RHYTHM PHARMACEUTICALS, INC. 10-K

Item 9A. Controls and Procedures Limitations on Effectiveness of Controls and Procedures We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this Annual Report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d 15(f) of the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, it used the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon such assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2025. C hanges in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d 15(f) under the Exchange Act) that occurred during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 124 Table of Conten ts Attestation of Independent Registered Public Accounting Firm Ernst & Young LLP, our independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, which is included below. Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Rhythm Pharmaceuticals, Inc. Opinion on Internal Control Over Financial Reporting We have audited Rhythm Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Rhythm Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, convertible preferred stock & stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 125 Table of Conten ts /s/ Ernst & Young LLP Boston, Massachusetts February 26, 2026 Item 9B. Other Information a) Disclosure in lieu of reporting on a Current Report on Form 8-K. None. b) Insider Trading Arrangements and Policies. On December 15, 2025 , Pamela Cramer , the Company's Chief Human Resources Officer , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 52,617 shares of the Company's common stock until March 15, 2027 . On December 15, 2025 , Jennifer Lee , the Company's EVP, Head of North America , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 62,459 shares of the Company's common stock until October 1, 2026 . On December 15, 2025 , Joseph Shulman , the Company's Chief Technical Officer , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 66,910 shares of the Company's common stock until March 12, 2027 . On December 15, 2025 , Lynn Tetrault , a member of the Company's Board of Directors , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act for the sale of up to 55,000 shares of the Company's common stock until September 16, 2026 . Other than as disclosed above, during the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance We have adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of our Code of Business Conduct and Ethics on our website at www.rhythmtx.com in the “Investors & Media” section under “Corporate Governance.” We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the SEC, as well as Nasdaq’s requirement to disclose waivers with respect to directors and executive officers. The information contained on our website is not considered part of, or incorporated by reference into, this Annual Report or any other filing that we make with the SEC. The remaining information required under this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2025. 126 Table of Conten ts Item 11. Executive Compensation The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders, which proxy statement will be filed with the Securities and Exchange commission not later than 120 days after the close of our fiscal year ended December 31, 2025. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity Compensation Plan Information The following table provides information as of December 31, 2025, regarding our common stock that may be issued under (1) the 2017 Plan; (2) our 2017 Employee Stock Purchase Plan, (the 2017 ESPP); and (3) the 2022 Inducement Plan. Plan Category: Number of Securities to be Issued Upon Exercise of Outstanding Options, Restricted Stock Units Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Available for Future Issuance Under Equity Compensation Plans Equity compensation plans approved by stockholders 2017 Plan 9,080,190 $ 28.45 4,636,850 2017 ESPP — — 1,240,958 Equity compensation plans not approved by stockholders 2022 Inducement Plan 565,567 $ 23.25 59,067 Total 9,645,757 $ 28.15 5,936,875 (1) The 2017 Plan provides for an annual increase on each January 1 commencing in 2018 and ending in 2027, by an amount equal to 4% of the number of shares of common stock outstanding as of the end of the immediately preceding fiscal year, provided that the Board may provide for no increase or that the increase will be a lesser number of shares. (2) The 2017 ESPP provides for an annual increase on each January 1 commencing in 2018 and ending in 2027, by an amount equal to the lesser of (i) 1% of the number of shares of common stock outstanding as of the end of the immediately preceding fiscal year or (ii) 682,102, provided that the Board may provide for no increase or that the increase will be a lesser number of shares. (3) The 2022 Inducement Plan adopted on February 9, 2022. Awards issued under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. An aggregate of 1,000,000 shares of the Company’s common stock were reserved for issuance under the 2022 Inducement Plan. The material terms of the 2022 Inducement Plan are described in Note 9 to the consolidated financial statements included herein. Other The remaining information required under this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2025. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2025. Item 14. Principal Accountant Fees and Services The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual meeting of stockholders, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2025. 127 Table of Conten ts PART IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Consolidated Financial Statements. For a list of the consolidated financial statements included herein, see Index on page F-1 of this report. 2. Financial Statement Schedules. All financial statement schedules have been omitted because the required information is either presented in the consolidated financial statements or the notes thereto or is not applicable or required. 3. List of Exhibits. The following is a list of exhibits filed as part of this Annual Report. 128 Table of Conten ts Exhibit Index Incorporated by Reference Exhibit Number Exhibit Description Form Date Number 2.1 Asset Purchase Agreement, dated January 5, 2021, between the Registrant and Alexion Pharmaceuticals, Inc. 8-K 1/5/2021 2.1 2.2 Share Purchase Agreement, by and between Rhythm Pharmaceuticals Netherlands B.V. and Xinvento B.V., dated February 27, 2023. 10-K 3/1/2023 2.2 3.1 Amended and Restated Certificate of Incorporation. 8-K 6/26/2025 3.1 3.2 Amended and Restated Bylaws. 8-K 12/18/2023 3.1 3.3 Amended and Restated Certificate of Designations 10-Q 05/07/2024 3.4 4.1 Form of Common Stock Certificate. S-1/A 9/25/2017 4.1 4.2 Form of Indenture to be entered into between the Registrant and a trustee acceptable to the registrant. S-3 11/2/2021 4.3 4.3 Form of Indenture. S-3ASR 3/2/2023 4.1 4.4 Description of the Registrant’s Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. 10-K 3/1/2023 4.3 10.1† Form of Indemnification Agreement. S-1/A 9/25/2017 10.1 10.2† 2015 Equity Incentive Plan and Form of Option Agreement and Notice of Exercise. S-1/A 9/25/2017 10.21 10.3.1† 2017 Equity Incentive Plan and Form of Option Agreement and Notice of Exercise. 10-Q 11/14/2017 10.2 10.3.2† 2017 Equity Incentive Plan Restricted Stock Unit Award Agreement 10-K 3/2/2020 10.18 10.3.3† 2017 Equity Incentive Plan Performance Unit Agreement 10-Q 05/07/2024 10.4 10.4.1† 2017 Employee Stock Purchase Plan 10-Q 11/14/2017 10.10 10.4.2† First Amendment to the 2017 Employee Stock Purchase Plan S-1 6/18/2018 10.17 10.5.1† 2022 Employment Inducement Plan and Form of Option Agreement 10-K 3/1/2022 10.5.1 10.5.2† 2022 Employment Inducement Plan Form of Restricted Stock Unit Agreement 10-K 3/1/2022 10.5.2 10.6† Non-Employee Director Compensation Program 10-Q 8/5/2025 10.1 10.7† Deferred Compensation Plan (Employees) S-8 1/16/2026 99.1 10.8‡ License Agreement, dated March 21, 2013, by and between the Registrant (f/k/a Rhythm Metabolic, Inc.) and Ipsen Pharma S.A.S. S-1 9/5/2017 10.6 10.9‡ License Agreement, dated January 4, 2016, by and between the Registrant and Camurus AB. S-1 9/5/2017 10.8 10.10.1 Lease, dated November 25, 2015, by and between the Registrant and 500 Boylston & 222 Berkeley Owner (DE) LLC. S-1 9/5/2017 10.11 10.10.2 First Amendment to Lease, dated April 15, 2016, by and between the Registrant and 500 Boylston & 222 Berkeley Owner (DE) LLC. 10-K 3/8/2019 10.9 10.10.3 Second Amendment to Lease, dated August 6, 2018, by and between the Registrant and 500 Boylston & 222 Berkeley Owner (DE) LLC. 8-K 8/9/2018 10.1 10.10.4 Third Amendment to Lease, dated August 6, 2018, by and between the Registrant and 500 Boylston & 222 Berkeley Owner (DE) LLC. 10-Q 05/07/2024 10.5 10.11† Amended & Restated Offer Letter, dated August 3, 2023, by and between the Registrant and Hunter Smith. 8-K 8/3/2023 10.4 10.12† Offer Letter, dated September 4, 2020, by and between the Registrant and Yann Mazabraud. 10-Q 11/2/2020 10.1 129 Table of Conten ts 10.13† Amended & Restated Offer Letter, dated July 28, 2023, by and between the Registrant and Joseph Shulman. 8-K 8/3/2023 10.2 10.14† Amended & Restated Offer Letter, dated August 3, 2023, by and between the Registrant and Jennifer Chien. 8-K 8/3/2023 10.3 10.15† Amended & Restated Offer Letter, dated July 28, 2023, by and between the Registrant and David P. Meeker. 8-K 8/3/2023 10.1 10.16† Offer Letter, dated July 9, 2021, by and between the Registrant and Pamela Cramer 10-Q 8/3/2021 10.1 10.17†* Offer Letter, dated May 20, 2024, by and between the Registrant and Alastair Garfield. 10.18‡‡ Revenue Interest Financing Agreement, dated June 16, 2022, by and between the Company and entities managed by HealthCare Royalty Management, LLC 10-Q 8/03/2022 10.1 10.19‡‡ Exclusive License Agreement, dated January 4, 2024, by and between Rhythm Pharmaceuticals, Inc. and LG Chem, Ltd. 10-K 2/29/2024 10.25 10.20‡‡ Investment Agreement dated April 1, 2024, by and between Rhythm Pharmaceuticals, Inc., certain affiliates of Perceptive Advisors LLC, and certain other investors 8-K 04/01/2024 10.1 19.0 Rhythm Global Insider Trading Policy 10-K 02/28/2025 19.0 21.1* List of Subsidiaries 23.1* C onsent of Ernst & Young LLP, Independent Registered Public Accounting Firm 31.1* Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 31.2* Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 32.1** Certification of the Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 32.2** Certification of the Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 97† Policy for Recovery of Erroneously Awarded Compensation 10-K 2/29/2024 97 101.INS* Inline XBRL Instance Document- the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ___________________________________________________________ * Filed herewith. ** Furnished and not filed herewith. † Indicates management contract or compensatory plan. ‡ Indicates confidential treatment has been requested with respect to specific portions of this exhibit. Omitted portions have been filed with the SEC pursuant to Rule 406 of the Securities Act. ‡‡ Indicates that portions of this exhibit (indicated by asterisks) have been omitted pursuant to Regulation S-K, Item 601(b)(10). Such omitted information is not material and the registrant customarily and actually treats such information as private or confidential. 130 Table of Conten ts Item 16. Form 10-K Summary None 131 Table of Conten ts SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RHYTHM PHARMACEUTICALS, INC. By: /s/ David P. Meeker M.D. David P. Meeker M.D. President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ David P. Meeker M.D. Chief Executive Officer, Director, Chairman of the Board February 26, 2026 David P. Meeker M.D. (Principal Executive Officer) /s/ Hunter Smith Chief Financial Officer February 26, 2026 Hunter Smith (Principal Financial Officer) /s/ Christopher P. German Corporate Controller February 26, 2026 Christopher P. German (Principal Accounting Officer) /s/ Edward T. Mathers Lead Director February 26, 2026 Edward T. Mathers /s/ Stuart Arbuckle Director February 26, 2026 Stuart Arbuckle /s/ Jennifer L. Good Director February 26, 2026 Jennifer L. Good /s/ Christophe R. Jean Director February 26, 2026 Christophe R. Jean /s/ David W. J. McGirr Director February 26, 2026 David W. J. McGirr /s/ Lynn A. Tetrault Director February 26, 2026 Lynn A. Tetrault 132 Table of Conten ts RHYTHM PHARMACEUTICALS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID No. 42 ) F-2 Audited Consolidated Financial Statements: Consolidated Balance Sheets F-5 Consolidated Statements of Operations and Comprehensive Loss F-6 Consolidated Statements of Convertible Preferred Stock & Stockholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 F-1 Table of Conten ts REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Rhythm Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Rhythm Pharmaceuticals, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, convertible preferred stock & stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-2 Table of Conten ts Accrued and Prepaid Research and Development Expenses related to Phase 3 evaluation of setmelanotide on acquired hypothalamic obesity. Description of the Matter The Company’s accrued expenses and other current liabilities related to research and development costs were $17.1 million at December 31, 2025. In addition, the Company’s prepaid expenses and other current assets and other long-term assets related to research and development costs were $16.2 million and $1.7 million, respectively, at December 31, 2025. As discussed in Note 2 of the consolidated financial statements, the Company’s research and development expenses are based on the Company’s estimates of the progress of the related studies or clinical trials, including the phase or completion of events, invoices received, and contracted costs, which results in an accrual or prepayment at the balance sheet date. Auditing the Company’s accrued and prepaid research and development expenses for the Phase 3 evaluation of setmelanotide on acquired hypothalamic obesity was complex and judgmental, as accounting for the costs associated with this clinical trial required significant estimation of the level of services performed and the associated costs incurred by service providers. Additionally, due to the long duration of this clinical trial and the timing of invoicing received from third parties, the actual amounts incurred are not always known prior to the issuance of the Company’s financial statements. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant controls over the Company’s accrued and prepaid research and development expenses, including management’s review control over the review of the estimation of levels of services provided, determination of costs incurred to date and the completeness and accuracy of the data used in determining prepaid and accrued research and development expenses estimate. To evaluate the prepaid and accrued research and development costs for this clinical trial at December 31, 2025, our audit procedures included, among others, testing the completeness and accuracy of the underlying data used in the estimates and evaluating the significant judgments and estimates made by management to determine the recorded prepaid and accrued amounts. To test the significant judgments and estimates, we corroborated the progress of research and development activities through discussion with the Company’s research and development personnel that oversee the research and development projects and inspected the Company’s contracts with third parties and any pending change orders to assess the impact on amounts recorded. In addition, we tested estimates of costs incurred to date by confirming actual costs incurred with the relevant third parties and through review of invoices received by the Company. We also analyzed fluctuations in the prepaid and accrued amounts by vendor and by trial throughout the period subject to audit, evaluated the costs incurred per trial, site and/or patient for reasonableness and tested subsequent invoices received from third parties. F-3 Table of Conten ts Allowances for Rebates under the Medicaid Drug Rebate Program Description of the Matter As discussed in Note 2 to the Company’s consolidated financial statements, the Company recognizes revenue from product sales based on amounts due from customers net of allowances for variable consideration. Variable consideration includes, among others, rebates mandated by law under the Medicaid Drug Rebate Program. The Company includes an estimate of variable consideration in its transaction price at the time of sale, when control of the product transfers to the customer. The Company estimates its Medicaid Drug Rebate Program rebates based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, contractual rebate rates and estimated lag time of the rebate invoices. Medicaid Drug Rebate Program rebate accruals inclusive of estimated amounts payable for claims not yet received or processed are classified as sales allowances and recorded within accrued expenses and other current liabilities on the Company’s consolidated balance sheet. Sales allowances, included within accrued expenses and other current liabilities, were $31.6 million as of December 31, 2025. Auditing the allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. was complex and judgmental due to the complexity of the government mandated calculations. The allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. are sensitive to these calculations. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process, including management’s review control over the computation and review of the allowances for rebates under the Medicaid Drug Rebate Program. We tested the Company’s control to assess the completeness and accuracy of the current and historical data that supports the estimate of the allowance for rebates under the Medicaid Drug Rebate Program, the assumptions related to the inputs utilized as well as management’s review of the application of the government pricing regulations. Our audit procedures to test the allowances for rebates owed pursuant to the Medicaid Drug Rebate Program included, among others, procedures to assess the government mandated calculations used to determine the allowance and procedures to test the completeness and accuracy of the underlying data used in the calculations. To test the government mandated calculations used to determine the allowance, we involved our government pricing specialists to assist in evaluating the Company’s methodology and calculations to measure certain estimated rebates. To test the completeness and accuracy of the underlying data used in the government mandated calculations, we compared the data used in the Company’s calculations to underlying sales data. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2015. Boston, Massachusetts February 26, 2026 F-4 Table of Conten ts RHYTHM PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 54,301 $ 89,137 Short-term investments 334,648 231,428 Accounts receivable, net 26,081 18,512 Inventory 25,753 18,741 Prepaid expenses and other current assets 26,133 16,382 Total current assets 466,916 374,200 Property and equipment, net 1,104 632 Right-of-use asset 3,049 3,477 Intangible assets, net 5,319 6,174 Restricted cash 522 464 Other long-term assets 3,286 7,326 Total assets $ 480,196 $ 392,273 Liabilities, Convertible Preferred Stock and Stockholders’ equity Current liabilities: Accounts payable $ 13,947 $ 12,328 Accrued expenses and other current liabilities 83,855 62,658 Other current liability - LG Chem — 37,704 Deferred revenue 194 1,286 Deferred royalty obligation, current 7,296 1,541 Lease liability 650 — Total current liabilities 105,942 115,517 Long-term liabilities: Deferred royalty obligation 100,886 108,269 Lease liability, non-current 3,342 3,938 Derivative liability — — Total liabilities 210,170 227,724 Commitments and contingencies (Note 12) Series A convertible preferred stock, $ 0.001 par value: 150,000 shares authorized; 132,500 and 150,000 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively. Liquidation preference of $ 132,500 and $ 150,000 as of December 31, 2025, and December 31, 2024, respectively. 130,957 142,820 Stockholders’ equity: Common stock, $ 0.001 par value: 120,000,000 shares authorized; 67,205,321 and 62,390,654 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 67 61 Additional paid-in capital 1,491,675 1,177,045 Accumulated other comprehensive (loss) income ( 796 ) ( 39 ) Accumulated deficit ( 1,351,877 ) ( 1,155,338 ) Total stockholders’ equity 139,069 21,729 Total liabilities, convertible preferred stock and stockholders’ equity $ 480,196 $ 392,273 The accompanying notes are an integral part of these financial statements. F-5 Table of Conten ts RHYTHM PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Revenues: Product revenue, net $ 194,771 $ 130,126 $ 77,428 License revenue ( 5,014 ) — — Total revenues 189,757 130,126 77,428 Costs and expenses: Cost of sales 19,492 13,368 9,302 Research and development 167,340 237,957 134,951 Selling, general, and administrative 194,941 144,304 117,532 Total costs and expenses 381,773 395,629 261,785 Loss from operations ( 192,016 ) ( 265,503 ) ( 184,357 ) Other income (expense): Other income, net 1,264 2,239 190 Gain on settlement of forward contract — 8,900 — Interest expense ( 20,583 ) ( 20,603 ) ( 13,892 ) Interest income 15,293 14,711 13,945 Total other income (expense), net ( 4,026 ) 5,247 243 Loss before income taxes ( 196,042 ) ( 260,256 ) ( 184,114 ) Provision for income taxes 497 346 564 Net loss $ ( 196,539 ) $ ( 260,602 ) $ ( 184,678 ) Accrued dividends on convertible preferred stock ( 5,378 ) ( 3,970 ) — Net loss attributable to common stockholders $ ( 201,917 ) $ ( 264,572 ) $ ( 184,678 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 3.11 ) $ ( 4.34 ) $ ( 3.20 ) Weighted-average common shares outstanding, basic and diluted 64,984,361 60,995,204 57,673,128 Other comprehensive loss: Net loss attributable to common stockholders $ ( 201,917 ) $ ( 264,572 ) $ ( 184,678 ) Foreign currency translation adjustment ( 1,261 ) 2 ( 140 ) Unrealized (loss) gain, net on marketable securities, net of tax 504 ( 175 ) 366 Comprehensive loss $ ( 202,674 ) $ ( 264,746 ) $ ( 184,452 ) The accompanying notes are an integral part of these financial statements. F-6 Table of Conten ts RHYTHM PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS' EQUITY (in thousands, except share data) Series A Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2022 — $ — 56,612,429 $ 56 $ 974,356 $ ( 92 ) $ ( 710,058 ) $ 264,262 Stock compensation expense — — — — 32,553 — — 32,553 Issuance of common stock in connection with ESPP — — 49,819 1,053 — — 1,053 Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units — — 745,066 1 7,467 — — 7,468 Issuance of common stock upon completion of ATM equity offering, net of offering costs — — 2,019,245 2 48,873 — — 48,875 Foreign currency translation adjustment — — — — — ( 140 ) — ( 140 ) Net unrealized gain on marketable securities — — — — — 366 — 366 Net loss — — — — — — ( 184,678 ) ( 184,678 ) Balance at December 31, 2023 — $ — 59,426,559 $ 59 $ 1,064,302 $ 134 $ ( 894,736 ) $ 169,759 Issuance of Series A Preferred Stock, net of $ 2.3 million of issuance costs 150,000 138,850 — — — — — — Stock compensation expense — — — — 39,682 — — 39,682 Issuance of common stock in connection with ESPP — — 44,554 — 1,270 — — 1,270 Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units — — 1,742,803 2 15,972 — — 15,974 Issuance of common stock as consideration for LGC license — — 432,143 — 18,716 — — 18,716 Issuance of common stock upon completion of ATM equity offering, net of $ 1.1 million offering costs — — 744,595 — 41,073 — — 41,073 Accretion of preferred stock dividends — 3,970 — — ( 3,970 ) — — ( 3,970 ) Foreign currency translation adjustment — — — — — 2 — 2 Net unrealized loss on marketable securities — — — — — ( 175 ) — ( 175 ) Net loss — — — — — — ( 260,602 ) ( 260,602 ) Balance at December 31, 2024 150,000 $ 142,820 62,390,654 $ 61 $ 1,177,045 $ ( 39 ) $ ( 1,155,338 ) $ 21,729 Stock compensation expense — — — — 66,818 — — 66,818 Issuance of common stock in connection with ESPP — — 37,514 1 1,583 — — 1,584 Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units — — 1,457,414 1 13,603 — — 13,604 Issuance of common stock upon completion of public offering, net of offering costs of $ 12.6 million — — 2,367,647 2 188,655 — — 188,657 Issuance of common stock upon completion of ATM equity offering, net of $ 0.7 million of offering costs — — 587,510 1 32,108 — — 32,109 Accretion of preferred stock dividends — 5,378 — — ( 5,378 ) — — ( 5,378 ) Conversion of Series A preferred stock redeemable to common stock ( 17,500 ) ( 17,241 ) 364,582 1 17,241 — — 17,242 Foreign currency translation adjustment — — — — — ( 1,261 ) — ( 1,261 ) Net unrealized gain on marketable securities — — — — — 504 — 504 Net loss — — — — — — ( 196,539 ) ( 196,539 ) Balance at December 31, 2025 132,500 $ 130,957 67,205,321 $ 67 $ 1,491,675 $ ( 796 ) $ ( 1,351,877 ) $ 139,069 The accompanying notes are an integral part of these financial statements. F-7 Table of Conten ts RHYTHM PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year ended December 31, 2025 2024 2023 Operating activities Net loss $ ( 196,539 ) $ ( 260,602 ) $ ( 184,678 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 66,818 39,682 32,553 Depreciation and amortization 1,338 1,563 1,758 Non-cash interest expense 20,584 20,603 13,360 Non-cash accretion & amortization of short-term investments ( 6,516 ) ( 8,165 ) ( 9,835 ) Non-cash rent expense 428 400 401 Change in fair value of embedded derivative liability ( 910 ) ( 1,420 ) ( 190 ) Gain on settlement of forward contract — ( 8,900 ) — Acquired IPR&D assets classified as investing activities — 92,385 5,667 Other non-cash items 90 — — Changes in operating assets and liabilities: Accounts receivable ( 7,570 ) ( 3,645 ) ( 8,643 ) Inventory ( 7,474 ) ( 10,117 ) ( 5,707 ) Prepaid expenses and other current assets ( 6,327 ) ( 5,524 ) 2,876 Deferred revenue ( 1,092 ) — ( 148 ) Other long-term assets, net ( 397 ) 7,943 1,656 Accounts payable, accrued expenses and other liabilities 21,892 21,918 14,773 Net cash used in operating activities ( 115,675 ) ( 113,879 ) ( 136,157 ) Investing activities Purchases of short-term investments ( 348,669 ) ( 268,313 ) ( 354,918 ) Maturities of short-term investments 252,469 260,640 354,967 Acquisition of IPR&D assets ( 40,000 ) ( 40,500 ) ( 5,667 ) Purchases of property and equipment ( 953 ) — ( 47 ) Net cash used in investing activities ( 137,153 ) ( 48,173 ) ( 5,665 ) Financing activities Repayment of deferred royalty obligation ( 19,917 ) ( 12,900 ) ( 7,398 ) Proceeds from issuance of common stock upon completion of public offering, net of offering costs 188,657 — — Proceeds from the exercise of stock options 13,604 15,976 7,468 Proceeds from issuance of common stock from ESPP 1,584 1,270 1,053 Net proceeds from issuance of common stock 34,035 39,146 48,875 Proceeds from royalty financing agreement, net of issuance costs — — 24,370 Gain on settlement of forward contract — 8,900 — Proceeds from Series A Preferred Stock, net of issuance costs — 138,850 — Net cash provided by financing activities 217,963 191,242 74,368 Effect of exchange rates on cash 87 2 ( 142 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 34,778 ) 29,192 ( 67,596 ) Cash, cash equivalents and restricted cash at beginning of period 89,601 60,409 128,005 Cash, cash equivalents and restricted cash at end of period $ 54,823 $ 89,601 $ 60,409 Supplemental disclosure of non-cash investing and financing activities: Non-current liability issued in exchange for the acquisition of IPR&D $ — $ 33,669 $ — Issuance of common stock in exchange for IPR&D $ — $ 18,716 $ — Accretion of preferred stock dividends $ 5,378 $ 3,970 $ — The accompanying notes are an integral part of these financial statements. F-8 Table of Conten ts Rhythm Pharmaceuticals, Inc. Notes to Consolidated Financial Statements (In millions, except share and per share information or as otherwise noted) 1. Nature of Business Rhythm Pharmaceuticals, Inc. (the “Company” or “we”) is a global, commercial-stage biopharmaceutical company dedicated to transforming the lives of patients and their families living with rare neuroendocrine diseases. We are focused on advancing our melanocortin-4 receptor agonists, including our lead asset, IMCIVREE (setmelanotide), as a precision medicine designed to treat hyperphagia and severe obesity caused by 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 hunger, and severe obesity due to an impaired MC4R pathway, which may be caused by traumatic injury or genetic variants. 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. IMCIVREE, an MC4R agonist for which we hold worldwide rights, is the first-ever therapy developed for patients with certain rare diseases that is approved or authorized in the United States, European Union (EU), Great Britain, Canada and other countries and regions . 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, 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. Commercialization of approved products will require significant resources and in order to market IMCIVREE, the Company must continue to build its sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even though the Company has an approved product, and even if the Company’s further product development efforts are successful, it is uncertain when, if ever, the Company will realize sufficient revenue from product sales to fund operations. Liquidity The Company has incurred operating losses and negative cash flows from operations since inception, and e xpects operating losses to continue for the foreseeable future . As of December 31, 2025, the Company had an accumulated deficit of $ 1.4 billion. T he Company has primarily funded these losses through the proceeds from the sales of our common stock and preferred stock, asset sales, royalty financing, out-license arrangements, as well as capital contributions received from the former parent company, Rhythm Holdings LLC. The Company has devoted substantially all of its resources to its drug development efforts, comprising of research and development, the acquisition of in process research and development assets, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property, commercialization activities and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to continue to develop its product candidates and ultimately upon its ability to attain profitable operations. At December 31, 2025, the Company had $ 388.9 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, revenue and revenue growth, and funded research and development programs to maintain the Company's operations and meet the Company's obligations. There is no guarantee that additional equity or other financings will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back, terminate its operations or seek to merge with or be acquired by another company. Management believes that the Company's existing cash resources will be sufficient to fund the Company's operations through at least the next twelve months from the filing of this Annual Report on Form 10-K with the SEC. F-9 Table of Conten ts 2. Summary of Significant Accounting Policies Basis of Presentation The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates relied upon in preparing these financial statements include but are not limited to, estimates related to determining our net product revenue, and accruals related to research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of Rhythm Pharmaceuticals, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Segment Information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company currently operates in two business segments, which are U.S. and international segments for the development and commercialization of therapies for patients with rare diseases. A single management team that reports to the Chief Executive Officer comprehensively manages the entire business. The Company meets the aggregation criteria of ASC 280 and therefore has one reportable segment for the year ended December 31, 2025. In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , which improves segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. 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. Off-Balance Sheet Risk and Concentrations of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and short-term investments, which are maintained at two federally insured financial institutions. The deposits held at these two institutions are in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. For the years ended December 31, 2025 and 2024, approximately 69 % and 74 %, respectively, of all of the Company’s revenue was generated from a single customer in the United States. Additionally, a single international customer also generated approximately 10 % of the Company's revenue during the year ended December 31, 2025. As of December 31, 2025 and 2024, approximately 56 % and 67 %, respectively, of the Company’s accounts receivable was outstanding from a single customer in the United States. F-10 Table of Conten ts The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its product. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results. The Company relies on separate third parties to perform genetic testing in the United States and Europe, respectively. The inability of the vendor to fulfill testing services for the Company could materially impact future operating results and adversely impact our ability to further develop setmelanotide. A change in the relationship with the genetic testing service providers, or an adverse change in their business, could materially impact future operating results. Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents includes bank demand deposits, U.S. treasury bills and money market funds that invest primarily in U.S. government treasuries. Short-Term Investments Short-term investments consist of investments with maturities greater than 90 days, as of the date of purchase. The Company has classified its investments with maturities beyond one year as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio available-for-sale. Accordingly, these investments are recorded at fair value, which is based on quoted market prices. Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. To the extent the amortized cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss; however, management considers the risk of credit loss to be minimized by the Company's policy of investing in financial instruments issued by highly-rated financial institutions. When assessing the risk of credit loss, management considers factors such as the severity and the reason of the decline in value (i.e., any changes to the rating of the security by a rating agency or other adverse conditions specifically related to the security) and management's intended holding period and time horizon for selling. During the years ended December 31, 2025, 2024, and 2023, the Company did not recognize any credit losses related to its available-for-sale debt securities. Further, as of December 31, 2025 and 2024, the Company did not record an allowance for credit losses related to its available-for-sale debt securities. Restricted Cash Restricted cash consists of security deposits in the form of letters of credit placed in separate restricted bank accounts as required under the terms of the Company’s lease arrangement for its corporate office in Boston, Massachusetts and the Company’s corporate travel credit card. Accounts Receivable, net Accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts and any estimated expected credit losses. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. To date, the Company has not experienced any material credit losses. The Company's contracts with its customers have customary payment terms that generally require payment within 90 days. The Company analyzes amounts that are past due for collectability, and periodically evaluates the creditworthiness of its customer. At December 31, 2025 and 2024, the Company determined an allowance for doubtful account was not required based upon its review of contractual payments and its customer payment histories. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , or ASC 606. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. F-11 Table of Conten ts Product Revenue, Net In the United States, which accounts for the largest portion of our total revenues, the Company sells its product through a specialty pharmacy. The product is distributed through third-party logistics, or 3PL, distribution agent that does not take title to the product. Once the product is delivered to the Company’s specialty pharmacy provider, our customer in the United States, the customer (or “wholesaler”) takes title to the product. The wholesaler then distributes the product to patients. In our distribution agreement with the 3PL company, the Company acts as principal because we retain control of the product. Internationally, we make sales primarily to specialty distributors and retail pharmacy chains, as well as hospitals, many of which are government-owned or supported. The Company offers returns of product sold to the customer on a limited basis, however, no material returns have been recognized to date. Revenue from product sales is recognized when the customer obtains control of our product, which occurs at a point in time, upon transfer of title to the customer because at that point in time we have no ongoing obligations to the customer. There are no other performance obligations besides the sale of product. We classify payments to our customers or other parties in the distribution channel for services that are distinct and priced at fair value as selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss. Otherwise, payments to a customer or other parties in the distribution channel that do not meet those criteria are classified as a reduction of revenue, as discussed further below. Taxes collected from the customer relating to product sales and remitted to governmental authorities are excluded from revenue. Because our payment terms are generally ninety days or less, the Company concluded there is not a significant financing component because the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. The Company expenses incremental costs of obtaining a contract as and when incurred since the expected amortization period of the asset that we would have recognized is one year or less. Reserves for Variable Consideration Revenues from product sales are recorded at the net sales price, or the transaction price, which includes estimates of variable consideration for which reserves are established and which result from discounts, rebates, and co-pay assistance that are offered within contracts between us and our customers, health care providers and other indirect customers relating to the sale of IMCIVREE. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following are the components of variable consideration related to product revenue: Government rebates: The Company is subject to discount obligations under government programs, including U.S. Medicaid programs, Medicare and Tricare in the United States as well as certain government rebates and pricing adjustments in certain international markets that we operate. We estimate these rebates based upon a range of possible outcomes that take into consideration among other things, historical experience of claims submitted by the various states and jurisdictions, contractual rebate rates, estimated lag time of the rebate invoices and the estimated payer mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability that is included in accrued expenses and other current liabilities on our consolidated balance sheets. On a quarterly basis, we update our estimates and record any necessary adjustments in the period that we identify the adjustments. Trade discounts and allowances: The Company provides customary invoice discounts on IMCIVREE sales to certain of our customers for items such as prompt payment. These are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive and pay for various distribution services from our customers in the distribution channel. For services that are not distinct from the sale of our product, such fees are classified as a reduction of product revenue. Product returns: Our customers have limited return rights related to the product’s damage or defect. The Company estimates the amount of product sales that may be returned and records the estimate as a reduction of revenue F-12 Table of Conten ts 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. Other incentives: Other incentives include co-payment assistance the Company provides to patients with commercial insurance that have coverage and reside in states that allow co-payment assistance. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue. The estimate is recorded as a reduction of revenue in the same period the related revenue is recognized. Provisions for trade discounts, chargebacks and allowances are recorded as reductions to accounts receivable, and returns, government rebates, and other incentives are recorded as a component of accrued expenses. The table below summarizes balances and activity in each of the product revenue allowance and reserve categories as follows (in thousands): Provision for Cash Discounts Fees, Rebates and Other Incentives Total Beginning Balance at December 31, 2023 $ 199 $ 9,475 $ 9,674 Provision related to sales in the current year 2,317 27,315 29,632 Credit and payments made ( 2,263 ) ( 20,940 ) ( 23,203 ) Ending balance December 31, 2024 $ 253 $ 15,850 $ 16,103 Provision related to sales in the current year 3,670 45,811 49,481 Credit and payments made ( 3,620 ) ( 30,097 ) ( 33,717 ) Ending balance December 31, 2025 $ 303 $ 31,564 $ 31,867 Provision for cash discounts are recorded as reductions of accounts receivable, and fees, rebates, and other incentives are recorded as components of accrued expenses. License Agreements We generate revenue from license or similar agreements with pharmaceutical companies for the development and commercialization of certain of our products and product candidates. Such agreements may include the transfer of intellectual property rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and development services, and participation on certain committees with the counterparty. Payments made by the customers may include non-refundable upfront fees, payments upon the exercise of customer options, payments based upon the achievement of defined milestones, and royalties on sales of products and product candidates if they are approved and commercialized. If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize the transaction price allocated to the license as revenue upon transfer of control of the license. We evaluate all other promised goods or services in the agreement to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations. We utilize judgment to determine the transaction price. In connection therewith, we evaluate contingent milestones at contract inception to estimate the amount which is not probable of a material reversal to include in the transaction price using the most likely amount method. Milestone payments that are not within our control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, we re-evaluate the probability of achieving development milestone payments that may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment. F-13 Table of Conten ts We then determine whether the performance obligations or combined performance obligations are satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress, as applicable, for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded within deferred revenue. Contract liabilities within deferred revenue are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met. For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied). Refer to Note 10, Significant Agreements , for discussion related to the Company’s accounting for the RareStone Group, Ltd. agreement. Deferred Royalty Obligation We treat the debt obligation to HealthCare Royalty Management, LLC as discussed further in Note 11, “Long-Term Obligations”, as a deferred royalty obligation, amortized using the effective interest rate method over the estimated life of the revenue streams. We recognize interest expense thereon using the effective rate, which is based on our current estimates of future revenues over the life of the arrangement. In connection therewith, we periodically assess our expected revenues using internal projections, impute interest on the carrying value of the deferred royalty obligation, and record interest expense using the imputed effective interest rate. To the extent our estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation. The assumptions used in determining the expected repayment term of the deferred royalty obligation and amortization period of the issuance costs requires that we make estimates that could impact the classification of such costs, as well as the period over which such costs will be amortized. Inventory Prior to receiving approval from the FDA in November 2020 to sell IMCIVREE in the United States, the Company expensed all costs incurred related to the manufacture of IMCIVREE as research and development expense because of the inherent risks associated with the development of a drug candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates. The Company values inventories at the lower of cost or estimated net realizable value. The Company determines the cost of inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods include packaged and labelled products. Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for research and development, it is expensed as research and development once that determination is made. Inventory consists of the following (in thousands): December 31, 2025 December 31, 2024 Raw Materials $ 6,745 $ 6,776 WIP 1,631 1,250 Finished Goods 17,377 10,715 Total Inventory $ 25,753 $ 18,741 Cost of Product Sales Cost of product sales consists of manufacturing costs, transportation and freight, amortization of capitalized intangibles, royalty payments and indirect overhead costs associated with the manufacturing and distribution of IMCIVREE. Cost of product sales may also include periodic costs related to certain manufacturing services and inventory F-14 Table of Conten ts adjustment charges. Finally, cost of sales may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances. Intangible Assets, net Definite-lived intangible assets related to capitalized milestones under license agreements are amortized on a straight-line basis over their remaining useful lives, which are estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then a shorter period is used. Amortization expense is recorded as a component in cost of sales in the consolidated statements of operations and comprehensive loss. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist primarily of property and equipment and finite lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the Company measures the impairment to be recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, less the cost to sell. No events or changes in circumstances existed to require an impairment assessment during the years ended December 31, 2025, 2024 and 2023. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Prepaid expenses and other current assets consists of the following (in thousands): December 31, 2025 2024 Prepaid research and development costs $ 16,166 $ 7,580 Other current assets 9,967 8,802 Prepaid expenses and other current assets $ 26,133 $ 16,382 Other Long-Term Assets Other long-term assets consist primarily of costs incurred in advance of services being received, including services related to clinical trial programs. Since the Company will not receive services within one year of the balance sheet date, these assets are considered long-term. Other long-term assets consists of the following (in thousands): December 31, 2025 2024 Long-term research and development costs $ 1,660 $ 6,209 Other long-term assets 1,626 1,117 Other long-term assets $ 3,286 $ 7,326 F-15 Table of Conten ts Property and Equipment Property and equipment consists of the following (in thousands): Useful Life December 31, 2025 2024 Leasehold improvements * $ 2,733 $ 2,705 Office equipment 5 years 154 154 Computers and software 3 years 1,291 1,291 Furniture, fixtures and equipment 5 years 1,249 1,249 Construction in progress 926 — Property and equipment, gross 6,353 5,399 Less accumulated depreciation and amortization ( 5,249 ) ( 4,767 ) Property and equipment, net $ 1,104 $ 632 * Shorter of asset life or lease term. Depreciation and amortization expense related to property and equipment for the years ended December 31, 2025, 2024 and 2023 was $ 0.5 million , $ 0.7 million, and $ 0.9 million respectively. Property and equipment are recorded at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets. Upon disposal, retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. Acquired IPR&D and Milestone Expense In an asset acquisition, payments incurred prior to regulatory approval to acquire rights to in-process research and development projects are expensed as acquired IPR&D and recorded as a component of research and development expense in the consolidated statements of operations and comprehensive net loss unless the project has an alternative future use. These costs include upfront and development milestone payments related to licensing arrangements, or other asset acquisitions that provide rights to develop, manufacture and/or sell pharmaceutical products. Where contingent development milestone payments are due to third parties, prior to regulatory approval, the payment obligations are expensed when the milestone results are achieved. Regulatory and commercial milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products sold over the remaining useful life of the related product. Foreign Currency Translation The assets and liabilities of the Company’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenue and expense amounts for these subsidiaries are translated using the average exchange rates for the period. Changes resulting from foreign currency translation are included in accumulated other comprehensive income (loss) on the Company’s consolidated statement of stockholders’ equity. Net foreign currency exchange transaction gains (losses), which are included in other (expense) income, net on our consolidated statements of operations, were immaterial for the years ended December 31, 2025, 2024 and 2023. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 — Quoted market prices in active markets for identical assets or liabilities. F-16 Table of Conten ts Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s cash equivalents and marketable securities and derivative liability at December 31, 2025 and 2024 were carried at fair value, determined according to the fair value hierarchy. See Note 5 for further discussion. The carrying amounts reflected in the consolidated balance sheets for accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term maturities at December 31, 2025 and 2024, respectively. Research and Development Expenses Costs incurred in the research and development of the Company’s products are expensed to operations as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services and other outside costs. The value of goods and services received from contract research organizations, or CROs, or contract manufacturing organizations, or CMOs, in the reporting period are estimated based on the level of services performed and progress in the period for which the Company has not yet received an invoice from the supplier. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses, and expensed as the related goods are delivered or the services are performed. Income Taxes The Company is taxed as a C corporation for federal income tax purposes. Income taxes for the Company are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. Income taxes have been calculated on a separate tax return basis. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits as provision for income taxes in the accompanying consolidated statements of operations. As of December 31, 2025 and 2024, no accrued interest or penalties are included as a component of accrued expenses in the consolidated balance sheets. F-17 Table of Conten ts Net Loss Per Share Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by adjusting the weighted-average shares outstanding for the potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the more dilutive of the if-converted or treasury stock method. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and performance stock units are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. The following table includes the potential common shares, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share due to their anti-dilutive effect, under either the treasury stock or if-converted method for the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Stock options 6,466,178 6,611,391 6,551,025 Restricted stock units 2,884,935 1,805,412 1,079,382 Performance stock units 294,644 249,322 581,246 Common stock reserved for the conversion of Series A convertible preferred stock 2,760,413 3,124,995 — Potential common shares 12,406,170 11,791,120 8,211,653 Comprehensive Loss Comprehensive loss represents the net change in stockholders’ equity during a period from sources other than transactions with shareholders. As reflected in the accompanying consolidated statements of operations and comprehensive loss, our comprehensive loss is comprised of net losses, foreign currency translation adjustments and unrealized gains and losses on marketable debt securities. These changes in equity are reflected net of tax. Patent Costs Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expenses. Patent costs were $ 2.0 million , $ 1.3 million and $ 0.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. See Note 16. Application of New or Revised Accounting Standards From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Recently adopted accounting pronouncements In December 2024, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , or ASU 2023-09. The new guidance requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendments in the ASU are intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for us beginning in fiscal year ending December 31, 2025. The Company has adopted this update on a prospective basis. The adoption of this guidance resulted in expanded disclosures in its consolidated financial statements. F-18 Table of Conten ts In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , which improves segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. 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. Recently issued accounting pronouncements, not yet adopted In December 2025, the FASB issued ASU 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors, or make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company is in the process of evaluating this guidance to determine the impact it may have on its consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270) Narrow-Scope Improvements.” The amendments in this update provide clarity on interim disclosure requirements and the applicability of Topic 270. The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU are required to be adopted for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 “Income Statement: Reporting Comprehensive Income—Expense Disaggregation Disclosures,” which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. 3. Asset Acquisitions LG Chem, Ltd. On January 4, 2024, the Company entered into a license agreement and share issuance agreement with LG Chem, Ltd. (“LGC”). Under the terms of the license agreement, the Company obtained worldwide rights to LGC’s proprietary compound 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. The shares were issued at a per share price equal to the ten-day volume weighted average closing price for our common stock, calculated as of the trading day immediately prior to January 4, 2024. As of January 4, 2024, the fair value of common stock issued was $ 18.7 million. The total purchase consideration also included an additional $ 40.0 million license fee payable in 18 months, which had a present value at closing of $ 33.7 million, which was accreted to its full value through interest expense, and $ 0.8 million of transaction costs which are recorded as selling, general and administrative expenses. On July 1, 2025, the Company made this additional payment of $ 40.0 million to LGC. 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. In addition and subject to the completion of Phase 2 development of bivamelagon, the Company has agreed to pay LGC royalties of between low-to-mid single digit percent of net revenues from its MC4R portfolio, including bivamelagon, commencing in 2029 and dependent upon achievement of various regulatory and indication approvals, and subject to customary deductions and anti-stacking. Royalties may further increase to a low double digit percent royalty, though such royalty would only be applicable on net sales of bivamelagon in a region if bivamelagon is covered by a composition of matter or method of use patent controlled F-19 Table of Conten ts by LGC in such region and the Company’s MC4R portfolio is not covered by any composition of matter or method of use patents controlled by the Company in such region. Such increased rate would only apply on net sales of bivamelagon for the limited remainder of the royalty term in the relevant region. The assets acquired were In-Process Research and Development (“IPR&D”) assets. However, since the IPR&D assets were determined to have no alternative future use, the Company recognized the $ 92.4 million of purchase consideration as research and development expense in the year ended December 31, 2024. The Company determined that the additional contingent consideration did not meet the definition of a derivative as of the acquisition date. Therefore, the Company did not record a contingent consideration liability on the acquisition date. The Company will recognize any future contingent consideration payments related to the LGC transaction in the period in which the achievement of the underlying milestones becomes probable. Xinvento B.V. On February 27, 2023, the Company, through its wholly-owned Dutch subsidiary, Rhythm Pharmaceuticals Netherlands B.V., a Dutch private limited liability company (“Rhythm BV”), entered into a Share Purchase Agreement (the “Purchase Agreement”) with Xinvento B.V., a Dutch private limited liability company based in the Netherlands (“Xinvento”), and the other parties named therein, pursuant to which, and concurrently with the execution thereof, Rhythm BV acquired all of the issued and outstanding shares of Xinvento. The aggregate consideration at closing was approximately $ 5.7 million, inclusive of transaction costs, as adjusted pursuant to the terms of the Purchase Agreement and subject to the distribution and payment terms set forth therein (the “Closing Purchase Price”). In addition to the Closing Purchase Price, the Purchase Agreement provides for the payment of additional contingent consideration totaling up to $ 206 million upon achievement of certain development, regulatory and commercial milestones by Xinvento, as follows: (i) up to an aggregate of $ 6 million in clinical development milestones; (ii) up to an aggregate of $ 125 million in regulatory approval and commercial milestones; and (iii) up to an aggregate of $ 75 million in sales milestones in the event a second molecule is selected, developed and approved. The total purchase consideration of $ 5.7 million was composed of $ 4.5 million of cash paid at closing, a $ 0.5 million holdback, payable on the one-year anniversary of the acquisition, and $ 0.6 million of acquisition-related costs. The $ 0.5 million holdback was paid in the quarter ended March 31, 2024, and is reflected in investing activities in the consolidated statement of cash flow for the year ended December 31, 2024. The Company determined that substantially all of the value as of acquisition date related to Xinvento’s In-Process Research and Development. As a result, the Company determined this transaction should be accounted for as an asset acquisition. The assets acquired were In-Process Research and Development (IPR&D) assets. However, since the IPR&D assets were determined to have no alternative future use, the Company recognized the $ 5.7 million of purchase consideration as research and development expense in the year ended December 31, 2023. The Company determined that the additional contingent consideration did not meet the definition of a derivative as of the acquisition date. Therefore, the Company did not record a contingent consideration liability on the acquisition date. The Company will recognize any future contingent consideration payments related to the Xinvento transaction in the period in which the achievement of the underlying milestones becomes probable. Xinvento's results of operations are included in the consolidated financial statements from the date of acquisition. For the years ended December 31, 2025 and 2024, the net loss associated with the operations of Xinvento was de minimis in the Company’s consolidated statements of operations. F-20 Table of Conten ts 4. Accrued Expenses Accrued expenses consists of the following (in thousands): December 31, 2025 December 31, 2024 Research and development costs $ 17,084 $ 17,871 Professional fees 5,827 4,280 Payroll related 22,433 18,216 Royalties 2,870 2,091 Sales allowances 31,564 15,850 Other 4,078 4,350 Accrued expenses and other current liabilities $ 83,855 $ 62,658 5. Fair Value of Financial Assets and Liabilities The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands): Fair Value Measurements as of December 31, 2025 using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 33,949 $ — $ — $ 33,949 Marketable securities: US treasury securities 71,877 — — 71,877 Corporate debt securities and commercial paper — 262,771 — 262,771 Derivative asset — — 1,180 1,180 Total $ 105,826 $ 262,771 $ 1,180 $ 369,777 Fair Value Measurements as of December 31, 2024 using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Commercial Paper $ — $ 2,984 $ — $ 2,984 Money market funds 71,334 — — 71,334 Marketable securities: — US treasury securities 65,118 — — 65,118 Corporate debt securities and commercial paper — 166,310 — 166,310 Derivative asset — — 270 270 Total $ 136,452 $ 169,294 $ 270 $ 306,016 As of December 31, 2025 and 2024 the carrying amount of cash and cash equivalents and short-term investments was $ 388.9 million and $ 320.6 million, respectively, which approximates fair value. Cash and cash equivalents and short-term investments includes investments in U.S. treasury securities and money market funds that invest in U.S. government securities that are valued using quoted market prices. Accordingly, money market funds and government funds are categorized as Level 1. The financial assets valued based on Level 2 inputs consist of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations. F-21 Table of Conten ts The embedded derivative asset associated with our deferred royalty obligation , as discussed further in Note 11, Long-Term Obligations , is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the deferred royalty obligation. The embedded derivative (asset) or liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other (expense) income, net. The assumptions used in the option pricing Monte Carlo simulation model include: (1) our estimates of the probability and timing of related events; (2) the probability-weighted net sales of IMCIVREE, including worldwide net product sales, upfront payments, milestones and royalties; (3) our risk-adjusted discount rate that includes a company specific risk premium; (4) our cost of debt; (5) volatility; and (6) the probability of a change in control occurring during the term of the instrument. The forward contract associated with our Series A Convertible Preferred Stock, as discussed further in Note 9, “Series A Preferred Stock”, is measured at fair value. In order to value the forward contract, a binomial lattice model was used to determine the fair value of the Series A Preferred Stock. The fair value of the forward contract was measured as the difference between the consideration payable of $ 150.0 million and the fair value of the Series A Preferred Stock. The fair value of the forward contract was determined to be $ 0 at initial issuance and the change in the fair value from initial issuance to settlement of $ 8.9 million was recognized as other income in the consolidated statements of operation for the year ended December 31, 2024. The significant assumptions used in the binomial lattice model include: (1) the Company’s common stock price on the issuance and settlement dates; (2) the Conversion Price as of $ 48.00 as per the Agreement; (3) a 20-year term to maturity; (4) risk free rates ( 4.6 % - 5 %); and (5) volatility ( 68 % and 67 %). The following tables set forth a summary of the changes in the estimated fair value of our embedded derivative liability (asset) (in thousands): Year ended December 31, 2025 2024 Beginning aggregate estimated fair value of Level 3 liability (asset) $ ( 270 ) $ 1,150 Change in fair value of embedded derivative ( 910 ) ( 1,420 ) Fair value of forward contract - Series A Convertible Preferred Stock — 8,900 Settlement of forward contract — ( 8,900 ) Ending aggregate estimated fair value of Level 3 liability (asset) $ ( 1,180 ) $ ( 270 ) The estimated fair value of the derivative (asset) or liability related to our Royalty Interest Financing Agreement (RIFA) with HealthCare Royalty was determined using Level 3 inputs. The fair value measurement of the derivative (asset) or liability is sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument. Marketable Securities The following tables summarize the Company's marketable securities (in thousands): December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 262,412 $ 370 $ ( 11 ) $ 262,771 U.S. Treasury Securities 71,634 243 — 71,877 $ 334,046 $ 613 $ ( 11 ) $ 334,648 F-22 Table of Conten ts December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Assets Corporate debt securities and commercial paper (due within 1 year) $ 166,255 $ 147 $ ( 92 ) $ 166,310 U.S. Treasury Securities 65,074 79 ( 35 ) 65,118 $ 231,329 $ 226 $ ( 127 ) $ 231,428 6. Intangible Assets, net As of December 31, 2025 As of December 31, 2024 Estimated life (years) Cost Accumulated Amortization Net Cost Accumulated Amortization Net (In thousands) Capitalized Milestones 11 $ 9,000 $ ( 3,681 ) $ 5,319 $ 9,000 $ ( 2,826 ) $ 6,174 As of December 31, 2025, the Company’s finite-lived intangible assets, which totaled $ 5.3 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 December 31, 2025, amortization expense for the next five years and beyond is summarized as follows (in thousands): 2026 $ 855 2027 855 2028 855 2029 855 2030 855 Thereafter 1,044 Total $ 5,319 The Company began amortizing its finite-lived intangible assets in April 2021 over an 11 year period based on IMCIVREE’s expected patent exclusivity period. Amortization expense totaled $ 0.9 million , $ 0.9 million and $ 0.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense is recorded as a component of cost of sales on the consolidated statements of operations and comprehensive loss. 7. Common Stock Common Stock On December 4, 2025, one of the Company's Series A Convertible Preferred Stock holders exercised their conversion right and converted 17,500 Convertible Preferred A Stock into 364,582 shares of common stock. Refer to Note 9, Series A Convertible Preferred Stock, for further information. 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 $ 188.7 million, net of $ 12.6 million of F-23 Table of Conten ts underwriting discounts and commissions, and other offering expenses incurred by the Company, for a total share issuance of 2,367,647 . 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 $ 200.0 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 Securities Exchange Commission a prospectus supplement, dated February 29, 2024, which, combined with the Base Prospectus (together, the “New Prospectus”), amended the Prior Prospectus in its entirety. The issuances and sales under the Sales Agreement, as amended by the Amendment, will be made pursuant to the Registration Statement and the New Prospectus. In the quarter ended December 31, 2024 the Company sold 744,595 shares of common stock in the ATM program for net proceeds of $ 41.2 million. The Company also sold an additional 587,510 shares of common stock in the ATM program through January 21, 2025 for net proceeds of approximately $ 32.1 million. On September 19, 2022 , the Company completed a public offering of 4,800,000 shares of common stock at a price to the public of $ 26.00 per share. The Company received $ 116,887 in net proceeds after deducting underwriting discounts, commissions and offering expenses. In addition, the Company granted the underwriters a 30 -day option to purchase up to an additional 720,000 shares of its common stock at the price to the public, less underwriting discounts and commissions. On October 18, 2022 , the Company completed the sale of an additional 580,000 shares of common stock at a price to the public of 26.00 per share pursuant to the partial exercise of the underwriters’ option to purchase additional shares, for aggregate net proceeds of approximately $ 14.2 million, after deducting underwriting discounts, commissions and offering expenses. On November 2, 2021 , the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”), pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $ 100.0 million, from time to time through an “at the market” equity offering program under which Cowen acts as sales agent (the “ATM Program”). Between August 10, 2023 and August 21, 2023, the Company sold approximately two million shares of its common stock in the ATM Program for net proceeds of approximately $ 48.9 million. 8. Stock-based Compensation 2017 Equity Incentive Plan The Rhythm Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, performance units, restricted stock awards, restricted stock units and stock grants to employees, consultants, advisors and directors of us or our affiliates, as determined by the board of directors. The number of shares authorized under the 2017 Plan increases on the first day of each calendar year, commencing on January 1, 2018 and ending on (and including) January 1, 2027, by an amount equal to 4 % of the outstanding shares of stock outstanding as of the end of the immediately preceding fiscal year. On January 1, 2026, 2025, 2024 and 2023 , 2,688,212 , 2,495,626 , 2,377,062 , and 2,264,497 shares, respectively, were added to the 2017 Plan. Notwithstanding the foregoing, the board of directors may act prior to January 1 for a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 Plan for such year, or that the increase in the number of shares authorized under the 2017 Plan for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. Shares of common stock issued upon the exercise of stock options are generally issued from new shares of the Company. The 2017 Plan provides that the exercise price of incentive stock options cannot be less than 100 % of the fair market value of the common stock on the date of the award for participants who own less than 10 % of the total combined voting power of stock of the Company, and not less than 110 % for participants who own more than 10 % of the Company's voting power. Awards granted under the 2017 Plan will vest over periods as determined by the Company's board of directors. For options granted to date, the exercise price equaled the fair value of the common stock as determined by the board of directors on the date of grant. As of December 31, 2025 , an aggregate of 13,717,040 shares of common stock were authorized for issuance under the 2017 Plan, of which a total of approximately 4,636,850 shares of common stock remained available for future awards. In addition, a total of 9,080,190 shares of common stock reserved for issuance were subject to currently outstanding stock options, performance share units and restricted stock units granted under the Plan. F-24 Table of Conten ts 2022 Inducement Plan On February 9, 2022 , the Company’s board of directors adopted the Rhythm Pharmaceuticals, Inc. 2022 Employment Inducement Plan (the “2022 Inducement Plan”), which became effective on such date without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”). The 2022 Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, performance units, restricted stock awards, restricted stock units and stock grants. In accordance with Rule 5635(c)(4), awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. An aggregate of 1,000,000 shares of the Company’s common stock have been reserved for issuance under the 2022 Inducement Plan. The exercise price of stock options granted under the 2022 Inducement Plan will not be less than the fair market value of a share of the Company’s common stock on the grant date. Other terms of awards, including vesting requirements, are determined by the Company’s board of directors and are subject to the provisions of the 2022 Inducement Plan. Stock options granted to employees generally vest over a four-year period but may be granted with different vesting terms. Certain options may provide for accelerated vesting in the event of a change in control. Stock options granted under the 2022 Inducement Plan expire no more than 10 years from the date of grant. As of December 31, 2025 , there were 371,148 stock option awards outstanding, 194,419 restricted stock unit awards outstanding and 59,067 shares of common stock available for future grant under the 2022 Inducement Plan. 2017 Employee Stock Purchase Plan The Company maintains the Rhythm Pharmaceuticals, Inc. 2017 Employee Stock Purchase Plan, (the “2017 ESPP”), which became effective in connection with the completion of the Company’s IPO in October 2017. As of December 31, 2025 , a total of 1,240,958 shares of common stock were reserved for issuance under the 2017 ESPP. In addition, the number of shares authorized under the 2017 ESPP increases on the first day of each calendar year, commencing on January 1, 2019 and ending on (and including) January 1, 2027, by an amount equal to the lesser of 1 % of outstanding shares as of the end of the immediately preceding fiscal year. On January 1, 2025, 2024 and 2023, no shares were added to the 2017 ESPP. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no such January 1 increase in the number of shares authorized under the 2017 ESPP for such year, or that the increase in the number of shares authorized under the 2017 ESPP for such year will be a lesser number than would otherwise occur pursuant to the preceding sentence. During the years ended December 31, 2025, 2024 and 2023, shares of 37,514 , 44,554 , and 49,819 were issued under the 2017 ESPP. The purchase price of common stock under our ESPP is equal to 85.0 % of the lower of (i) the market value per share of the common stock on the first business day of an offering period or (ii) the market value per share of the common stock on the purchase date. The fair value of the discounted purchases made under our ESPP is calculated using the Black-Scholes model. The fair value of the look-back provision plus the 15.0 % discount is recognized as compensation expense over the 6 months purchase period. Stock Options The Company estimates the fair value of stock option awards to employees and non-employees using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including (a) the expected volatility of the underlying common stock, (b) the expected term of the award, (c) the risk-free interest rate, and (d) expected dividends. The Company bases its estimate of expected volatility using a blend of its stock price history for the length of time it has market data for its stock and using the historical volatility of a group of companies in the pharmaceutical and biotechnology industries in a similar stage of development as the Company that are publicly traded. For these analyses, the Company selected companies with comparable characteristics to its own including enterprise value, risk profiles and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of its stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. The Company estimated the expected life of its employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option. The risk-free interest rates for periods within the expected life of the option are based on the U.S. Treasury yield curve in effect during the period the options were granted. We have elected to account for forfeitures as they occur. F-25 Table of Conten ts The grant date fair value of awards subject to service-based vesting is recognized ratably over the requisite service period, which is generally the vesting period of the respective awards. The Company's stock option awards typically vest over a service period that ranges from one to four years and includes awards with one year cliff vesting followed by ratable monthly and quarterly vesting thereafter and ratable monthly and quarterly vesting beginning on the grant date. During the years ended December 31, 2025, 2024 and 2023, the Company granted 740,919 , 926,543 , and 842,528 stock option awards pursuant to the 2017 Plan to certain directors, employees and non-employees, respectively. Using the Black-Scholes option pricing model, the weighted-average grant date fair value relating to outstanding stock options granted under the 2017 Plan during the years ended December 31, 2025, 2024, and 2023 was $ 57.70 , $ 32.69 , and $ 17.72 , respectively. During the years ended December 31, 2025, 2024 and 2023, the Company granted 0 , 57,100 , and 229,360 stock option awards pursuant to the 2022 Inducement Plan. Using the Black-Scholes option pricing model, the weighted-average grant date fair value relating to outstanding stock options granted under the Company’s stock option plan during the years ended December 31, 2024 and 2023 were $ 29.16 and $ 15.30 , respectively. The fair value of stock options granted to employees and directors was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended December 31, 2025 2024 2023 Risk‑free interest rate 4.32 % 4.29 % 2.35 % Expected term (in years) 6.25 6.13 6.11 Expected volatility 71.67 % 74.59 % 76.11 % Expected dividend yield — — — A summary of the Company's stock option activity for the year ended December 31, 2025 is as follows: Number of Options Weighted- Average Exercise Price Weighted‑ Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2024 6,611,391 $ 23.29 6.66 $ 216,413 Granted 740,919 $ 57.70 — $ — Exercised ( 843,525 ) $ 16.13 — $ 52,980 Cancelled ( 42,607 ) $ 26.03 — $ — Outstanding as of December 31, 2025 6,466,178 $ 28.15 6.12 $ 510,138 Options exercisable at December 31, 2025 4,940,330 $ 23.09 5.48 $ 414,757 Restricted Stock Units The Company may grant restricted stock units (“RSUs”) to employees and nonemployee directors under the 2017 Plan and to employees under the 2022 Inducement Plan. Each RSU represents a right to receive one share of the Company's common stock upon the completion of a specific period of continued service. RSU awards granted are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair values of these RSUs on a straight-line basis over the requisite service period of these awards. F-26 Table of Conten ts A summary of the Company's restricted stock unit activity for the year ended December 31, 2025 is as follows: Number of RSUs Weighted- Average Grant Date Fair Value Unvested as of December 31, 2024 1,826,709 $ 36.40 Granted 1,771,564 65.24 Vested ( 635,186 ) 33.36 Cancelled ( 78,152 ) 47.84 Unvested as of December 31, 2025 2,884,935 $ 54.42 As of December 31, 2025, the aggregate intrinsic value of unvested RSUs was $ 308.8 million. Performance Stock Units In November 2021, the Company granted a maximum of 956,145 performance stock units (“PSUs”) to employees under the 2017 Plan. Each PSU represents a right to receive one share of the Company's common stock upon vesting. The performance-based stock units granted in 2021 vested on December 31, 2024 based upon i) continued service through the vesting date and (ii) the achievement of specific clinical development and regulatory performance events, as approved by the compensation committee. PSU awards are valued at the market price of the Company's common stock on the date of grant. The Company recognizes stock-based compensation expense for the fair value of these PSUs for the awards that are probable of vesting over the service period. During each financial period, management estimates the probable number of PSU’s that would vest until the ultimate achievement of the performance goal is known. In the year ended December 31, 2024, 581,346 of the PSUs granted in 2021 vested. In April 2024, the Company approved a maximum of 340,000 PSUs to employees under the 2017 Plan. Each PSU represents a right to receive one share of the Company's common stock upon vesting. The performance-based stock units approved in 2024 will vest based the achievement of the following milestones i) continued service through the the date on which the Compensation Committee determines that the performance metrics have been achieved, ii) the achievement of annual net product revenue amounts, and iii) the achievement of specific clinical development and regulatory performance events, as approved by the compensation committee. The Company recognizes stock-based compensation expense for the fair value of these PSUs for the awards that are probable of vesting over the service period. The Company granted 45,322 PSU’s during the year ended December 31, 2025. During each financial period, management estimates the probable number of PSU’s that would vest until the ultimate achievement of the performance goal is known. As of December 31, 2025 none of these PSU’s have vested. A summary of the Company's performance stock unit activity for the year ended December 31, 2025 is as follows: Number of PSUs Weighted- Average Grant Date Fair Value Unvested as of December 31, 2024 249,322 $ 13.24 Granted 45,322 56.60 Vested — — Cancelled — — Unvested as of December 31, 2025 294,644 $ 41.11 F-27 Table of Conten ts The following table summarizes the classification of the Company's stock-based compensation expenses related to stock options, restricted stock units, performance stock units and the employee stock purchase plan recognized in the Company's consolidated statements of operations and comprehensive loss (in thousands). Year Ended December 31, 2025 2024 2023 Research and development $ 19,802 $ 10,514 $ 8,449 Selling, general, and administrative 47,016 29,168 24,104 Total $ 66,818 $ 39,682 $ 32,553 Stock-based compensation expense by award type recognized during the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Stock options $ 22,225 $ 21,788 $ 17,671 Employees stock purchase plan 685 538 581 Restricted stock units 39,256 16,886 5,998 Performance stock units 4,652 470 8,303 Total $ 66,818 $ 39,682 $ 32,553 As of December 31, 2025, the Company has unrecognized compensation cost of $ 42.6 million related to non-vested employee, non-employee and director stock option awards under all equity plans that are expected to be recognized over a weighted-average period of 2.09 years. The Company has unrecognized compensation cost of $ 126.1 million related to non-vested employee restricted stock unit and performance stock unit awards under all equity plans that are expected to be recognized over a weighted-average period of 2.45 years. 9. Series A Convertible Preferred Stock On April 1, 2024, the Company entered into 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. The Company determined the obligation to issue 150,000 shares of Convertible Preferred Stock to Perceptive and Investors in the future at a set price represented a forward contract which was required to be accounted for at fair value. The fair value of the forward contract was measured as the difference between the fair value of the Convertible Preferred Stock, as determined using a binomial lattice valuation model, and the consideration payable to the Company. The assumptions used in the binomial lattice model include: (1) the Company’s common stock price on the issuance and settlement dates; (2) the Conversion Price as of $ 48.00 as per the Agreement; (3) a 20 -year term to maturity; (4) risk-free rates; and (5) volatility. 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 $ 8.9 million and the fair value of the Convertible Preferred Stock was determined to be $ 141.1 million . The Convertible Preferred Stock was recorded at its fair value on the Issuance and the change in fair value of the forward contract was recorded as other income in its consolidated statement of operations for the year ended December 31, 2024. Issuance costs of $ 2.3 million were incurred and recorded as a reduction in the carrying value of the Convertible Preferred Stock in the year ended December 31, 2024. 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 December 31, 2025. F-28 Table of Conten ts On December 4, 2025, and in accordance with the terms described below, a holder of the Company's Series A Convertible Preferred Stock exercised their right to convert 17,500 shares of Series A Convertible Preferred Stock to common shares. Each of the 17,500 shares of Series A Convertible Preferred Stock converted to 20.8333 shares of common stock, resulting in a total of 364,582 shares of common stock. The Company reclassified the carrying value of the converted shares of $ 17.2 million from Series A convertible Preferred Stock to common stock and additional paid in capital, for this non-cash financing event. The Company accrued dividends of $ 5.4 million for the year ended December 31, 2025, as a reduction to additional paid-in capital and an increase to the carrying value of Series A Convertible Preferred Stock. After conversion of the 17,500 shares of Series A Convertible Preferred Stock, and the accretion of preferred stock dividends, the carrying value of Series A Convertible Preferred Stock as of December 31, 2025 was $ 131.0 million. The Convertible Preferred Stock has the following rights and privileges: Liquidation: The Series A Preferred Stock will rank senior to the Company’s common stock with respect to the distribution of assets upon the Company’s liquidation, dissolution or winding up. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (“Liquidation”), each holder of Convertible Preferred Stock shall be entitled to receive payment for the greater of (i) 1.75 multiplied by the sum of the Liquidation Preference (i.e., Initial Liquidation Preference of $ 1,000 per share plus Paid-in-Kind (“PIK”) Dividends) plus unpaid Regular Dividends (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference) or (ii) the amount such holder would have received if the Convertible Preferred Stock were fully converted to common stock. If the assets available for distribution are not sufficient to pay the holders of the Convertible Preferred Stock pursuant to the preceding sentence, the assets will be distributed ratably to the holders of the Convertible Preferred Stock. Voting: Holders of the Convertible Preferred Stock have the right to vote with the holders of common stock on each matter submitted for a vote on an as-converted basis, subject to the terms of the Convertible Preferred Stock as specified in the Amended and Restated Certificate of Designations. The holders of the Convertible Preferred Stock shall also have certain protective voting rights. Specifically, as long as the Convertible Preferred Stock are outstanding, each of the following events require at least a two thirds affirmative vote of the Convertible Preferred Stock holders: (a) any amendment or modification of the Certificate of Incorporation to authorize or create, or to increase the authorized number of shares of, any class or series of Dividend Parity Stock, Liquidation Parity Stock, Dividend Senior Stock or Liquidation Senior Stock, (b) any amendment, modification, repeal or waiver of any provision of the Certificate of Incorporation or the Amended and Restated Certificate of Designations that adversely affects the rights, preferences, privileges or powers of the Convertible Preferred Stock, (c) increase or decrease the number of authorized shares of Convertible Preferred Stock or issue additional shares of Convertible Preferred Stock, (d) the Company’s consolidation or combination with, or merger with or into, another Person, or any binding or statutory share exchange or involving the Convertible Preferred Stock, in each case unless: (i) the Convertible Preferred Stock either (x) remains outstanding after such consolidation, combination, merger, share exchange or reclassification; or (y) is converted or reclassified into, or is exchanged for, or represents solely the right to receive, preference securities of the continuing, resulting or surviving Person of such consolidation, combination, merger, share exchange or reclassification, or the parent thereof; (ii) the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, have rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the Holders or the holders thereof, as applicable, than the rights, preferences and voting powers, taken as a whole, of the Convertible Preferred Stock immediately before the consummation of such consolidation, combination, merger, share exchange or reclassification; and (iii) the issuer of the Convertible Preferred Stock that remains outstanding or such preference securities, as applicable, is a corporation duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that, if not the Company, will succeed to the Company under the Amended and Restated Certificate of Designations and the Convertible Preferred Stock. Redemption: 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 F-29 Table of Conten ts 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 December 31, 2025, the Company does not consider a change of control to be probable and therefore the Convertible Preferred Stock is not considered redeemable. Dividends: 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. Since dividends do not commence until the second anniversary of the Issuance, the Convertible Preferred Stock is considered increasing rate preferred stock. Accordingly, the Company accretes the dividends, using the effective interest method, from Issuance to the first contractual call date, April 15, 2 029. Conversions: Holders of Convertible Preferred Stock have the option to convert any number of whole shares at any time. The conversion is based on the sum of the Liquidation Preference plus unpaid Dividends divided by the $ 48.00 Conversion Price. Given the Initial Liquidation Preference of $ 1,000 , each share of Convertible Preferred Stock would be convertible into 20.8333 shares of common stock, prior to any adjustments such as PIK Dividends, unpaid Dividends, stock splits, or voluntary conversion rate increases. Upon conversion, cash will be paid in lieu of any fractional share of common stock. However, based on certain restrictions on the conversion of the Convertible Preferred Stock specified in the Amended and Restated Certificate of Designations, a holder of Convertible Preferred Stock is not entitled to effect a conversion of any portion of its shares of Convertible Preferred Stock, or to vote in its capacity as a holder of shares of Convertible Preferred Stock with respect to matters submitted to holders of the common stock if, after giving effect to such conversion, that holder would beneficially own in excess of 4.99 %, in the case of one holder, or 9.99 %, in the case of the other holder, of the number of shares of common stock outstanding immediately after giving effect to such exercise. On May 7, 2024, the Company filed an Amended and Restated Certificate of Designations in respect of the Convertible Preferred Stock containing certain technical amendments to the terms of the Convertible Preferred Stock. The amendments contained in the Amended and Restated Certificate of Designations (x) limited the voting rights of the Convertible Preferred Stock to 24.9438 shares of the Company’s common stock per $ 1,000 liquidation preference of Convertible Preferred Stock and (y) eliminated a 1 % step up in the interest rate that otherwise would have applied in the unlikely event that the Company was required to obtain and failed to obtain stockholder approval for certain conversion shares underlying the Convertible Preferred Stock. On July 10, 2024, the Company filed with 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. 10. Significant Agreements License Agreements RareStone Group Ltd. In December 2021, the Company entered into an Exclusive License Agreement with RareStone Group Ltd., or the RareStone License. Pursuant to the RareStone License, we granted to RareStone an exclusive, sublicensable, royalty-bearing license under certain patent rights and know-how to develop, manufacture, commercialize and otherwise exploit any pharmaceutical product that contains setmelanotide in the diagnosis, treatment or prevention of conditions and diseases in humans in China, including mainland China, Hong Kong and Macao. In accordance with the terms of the RareStone License , RareStone made an upfront payment to Rhythm of $ 7.0 million and issued Rhythm 1,077,586 ordinary shares. The Company was eligible to receive development and commercialization milestones, as well as tiered royalty payments on annual net sales of IMCIVREE. F-30 Table of Conten ts The Company initially estimated the fair value of the RareStone equity to be $ 2.4 million based on a preliminary valuation during the first quarter of 2022. Upon completion of the valuation procedures during the second quarter of 2022, the Company concluded the initial fair value of the RareStone equity to be $ 1.0 million . During the third quarter of 2022, the Company estimated the fair value of the RareStone equity to be de minimis based upon the results of an updated valuation and recorded an other-than-temporary impairment of $ 1.0 million related to the decline in fair value as a component of other expense in our consolidated statements of operations and other comprehensive loss for the year ended December 31, 2022. The other-than-temporary impairment of $ 1.0 million included the reclassification of a $ 0.3 million unrealized l oss previously recorded as a component of accumulated other comprehensive income (loss) in our consolidated statement of stockholders’ equity during the second quarter of 2022. The Company received total upfront consideration of $ 8.0 million comprised of an upfront payment of $ 7.0 million, and the estimated fair value of the RareStone equity of $ 1.0 million. The Company determined that the RareStone License contains two performance obligations, the delivery of the license and the supply of clinical and commercial product. Based on a relative fair-value allocation between the license and the manufacture of clinical and commercial product, the Company re cognized $ 6.8 million of license revenue in the consolidated statements of operations and comprehensive loss during the year ended December 31, 2022 . The discount related to commercial manufacturing supply will be deferred and recognized over the commercial supply period or upon termination of the agreement. On March 14, 2025, we entered into a termination agreement (the “Termination Agreement”) with RareStone Group Ltd. (“RareStone”) and RareStone Medicine (Shenzhen) Co., Ltd. (“RareStone Shenzhen”), pursuant to which the Company, RareStone and RareStone Shenzhen have mutually agreed to terminate (i) the Exclusive License Agreement between the Company and RareStone, dated December 3, 2021 (the “License Agreement”); and (ii) the Share Purchase Agreement between the Company and RareStone, dated December 3, 2021 (the “Share Purchase Agreement”, and with the License Agreement the “RareStone Agreements”). Under the Termination Agreement, the Company agreed to pay $ 6.3 million as a repayment of a portion of the upfront payment made pursuant to Section 7.1 of the License Agreement. In connection with the Termination Agreement, the Company and RareStone also entered into a Share Repurchase Agreement dated March 14, 2025, pursuant to which the Company has agreed to convey all of the shares acquired under the original Share Purchase Agreement back to RareStone, for no additional consideration. The Company had previously written off the value of the shares in the year ended December 31, 2022. Prior to executing the termination agreement, the Company had recorded $ 1.3 million of deferred revenue related to this arrangement for unsatisfied performance obligations. As a result of the Termination Agreement, the Company recognized the $ 6.3 million paid to RareStone as a reduction in previously-recognized license revenue as it represented consideration paid to a customer, and recognized all existing deferred revenue resulting in a net reduction in license revenue of $ 5.0 million . Ipsen Pharma S.A.S. Pursuant to our March 21, 2013 license agreement with Ipsen Pharma, S.A.S., or Ipsen, the Company has an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to research, develop, and commercialize compounds that were discovered or researched by Ipsen in the course of conducting its MC4R program or that otherwise were covered by the licensed patents. Under the terms of the setmelanotide Ipsen license agreement, assuming that setmelanotide is successfully developed, receives regulatory approval and is commercialized, Ipsen may receive aggregate payments of up to $ 40.0 million upon the achievement of certain development and commercial milestones and royalties on future product sales in the mid-single digits. Substantially all of such aggregate payments of up to $ 40.0 million are for milestones that may be achieved no earlier than first commercial sale of setmelanotide. In the event that the Company executes a sublicense agreement, it shall make payments to Ipsen, depending on the date of such sublicense agreement, ranging from 10 % to 20 % of all revenues actually received under such sublicense agreement. The Company capitalized a $ 5.0 million and $ 4.0 million commercial milestone as a finite-lived intangible asset, as a result of the first commercial sales of IMCIVREE in the U.S. and Europe during March 2021 and March 2022, respectively. There were no research and development expenses related to milestones recorded in each of the years ended December 31, 2025, 2024 and 2023. Camurus In January 2016, the Company entered into a license agreement with Camurus AB, or Camurus, for the use of Camurus' drug delivery technology. The contract includes a non-refundable and non-creditable signing fee of $ 0.5 million. F-31 Table of Conten ts The Camurus agreement also includes up to $ 7.8 million in one-time, non-refundable development milestones achievable upon certain regulatory successes. The Company is also required to pay to Camurus, mid to mid-high single digit royalties, on a product-by-product and country-by-country basis of annual net sales, until the later of (i) 10 years after the date of first commercial sale of such product in such country; or (ii) the expiration of the last to expire valid claim of all licensed patent rights in such country covering such product. The Company is also required to pay one-time, non-refundable, non-creditable sales milestones upon the achievement of certain sales levels for such product that cannot be in excess of $ 57.0 million. The Company recorded development milestone expenses related to this license agreement of $ 1.0 million during the year ended December 31, 2022. The expenses were recorded as research and development expenses when the milestone criteria were met in full during 2023. There are no research and development expenses related to milestones recorded in 2025 or 2024. 11. Long-Term Obligations On June 16, 2022, we entered into a RIFA with entities managed by HealthCare Royalty Management, LLC, collectively referred to as the Investors. Pursuant to the RIFA and subject to customary closing conditions, the Investors have agreed to pay the Company an aggregate investment amount of up to $ 100.0 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 $ 125.0 million, 7.5 % on annual net revenues of between $ 125.0 million and $ 300.0 million and 2.5 % on annual net revenues exceeding $ 300.0 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. As of December 31, 2025 we have made $ 40.3 million of payments. The Investors’ rights to receive the Revenue Interests will terminate on the date on which the Investors have received payments equal to a certain percentage of the funded portion of the Investment Amount including the aggregate of all payments made to the Investors as of such date, each percentage tier referred to as the Hard Cap, unless the RIFA is earlier terminated. The total Revenue Interests payable by us to the Investors is capped between 185 % and 250 % of the Investment Amount paid, dependent on the aggregate royalty paid between 2028 and 2032. If a change of control of occurs, the Investors may accelerate payments due under the RIFA up to the Hard Cap plus any other obligations payable under the RIFA. The repayment period commenced on July 8, 2022 for the Initial Investment Amount, and expires on the earlier of (i) the date at which the Investors received cash payments totaling an aggregate of a Hard Cap ranging from 185 % to 250 % of the Initial Investment Amount or (ii) the legal maturity date of July 8, 2034. If the Investors have not received payments equal to 250 % of the Investment Amount by the twelve-year anniversary of the initial closing date, we will be required to pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously received by Investors. In the event of a change of control, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time, ranging from 185 % to 250 % plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to Investors under the deferred royalty obligation, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of IMCIVREE in the U.S. or our breach of any covenant contained in the RIFA and our failure to cure the breach within the prescribed time frame, we are obligated to pay Investors an amount equal to the Hard Cap in effect at the time of default ranging from 185 % to 250 % plus any Under Performance Payment of the Investment Amount less payments previously received by Investors. In addition, upon an event of default, Investors may exercise all other rights and remedies available under the RIFA, including foreclosing on the collateral that was pledged to Investors, which consists of all of our present and future assets relating to IMCIVREE. F-32 Table of Conten ts We have evaluated the terms of the RIFA and concluded that the features are similar to those of a debt instrument. Accordingly, we have accounted for the transaction as long-term debt and presented it as a deferred royalty obligation on our consolidated balance sheets. We have further evaluated the terms of the RIFA and determined that the repayment of the Hard Cap in effect at the time which ranges from 185 % to 250 % of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition. We determined the fair value of the derivative using an option pricing Monte Carlo simulation model taking into account the probability of change of control occurring and potential repayment amounts and timing of such payments that would result under various scenarios, as further described in Note 5, Fair Value of Financial Instruments, to our consolidated financial statements. During the second quarter of 2022, the Company recorded $ 1.6 million for the initial fair value of the embedded derivative liability (asset). The fair value of the embedded derivative asset was $( 1.2 ) million and $( 0.3 ) million as of December 31, 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 years ended December 31, 2025 and December 31, 2024, we recognized other income of $ 0.9 million and $ 1.4 million, due to the remeasurement of the embedded derivative liability (asset). The carrying value of the deferred royalty obligation at December 31, 2025 was $ 108.2 million based on $ 100.0 million of proceeds, net of the initial fair value of the bifurcated embedded derivative liability upon execution of the RIFA, and debt issuance costs incurred. The carrying value is classified as $ 7.3 million within current liabilities an d $ 100.9 million within long-term liabilities on the consolidated balance sheet as of December 31, 2025. The carrying value of the deferred royalty obligation approximated fair value at December 31, 2025. The effective interest rate as of December 31, 2025 was 17.05 %. 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. The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make estimates that could impact the classification of these costs, as well as the period over which these costs will be amortized. 12. Commitments and Contingencies Legal Proceedings The Company, from time to time, may be party to various litigation arising in the ordinary course of business. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. Other The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones that may be met in subsequent periods, or royalties on future sales of specified products. See Note 10 for discussion of these arrangements. Additionally, the Company is party to various contracts with CROs and CMOs that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement. Based on the Company’s current development plans as of December 31, 2025, the Company does not expect to make material milestone payments due to third parties during the next 12 months from the filing of this Annual Report on Form 10-K, in connection with our license agreements. These milestones generally become due and payable upon achievement of such milestones or sales and achievement of development milestones. When the achievement of these milestones or sales have not occurred, such contingencies are not recorded in the Company’s consolidated financial statements. 13. Related-Party Transactions Expenses paid directly to related parties for the years ended December 31, 2025 and 2024, were immaterial. Outstanding payments due to related parties as of December 31, 2025 and December 31, 2024 were immaterial. F-33 Table of Conten ts 14. Income Taxes The components of loss before income taxes are as follows (in thousands): As of December 31, 2025 2024 2023 United States $ ( 196,054 ) $ ( 258,927 ) $ ( 178,669 ) Foreign 12 ( 1,329 ) ( 5,445 ) Loss before income taxes $ ( 196,042 ) $ ( 260,256 ) $ ( 184,114 ) Components of provision for income taxes are as follows (in thousands): As of December 31, Current: 2025 2024 2023 U.S. Federal $ — $ — $ — U.S. State and Local — — 1 Foreign 497 346 563 Total Current Expense $ 497 $ 346 $ 564 Deferred: U.S. Federal $ — $ — $ — U.S. State and Local — — — Foreign — — — Total Deferred Expense $ — $ — $ — F-34 Table of Conten ts The following table presents reconciliation of the income tax expense (benefit) at the federal statutory tax rate to the Company's effective income tax rate for the year ended December 31, 2025 after the adoption of ASU 2023-09: December 31, 2025 Amount Percentage (In thousands) U.S. Federal Statutory Tax Rate $ ( 41,169 ) 21.00 % State and Local Income Tax, Net of Federal (National) Income Tax Effect — — % Foreign Tax Effects:  Other Foreign Jurisdictions 529 ( 0.27 ) % Tax Credits: Research & Development Credits ( 13,073 ) 6.67 % Changes in Valuation Allowances 51,008 ( 26.02 ) % Nontaxable or Nondeductible Items: Executive Compensation Limit 8,661 ( 4.42 ) % Stock-Based Compensation ( 2,283 ) 1.16 % LG Chem ( 3,930 ) 2.00 % Deferred royalty financing 913 ( 0.46 ) % Other 207 ( 0.10 ) % Other Adjustments ( 366 ) 0.19 % Income tax expense / Effective Tax Rate $ 497 ( 0.25 ) % The following table presents a reconciliation of the income tax expense (benefit) at the federal statutory tax rate to the Company's effective income tax rate for the years ended December 31, 2024 and 2023, before the adoption of ASU 2023-09 is as follows: As of December 31, 2024 2023 Statutory tax rate 21.00 % 21.00 % State tax, net of federal benefit 5.61 10.24 Research and development credits 3.75 4.02 Stock-based compensation ( 0.57 ) ( 1.37 ) Other ( 1.61 ) ( 0.16 ) Rate changes ( 2.04 ) ( 6.52 ) Executive Compensation ( 2.26 ) ( 0.32 ) License Agreement ( 1.51 ) — Change in valuation allowance ( 22.50 ) ( 27.10 ) Effective tax rate ( 0.13 ) % ( 0.21 ) % F-35 Table of Conten ts The principal components of the Company's deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 236,991 $ 167,375 Research and development credits 19,853 17,604 Orphan drug credit 46,211 34,603 Capitalized license fee 23,418 21,661 Stock-based compensation 8,573 5,113 Section 174 Costs 33,718 67,624 Deferred revenue — 336 Section 163(j) Interest Limitation 5,589 4,417 Accrued Expenses & Other 7,811 7,971 Total deferred tax assets 382,164 326,704 Valuation allowance ( 381,166 ) ( 325,503 ) Net deferred tax assets 998 1,201 Deferred tax liabilities: Operating lease right-of-use asset and other ( 998 ) ( 1,201 ) Net deferred tax liabilities ( 998 ) ( 1,201 ) Total deferred tax assets / liabilities $ — $ — ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2025 and 2024, because the Company's management has determined that is it more likely than not that these assets will not be realized. The increase in the valuation allowance of $ 55.7 million in 2025 and $ 58.3 million in 2024 primarily relates to the net loss incurred by the Company during each period. As of December 31, 2025, the Company had federal and state net operating loss carryforwards of approximately $ 917.3 million and $ 807.9 million, respectively, which are available to reduce future taxable income. The net operating loss carryforwards expire at various times beginning in 2033 for federal and state purposes. Of the federal net operating loss carryforwards at December 31, 2025, $ 844.1 million can be carried forward indefinitely. As of December 31, 2025, the Company had gross foreign net operating loss carryforwards of approximately $ 4.5 million which have an indefinite carryforward period. As of December 31, 2025, the Company had federal and state research tax credits of approximately $ 15.3 million and $ 4.6 million, respectively, which may be used to offset future tax liabilities. Additionally, as of 2025, the Company had a federal orphan drug credit related to qualifying research of $ 46.2 million. These tax credit carryforwards will begin to expire at various times beginning in 2033 for federal purposes and 2028 for state purposes. The net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the Internal Revenue Code. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. F-36 Table of Conten ts The Company has not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries as such amounts are considered to be indefinitely reinvested in these jurisdictions. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as its subsidiaries continue to expand their operations. The amount of any unrecognized deferred tax liability related to undistributed foreign earnings is immaterial. The Company has not recorded any reserves for uncertain tax positions as of December 31, 2025 and 2024. The Company has not, as yet, conducted a study of research and development credit carryforwards. This study may result in an adjustment to the Company's research and development credit carryforwards; however, until a study is completed and any adjustment known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company's research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations and comprehensive loss if an adjustment were required. Interest and penalty charges, if any, related to unrecognized tax benefits will be classified as provision for income taxes in the accompanying statements of operations and comprehensive loss. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions. The Company is subject to examination by the U.S. federal, state, local, and foreign income tax authorities for tax years 2013 forward. The Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for any tax years. 15. Segment and Geographic Information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The company has identified that there is a single management team that reports to the Chief Executive Officer, who is the CODM and comprehensively manages the entire business. The CODM reviews financial information on a consolidated basis, specifically but not limited to, revenue and operating expenses by key functional area to evaluate performance and allocate resources. Based on the manner in which the CODM reviews operating results, the Company has identified two operating segments: United States ("U.S.") and international. These two operating segments have been aggregated into a single reportable segment in accordance with the aggregation criteria in ASC 280, Segment Reporting, as they have similar economic characteristics and are similar in several qualitative areas including: the nature of products and services provided, the type of customers served, the methods of distribution, and the regulatory environment in which they operate. F-37 Table of Conten ts The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands): Segment Analysis 2025 2024 2023 Net product revenue - U.S. $ 133,551 $ 96,108 $ 62,425 Net product revenue - International 61,220 34,018 15,002 Total net product revenue 194,771 130,126 77,428 License revenue ( 5,014 ) - — Total net revenue 189,757 130,126 77,428 Cost of sales 19,492 13,368 9,302 Global headcount expense 172,648 119,084 96,413 Preclinical, clinical and development expense 87,322 82,180 74,465 Commercial & medical affairs 66,963 55,767 47,905 Corporate, general & administrative 35,348 32,135 27,154 Other segment expenses — 93,094 6,571 Other (income) expense, net ( 1,264 ) ( 11,139 ) 317 Interest (income) expense, net 5,290 5,893 ( 585 ) Income taxes 497 346 564 Net loss $ ( 196,539 ) $ ( 260,602 ) $ ( 184,678 ) Geographic Data The Company allocates, for the purpose of geographic data reporting, its revenue based upon the location of its customers. Total revenue by geographic area was as follows (in thousands): Year ended December 31, 2025 2024 2023 US $ 133,551 $ 96,108 $ 62,425 International 61,220 34,018 15,003 Total net product revenue $ 194,771 $ 130,126 $ 77,428 As of December 31, 2025 and 2024, long-lived assets at locations outside the United States were not material. 16. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than as disclosed within the above notes to these consolidated financial statements, and except as described below. On January 26 , 2026, and in accordance with the terms described below, the same holder referred to in Note 9, Series A Convertible Preferred Stock , exercised its right to convert another 17,500 shares of Series A Convert ible Preferred Stock to common shares. Each of the 17,500 preferred shares converted to 20.8333 shares of common stock, resulting in a total of 364,582 shares of common stock. The Company reclassified the carrying value of the converted shares of $ 17.4 million from Series A convertible Preferred Stock to common stock and additional paid in capital. F-38