What changed in this filing

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Item 1. Financial Statements

2025-08-05 compared with 2025-05-07 · 135 added, 98 removed, 546 unchanged (30% of the section changed)

30 unchanged sentences

150,000 shares authorized;

150,000 and 150,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

Liquidation preference of $ 150,000 as of March 31, 2025.

150,000 and 150,000 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively.

Liquidation preference of $ 150,000 as of June 30, 2025.

Stockholders’ equity:

1 unchanged sentence

10,000,000 shares authorized;

no shares issued and outstanding at March 31, 2025 and December 31, 2024

no shares issued and outstanding at June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value:

120,000,000 shares authorized;

63,494,892 and 62,390,654 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

63,913,185 and 62,390,654 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

9 unchanged sentences

(in thousands, except share and per share data)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Product revenue, net

9 unchanged sentences

Other income (expense), net

Gain on settlement of forward contract

Interest expense

32 unchanged sentences

( 1,204,836 )

Stock compensation expense

Issuance of common stock in connection with ESPP

Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units

Accretion of preferred stock dividends

Foreign currency translation adjustment

Net unrealized loss on marketable securities

Balance at June 30, 2025

( 1,251,468 )

Balance at December 31, 2023

7 unchanged sentences

( 1,036,108 )

Issuance of Series A Preferred Stock, net of $ 2,250 of issuance costs

Stock-based compensation expense

Issuance of common stock in connection with ESPP

Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units

Issuance of common stock as consideration for LGC license

Accretion of preferred stock dividends

Foreign currency translation adjustment

Unrealized loss on marketable securities

Balance at June 30, 2024

( 1,068,369 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three months ended March 31,

Six months ended June 30,

Operating activities

6 unchanged sentences

Change in fair value of embedded derivative liability

Gain on settlement of forward contract

Acquired IPR&D assets classified as investing activities

Foreign currency (gain) loss

Changes in operating assets and liabilities:

14 unchanged sentences

Proceeds from issuance of common stock from ESPP

Proceeds from Series A Preferred Stock, net of issuance costs

Gain on settlement of forward contract

Proceeds from ATM equity offering

11 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share information)

Nature of Business

2 unchanged sentences

We are focused on advancing our melanocortin-4 (MC4R) receptor agonists, including our lead asset, IMCIVREE ® (setmelanotide), as a precision medicine designed to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases.

While obesity affects hundreds of millions of people worldwide, we are developing therapies for a subset of individuals who have hyperphagia, a pathological insatiable hunger and impaired satiety accompanied by persistent and abnormal food-seeking behaviors, decreased energy expenditure and severe obesity due to diseases such as acquired or congenital hypothalamic obesity, Bardet-Biedl syndrome (BBS) or other diseases caused by impaired MC4R pathway signaling.

While obesity affects hundreds of millions of people worldwide, we are developing therapies for a subset of individuals who have hyperphagia, a pathological insatiable hunger and impaired satiety accompanied by persistent and abnormal food-seeking behaviors, decreased energy expenditure and severe obesity due to diseases such as acquired or congenital hypothalamic obesity (“HO”) Bardet-Biedl syndrome (BBS) or other diseases caused by impaired MC4R pathway signaling.

The MC4R pathway is an endocrine pathway in the brain that is responsible for regulating hunger, caloric intake and energy expenditure, which consequently affect body weight.

1 unchanged sentence

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 has wholly owned subsidiaries in the US, the United Kingdom, the Netherlands, France, Germany, Italy, Spain, Switzerland, Japan 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.

4 unchanged sentences

The Company has incurred operating losses and experienced negative cash flows from operations since inception.

As of March 31, 2025, the Company had an accumulated deficit of $ 1.2 billion.

As of June 30, 2025, the Company had an accumulated deficit of $ 1.3 billion.

The Company has funded these losses primarily from the proceeds from the sales of common and preferred stock, product revenue, asset sales, royalty financing, out-license arrangements, as well as capital contributions received from the former parent company, Rhythm Holdings LLC.

2 unchanged sentences

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.

As of March 31, 2025, the Company had $ 314,488 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 financing will be available to the Company on acceptable terms, or at all.

As of June 30, 2025, the Company had $ 291.0 million 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 financing 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.

5 unchanged sentences

As permitted under these rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted.

The accompanying condensed consolidated balance sheet as of March 31, 2025, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of convertible preferred stock and stockholders’ equity for the three months ended March 31, 2025 and 2024 and the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 and the related footnote disclosures are unaudited.

The accompanying condensed consolidated balance sheet as of June 30, 2025, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025 and 2024, the condensed consolidated statements of convertible preferred stock and stockholders’ equity for the three and six months ended June 30, 2025 and 2024 and the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 and the related footnote disclosures are unaudited.

In management's opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2024 and include all adjustments, which are all normal recurring adjustments, necessary for the fair presentation of the interim financial statements.

The results for the three months ended March 31, 2025 are not necessarily indicative of the results expected for the full fiscal year, any other interim periods, or any future year or period.

The results for the six months ended June 30, 2025 are not necessarily indicative of the results expected for the full fiscal year, any other interim periods, or any future year or period.

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited condensed consolidated financial statements.

As of March 31, 2025, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

As of June 30, 2025, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Estimates

18 unchanged sentences

The Company adopted the guidance in the fiscal year beginning January 1, 2024.

There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 15.

There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 15, Segment and Geographic Information .

Off-Balance Sheet Risk and Concentrations of Credit Risk

5 unchanged sentences

The Company does not require collateral to secure amounts due from its customers.

For the three months ended March 31, 2025 and 2024, approximately 65 % and 74 % of all of the Company’s revenue was generated from a single customer in the United States.

As of March 31, 2025 and December 31, 2024, approximately 61 % and 67 %, respectively, of the Company’s accounts receivable was outstanding from a single customer in the United States.

For the three months ended June 30, 2025 and 2024, approximately 66 % and 74 % of all of the Company’s revenue was generated from a single customer in the United States.

As of June 30, 2025 and December 31, 2024, approximately 48 % and 67 %, 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 the manufacture and supply of its product.

12 unchanged sentences

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.

Company considers its investment portfolio available-for-sale.

Accordingly, these investments are recorded at fair value, which is based on quoted market prices.

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.

2 unchanged sentences

When assessing the risk of credit loss, management considers factors such as the severity and the reason for 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 three months ended March 31, 2025 and 2024, the Company did no t recognize any credit losses related to its available-for-sale debt securities.

Further, as of March 31, 2025 and December 31, 2024, the Company did no t record an allowance for credit losses related to its available-for-sale debt securities.

During the three and six months ended June 30, 2025 and 2024, the Company did not recognize any credit losses related to its available-for-sale debt securities.

Further, as of June 30, 2025 and December 31, 2024, the Company did not record an allowance for credit losses related to its available-for-sale debt securities.

Accounts Receivable, net

4 unchanged sentences

The Company analyzes amounts that are past due for collectability, and periodically evaluates the creditworthiness of its customers.

As of March 31, 2025 and December 31, 2024, the Company determined an allowance for doubtful accounts was not required based upon our review of contractual payments and our customers’ circumstances.

As of June 30, 2025 and December 31, 2024, the Company determined an allowance for doubtful accounts was not required based upon our review of contractual payments and our customers’ circumstances.

Revenue Recognition

38 unchanged sentences

The Company estimates the amount of product sales that may be returned and records the estimate as a reduction of revenue and a refund liability in the period the related product revenue is recognized.

Based on the distribution model for IMCIVREE, the Company believes there will be minimal returns and these reserves have not been material to date.

Based on the distribution model for IMCIVREE, the Company believes there will continue to be minimal returns and these reserves have not been material to date.

Other incentives:

6 unchanged sentences

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.

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.

41 unchanged sentences

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 three months ended March 31, 2025 and 2024, respectively.

No events or changes in circumstances existed to require an impairment assessment during the three and six months ended June 30, 2025 and 2024, respectively.

Acquired IPR&D and Milestone Expenses

2 unchanged sentences

Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the achievement of the underlying milestone becomes probable.

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.

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

4 unchanged sentences

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 three months ended March 31, 2025 and 2024, respectively.

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 six months ended June 30, 2025 and 2024, respectively.

Fair Value Measurements

6 unchanged sentences

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 asset as of March 31, 2025 and December 31, 2024 were carried at fair value, determined according to the fair value hierarchy.

See Note 6 for further discussion.

The carrying amounts reflected in the condensed consolidated balance sheets for accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term maturities as of March 31, 2025 and December 31, 2024, respectively.

The Company’s cash equivalents and marketable securities and derivative asset as of June 30, 2025 and December 31, 2024 were carried at fair value, determined according to the fair value hierarchy.

See Note 6, Fair Value of Financial Assets and Liabilities, for further discussion.

Net Loss Per Share

5 unchanged sentences

Three Months Ended

Six Months Ended

Stock options

6 unchanged sentences

Subsequent events have been evaluated as required.

See Note 16, Subsequent Events .

Application of New or Revised Accounting Standards

7 unchanged sentences

We are currently evaluating the impact of the new standard on our consolidated financial statements which is expected to result in enhanced disclosures, however, we do not otherwise expect the adoption of the new guidance to have a material impact on our financial condition or results of operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The standard requires disclosure of incremental segment information on an annual and interim basis and allows for multiple measures of a segment’s profit or loss provided that one of those measures is consistent with GAAP.

The amendments in this update do not change how a public company identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments, but rather requires public entities to provide in interim periods all disclosures about a reporting segment’s profit or loss and assets that are currently required annually.

ASU 2023-07 becomes effective for the annual period starting on January 1, 2024, and for interim periods starting on January 1, 2025.

The company adopted this standard in the year ending December 31, 2024.

Asset Acquisitions

1 unchanged sentence

On January 4, 2024, the Company entered into a license agreement and share issuance agreement with LG Chem, Ltd.

Under the terms of the license agreement, the Company obtained worldwide rights to LGC’s proprietary compound bivamelagon and assumed sponsorship of two ongoing LGC Phase 2 studies designed to evaluate safety, tolerability, pharmacokinetics and weight loss efficacy of bivamelagon.

Under the terms of the license agreement, the Company obtained worldwide rights to LGC’s proprietary compound bivamelagon.

The total purchase consideration of $ 92.4 million was composed of $ 40.0 million of cash paid at closing and issued shares of the Company’s common stock with an aggregate value of $ 20.0 million.

2 unchanged sentences

The total purchase consideration also includes an additional $ 40.0 million license fee payable in 18 months , whose present value at closing was $ 33.7 million, and $ 0.8 million of transaction costs which are recorded as selling, general and administrative expenses.

The carrying value of the license fee payable is $ 38.8 million as of March 31, 2025 and is reflected in current liabilities on our condensed consolidated balance sheet.

The carrying value of the license fee payable is $ 40.0 million as of June 30, 2025, and is reflected in current liabilities on our condensed consolidated balance sheet.

On July 1, 2025, the Company made the final consideration payment of $ 40.0 million to LGC for the Company’s asset purchase of their proprietary compound bivamelagon from January 2024.

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 bivamelagon.

7 unchanged sentences

The Company will recognize any future contingent consideration payments related to the LGC transaction in the period in which the achievement of the underlying milestones becomes probable.

Inventory consists of the following:

Inventory consists of the following (in thousands):

Raw Materials

2 unchanged sentences

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

Accrued expenses and other current liabilities consisted of the following (in thousands):

Research and development costs

4 unchanged sentences

Fair Value of Financial Assets and Liabilities

As of March 31, 2025 and December 31, 2024, the carrying amount of cash and cash equivalents and short-term investments was $ 314,488 and $ 320,565 respectively, which approximates fair value.

As of June 30, 2025 and December 31, 2024, the carrying amount of cash and cash equivalents and short-term investments was $ 291.0 million and $ 320.6 million respectively, which approximates fair value.

Cash and cash equivalents and short-term investments includes investments in U.S.

3 unchanged sentences

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 following tables present information about the Company's financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair value:

Fair Value Measurements as of

March 31, 2025 using:

June 30, 2025 using:

Cash equivalents:

Commercial Paper

Money market funds

25 unchanged sentences

The following tables set forth a summary of the changes in the estimated fair value of our embedded derivative liability (asset) (in thousands):

Three months ended

Six months ended

Beginning aggregate estimated fair value of Level 3 liability (asset)

Change in fair value of embedded derivative

Fair value of forward contract - Series A Convertible Preferred Stock

Settlement of forward contract

Ending aggregate estimated fair value of Level 3 liability (asset)

Marketable Securities

The following tables summarize the Company's marketable securities:

March 31, 2025

The following tables summarize the Company's marketable securities (in thousands):

June 30, 2025

Corporate debt securities and commercial paper (due within 1 year)

4 unchanged sentences

Intangible Assets

As of March 31, 2025

As of June 30, 2025

As of December 31, 2024

1 unchanged sentence

Capitalized Milestones

As of March 31, 2025, the Company’s finite-lived net intangible assets, which totaled $ 5,960 , 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 connection with the Company’s first commercial sale of IMCIVREE in the U.S.

As of June 30, 2025, the Company’s finite-lived net intangible assets, which totaled $ 5.7 million, 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 connection with the Company’s first commercial sale of IMCIVREE in the U.S.

in March 2021 and in France in March 2022.

As of March 31, 2025, amortization expense for the next five years and beyond is summarized as follows:

Amortization expense totaled $ 214 and $ 214 for the three months ended March 31, 2025 and 2024, respectively.

As of June 30, 2025, amortization expense for the next five years and beyond is summarized as follows (in thousands):

2025 (remainder)

Amortization expense totaled $ 0.2 million for each of the three months ended June 30, 2025 and 2024, respectively.

Amortization expense totaled $ 0.4 million for each of the six months ended June 30, 2025 and 2024, respectively.

Amortization expense is included in cost of sales in the condensed consolidated statements of operations and comprehensive loss.

The Company recorded an income tax provision of approximately $ 80 and $ 300 for the three months ended March 31, 2025 and 2024, respectively.

The Company recorded an income tax provision of approximately $ 0.3 million and $ 0.5 million for the three months ending June 30, 2025, and 2024, respectively.

The Company recorded an income tax provision of approximately $ 0.4 million and $ 0.8 million for the six months ending June 30, 2025, and 2024, respectively.

The income tax provision is a result of taxable income from the Company’s foreign jurisdictions.

The Company expects to maintain a full valuation allowance against its net deferred tax assets for the year ended December 31, 2025.

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States.

The Company is currently evaluating the impact of OBBB on its consolidated financial statements.

Series A Convertible Preferred Stock

On April 1, 2024, the Company entered into an Investment Agreement (the “Investment Agreement”) with certain affiliates of Perceptive Advisors LLC (“Perceptive”) and certain other investors (each, an “Investor” and collectively, the “Investors”), relating to the issuance and sale of 150,000 shares of a new series of the Company’s Series A Convertible Preferred Stock, par value $ 0.001 per share, titled the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”), for an aggregate purchase price of $ 147,750 , net of $ 2,250 of issuance costs, or $ 1,000 per share (the “Issuance”).

On April 1, 2024, the Company entered into an Investment Agreement (the “Investment Agreement”) with certain affiliates of Perceptive Advisors LLC (“Perceptive”) and certain other investors (each, an “Investor” and collectively, the “Investors”), relating to the issuance and sale of 150,000 shares of a new series of the Company’s Series A Convertible Preferred Stock, par value $ 0.001 per share, titled the “Series A Convertible Preferred Stock” (the “Convertible Preferred Stock”), for an aggregate purchase price of $ 147.8 million, net of $ 2.3 million of issuance costs, or $ 1,000 per share (the “Issuance”).

The Issuance closed on April 15, 2024.

8 unchanged sentences

The fair value of the forward contract upon issuance was determined to be $ 0 .

Upon closing, the value of the forward contract was determined to be $ 8,900 and the fair value of the Convertible Preferred Stock was determined to be $ 141,100 .

Upon closing, the value of the forward contract was determined to be $ 8.9 million and the fair value of the Convertible Preferred Stock was determined to be $ 141.1 million.

The Company classifies its Convertible Preferred Stock outside of stockholders’ equity as the redemption of such shares is outside the Company’s control.

The Company did not adjust the carrying values of the Convertible Preferred Stock to redemption value as the shares are not probable of becoming redeemable as of March 31, 2025.

The Company did not adjust the carrying values of the Convertible Preferred Stock to redemption value as the shares are not probable of becoming redeemable as of June 30, 2025.

The Convertible Preferred Stock has the following rights and privileges:

11 unchanged sentences

The Company has the right to redeem all Convertible Preferred Stock after the Redemption Trigger Date, which is the fifth anniversary of the Initial Issue Date of April 15, 2024.

The amount payable on the redemption date is equal to the Liquidation Preference (i.e., Initial Liquidation Preference of $ 1,000 per share plus PIK Dividends) plus any unpaid

Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).

If a change of control occurs, each holder shall have the right to require the Company to repurchase all, or any whole number of shares that is less than all, of the holder’s Convertible Preferred Stock at an amount equal to 1.75 multiplied by the sum of the Liquidation Preference (i.e., Initial Liquidation Preference of $ 1,000 per share plus PIK Dividends) plus any unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).

As of March 31, 2025, the Company did not adjust the carrying value of the Convertible Preferred Stock to its redemption value, since a change of control was determined to not be probable.

The amount payable on the redemption date is equal to the Liquidation Preference (i.e., Initial Liquidation Preference of $ 1,000 per share plus PIK Dividends) plus any unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).

multiplied by the sum of the Liquidation Preference (i.e., Initial Liquidation Preference of $ 1,000 per share plus PIK Dividends) plus any unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference).

As of June 30, 2025, the Company did not adjust the carrying value of the Convertible Preferred Stock to its redemption value, since a change of control was determined to not be probable.

After the second anniversary, dividends on the Convertible Preferred Stock accrue quarterly, at a 6 % annual rate, and if not paid out in cash before the quarter end, will become PIK Dividends and added to the liquidation preference, or original issue price plus PIK Dividends.

1 unchanged sentence

Accordingly, the Company accretes the dividends, using the effective interest method, from Issuance to the first contractual call date, April 15, 2029.

The Company accrued dividends of $ 1,322 for the three months ended March 31, 2025, as a reduction to Additional Paid-In Capital and an increase to the carrying value of Convertible Preferred Stock.

The carrying value of Convertible Preferred Stock as of March 31, 2025 is $ 144,142 .

The Company accrued dividends of $ 2.7 million for the six months ended June 30, 2025, as a reduction to Additional Paid-In Capital and an increase to the carrying value of Convertible Preferred Stock.

The carrying value of Convertible Preferred Stock as of June 30, 2025 is $ 145.5 million.

Holders of Convertible Preferred Stock have the option to convert any number of whole shares at any time.

6 unchanged sentences

On July 10, 2024, the Company filed with the Securities Exchange Commission (the “SEC”) a prospectus supplement to the prospectus included in the Company’s registration statement on Form S-3ASR filed with the SEC on March 2, 2023, covering the resale from time to time by the Investors of up to an aggregate of 3,124,995 shares of common stock, to satisfy registration rights that the Company granted to such stockholders in connection with the Issuance.

As of March 31, 2025, an aggregate of 14,096,737 shares of common stock were reserved for issuance under the Company’s stock plans, which includes stock options, restricted stock units, and performance stock units that have been

granted covering 10,112,090 shares of common stock, 150,000 shares of Convertible Preferred Stock potentially convertible into 3,125,000 shares of common stock, and 1,256,597 shares of common stock that remain available for future grants under the Company’s 2017 Equity Incentive Plan (the “2017 Plan”), 2017 Employee Stock Purchase Plan and 2022 Employment Inducement Plan (the “Inducement Plan”).

On February 29, 2024, the Company and Cowen entered into Amendment No.

1 to Sales Agreement (the “Amendment”) to increase the aggregate offering price of the shares of common stock that may be issued and sold pursuant to the Sales Agreement to $ 200,000,000 (excluding the aggregate offering price of shares of common stock issued and sold pursuant to the Sales Agreement prior to February 29, 2024).

As of June 30, 2025, an aggregate of 16,174,070 shares of common stock were reserved for issuance under the Company’s stock plans, which include stock options, restricted stock units, and performance stock units that have been granted covering 9,883,607 shares of common stock, as well as 5,002,335 of shares available under the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) and 1,256,597 shares of common stock available for future grants under the Company’s Employee Stock Purchase Plan.

Additionally, as of June 30, 2025, 3,125,000 shares of common stock were reserved for issuance to satisfy the estimated 3,124,995 shares of common stock issuable upon conversion of the 150,000 shares of Convertible Preferred Stock.

On February 29, 2024, the Company and Cowen and Company, LLC (“Cowen”) entered into Amendment No.

1 to Sales Agreement (the “Amendment”) to increase the aggregate offering price of the shares of common stock that may be issued and sold pursuant to the Sales Agreement to $ 200.0 million (excluding the aggregate offering price of shares of common stock issued and sold pursuant to the Sales Agreement prior to February 29, 2024).

In connection with the Amendment, on February 29, 2024, the Company filed with the SEC a prospectus supplement, dated February 29, 2024, which, combined with the Base Prospectus (together, the “New Prospectus”), amended the Prior Prospectus in its entirety.

12 unchanged sentences

Stock options granted under the Inducement Plan expire no more than 10 years from the date of grant.

As of March 31, 2025, 556,100 stock option awards and 422,934 restricted stock unit awards have been granted under the Inducement Plan.

As of March 31, 2025, 20,966 shares of common stock are available for future grant under the Inducement Plan.

As of June 30, 2025, 548,390 stock option awards and 412,065 restricted stock unit awards have been granted under the Inducement Plan, net of forfeitures.

As of June 30, 2025, 39,545 shares of common stock are available for future grant under the Inducement Plan.

Related-Party Transactions

Expenses paid directly to related parties for the three months ended March 31, 2025 and 2024, were immaterial.

Outstanding payments due to related parties as of March 31, 2025 and December 31, 2024 were also immaterial.

Expenses paid directly to related parties for the three and six months ended June 30, 2025 and 2024, were immaterial.

Outstanding payments due to related parties as of June 30, 2025 and December 31, 2024 were also immaterial.

Significant Agreements

13 unchanged sentences

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.

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 $ 100.0 million, or the Investment Amount.

Under the terms of the RIFA, we received $ 37.5 million on June 29, 2022 upon FDA approval of IMCIVREE in BBS, referred to as the Initial Investment Amount, and we received an additional $ 37.5 million on September 29, 2022 of the Investment Amount upon EMA approval for BBS.

On September 12, 2023, we received the remaining $ 24.4 million 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 .

The applicable tiered percentage will initially be 11.5 % on annual net revenues up to $ 125 million, 7.5 % on annual net revenues of between $ 125 million and $ 300 million and 2.5 % on annual net revenues exceeding $ 300 million.

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.

We made repayments of $ 4,615 in the three months ended March 31, 2025.

As of March 31, 2025 we have made cumulative payments of $ 25,045 .

We made repayments of $ 8.9 million in the six months ended June 30, 2025.

As of June 30, 2025 we have made cumulative payments of $ 29.4 million.

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.

If a change of control 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.

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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 2, Summary of Significant Accounting Policies , to our condensed consolidated financial statements.

The aggregate fair value of the embedded derivative asset (liability) was $ 190 and $ 270 as of March 31, 2025 and December 31, 2024, respectively.

The aggregate fair value of the embedded derivative asset (liability) was $ 0.7 million and $ 0.3 million as of June 30, 2025 and December 31, 2024, 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 three months ended March 31, 2025 and 2024, we recognized other income of ($ 80 ) and $ 490 , respectively, due to the remeasurement of the embedded derivative liability.

The carrying value of the deferred royalty obligation as of March 31, 2025 was $ 109,524 based on $ 100,000 of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the RIFA, and debt issuance costs incurred.

The carrying value is classified as $ 1,590 within current liabilities and $ 107,934 within long-term liabilities on the consolidated balance sheet as of March 31, 2025.

The carrying value of the deferred royalty obligation approximated fair value as of March 31, 2025 and December 31, 2024.

The effective interest rate as of March 31, 2025 was 15.99 %.

In connection with the deferred royalty obligation, we incurred debt issuance costs totaling $ 3,287 .

For the three months ended June 30, 2025 and 2024, we recognized other income of $ 0.5 million and $ 0.3 million, respectively, due to the remeasurement of the embedded derivative liability.

For the six months ended June 30, 2025 and 2024, we recognized other income of $ 0.4 million and $ 0.8 million, respectively, due to the remeasurement of the embedded derivative liability or asset.

The carrying value of the deferred royalty obligation as of June 30, 2025 was $ 109.8 million based on $ 100.0 million of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the RIFA, and debt issuance costs incurred.

The carrying value is classified as $ 3.8 million within current liabilities and $ 106.0 million within long-term liabilities on the consolidated balance sheet as of June 30, 2025.

The carrying value of the deferred royalty obligation approximated fair value as of June 30, 2025 and December 31, 2024.

The effective interest rate as of June 30, 2025 was 17.01 %.

In connection with the deferred royalty obligation, we incurred debt issuance costs totaling $ 3.3 million.

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.

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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.

The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones whose achievement may become probable in subsequent periods, or royalties on future sales of specified products.

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 March 31, 2025, the Company does not expect to make milestone payments due to third parties during the next 12 months from the filing of this Form 10-Q, in connection with our license agreements.

sales of specified products.

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 June 30, 2025, the Company does not deem it probable that we will make material milestone payments to third parties during the next 12 months from the filing of this Form 10-Q, in connection with our license agreements.

These milestones are generally recognized in the period in which the achievement of the underlying milestones becomes probable.

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A single management team that reports to the Chief Executive Officer comprehensively manages the entire business.

The Company meets the aggregation criteria of ASC 280 and therefore has one reportable segment for the year ended March 31, 2025.

The Company meets the aggregation criteria of ASC 280 and therefore has one reportable segment for the six months ended June 30, 2025.

The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands):

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Net product revenue - U.S.

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License revenue

Total net revenue

Total revenue, net

Cost of sales

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The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of its customers.

Total product revenue, net, by geographic area was as follows:

Three months ended March 31,

Total product revenue, net, by geographic area was as follows (in thousands):

Three months ended June 30,

Six months ended June 30,

International

Total product revenue, net

As of March 31, 2025 and December 31, 2024, long-lived assets at locations outside the United States were not material.

As of June 30, 2025 and December 31, 2024, long-lived assets at locations outside the United States were not material.

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.

No events or transactions occurred subsequent to the balance sheet date that require disclosure.

On July 9, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co.

LLC and BofA Securities, Inc., as the representatives of the several underwriters named in the Underwriting Agreement (collectively, the “Underwriters”), in connection with a follow-on offering, issuance and sale by the Company of 2,058,824 shares of the Company’s common stock.

The offering price of the shares of common stock to the public was $ 85.00 per share.

In addition, under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 308,823 additional shares of Common Stock, at the public offering price per share, less underwriting discounts and commissions.

On July 10, 2025, the Underwriters exercised the option in full.

The closing of the sale of the shares pursuant to the offering, including the shares sold pursuant to the exercise in full of the option, took place on July 11, 2025, resulting in net proceeds of approximately $ 189.2 million, net of underwriting discounts and commissions, but excluding certain other offering expenses payable by the Company, for a total share issuance of 2,367,647 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements