What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-07 · 148 added, 95 removed, 221 unchanged (52% of the section changed)

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our ability to protect our intellectual property;

ongoing activities under and our ability to negotiate our collaboration and license agreements, if needed, and the impact of termination;

ongoing activities under and our ability to

negotiate our collaboration and license agreements, if needed, and the impact of termination;

our marketing, commercial sales, revenue generation, and cost of revenue;

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

While obesity affects hundreds of millions of people worldwide, we are advancing 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-Biedel syndrome (BBS) or other diseases caused by impaired MC4R pathway signaling.

While obesity affects hundreds of millions of people worldwide, we are advancing 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-Biedel syndrome (BBS) or other diseases caused by impaired MC4R pathway signaling.

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

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On April 7, 2025, we announced positive topline results from the pivotal Phase 3 TRANSCEND trial evaluating setmelanotide for the treatment of acquired hypothalamic obesity.

The global trial, which we believe is the largest and longest placebo-controlled trial to evaluate a therapy for patients with acquired hypothalamic obesity, met its primary endpoint with a statistically significant and highly clinically meaningful reduction in body mass index (BMI) with setmelanotide in both adult and pediatric patients versus placebo.

The global trial, which we believe is the largest and longest placebo-controlled trial to evaluate a therapy for patients with acquired hypothalamic obesity, met its primary

endpoint with a statistically significant and highly clinically meaningful reduction in body mass index (BMI) with setmelanotide in both adult and pediatric patients versus placebo.

No new safety signals with setmelanotide were observed, in line with setmelanotide’s well-established and well-understood safety profile.

Given these compelling new efficacy data with setmelanotide, we are preparing to submit a supplemental New Drug Application to the FDA and a Type II variation request to the European Medicines Agency in the third quarter of 2025.

We anticipate reading out data from a 12-patient cohort in Japan in the first quarter of 2026 which we believe, if successful, could support registration of setmelanotide in Japan for this disease.

Given these compelling new efficacy data with setmelanotide, we anticipate completing submissions of a supplemental New Drug Application to the FDA and a Type II variation request to the European Medicines Agency (the “EMA”) in the third quarter of 2025.

We also anticipate reading out data from a 12-patient cohort in Japan in the first quarter of 2026 which we believe, if successful, could support registration of setmelanotide in Japan for this disease.

With these planned submissions, we believe setmelanotide has the potential to become the first-ever approved therapy for patients with acquired hypothalamic obesity.

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In addition to our commercial efforts and inclusive of late-stage development efforts, we are advancing what we believe is the most comprehensive clinical research and development program ever initiated in MC4R pathway diseases, with multiple ongoing and planned clinical trials.

Our MC4R pathway program is designed to expand the total number of patients who we believe would benefit from setmelanotide therapy or from one of our new drug candidates, RM-718,

which is designed to be a more selective MC4R agonist with weekly administration, or bivamelagon, an investigational oral small molecule MC4R agonist in Phase 2 clinical trials.

Our MC4R pathway program is designed to expand the total number of patients who we believe would benefit from setmelanotide therapy or from one of our new drug candidates, RM-718, which is designed to be a more selective MC4R agonist with weekly administration, or bivamelagon, an investigational oral small molecule MC4R agonist in Phase 2 clinical trials.

As mentioned above, our Phase 3 trial of setmelanotide in patients with acquired hypothalamic obesity met the primary and key secondary endpoints, and we have initiated an additional, independent substudy in patients with congenital hypothalamic obesity as part of that trial.

We are advancing next-generation MC4R agonists in clinical trials.

We anticipate reading out topline data from our Phase 2 trial evaluating bivamelagon in patients with acquired hypothalamic obesity in the third quarter of 2025, and we anticipate completing enrollment in Part C of the Phase 1 trial evaluating the weekly RM-718 in patients with acquired hypothalamic obesity.

In addition, our Phase 3 EMANATE trial, comprised of four independent substudies evaluating setmelanotide in genetically caused MC4R pathway diseases is ongoing, and we recently completed our Phase 2 DAYBREAK trial evaluating setmelanotide in additional genetic indications.

In July 2025, we announced bivamelagon achieved statistically significant and clinically meaningful BMI reductions at 14 weeks of treatment in a Phase 2 trial in patients with acquired hypothalamic obesity.

We anticipate completing enrollment in Part C of the Phase 1 trial evaluating the weekly RM-718 in patients with acquired hypothalamic obesity in the first quarter of 2026.

Our Phase 3 EMANATE trial, comprised of four independent substudies evaluating setmelanotide in genetically caused MC4R pathway diseases is ongoing, and we completed our Phase 2 DAYBREAK trial evaluating setmelanotide in additional genetic indications in 2024.

We are leveraging what we believe is the largest known DNA database focused on obesity - with approximately 100,000 sequencing samples as of December 31, 2024 - to improve the understanding, diagnosis and care of people living with severe obesity due to certain variants in genes associated with the MC4R pathway.

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We believe that all these patients face similar challenges as other patients with rare diseases, namely lack of awareness, resources, tests, tools and, especially, therapeutic options.

Additional recent clinical, regulatory, corporate and commercial updates include:

On May 7, 2025, we announced:

● revenue from global sales of IMCIVREE was $37.7 million for the first quarter of 2025.

The number of patients on reimbursed therapy increased 14% in the first quarter of 2025 compared to the fourth quarter of 2024, as patient demand for IMCIVREE remained strong.

Revenue of $24.5 million, or 65% of product revenue, was generated in the United States.

The number of patients on reimbursed therapy in the United States continued to increase during the quarter.

revenue was affected by an $8.3 million decrease in inventory at the specialty pharmacy that dispenses IMCIVREE to patients and a $1.1 million increase in product dispensed to patients, resulting in a net decrease in product revenue of $7.2 million in the first quarter of 2025 compared to the fourth quarter of 2024.

Revenue of $13.2 million, or 35% of product revenue, was generated outside the United States, an increase of $3.2 million quarter over quarter.

On April 7, 2025, we announced the pivotal Phase 3 TRANSCEND trial met its primary endpoint with a -19.8% placebo-adjusted body mass index (BMI) reduction with setmelanotide in patients (N=120) with acquired HO.

Highlights included:

● Patients with acquired HO on setmelanotide therapy (n=81) achieved mean BMI change of -16.5% compared with +3.3% for placebo (n=39) at 52 weeks (p<0.0001);

● -19.2% placebo-adjusted BMI reduction achieved in adult patients 18 years old and older (n=49) at 52 weeks;

● -20.2% placebo-adjusted BMI reduction achieved in patients younger than 18 years old (n=71) at 52 weeks;

● 80% of patients on setmelanotide achieved BMI reduction of 5% or greater at 52 weeks;

● No new safety signals with setmelanotide were observed, in line with setmelanotide’s well-established and well-understood safety profile.

Today, we announced new data from the Phase 3 TRANSCEND trial that demonstrated a consistent and statistically significant mean BMI reduction across three stratified age groups:

● -19.5% placebo-adjusted BMI reduction achieved in pediatric patients ages 4 to younger than 12 years old (n=31:

20 setmelanotide, 11 placebo) at 52 weeks (p<0.0001);

● -21.0% placebo-adjusted BMI reduction achieved in adolescent patients ages 12 to younger than 18 years old (n=40:

28 setmelanotide, 12 placebo) at 52 weeks (p<0.0001);

● -19.2% placebo-adjusted BMI reduction achieved in adult patients ages 18 and older (n=49:

33 setmelanotide, 16 placebo) at 52 weeks (p<0.0001).

Additionally, on April 7, 2025, we announced that we dosed the first patients with Prader-Willi syndrome in a 26-week, open-label Phase 2 trial of setmelanotide.

The trial will assess the safety and efficacy of a daily dose of subcutaneous setmelanotide in approximately 20 patients for up to 26 weeks.

On March 20, 2025, we announced that we reacquired the rights to IMCIVREE® (setmelanotide) in China, including mainland China, Hong Kong and Macau, as we terminated our 2021 licensing agreement with RareStone Group Ltd.

On March 19, 2025, we announced that we received orphan drug designation from Japan’s Ministry of Health, Labour and Welfare (MHLW) for setmelanotide as a treatment for acquired hypothalamic obesity.

On March 18, 2025, we announced a new research collaboration with the Raymond A.

Wood Foundation, a patient advocacy organization for survivors of craniopharyngioma and hypothalamic-pituitary brain tumors, to study the impact of fatigue on persons with craniopharyngioma.

Additional recent corporate and commercial updates include:

On August 5, 2025, we announced revenue from global sales of IMCIVREE was $48.5 million for the second quarter of 2025, an increase of 29% percent on a sequential basis from the first quarter of 2025, primarily driven by sales of IMCIVREE for the treatment of patients with BBS.

In the second quarter of 2025, revenue of $32.0 million, or 66% of product revenue, was generated in the United States, an increase of 31% on a sequential basis.

Revenue of $16.5 million, or 34% of product revenue, was generated outside of the United States, a sequential increase of 24%.

On July 11, 2025, we closed a public offering of 2,367,647 shares of its common stock at a public offering price of $85 per share, 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.

Additional recent clinical and regulatory updates include:

On August 5, 2025, we announced that we enrolled the first patient with hypothalamic obesity in Part C of our Phase 1 trial evaluating RM-718, a weekly-administered investigational MC4R agonist.

On July 12, 2025, at the Endocrine Society’s Annual Meeting, data from our pivotal Phase 3 TRANSCEND trial evaluating setmelanotide in acquired hypothalamic obesity, the largest randomized, placebo-controlled trial in acquired hypothalamic obesity to date, were delivered in an oral presentation.

Highlights of the presentation included:

● -19.8% placebo-adjusted difference in BMI reduction (N=120);

● Statistically significant BMI reductions following setmelanotide treatment were consistently observed across subgroups stratified by age (<12, 12 to 17, <18, and 18 years and older;

ranging from -15.6% to -17.2%) and by sex (-16.3% female;

On July 9, 2025, we announced bivamelagon achieved statistically significant and clinically meaningful BMI reductions at 14 weeks of treatment in our Phase 2 trial in patients with acquired hypothalamic obesity, including:

● -9.3% BMI reduction from baseline in the 600mg cohort (n=8) (p-value=0.0004);

● -7.7% BMI reduction from baseline in the 400mg cohort (n=7) (p-value=0.0002);

● Post-hoc analyses showing bivamelagon demonstrated BMI reductions consistent with BMI reductions achieved with setmelanotide therapy as observed in similar patient populations at comparable dosing durations;

● Safety and tolerability results were consistent with MC4R agonism and mechanism of action during the placebo-controlled portion of the trial.

During the Joint Congress between the European Society for Paediatric Endocrinology and the European Society of Endocrinology (ESPE-ESE) and the European Congress on Obesity (ECO) in May 2025, we presented new, real-world data that showed consistent improvements in body mass index, BMI-z, and hunger scores in 30 patients with acquired hypothalamic obesity and five (5) patients with congenital hypothalamic obesity who were treated with setmelanotide for up to nine months.

We currently expect to achieve the following, near-term milestones:

● Submit a supplemental New Drug Application to the FDA and a Type II variation request to the European Medicines Agency for setmelanotide for the treatment of acquired HO in the third quarter of 2025;

● Announce topline data from the bivamelagon Phase 2 trial in acquired HO in the third quarter of 2025;

● Complete enrollment in the setmelanotide Phase 2 trial in Prader-Willi syndrome (PWS) in the third quarter of 2025;

● Complete enrollment in the Phase 1, Part C trial evaluating the weekly, MC4R agonist RM-718 in patients with acquired hypothalamic obesity and provide an update from the trial on efficacy, safety and tolerability results in the second half of 2025;

● Complete enrollment in the setmelanotide Phase 3 trial substudy in congenital hypothalamic obesity in the second half of 2025;

● Announce topline data in the 12-patient Japanese cohort of the setmelanotide Phase 3 trial in acquired HO in the first quarter of 2026;

● Complete submissions of a supplemental New Drug Application to FDA and a Type II variation request to the EMA seeking approval for setmelanotide for the treatment of acquired hypothalamic obesity in the third quarter of 2025;

● Disclose preliminary results from our setmelanotide Phase 2 trial in Prader-Willi syndrome in the second half of 2025;

● Complete enrollment in the Phase 1, Part C trial evaluating the weekly, MC4R agonist RM-718 in patients with acquired hypothalamic obesity in the first quarter of 2026;

● Announce topline data in the 12-patient Japanese cohort of the setmelanotide Phase 3 trial in acquired hypothalamic obesity in the first quarter of 2026;

● Announce topline data in the Phase 3 EMANATE trial evaluating setmelanotide in genetically caused MC4R pathway diseases in the first quarter of 2026;

● Complete enrollment in the setmelanotide Phase 3 trial substudy in congenital hypothalamic obesity in the first half of 2026;

● Pending alignment with U.S and European regulatory agencies, initiate a pivotal Phase 3 trial evaluating bivamelagon in acquired hypothalamic obesity in 2026.

IMCIVREE first became commercially available to patients 6 years of age and older with obesity due to POMC, PCSK1 or LEPR deficiency in the U.S.

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From August 2015 through August 2017, we raised aggregate net proceeds of $80.8 million through our issuance of Convertible Preferred Stock.

Since our initial public offering, or IPO, on October 10, 2017, through our underwritten follow-on offerings and through our ATM program through March 31, 2025, we have raised aggregate net proceeds of approximately $864.8 million through the issuance of our common stock after deducting underwriting discounts, commissions and offering related transaction costs.

Since our initial public offering, or IPO, on October 10, 2017, through our underwritten follow-on offerings and through our ATM program through June 30, 2025, we have raised aggregate net proceeds of approximately $864.8 million through the issuance of our common stock after deducting underwriting discounts, commissions and offering related transaction costs.

Additionally, on July 9, 2025, we entered into an underwriting agreement with Morgan Stanley & Co.

LLC and BofA Securities, Inc., as the representatives of the several 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, at $0.001 par value per share.

The offering price of the shares of Common Stock to the public was $85.00 per share.

In addition, 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 Offering closed on July 11, 2025, for net proceeds of $189.2 million, net of certain costs including underwriting discounts and commissions, but excluding certain other offering expenses payable by the Company, for total share issuance of 2,367,647 (as disclosed in Note 16, Subsequent events ).

We also received $100.0 million from the sale of our Rare Pediatric Disease Priority Review Voucher (“PRV”), to Alexion Pharmaceuticals, Inc.

in February 2021.

In June 2022, we entered into the Revenue Interest Financing Agreement (“RIFA”), with entities managed by HealthCare Royalty Partners, collectively referred to as the Investors, and through March 31, 2025 have received cumulative proceeds of $96.7 million, net of certain transaction costs.

In June 2022, we entered into the Revenue Interest Financing Agreement (“RIFA”), with entities managed by HealthCare Royalty Partners, collectively referred to as the Investors, and through June 30, 2025 have received cumulative proceeds of $96.7 million, net of certain transaction costs.

On April 1, 2024, we entered into an Investment Agreement with certain affiliates of Perceptive Advisors LLC, or Perceptive, and certain other 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”, or the Convertible Preferred Stock, for an aggregate purchase price of $150.0 million, or $1,000 per share (as disclosed in Note 9, Series A Preferred Stock ).

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If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue the development or commercialization of setmelanotide.

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

Our net loss was $49.5 million and $141.4 million for the three months ended March 31, 2025 and March 31, 2024, respectively.

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

Our net loss was $46.6 million and $32.3 million for the three months ended June 30, 2025 and June 30, 2024.

Our net loss was $96.1 million and $173.6 million

for the six months ended June 30, 2025 and June 30, 2024.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

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● continue to operate as a public company.

As of March 31, 2025, our existing cash and cash equivalents and short-term investments were approximately $314.5 million.

We expect that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations into 2027.

As of June 30, 2025, our existing cash and cash equivalents and short-term investments were approximately $291.0 million.

We expect that our cash and cash equivalents and short-term investments as of June 30, 2025, combined with the net proceeds from our July 2025 offering, will be sufficient to fund our planned operations for at least 24 months.

Financial Operations Overview

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IMCIVREE became commercially available in the United States in the first quarter of 2021.

We recorded our first sales of IMCIVREE in the United States in March 2021 and we made our first sales in France during March 2022 under the paid early access program.

We recorded our first sales of IMCIVREE in the United States in March 2021 and we made our first sales in the EU in March 2022 under a paid early access program.

IMCIVREE was approved by the FDA and the EC in adult and pediatric patients six years of age and older with obesity due to BBS in June and September 2022, respectively.

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Also in 2024, the EC and MHRA authorized IMCIVREE for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 2 years of age and above.

Following these approvals, we expect our sales of IMCIVREE will continue to grow as we identify and treat more patients with this disease and obtain reimbursement throughout the international markets in which we operate.

We expect our sales of IMCIVREE will continue to grow as we identify and treat more patients with this disease and obtain reimbursement throughout the international markets in which we operate, however, we cannot estimate or predict with certainty the rates at which sales in any of our markets will grow and whether such sales will grow at a higher or lower pace as compared to sales in the United States.

License revenue

For the three months ended March 31, 2025, we recognized a reduction of previously-recognized license revenue of $5.0 million in connection with the termination of our exclusive license agreement with RareStone.

For the six months ended June 30, 2025, we recognized a reduction of previously-recognized license revenue of $5.0 million in connection with the termination of our exclusive license agreement with RareStone.

See Note 12, Significant Agreements , to the unaudited condensed consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Three Months Ended

Six Months Ended

Research and development summary

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Three Months Ended

Six Months Ended

Selling, general and administrative summary

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The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

These items are monitored and analyzed by us for changes in facts and circumstances on an ongoing basis, and material changes in these estimates could occur in the future.

These items are monitored and analyzed by us for changes in facts and circumstances on an ongoing basis, and material changes in these

estimates could occur in the future.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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Results of Operations

Comparison of the three months ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024, together with the changes in those items in dollars and as a percentage:

Comparison of the three months ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage:

Three Months Ended

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Product revenue, net

Costs and expenses:

Cost of sales

Research and development

Selling, general, and administrative

Total costs and expenses

Loss from operations

Other income (expense), net

Loss before income taxes

Provision for income taxes

Product revenue, net .

Product revenue, net increased by $19.4 million to $48.5 million for the three months ended June 30, 2025 from $29.1 million for the three months ending June 30, 2024, an increase of 67%.

We expect our sales of IMCIVREE to continue to increase.

We have achieved market access or named patient sales of IMCIVREE for BBS or POMC and LEPR deficiencies, or both, in more than 20 countries outside the United States, and we continue to collaborate with authorities to achieve access in additional markets.

For the three months ended June 30, 2025, and 2024, a substantial amount of our product revenue, or 66% and 74%, respectively, was generated from sales of our product to patients in the United States.

Cost of sales.

Cost of sales increased by $2.6 million to $5.5 million for the three months ending June 30, 2025, from $2.9 million for the three months ending June 30, 2024, an increase of 88%, which was driven by a corresponding increase in revenue in the three months ending June 30, 2025 .

Cost of sales is composed of royalty expense due to Ipsen Pharma S.A.S., or Ipsen, on our net product revenue;

amortization of our capitalized sales-based milestone payment made to Ipsen, upon our first commercial sale in the United States and European Union, the cost of product, as well as costs associated with our patient assistance programs.

Specifically, the $2.6 million increase in cost of sales in the three months ended June 30, 2025, from the same period in 2024, was due to $0.9 million of additional royalties due to our growth in sales and $1.6 million attributed to increased product costs associated with higher sales volume.

We expect cost of sales as a percentage of revenue to continue to be in a range of 10% to 12% in the foreseeable future.

Research and development expense.

Research and development expense increased by $12.1 million to $42.3 million for the three months ending June 30, 2025, from $30.2 million for the three months ending June 30, 2024, an increase of 40%.

The net increase was primarily due to the following:

● an increase of $5.0 million associated with chemistry, manufacturing, and controls (CMC) costs for drug formulation to support our ongoing Phase 1 clinical trial of RM-718 and the Phase 2 bivamelagon trial acquired from LGC,

● an increase of $3.1 million associated with higher clinical trial expenses, primarily related to our Phase 3 EMANATE study and Phase 2 bivamelagon trial acquired from LGC,

● an increase of $3.5 million related to personnel costs including $2.0 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees in order to support the growth of our research and development programs, and $1.5 million of stock-based compensation, and

● an increase of $0.5 million in professional services to support our growing research and development programs.

Selling, general and administrative expense.

Selling, general and administrative expense increased by $9.5 million to $45.9 million for the three months ended June 30, 2025, from $36.4 million for the three months ended June 30, 2024, an increase of 26%.

The increase was primarily due to the following:

● an increase of $6.9 million related to personnel costs including $4.0 million of stock-based compensation, and $2.9 million with additional headcount to support our expanding business operations as well as to establish commercial operations in international regions,

● an increase of $1.4 million related to increased marketing and promotion costs to support continued revenue growth, and

● an increase of $1.1 million in professional services, including legal and consulting expenses, to support our ongoing growth.

Other income (expense), net.

Other income (expense), net decreased by ($9.7) million to ($1.0) million for the three months ended June 30, 2025 from $8.7 million of other income for the three months ended June 30, 2024.

The decrease was primarily due to the following:

● a one-time gain of $8.9 million was recognized for the settlement of the forward contract recorded with the issuance of our Series A Convertible Preferred Stock (the “Convertible Preferred Stock”) during the three months ended June 30, 2024;

which did not recur in 2025,

● a decrease in interest income of $0.9 million earned on our short-term investments, based on higher investment balances from the proceeds of $150.0 million from the Convertible Preferred Stock issuance during the three months ending June 30, 2024, and

● recognition of $1.2 million of non-cash interest expense in the three months ended June 30, 2025, associated with accretion of the deferred royalty obligation as well as the liability payable to LGC that was paid in July 2025.

The above decreases were partially offset by:

● an increase in other income of $1.3 million driven by a gain on unrealized foreign exchange as well as a gain on the fair value of the embedded derivative.

Comparison of the six months ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage:

Six Months Ended

(in thousands)

Statement of Operations Data:

Product revenue, net

License revenue

Total revenues

Costs and expenses:

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Product revenue, net .

Product revenue, net increased by $11.8 million to $37.7 million for the three months ended March 31, 2025 from $26.0 million for the three months ended March 31, 2024, an increase of 45%.

Product revenue, net increased by $31.2 million to $86.2 million for the six months ending June 30, 2025, from $55.0 million for the six months ending June 30, 2024, an increase of 57%.

We expect our sales of IMCIVREE to continue to increase.

We have achieved market access for IMCIVREE for BBS or POMC and LEPR deficiencies, or both, in more than 15 countries outside the United States, and we continue to collaborate with authorities to achieve access in additional markets.

For the three months ended March 31, 2025 and 2024, a substantial amount of our product revenue, or 65% and 74%, respectively, was generated from sales of our product to patients in the United States.

For the six months ended June 30, 2025, and 2024, a substantial amount of our product revenue , or 65% and 75%, respectively, was generated from sales of our product to patients in the United States.

License revenue .

See Note 12, Significant Agreements , to the unaudited condensed consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cost of sales.

Cost of sales increased by $0.8 million to $3.6 million for the three months ended March 31, 2025 from $2.8 million for the three months ended March 31, 2024, an increase of 30%, which was driven by a corresponding increase in revenue in the three months ended March 31, 2025 .

Cost of sales is composed of royalty expense due to Ipsen Pharma S.A.S., or Ipsen, on our net product revenue;

Cost of sales increased by $3.4 million to $9.2 million for the six months ended June 30, 2025 from $5.8 million for the six months ended June 30, 2024, an increase of 60%, which was driven by a corresponding increase in revenue in the six months ended June 30, 2025 .

Cost of sales is composed of royalty expense due to Ipsen on our net product revenue;

Specifically, the $0.8 million increase in cost of sales in the three months ended March 31, 2025 from the same period in 2024 was due to $0.6 million of additional royalties due to our growth in sales and $0.2 million attributed to increased product cost associated with higher sales volume.

Specifically, the $3.4 million increase in cost of sales in the six months ended June 30, 2025, from the same period in 2024 was due to $1.6 million of additional royalties due to our growth in sales and $1.8 million attributed to increased product costs associated with higher sales volume.

We expect cost of sales as a percentage of revenue to continue to be in a range of 10% to 12% in the foreseeable future.

Research and development expense.

Research and development expense decreased by $91.7 million to $37.0 million for the three months ended March 31, 2025 from $128.7 million for the three months ended March 31, 2024, a decrease of 71%.

Research and development expense decreased by $79.6 million to $79.3 million for the six months ended June 30, 2025 from $158.9 million for the six months ended June 30, 2024, a decrease of 50%.

The net decrease was primarily due to the following:

● a decrease of $92.5 million related to acquired In-Process Research and Development (“IPR&D”) costs associated with the acquisition of LGC’s proprietary compound bivamelagon in the three months ended March 31, 2024, which did not recur in 2025;

● a decrease of $92.5 million related to acquired In-Process Research and Development (“IPR&D”) costs associated with the acquisition of LGC’s proprietary compound bivamelagon in the six months ended June 30, 2024, which did not recur in 2025;

● a net decrease of $2.2 million in our clinical trial costs due to the completion and wind down of our long-term extension trial, Phase 2 Basket trial, Phase 3 pediatrics trial, and switch trial, as well as decreased genetic sequencing costs.

The above decreases were partially offset by:

● an increase of $2.9 million in salaries, benefits and stock-based compensation related to the hiring of additional full-time employees in order to support the growth of our research and development programs;

● an increase of $7.5 million associated with chemistry, manufacturing, and controls (CMC) costs for drug formulation to support our ongoing Phase 1 clinical trial of RM-718 and the Phase 2 bivamelagon trial acquired from LGC,

● an increase of $6.6 million related to personnel costs, including $3.4 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees in order to support the growth of our research and development programs, and $3.2 million of stock-based compensation, and

● an increase of $0.7 million in professional services related to research and development expenses.

Selling, general and administrative expense.

Selling, general and administrative expense increased by $4.7 million to $39.1 million for the three months ended March 31, 2025 from $34.4 million for the three months ended March 31, 2024, an increase of 14%.

Selling, general and administrative expense increased by $14.2 million to $85.0 million for the six months ended June 30, 2025 from $70.8 million for the six months ended June 30, 2024, an increase of 20%.

The increase was primarily due to the following:

● an increase of $5.9 million due to increased compensation and benefits related costs, including stock-based compensation, associated with additional headcount to support our expanding business operations as well as to establish commercial operations in international regions;

● an increase of $1.3 million related to increased marketing and promotion costs to support continued revenue growth.

● an increase of $13.0 million related to personnel costs including $7.4 million of stock-based compensation, as well as $5.5 million of additional headcount to support our expanding business operations as well as to establish commercial operations in international regions,

● an increase of $2.6 million related to increased marketing and promotion costs to support continued revenue growth, and

● an increase in patents and regulatory expense of $0.5 million to support our ongoing growth.

The above increases were partially offset by:

● a decrease of $2.0 million related to professional services costs, including legal, consulting and tax services;

● a decrease of $0.8 million related to CMC costs.

● a decrease in CMC and other related costs of $1.7 million.

Other income (expense), net.

Other (expense), net increased by $1.2 million to $2.4 million for the three months ended March 31, 2025 from $1.2 million for the three months ended March 31, 2024.

The increase was primarily due to the following:

● recognition of $1.1 million of non-cash interest expense in the three months ended March 31, 2025 associated with accretion of the non-current liability payable to LGC in July 2025;

● a net increase of $0.6 million recognized for the net change in fair value of the embedded derivatives in our debt royalty obligation, as well as realized foreign currency losses.

The above amount was partially offset by:

● an increase in interest income of $0.6 million earned on our short-term investments, based on higher investment balances from the proceeds of $150.0 million from the convertible preferred stock issuance and proceeds of $75.0 million received from our ATM equity financing.

Other income (expense), net decreased by ($10.9) million to ($3.4) million for the six months ended June 30, 2025 from $7.5 million of other income for the six months ended June 30, 2024.

The decrease was primarily due to the following:

● a one-time gain of $8.9 million that was recognized for the settlement of the forward contract recorded with the issuance of Convertible Preferred Stock during the three months ended June 30, 2024;

which did not recur in 2025, and

● the recognition of $1.9 million of non-cash interest expense in the three months ended June 30, 2025, primarily associated with an increase in the accretion of the deferred royalty obligation as well as the non-current liability payable to LGC that was paid in July 2025.

Liquidity and Capital Resources

As of March 31, 2025, our cash and cash equivalents and short-term investments were approximately $314.5 million.

The following table provides information regarding our cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

As of June 30, 2025, our cash and cash equivalents and short-term investments were approximately $291.0 million.

On July 11, 2025, we closed a public offering of 2,367,647 of common stock at a public offering price of $85 per share, resulting in net proceeds of approximately $189.2 million, after deducting underwriting discounts and commissions, excluding certain offering expenses payable by us.

The following table provides information regarding our cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

(in thousands)

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The use of cash in all periods resulted primarily from our net loss adjusted for non-cash charges and changes in components of operating assets and liabilities.

Net cash used in operating activities was $40.4 million for the three months ended March 31, 2025 and consisted primarily of a net loss of $49.5 million adjusted for non-cash items of $17.1 million, which consisted of stock-based compensation, non-cash interest expense, non-cash accretion and amortization of short-term investments, depreciation and amortization, rent expense and the change in the fair value of our embedded derivative asset.

The change in operating assets and liabilities used net cash of approximately $7.9 million and was primarily driven by net decreases in accounts payable and accrued expenses of $3.6 million, the change in deferred revenue of $1.3 million, and net increases in prepaids and other current assets of $3.2 million.

These net uses of cash were offset by net increases in other long-term assets of $0.1 million and net increases in accounts receivable and inventory of $0.1 million.

Net cash used in operating activities was $40.7 million for the three months ended March 31, 2024 and consisted primarily of a net loss of $141.4 million adjusted for non-cash items of $102.8 million, which consisted of stock-based compensation, depreciation and amortization, and the change in the fair value of our embedded derivative liability, totaling $10.4 million.

Our net loss adjusted for non-cash items also includes $92.4 million of acquired IPR&D assets, which are classified as investing activities.

The change in operating assets and liabilities used net cash of approximately $2.2 million, primarily driven by net increases in prepaid expenses and other assets of $2.4 million and net decreases in accounts payable and accrued expenses of $1.3 million, offset by a net increase in long-term assets of $1.2 million and decreases in accounts receivable and inventory of $0.3 million.

Net cash used in operating activities was $63.7 million for the six months ended June 30, 2025 and consisted primarily of a net loss of $96.1 million adjusted for non-cash items of $35.9 million, which consisted of stock-based compensation, non-cash interest expense, non-cash accretion and amortization of short-term investments, depreciation and amortization, rent expense, the change in the fair value of our embedded derivative asset, and the change in unrealized gain on foreign currency.

The change in operating assets and liabilities used net cash of approximately $3.4 million and was primarily driven by net increases in prepaids and other current assets of $10.0 million, the change in accounts receivable of $7.1 million, and the change in deferred revenue of $1.3 million.

These net uses of cash were offset by an increase in accounts payable, accrued expenses and other liabilities of $9.6 million, and net decreases in other long-term assets of $5.5 million.

Net cash used in operating activities was $69.8 million for the six months ended June 30, 2024 and consisted primarily of a net loss of $173.6 million adjusted for non-cash items of $108.1 million, which consisted of non-cash stock-based compensation, depreciation and amortization, rent expense and the change in the fair value of our embedded derivative liability, totaling $18.3 million.

Our net loss adjusted for non-cash items also includes $92.4 million of acquired IPR&D assets, which are classified as investing activities, as well as an $8.9 million gain on the settlement of a forward contract.

The change in operating assets and liabilities used net cash of approximately $4.3 million, primarily driven by net increases in accounts receivable and inventory of $6.1 million, net decreases in accounts payable and accrued expenses of $0.8 million, offset by net decreases in long-term assets of $2.2 million and net decreases in prepaid expenses of $0.3 million.

Net cash provided by investing activities

Net cash provided by investing activities was $24.8 million for the three months ended March 31, 2025 and relates to gross maturities of short-term investments of $58.3 million, offset by purchases of short-term investments for $33.5 million.

Net cash provided by investing activities was $30.1 million for the three months ended March 31, 2024 and relates to gross maturities of short-term investments of $70.1 million, offset by cash used for the purchase of LGC’s proprietary compound bivamelagon for $40.0 million in January 2024.

Net cash provided by investing activities was $78.8 million for the six months ended June 30, 2025 and relates to gross maturities of short-term investments of $139.3 million, offset by purchases of short-term investments for $60.5 million.

Net cash provided by investing activities was $21.5 million for the six months ended June 30, 2024 and relates to gross maturities of short-term investments of $127.8 million, offset by purchases of short term investments for $66.3 million and cash used for the purchase of LGC’s proprietary compound LB54640 for $40.0 million in January 2024.

Net cash provided by financing activities

Net cash provided by financing activities was $32.5 million for the three months ended March 31, 2025, and consisted of net proceeds of $34.0 million from our ATM equity offering, as well as proceeds of $3.1 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan.

Net cash provided by financing activities was $31.6 million for the six months ended June 30, 2025, and consisted of net proceeds of $34.0 million from our ATM equity offering, as well as proceeds of $6.5 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan.

These proceeds were offset by $8.9 million of repayments of our deferred royalty obligation.

Net cash provided by financing activities was $4.2 million for the three months ended March 31, 2024, and consisted of proceeds of $7.0 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan.

These proceeds were offset by $2.8 million of repayments on our deferred royalty obligation.

Net cash provided by financing activities was $150.4 million for the six months ended June 30, 2024, and consisted of net proceeds of $147.8 million from the issuance of Series A Preferred Stock as well as proceeds of $8.4 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan.

These proceeds were offset by $5.8 million of repayments of our deferred royalty obligation.

Funding requirements

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We also expect to incur additional costs associated with operating as a public company.

We expect that our existing cash and cash equivalents and short-term investments as of March 31, 2025, will be sufficient to fund our operations into 2027.

Our cash and cash equivalents are maintained at financial institutions in amounts that exceed federally-insured limits.

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Adequate additional financing may not be available to us on acceptable terms, or at all.

Further, the global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

All of these factors could impact our liquidity and future funding requirements, including but not limited to our ability to raise additional capital when needed on acceptable terms, if at all.

Further, the global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines and fluctuations in consumer confidence and economic growth, increases in unemployment rates, the imposition of tariffs and other trade barriers, uncertainty about economic stability, and rising political uncertainty.

Any of these factors could impact our liquidity and future funding requirements, including but not limited to our ability to raise additional capital when needed on acceptable terms, if at all.

The duration of this economic slowdown is uncertain and the impact on our business is difficult to predict.

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Contractual obligations

As of March 31, 2025, there were no other material changes to our principal contractual obligations and commitments as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of June 30, 2025, there were no other material changes to our principal contractual obligations and commitments as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2025, there were no material changes to our quantitative and qualitative disclosures about market risks as reported in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risks” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of June 30, 2025, there were no material changes to our quantitative and qualitative disclosures about market risks as reported in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risks” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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 2. Management’s Discussion and Analysis