | Level 2 | Corporate Debt Securities and Commercial Paper | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Cash Equivalents | 8,484 | |
Marketable Securities | 215,765 | 205,611 |
Recurring | Level 2 | Money Market Funds | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Cash Equivalents | 4,979 | |
Recurring | Level 3 | Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Derivative liability | $ 1,150 | $ 1,340 |
Fair Value of Financial Asset_4
Fair Value of Financial Assets and Liabilities - Changes in Embedded Derivative Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Embedded Derivative Financial Instruments | Level 3 | ||
Fair value of embedded derivative liability | ||
Beginning aggregate estimated fair value of Level 3 liabilities | $ 1,340 | |
Initial recording of embedded derivative | $ 1,590 | |
Change in fair value of embedded derivative | (190) | (250) |
Ending aggregate estimated fair value of Level 3 liabilities | 1,150 | 1,340 |
Revenue Interest Financing Agreement | ||
Fair value of embedded derivative liability | ||
Beginning aggregate estimated fair value of Level 3 liabilities | 1,340 | |
Change in fair value of embedded derivative | 190 | 250 |
Ending aggregate estimated fair value of Level 3 liabilities | $ 1,150 | $ 1,340 |
Fair Value of Financial Asset_5
Fair Value of Financial Assets and Liabilities - Changes in Level 3 Securities (Details) - Level 3 - RareStone Group Ltd. - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value of Financial Assets | ||
Initial recording of RareStone equity | $ 1,040 | |
Realized loss included in other expense | $ (1,040) | |
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Fair Value of Financial Asset_6
Fair Value of Financial Assets and Liabilities - Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value of Financial Assets | ||
Amortized Cost | $ 215,491 | $ 205,702 |
Gross Unrealized Gains | 282 | |
Gross Unrealized Losses | (7) | (91) |
Fair Value | 215,765 | 205,611 |
Corporate Debt Securities and Commercial Paper | ||
Fair Value of Financial Assets | ||
Amortized Cost | 215,491 | 205,702 |
Gross Unrealized Gains | 282 | |
Gross Unrealized Losses | (7) | (91) |
Fair Value | $ 215,765 | $ 205,611 |
Right of Use Asset and Lease _3
Right of Use Asset and Lease Liability (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
May 31, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2018 | |
Right of Use Asset and Lease Liability | ||||||
Remaining term of operating lease (in years) | 1 year 7 months 6 days | |||||
Operating lease discount rate | 10% | |||||
Transition relief package | true | |||||
Lease term (in years) | 6 years | |||||
Lease renewal term (in years) | 5 years | 5 years | ||||
Option to extend | true | |||||
Rent expense, or operating lease costs | $ 551 | $ 551 | $ 551 | |||
Cash payments in the measurement of operating lease liability | $ 834 | $ 818 | $ 802 |
Right of Use Asset and Lease _4
Right of Use Asset and Lease Liability - Operating Lease Maturities (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Right of Use Asset and Lease Liability | |
2024 | $ 851 |
2025 | 502 |
Total operating lease payments | 1,353 |
Less: imputed interest | (93) |
Total operating lease liability | $ 1,260 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Operating Lease, Liability, Current, Capital Lease Obligations, Noncurrent |
Intangible Assets, Net - Amorti
Intangible Assets, Net - Amortization expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Definite-lived intangible assets | |||
2024 | $ 855 | ||
2025 | 855 | ||
2026 | 855 | ||
2027 | 855 | ||
2028 | 855 | ||
Thereafter | 2,753 | ||
Total | 7,028 | $ 7,883 | |
Amortization expense | $ 855 | $ 774 | $ 342 |
Finite-Lived Intangible Assets, Remaining Amortization Period | 11 years |
Common Stock (Details)
Common Stock (Details) - USD ($) | 12 Months Ended | ||||||
Oct. 18, 2022 | Sep. 19, 2022 | Nov. 02, 2021 | Feb. 09, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Common Stock | |||||||
Issuance of stock (in shares) | 580,000 | 4,800,000 | 5,750,000 | ||||
Issuance of stock | $ 131,112,000 | $ 161,726,000 | |||||
Price per share | $ 26 | $ 26 | $ 30 | ||||
Net proceeds from issuance of common stock | $ 14,175,000 | $ 116,887,000 | $ 161,550,000 | $ 48,875,000 | $ 131,112,000 | $ 161,726,000 | |
Period for option to purchase additional shares by underwriter | 30 days | ||||||
2017 Equity Incentive Plan | |||||||
Common Stock | |||||||
Common stock reserved for issuance | 7,541,429 | ||||||
Shares available for future grant | 4,187,953 | ||||||
2017 Employee Stock Purchase Plan | |||||||
Common Stock | |||||||
Common stock reserved for issuance | 1,323,026 | ||||||
2022 Employment Inducement Plan | |||||||
Common Stock | |||||||
Vesting period | 4 years | ||||||
Shares available for future grant | 179,925 | ||||||
Underwriter option to purchase | |||||||
Common Stock | |||||||
Issuance of stock (in shares) | 720,000 | ||||||
Issuance of stock | $ 750,000 | ||||||
At-the-market offering | |||||||
Common Stock | |||||||
Issuance of stock | $ 48,875,000 | ||||||
Common stock | At-the-market offering | |||||||
Common Stock | |||||||
Issuance of stock | $ 2,000,000 | $ 48,900,000 | |||||
Maximum | 2022 Employment Inducement Plan | |||||||
Common Stock | |||||||
Expiration period | 10 years | ||||||
Maximum | At-the-market offering | |||||||
Common Stock | |||||||
Aggregate proceeds | $ 100,000,000 | ||||||
Employee Stock Option | Maximum | |||||||
Common Stock | |||||||
Vesting period | 4 years |
Stock-based Compensation - 2017
Stock-based Compensation - 2017 Equity Incentive Plan (Details) - 2017 Equity Incentive Plan - shares | 12 Months Ended | |||
Jan. 01, 2024 | Jan. 01, 2023 | Jan. 01, 2022 | Dec. 31, 2023 | |
Stock-based Compensation | ||||
Percentage increase in authorized shares under the plan | 4% | |||
Number of additional shares added | 2,377,062 | 2,264,497 | 2,011,343 | |
Authorized shares | 11,729,382 | |||
Shares available for future grant | 4,187,953 | |||
Common stock reserved for issuance | 7,541,429 | |||
Exercise Price Not Less Than 100% Of Fair Market Value | ||||
Stock-based Compensation | ||||
Exercise price of incentive stock options over fair market value of the common stock | 100% | |||
Voting power of stock | 10% | |||
Exercise Price Not Less Than 110% Of Fair Market Value | ||||
Stock-based Compensation | ||||
Exercise price of incentive stock options over fair market value of the common stock | 110% | |||
Voting power of stock | 10% |
Stock-based Compensation - 2022
Stock-based Compensation - 2022 Inducement Plan (Details) - shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Feb. 09, 2022 | |
Stock-based Compensation | |||
Stock options outstanding | 6,551,025 | 6,374,544 | |
2022 Employment Inducement Plan | |||
Stock-based Compensation | |||
Authorized shares | 1,000,000 | ||
Vesting period | 4 years | ||
Stock options outstanding | 526,177 | ||
Restricted stock unit awards outstanding | 233,719 | ||
Shares available for future grant | 179,925 | ||
2022 Employment Inducement Plan | Maximum | |||
Stock-based Compensation | |||
Expiration period | 10 years |
Stock-based Compensation - 20_2
Stock-based Compensation - 2017 Employee Stock Purchase Plan (Details) - shares | 12 Months Ended | |||||
Jan. 01, 2023 | Jan. 01, 2022 | Jan. 01, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based Compensation | ||||||
Number of common stock options granted | 1,053,888 | |||||
Expected term | 6 years 1 month 9 days | 6 years 1 month 9 days | 6 years 1 month 9 days | |||
2017 Employee Stock Purchase Plan | ||||||
Stock-based Compensation | ||||||
Common stock reserved for issuance | 1,323,026 | |||||
Percentage increase in authorized shares under the plan | 1% | |||||
Number of additional shares added | 0 | 502,835 | 0 | |||
Number of shares issued | 49,819 | 92,932 | 38,051 | |||
Purchase price of ESPP meeting certain criteria as of the offering period (as a percent) | 85% | |||||
Discount recognized as compensation expense | 15% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based Compensation | |||
Number of common stock options granted | 1,053,888 | ||
Total intrinsic value of stock options exercised | $ 9,225 | ||
Employees stock purchase plan | |||
Stock-based Compensation | |||
Grant cliff vesting period | 1 year | ||
Employees stock purchase plan | Minimum | |||
Stock-based Compensation | |||
Vesting period of stock option awards | 1 year | ||
Employees stock purchase plan | Maximum | |||
Stock-based Compensation | |||
Vesting period of stock option awards | 4 years | ||
2017 Equity Incentive Plan | |||
Stock-based Compensation | |||
Number of common stock options granted | 842,528 | 1,929,345 | 1,678,230 |
Weighted average grant date fair value relating to outstanding stock options | $ 17.72 | $ 4.14 | $ 15.69 |
2022 Employment Inducement Plan | |||
Stock-based Compensation | |||
Vesting period of stock option awards | 4 years | ||
Number of common stock options granted | 229,360 | 347,985 | 0 |
Weighted average grant date fair value relating to outstanding stock options | $ 15.30 | $ 13.05 | $ 0 |
Stock-based Compensation - Blac
Stock-based Compensation - Black Scholes option pricing (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Weighted average assumptions | |||
Risk-free interest rate | 2.35% | 2.19% | 0.79% |
Expected term (in years) | 6 years 1 month 9 days | 6 years 1 month 9 days | 6 years 1 month 9 days |
Expected volatility | 76.11% | 69.16% | 69.80% |
Stock-based Compensation - Comm
Stock-based Compensation - Common stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | |||
Outstanding at beginning of the period | 6,374,544 | ||
Granted | 1,053,888 | ||
Exercised | (529,854) | ||
Cancelled | (347,553) | ||
Outstanding at end of the period | 6,551,025 | 6,374,544 | |
Options exercisable at end of the period | 3,936,040 | ||
Weighted-Average Exercise Price | |||
Outstanding at beginning of the period | $ 17.85 | ||
Granted | 25.42 | ||
Exercised | 14.09 | ||
Cancelled | 21.23 | ||
Outstanding at end of the period | 19.19 | $ 17.85 | |
Options exercisable at end of the period | $ 19.77 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding at end of the period | 7 years 2 months 23 days | 7 years 8 months 23 days | |
Options exercisable at end of the period | 6 years 6 months 14 days | ||
Aggregate Intrinsic Value | |||
Outstanding balance | $ 73,994 | ||
Exercised | $ 9,225 | ||
Options vested and expected to vest | 175,419 | ||
Options exercisable | $ 103,122 | ||
2017 Equity Incentive Plan | |||
Number of Options | |||
Granted | 842,528 | 1,929,345 | 1,678,230 |
Stock-based Compensation - RSU
Stock-based Compensation - RSU and PSU activity (Details) | 1 Months Ended | 12 Months Ended |
Nov. 30, 2021 USD ($) | Dec. 31, 2023 USD ($) $ / shares shares | |
Weighted Average Grant Date Fair Value | ||
Number of shares of common stock shares issued upon vesting | $ | 956,145 | |
Restricted stock units | ||
Number of Units | ||
Outstanding unvested at beginning of the period | shares | 774,166 | |
Granted | shares | 643,028 | |
Vested | shares | (214,837) | |
Cancelled | shares | (97,750) | |
Outstanding unvested at end of the period | shares | 1,104,607 | |
Weighted Average Grant Date Fair Value | ||
Outstanding unvested at beginning of the period | $ / shares | $ 12.18 | |
Granted | $ / shares | 24.97 | |
Vested | $ / shares | 14.30 | |
Cancelled | $ / shares | 15.61 | |
Outstanding unvested at end of the period | $ / shares | $ 17.44 | |
Aggregate intrinsic value | $ | $ 50,779,000 | |
Performance Shares [Member] | ||
Number of Units | ||
Outstanding unvested at beginning of the period | shares | 804,797 | |
Cancelled | shares | (223,451) | |
Outstanding unvested at end of the period | shares | 581,346 | |
Weighted Average Grant Date Fair Value | ||
Outstanding unvested at beginning of the period | $ / shares | $ 13.24 | |
Cancelled | $ / shares | 13.24 | |
Outstanding unvested at end of the period | $ / shares | $ 13.24 | |
Estimated percentage of payment awards granted eligible to vest | 90% |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation expense in Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based Compensation | |||
Stock based compensation expense | $ 32,553 | $ 19,831 | $ 20,804 |
Research and development | |||
Stock-based Compensation | |||
Stock based compensation expense | 8,449 | 5,814 | 7,687 |
Selling, general and administrative | |||
Stock-based Compensation | |||
Stock based compensation expense | 24,104 | 14,017 | 13,117 |
Stock options. | |||
Stock-based Compensation | |||
Stock based compensation expense | 17,671 | 15,477 | 17,988 |
Restricted stock units | |||
Stock-based Compensation | |||
Stock based compensation expense | $ 5,998 | $ 2,918 | $ 1,924 |
Stock-based Compensation - Co_2
Stock-based Compensation - Compensation expense by award type (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based Compensation | |||
Stock based compensation expense | $ 32,553 | $ 19,831 | $ 20,804 |
Research and development | |||
Stock-based Compensation | |||
Stock based compensation expense | 8,449 | 5,814 | 7,687 |
Selling, general and administrative | |||
Stock-based Compensation | |||
Stock based compensation expense | 24,104 | 14,017 | 13,117 |
2017 Equity Incentive Plan | Employee | |||
Stock-based Compensation | |||
Unrecognized compensation expense related to non-vested portion of awards | $ 16,880 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 7 months 17 days | ||
2017 Equity Incentive Plan | Employees, directors and nonemployees | |||
Stock-based Compensation | |||
Unrecognized compensation expense related to non-vested portion of awards | $ 27,322 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 25 days | ||
Stock options. | |||
Stock-based Compensation | |||
Stock based compensation expense | $ 17,671 | 15,477 | 17,988 |
Employees stock purchase plan | |||
Stock-based Compensation | |||
Stock based compensation expense | 581 | 408 | 310 |
Restricted stock units | |||
Stock-based Compensation | |||
Stock based compensation expense | 5,998 | 2,918 | 1,924 |
Performance stock units | |||
Stock-based Compensation | |||
Stock based compensation expense | $ 8,303 | $ 1,028 | $ 582 |
Significant Agreements (Details
Significant Agreements (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Apr. 03, 2018 USD ($) shares | Dec. 31, 2021 USD ($) item | Jan. 31, 2016 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) item | Mar. 31, 2022 USD ($) | Mar. 31, 2021 USD ($) | Feb. 26, 2010 USD ($) | |
Significant Agreements | |||||||||||
Revenue | $ 77,428,000 | $ 23,638,000 | $ 3,154,000 | ||||||||
One-time non-refundable development milestone payment | $ 70,000,000 | ||||||||||
RareStone Group Ltd. | |||||||||||
Significant Agreements | |||||||||||
Number of independent sub studies in patients | item | 4 | ||||||||||
Upfront payment | $ 7,000,000 | ||||||||||
Equity issued in conjunction with license agreement | 1,077,586 | ||||||||||
Aggregate payment upon achievement of development and commercial milestones | 62,500,000 | $ 62,500,000 | |||||||||
Equity recorded at fair value | $ 1,040,000 | $ 1,040,000 | 1,040,000 | $ 2,440,000 | |||||||
Realized loss on RareStone equity | $ 1,040,000 | ||||||||||
Loss on RareStone equity investment | $ 300,000 | ||||||||||
Upfront consideration | 8,040,000 | ||||||||||
Number of performance obligations | item | 2 | ||||||||||
License agreement commercial manufacturing supply discount | 1,286,000 | ||||||||||
Contract with customer liability revenue recognized | 6,754,000 | ||||||||||
Ipsen | License agreement | |||||||||||
Significant Agreements | |||||||||||
Amount of commercial milestone capitalized | $ 4,000,000 | $ 5,000,000 | |||||||||
Milestone expenses | 0 | 0 | 0 | ||||||||
Ipsen | License agreement | Maximum | |||||||||||
Significant Agreements | |||||||||||
Aggregate payment upon achievement of development and commercial milestones | $ 40,000,000 | ||||||||||
Ipsen | Sublicense agreement | Minimum | |||||||||||
Significant Agreements | |||||||||||
Payment based on revenue received, as percentage | 10% | ||||||||||
Ipsen | Sublicense agreement | Maximum | |||||||||||
Significant Agreements | |||||||||||
Payment based on revenue received, as percentage | 20% | ||||||||||
Camurus | License agreement | |||||||||||
Significant Agreements | |||||||||||
Milestone expenses | 0 | 1,000,000 | 0 | ||||||||
Non-refundable and non-creditable signing fee | $ 500,000 | ||||||||||
Royalty payment period | 10 years | ||||||||||
Camurus | License agreement | Maximum | |||||||||||
Significant Agreements | |||||||||||
One-time non-refundable development milestone payment | $ 7,750,000 | ||||||||||
One-time non-refundable non-creditable sales milestone payment | $ 57,000,000 | ||||||||||
Takeda | |||||||||||
Significant Agreements | |||||||||||
Equity issued in conjunction with license agreement | 4,448,000 | ||||||||||
Milestone expenses | 0 | 0 | 0 | ||||||||
One-time non-refundable development milestone payment | $ 70,000,000 | ||||||||||
Shares issued for license agreement (in shares) | shares | 223,544 | ||||||||||
Period after date of first commercial sale (in years) | 10 years | ||||||||||
License revenue | |||||||||||
Significant Agreements | |||||||||||
Revenue | $ 0 | $ 6,754,000 | $ 0 |
Long-Term Obligations (Details)
Long-Term Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Sep. 12, 2023 | Sep. 29, 2022 | Jun. 29, 2022 | Jun. 16, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Long-Term Obligations | |||||||
Deferred royalty obligation | $ 106,143 | $ 75,810 | |||||
Revenue Interest Financing Agreement | |||||||
Long-Term Obligations | |||||||
Remaining Investment Amount | $ 24,370 | $ 37,500 | $ 37,500 | 100,000 | |||
Repayment of debt | 7,398 | ||||||
Revenue interest payment period | 12 years | ||||||
Fair value of embedded derivative liability | 1,150 | 1,340 | $ 1,590 | ||||
Remeasurement of the embedded derivative liability | 190 | $ 250 | |||||
Deferred royalty obligation | $ 106,143 | ||||||
Effective interest rate | 15.12% | ||||||
Debt issuance costs | $ 3,287 | ||||||
Revenue Interest Financing Agreement | Annual net revenues up to 125 million | |||||||
Long-Term Obligations | |||||||
Royalty interest (as a percent) | 11.50% | ||||||
Threshold annual net revenues | $ 125,000 | ||||||
Revenue Interest Financing Agreement | Annual net revenues between 125 million and 300 million | |||||||
Long-Term Obligations | |||||||
Royalty interest (as a percent) | 7.50% | ||||||
Revenue Interest Financing Agreement | Annual net revenues exceeding 300 million | |||||||
Long-Term Obligations | |||||||
Royalty interest (as a percent) | 2.50% | ||||||
Threshold annual net revenues | $ 300,000 | ||||||
Revenue Interest Financing Agreement | March 31, 2027 | |||||||
Long-Term Obligations | |||||||
Threshold cumulative minimum payments (as a percent) | 60% | ||||||
Revenue Interest Financing Agreement | March 31, 2029 | |||||||
Long-Term Obligations | |||||||
Threshold cumulative minimum payments (as a percent) | 120% | ||||||
Revenue Interest Financing Agreement | Minimum | |||||||
Long-Term Obligations | |||||||
Revenue interest cap (as a percent) | 185% | ||||||
Revenue Interest Financing Agreement | Minimum | Annual net revenues between 125 million and 300 million | |||||||
Long-Term Obligations | |||||||
Threshold annual net revenues | $ 125,000 | ||||||
Revenue Interest Financing Agreement | Maximum | |||||||
Long-Term Obligations | |||||||
Aggregate investment amount | $ 100,000 | ||||||
Revenue interest cap (as a percent) | 250% | ||||||
Revenue Interest Financing Agreement | Maximum | Annual net revenues between 125 million and 300 million | |||||||
Long-Term Obligations | |||||||
Threshold annual net revenues | $ 300,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - Consultants and vendors - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related-Party Transactions | |||
Net costs | $ 1,141 | $ 1,868 | $ 1,961 |
Accounts payable | |||
Related-Party Transactions | |||
Due to related party | $ 1 | $ 13 |
Income Taxes - Components of in
Income Taxes - Components of income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Components of loss before income taxes | |||
United States | $ (178,669) | $ (181,119) | $ (69,612) |
Foreign | (5,445) | ||
Loss before taxes | $ (184,114) | $ (181,119) | $ (69,612) |
Income Taxes - Components of pr
Income Taxes - Components of provision for income taxes (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Current: | |
U.S. State and Local | $ 1 |
Foreign | 563 |
Current Income Tax Expense (Benefit) | $ 564 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of the income tax benefit | |||
Statutory tax rate | 21% | 21% | 21% |
State tax, net of federal benefit | 10.24% | 9.83% | 7.45% |
Research and development credit | 0.65% | 0.78% | 2.94% |
Orphan drug credit | 3.37% | 2.15% | 7.58% |
Stock compensation | (1.37%) | (0.29%) | (1.05%) |
Other | (0.48%) | (0.04%) | (0.47%) |
Rate changes | (6.52%) | ||
Change in valuation allowance | (27.10%) | (33.44%) | (37.45%) |
Effective tax rate | (0.21%) |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 153,685 | $ 135,470 |
Research and development credits | 16,139 | 14,380 |
Orphan drug credit | 25,484 | 19,281 |
Capitalized license fee | 2,311 | 2,776 |
Stock-based compensation | 13,159 | 11,074 |
Section 174 Costs | 50,688 | 29,663 |
Deferred revenue | 350 | 438 |
Accrued Expenses & Other | 5,680 | 4,536 |
Total deferred tax assets | 267,496 | 217,618 |
Valuation allowance | (267,158) | (217,257) |
Net deferred tax assets | 338 | 361 |
Deferred tax liabilities: | ||
Operating lease right-of-use asset and other | (338) | (361) |
Total deferred tax liabilities: | $ (338) | $ (361) |
Income Taxes - Operating loss c
Income Taxes - Operating loss carryforward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating loss carryforwards | ||
Increase in valuation allowance | $ 49,901 | $ 59,046 |
Federal net operating loss carryforwards | 555,563 | |
State net operating loss carryforwards | 597,952 | |
Net operating loss indefinite carryforwards | 482,396 | |
Foreign net operating loss carryforwards | 1,342 | |
Federal orphan drug credit related to qualifying research | 25,484 | |
Unremitted earnings of foreign subsidiaries | 730 | |
Accrued interest or penalties related to uncertain tax positions | 0 | $ 0 |
Research tax credits | Federal | ||
Operating loss carryforwards | ||
Research tax credits | 13,142 | |
Research tax credits | State | ||
Operating loss carryforwards | ||
Research tax credits | $ 3,794 |
Retirement Plan (Details)
Retirement Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Plan | |||
Percentage Company matches of eligible employee contributions | 100% | ||
Percentage of employee contributions matched by company | 4% | ||
Company contributions to retirement plan | $ 1,460 | $ 1,195 | $ 886 |
Segment and Geographic Informat
Segment and Geographic Information (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
Segment and Geographic Information | |
Number of operating segments | 1 |
Segment and Geographic Inform_2
Segment and Geographic Information - Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Segment and Geographic Information | |||
Total revenues | $ 77,428 | $ 23,638 | $ 3,154 |
United States | |||
Segment and Geographic Information | |||
Total revenues | 62,425 | 21,078 | $ 3,154 |
Germany | |||
Segment and Geographic Information | |||
Total revenues | 6,075 | 954 | |
Other | |||
Segment and Geographic Information | |||
Total revenues | $ 8,928 | $ 1,606 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - License agreement - L G Chem Ltd | Jan. 04, 2024 USD ($) |
Subsequent events | |
Cash payment | $ 40,000,000 |
Shares issued for license agreement | $ 20,000,000 |
Shares were issued at a per share price | 10 |
License agreement consideration payment | $ 40,000,000 |
Effective date of the license agreement | 18 months |
Cash upon achieving various regulatory and sales milestones | $ 205,000,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ (184,678) | $ (181,119) | $ (69,612) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |