RHYTHM PHARMACEUTICALS, INC. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the “safe harbor” created by those sections. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding: the promise or potential of any of our products or product candidates; the marketing, commercialization, and sales of IMCIVREE (setmelanotide), including marketing approval in Japan and the timing thereof; the design, success, cost and timing of our product development activities and clinical trials for setmelanotide, RM-718, bivamelagon, and our other product candidates; our ability to obtain regulatory approval for setmelanotide in further indications, as well as for RM-718, bivamelagon, and our other product candidates; our financial performance, including our expectations regarding our existing cash, operating losses, expenses and sources of future financing; the sufficiency of our cash, cash equivalents and short-term investments to fund our operations; expected milestone payments and the timing thereof; our ability to hire and retain necessary personnel; patient enrollments and the timing thereof; the timing of announcements regarding results of clinical trials; our ability to protect our intellectual property; ongoing activities under and our ability to negotiate our collaboration and license agreements, if needed, and the impact of termination; our marketing, commercial sales, revenue generation, and cost of revenue; expectations surrounding our manufacturing arrangements; the impact of the current or future economic conditions on our business and operations and our future financial results; and other statements identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “likely,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms are forward-looking statements. These forward-looking statements are neither promises nor guarantees of future performance, and are subject to a variety of known and unknown risks, uncertainties, and other important factors, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in such forward-looking statements. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including but not limited to those set forth in Part II, Item 1A under the heading “Risk Factors” of this Quarterly Report on Form 10-Q. Except as may be required by law, we have no plans to update our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Overview We are a global, commercial-stage biopharmaceutical company dedicated to transforming the lives of patients living with rare neuroendocrine diseases. We are focused on advancing our melanocortin-4 receptor (MC4R) agonists, including our lead asset, IMCIVREE ® (setmelanotide), as precision medicines designed to treat hyperphagia and severe obesity caused by MC4R pathway diseases. While obesity affects hundreds of millions of people worldwide, we are advancing therapies for a subset of individuals who have hyperphagia, a pathological, insatiable hunger and impaired satiety accompanied by persistent and abnormal food-seeking behaviors, decreased energy expenditure and severe obesity due to diseases such as acquired or congenital hypothalamic obesity (HO), Bardet-Biedl syndrome (BBS) or other diseases caused by impaired MC4R pathway signaling. The MC4R pathway is a neuroendocrine 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), United Kingdom, Canada and other countries and regions. IMCIVREE is approved by the U.S. Food and Drug Administration (FDA) to reduce excess body weight and maintain weight reduction long term in adult and pediatric patients aged 4 years and older with acquired HO and in adult and pediatric patients aged 2 years and older with syndromic or monogenic obesity due to BBS or pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency as determined by genetic testing demonstrating variants in POMC, PCSK1, or LEPR genes that are interpreted as pathogenic, likely pathogenic, or of uncertain significance (VUS). The European Commission (EC) has authorized IMCIVREE for the treatment of obesity and the control of hunger in adults and children 4 years of age and above with acquired hypothalamic obesity due to hypothalamic injury or impairment, and for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 2 years of age and above. The United Kingdom’s Medicines & Healthcare Products Regulatory Agency (MHRA) has authorized IMCIVREE for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR 26 Table of Contents deficiency in adults and children 2 years of age and above. In addition to the United States, we have achieved market access or named patient sales of IMCIVREE for BBS or POMC and LEPR deficiencies, or both, in more than 25 countries outside the United States, and we continue to collaborate with authorities to achieve access in additional markets. IMCIVREE’s label expansion to treat patients living with acquired HO was approved by the U.S. FDA on March 19, 2026, and a similar expansion of its marketing authorization was approved by the European Commission on April 30, 2026, making it the first approved therapy in the United States and the first approved therapy in Europe for patients with this rare disease. These approvals were supported by the positive pivotal Phase 3 TRANSCEND trial of setmelanotide in 142 patients with acquired HO. The global study met its primary endpoint, with a statistically significant -18.4% placebo-adjusted reduction in body mass index (BMI). For the primary endpoint of mean BMI change from baseline, study participants on setmelanotide therapy (n=94) achieved a -15.8% reduction compared with a +2.6% increase among patients on placebo (n=48) at 52 weeks (p<0.0001). Setmelanotide was generally well tolerated in the Phase 3 trial. The most common adverse events (affecting >20% of participants) were skin hyperpigmentation, nausea, vomiting and headache. In addition, on May 5, 2026, we announced that our Japanese New Drug Application (JNDA) for setmelanotide to treat acquired HO was accepted, validated and is now under review by Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) . We anticipate anticipate launch of IMCIVREE for acquired HO in Japan, pending a decision by Japan's Ministry of Health, Labour and Welfare (MHLW), by year-end 2026. Acquired hypothalamic obesity is a rare form of obesity that occurs following damage to the hypothalamic region of the brain. This disease most frequently follows the growth or surgical removal of craniopharyngioma, astrocytoma or other rare brain tumors. Additional causes of injury may include traumatic brain injury, stroke, or inflammation. Patients experience accelerated weight gain, a reduction in energy expenditure, and hyperphagia (a chronic pathological condition characterized by insatiable hunger, impaired satiety, and persistent abnormal food-seeking behaviors) leading to accelerated onset of severe obesity. We estimate there are approximately 10,000 people living with hypothalamic obesity in the U.S., 5,000 to 8,000 people living with hypothalamic obesity in Japan, and approximately 10,000 people living with hypothalamic obesity in the E.U. In addition to our commercial efforts and inclusive of late-stage development efforts, we are advancing what we believe is the most comprehensive clinical research and development program ever initiated in MC4R pathway diseases, with multiple ongoing and planned clinical trials. Our MC4R pathway program is designed to expand the total number of patients who we believe would benefit from setmelanotide therapy or advance one of our other drug candidates, including RM-718, which is designed to be a more selective MC4R agonist with weekly administration, and bivamelagon, an investigational oral small molecule MC4R agonist in Phase 2 clinical trials. As mentioned above, our Phase 3 trial of setmelanotide in patients with acquired HO met the primary and key secondary endpoints, and we have initiated an additional, independent substudy in patients with congenital hypothalamic obesity as part of that trial. We are advancing our next-generation MC4R agonists in clinical trials. In July 2025, we announced bivamelagon achieved statistically significant and clinically meaningful BMI reductions at 14 weeks of treatment in a Phase 2 trial in patients with acquired HO. We have also completed enrollment in Part C of the Phase 1 trial evaluating the weekly RM-718 in patients with acquired hypothalamic obesity and announced preliminary, promising data on August 4, 2026. We also are advancing MC4R agonists with the intention to improve the treatment landscape for patients living with Prader‑Willi syndrome (PWS), a rare, complex genetic neurodevelopmental disorder characterized by hyperphagia, severe obesity risk, and significant metabolic, cognitive, and behavioral complications. We estimate there are between 12,500 and 16,000 patients living with PWS in the United States and a similar number in Europe, based on updated internal prevalence estimates developed using a bottoms-up methodology analyzing incidence, age-specific survival and claims-based validation. Further, we estimate that 80% to 90% of PWS patients are living with hyperphagia and obesity, or approximately 8,500 – 12,750 patients. There are currently limited therapeutic options that effectively reduce the extreme hyperphagia and address low resting energy expenditure associated with PWS. Based on the central role of MC4R pathway dysfunction in PWS, we believe that targeting this biology represents a compelling therapeutic approach. On June 13, 2026, we announced positive preliminary data from a Phase 2 trial evaluating setmelanotide in patients with PWS that demonstrated treatment with setmelanotide was associated with improvements across multiple clinically relevant endpoints, including BMI, BMI-Z and measures for hyperphagia and anxiety. In addition to this ongoing trial of setmelanotide, we have begun enrolling patients in a Phase 2 trial evaluating RM-718 in PWS. We continue to leverage what we believe is the largest known DNA database focused on obesity - with approximately 120,000 sequencing samples as of December 31, 2025 - to improve the understanding, diagnosis and care of people living with severe obesity due to certain variants in genes associated with the MC4R pathway. Our Phase 3 EMANATE trial did not achieve the primary endpoint in each of its four independent substudies evaluating setmelanotide in genetically caused MC4R pathway diseases, but we did see positive signals in two genetic indications. We continue to 27 Table of Contents analyze the EMANATE results and evaluate potential clinical development paths to develop one of our product candidates in patients with SRC1 (NCOA1) deficiency and POMC insufficiency, including with our next-generation MC4R agonists bivamelagon or RM-718. In addition, we plan to continue to evaluate the potential for MC4R agonism in the genes and gene families previously identified through the exploratory Phase 2 DAYBREAK trial, including the SEMA3 family, PHIP, TBX3 or PLXNA family. Our sequencing-based epidemiology estimates show that each of these genetically-defined MC4R pathway deficiencies are considered rare diseases, according to established definitions based on patient populations. Our epidemiology estimates are approximately 4,600 to 7,500 for U.S. patients in setmelanotide's initial FDA-approved indications, including obesity due to biallelic POMC, PCSK1 or LEPR deficiencies, and BBS. Our epidemiology estimates for the two more prevalent indications studied in our Phase 3 EMANATE trial (SRC1 deficiency and POMC/PCSK1 insufficiency) suggest that approximately 26,000 U.S. patients with one of these genetically driven obesities have the potential to respond well to setmelanotide. Similarly, our epidemiology estimates for patients with genetic indications who demonstrated an initial response following stage 1 of our Phase 2 DAYBREAK trial is approximately 65,300. We believe that all these patients face similar challenges as other patients with rare diseases, namely lack of awareness, resources, tests, tools and, especially, therapeutic options. Additional recent clinical, regulatory, corporate and commercial updates include: • On Aug. 4, 2026, we announced that more than 400 patient start forms had been received for IMCIVREE for acquired HO from approximately 300 prescribers as of June 30, 2026, since the approval by the FDA on March 19, 2026; • Revenue from global sales of IMCIVREE was $71.3 million for the second quarter of 2026, an increase of 19% on a sequential basis from the first quarter of 2026. The number of patients on reimbursed therapy globally increased by greater than 20% as compared to the first quarter of 2026. ◦ U.S.: Revenue of $51.0 million, or 72% of product revenue, was generated in the United States in the second quarter of 2026, an increase of $14.1 million or 38% compared to the first quarter of 2026. The sequential quarter over quarter growth in U.S. revenue was driven primarily by increased patient demand for IMCIVREE in acquired HO, as well as continued growth in demand in Bardet-Biedl syndrome (BBS). ◦ Ex-U.S.: Revenue of $20.3 million, or 28% of product revenue, was generated outside the United States, a sequential decrease of $(2.9) million or (13)% compared to the first quarter of 2026. The Company incurred a $3.8 million charge associated with a retrospective rebate in France, of which $3.1 million was related to revenue booked in periods prior to the second quarter of 2026. The number of reimbursed patients on IMCIVREE continued to increase in the second quarter of 2026. • On Aug. 4, 2026, we announced preliminary data from Part C of the phase 2 study of RM-718 in acquired HO patients. Eleven patients with acquired HO were enrolled in the ongoing, open-label trial. Key preliminary findings include: ◦ -11.6% reduction in mean BMI from baseline (n=7) at 16 weeks of RM-718; ◦ RM-718 efficacy results at 16 weeks comparable to mean BMI reduction of -10.1% with bivamelagon (600 mg dose; n=7) at 14 weeks and -10.1% BMI reduction with setmelanotide at 16 weeks (n=64 patients in Phase 2 and 3 trials); and ◦ Two (2) mild instances of hyperpigmentation were reported and were limited to the injection site, with no generalized hyperpigmentation observed. • RM-718 was generally well tolerated, with the most common adverse events being injection site reactions, nausea, and vomiting; • Eight (8) patients remained on active treatment as of July 16, 2026, including two (2) patients who had not yet reached 16 weeks on therapy. Two participants discontinued treatment due to adverse events: injection site induration and nausea. One patient withdrew from the extension portion of the trial. • On Aug. 4, 2026, we announced that six abstracts, including three oral presentations and three poster presentations have been accepted for presentation at the European Society for Pediatric Endocrinology’s Annual Meeting (ESPE 2026) September 8-10, 2026. The presentations include: ◦ Efficacy and safety of setmelanotide in pediatric patients with acquired hypothalamic obesity: final phase 3 trial results; ◦ Impact of setmelanotide on metabolic index scores in pediatric participants with acquired hypothalamic obesity - A Phase 3 trial post-hoc analysis; ◦ Pediatric patients with acquired hypothalamic obesity treated with setmelanotide: real-world BMI and hunger data for up to 12 months in France; 28 Table of Contents ◦ Long-term weight outcomes of setmelanotide in pediatric participants with Bardet-Biedl syndrome or with POMC or LEPR deficiency and obesity; ◦ The association of clinical features of Bardet-Biedl syndrome in a large population of patients with obesity and a positive genetic test for biallelic BBS variants; ◦ Clinical features associated with pathogenic or likely pathogenic biallelic Bardet-Biedl syndrome variants in a large population of patients with obesity; • On July 8, 2026, we announced that results from Rhythm’s pivotal Phase 3 TRANSCEND trial evaluating setmelanotide in patients with acquired hypothalamic obesity were published in The New England Journal of Medicine; • On June 13, 2026, during the Endocrine Society’s Annual Meeting (ENDO 2026) we announced positive preliminary data from a Phase 2 trial evaluating setmelanotide in patients with PWS that demonstrated patients with PWS (N=17) achieved clinically meaningful BMI or BMI z-score reductions, reductions in fat mass with preservation of lean mass, and improvements in hyperphagia and anxiety measures. Results from the six-month analysis demonstrate that treatment with setmelanotide was associated with improvements across multiple clinically relevant endpoints, as of a data cut off date of May 7, 2026. Highlights include: ◦ Consistent BMI reductions in pediatric and adult patients at Month 6: ▪ -3.06% mean reduction in BMI (N=17 pts); ▪ -3.11% mean reduction in BMI in adult patients (n=10); with six achieving >2.5% BMI reduction, and four achieving >4% BMI reduction; ▪ −3.00% mean reduction in BMI in pediatric patients (n=7); ▪ −0.35 mean reduction in BMI z-score from baseline in pediatric patients (n=7); ▪ Five (5) of seven pediatric patients achieved clinically meaningful BMI z-score reduction > 0.2; ◦ Setmelanotide achieved preservation of lean mass and reductions in fat mass across 16 patients with data available from DEXA scans: ▪ +0.74% mean gain in lean mass and -4.19% mean loss in fat mass across 16 patients; ▪ Six (6) of nine adult patients achieved >5% reduction in fat mass; ▪ Five (5) of seven pediatric patients gained ≥2.95% in lean mass; ◦ Clinically meaningful improvement in hyperphagia score observed in patients with moderate to severe hyperphagia, defined as a ≥7-point reduction in Hyperphagia Questionnaire for Clinical Trials (HQ-CT) score ▪ Eight (8) of 10 patients who entered trial with moderate to severe hyperphagia ( > 13 at baseline) achieved clinically meaningful improvement of 7 points or better. ◦ Improvement in PWS Anxiousness and Distress Behaviors Questionnaire (PADQ) which measures anxiousness, emotional distress, and behavioral dysregulation. ▪ Of the 15 patients who had a baseline score >11, 10 patients achieved clinically meaningful improvement of ≥11 points; and ◦ Safety and tolerability results have been consistent with the well-established profile observed with setmelanotide. • In conjunction with the presentation of the above data, Rhythm also provided an update to its epidemiology estimates for PWS, including a PWS prevalence in each of the U.S. and Europe at between 12,500 - 16,000 and an estimate that 8,500 - 12,750 PWS patients are living with hyperphagia and obesity in each of the U.S. and Europe. These estimates are based on our internal review and interpretation of the literature and available prevalence data, combined with our analysis of survival rate data. • Also during ENDO 2026, we had additional data presentations that included long-term setmelanotide data in acquired HO; one-year bivamelagon data in acquired HO; post-hoc analysis of patients with acquired HO patients from the Phase 3 TRANSCEND trial with a history of bariatric surgery; weight category improvements patients with acquired HO achieved with one year of setmelanotide treatment; real-world efficacy analysis of U.S. patients with BBS; and results from the real-world RESTORE study of hyperphagia reduction in BBS patients treated with setmelanotide; 29 Table of Contents • On May 28, 2026, we announced the publication of a new evidence-based, consensus-driven diagnostic algorithm for Bardet-Biedl syndrome (BBS) in the peer-reviewed American Journal of Medical Genetics; and • On May 12, 2026, we announced six data presentations at The European Congress of Endocrinology (ECE), including real-world efficacy results in patients with acquired HO treated with setmelanotide enrolled in France’s early-access program, results from a study that evaluated hyperphagia severity in adults with Bardet-Biedl syndrome (BBS), results that demonstrated setmelanotide treatment in patients with acquired HO led to significant improvements in multiple metabolic index scores, and a study that highlighted the persistent and under-recognized health burden of acquired HO across life stages, drawing on the experiences of individuals with childhood-onset craniopharyngioma (CO-CP) from the Netherlands, Germany, and the UK. We currently anticipate the following, near-term milestones: • Complete enrollment in the setmelanotide substudy in congenital HO in the second half of 2026; • Complete enrollment in the Phase 1/2, Part D trial evaluating RM-718 in PWS in the second half of 2026; • Anticipate launch of IMCIVREE for acquired HO in Japan pending a decision by Japan's Ministry of Health, Labour and Welfare (MHLW) by year-end 2026; • Initiate a pivotal Phase 3 trial evaluating bivamelagon in acquired HO by year-end 2026; • Anticipate country-level launches of IMCIVREE for acquired HO in Europe beginning in 2027. Following IMCIVREE's initial approval in the United States and marketing authorizations in the EU, Great Britain and Canada, we are continuing to pursue a country-by-country strategy to establish market access and reimbursement for IMCIVREE in additional countries. We expect we may need to continue to fund our operations through the sale of equity, debt financings or other sources. We have built our own marketing and commercial sales infrastructure in the United States and are in the process of building a similar infrastructure in several European markets and the United Kingdom. We may enter into arrangements with other parties for certain markets outside the United States. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue the development or commercialization of setmelanotide. Since our inception, we have raised funds through the issuance of common and preferred equity, the sale of assets and a Revenue Interest Financing Agreement, or RIFA. We expect to continue to fund our operations through the sale of equity, debt financings or other sources. We have built our own marketing and commercial sales infrastructure in the United States and are in the process of building a similar infrastructure in several European markets and the United Kingdom. We may enter into collaborations with other parties for certain markets outside the United States. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue the development or commercialization of setmelanotide. We expect we may need to continue to fund our operations through the sale of equity, debt financings or other sources. We have built our own marketing and commercial sales infrastructure in the United States and are in the process of building a similar infrastructure in several European markets and the United Kingdom. We may enter into collaborations with other parties for certain markets outside the United States. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of setmelanotide. As of June 30, 2026, we had an accumulated deficit of $1.5 billion. Our net loss was $49.3 million and $46.6 million for the three months ended June 30, 2026 and June 30, 2025. Our net loss was $104.9 million and $96.1 million for the six months ended June 30, 2026 and June 30, 2025.We expect to continue to incur significant expenses and operating losses for the foreseeable future. Our expenses may increase in connection with our ongoing activities, as we: • continue to conduct clinical trials for setmelanotide and our other product candidates ; • engage contract manufacturing organizations, or CMOs, for the manufacture of clinical and commercial-grade setmelanotide; • seek regulatory approval for setmelanotide for future indications, and for our other product candidates ; 30 Table of Contents • expand our clinical and financial operations and build a marketing and commercialization infrastructure ; • engage in the sales and marketing efforts necessary to support the continued commercial efforts of IMCIVREE globally; • take into account the levels, timing and collection of revenue earned from sales of IMCIVREE and other products approved in the future, if any; and • continue to operate as a public company. As of June 30, 2026, our existing cash and cash equivalents and short-term investments were approximately $330.9 million. We expect that our cash and cash equivalents and short-term investments as of June 30, 2026, will be sufficient to fund our planned operations for at least 24 months. Financial Operations Overview Product revenue, net 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. To date, we have generated approximately $553.9 million in product revenue. Our lead product candidate, IMCIVREE, was approved by the FDA in November 2020 for chronic weight management in adult and pediatric patients six years of age and older with obesity due to POMC, PCSK1 or LEPR deficiency confirmed by genetic testing. IMCIVREE became commercially available in the United States in the first quarter of 2021. We recorded our first sales of IMCIVREE in the United States in March 2021 and we made our first sales in the EU in March 2022 under the paid early access program. IMCIVREE was approved by the FDA and the EC in adult and pediatric patients six years of age and older with obesity due to BBS in June and September 2022, respectively. In March 2026, IMCIVREE was approved by the FDA to reduce excess body weight and maintain reduction long term in adult and pediatric patients aged 4 years and older with acquired hypothalamic obesity (aHO). Following these initial approvals, sales of IMCIVREE have grown, and we expect will continue to grow. License revenue In the six months ended June 30, 2025, we recognized a reduction of previously-recognized license revenue of $5.0 million in connection with the termination of our exclusive license agreement with RareStone. See Note 12, Significant Agreements , to the unaudited condensed consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q. Cost of sales All of our inventory of IMCIVREE produced prior to FDA approval is available for commercial or clinical use. Most of the manufacturing costs have been recorded as research and development expenses in prior periods. We expect cost of sales to increase in 2026 as we continue to sell inventory that is produced after we began capitalizing manufacturing costs for IMCIVREE commercial inventory. Research and development expenses Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery and genetic sequencing efforts, and the clinical development of setmelanotide, which include: • expenses incurred under agreements with third parties, including CROs that conduct research and development and preclinical activities on our behalf, and the cost of consultants and CMOs that manufacture drug products for use in our preclinical studies and clinical trials; 31 Table of Contents • employee-related expenses including salaries, benefits and stock-based compensation expense; • the cost of lab supplies and acquiring, developing and manufacturing preclinical and clinical study materials; • the cost of genetic sequencing of potential patients in clinical studies; and • facilities, depreciation, and other expenses, which include rent and maintenance of facilities, insurance and other operating costs. We expense research and development costs to operations as incurred. 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. The capitalized amounts are expensed as the related goods are delivered or the services are performed. The following table summarizes our current research and development expenses: Three months ended June 30, Six months ended June 30, Research and development summary 2026 2025 2026 2025 Research and development expense $ 43,428 $ 42,308 $ 85,153 $ 79,281 We are unable to predict the duration and costs of the current or future clinical trials of our product candidates. The duration, costs, and timing of clinical trials and development of setmelanotide, RM-718, bivamelagon, and a potential therapeutic product candidate for congenital hyperinsulinism (CHI) will depend on a variety of factors, including: • the scope, rate of progress, and expense of our ongoing, as well as any additional, clinical trials and other research and development activities; • the rate of enrollment in clinical trials; • the safety and efficacy demonstrated by setmelanotide and other product candidates in future clinical trials; • changes in regulatory requirements; • changes in clinical trial design; and • the timing and receipt of any regulatory approvals. A change in the outcome of any of these variables with respect to the development of our product candidates would significantly change the costs and timing associated with its development and potential commercialization. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs to increase significantly for the foreseeable future as our setmelanotide and other development programs progress. However, we do not believe that it is possible at this time to accurately project total program-specific expenses to commercialization and there can be no guarantee that we can meet the funding needs associated with these expenses. Selling, general and administrative expenses Selling expenses consist of professional fees related to preparation for the continued commercialization of setmelanotide, as well as salaries and related benefits for commercial employees, including stock-based compensation. As we further implement and execute our commercialization plans to market setmelanotide in new territories and as we explore new collaborations to develop and commercialize setmelanotide, we anticipate that these expenses will materially increase. General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, relating to our full-time employees not involved in R&D or commercial activities. Other significant costs 32 Table of Contents include rent, information technology, legal fees relating to patent and corporate matters and fees for accounting and consulting services. The following table summarizes our current selling, general and administrative expenses: Three months ended June 30, Six months ended June 30, Selling, general and administrative summary 2026 2025 2026 2025 Selling, general and administrative expense 67,448 45,947 131,039 85,034 We anticipate that our selling, general and administrative expenses will increase in the future to support our continued and expanding commercialization efforts for IMCIVREE in the United States and the European Union as well as increased costs of operating as a global, commercial-stage biopharmaceutical public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, compliance with local rules and regulations in the United States and foreign jurisdictions, exchange listing and Securities and Exchange Commission, or SEC, expenses, insurance and investor relations costs, among other expenses. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances on an ongoing basis, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There were no significant changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. 33 Table of Contents Results of Operations Comparison of the three months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025, together with the changes in those items in dollars and as a percentage: Three months ended June 30, Change 2026 2025 $ % (in thousands) Statement of Operations Data: Product revenue, net $ 71,255 $ 48,502 $ 22,753 47 % Total revenues 71,255 48,502 22,753 47 % Costs and expenses: Cost of sales 8,931 5,543 3,388 61 % Research and development 43,428 42,308 1,120 3 % Selling, general, and administrative 67,448 45,947 21,501 47 % Total costs and expenses 119,807 93,798 26,009 28 % Loss from operations (48,552) (45,296) (3,256) 7 % Other income (expense), net (302) (999) 697 (70 %) Loss before income taxes (48,854) (46,295) (2,559) 6 % Provision for income taxes 444 337 107 32 % Net loss $ (49,298) $ (46,632) $ (2,666) 6 % Product revenue, net . Product revenue, net increased by $22.8 million to $71.3 million for the three months ended June 30, 2026 from $48.5 million for the three months ended June 30, 2025, an increase of 47%, primarily due to higher volume of product sold both domestically and internationally. The increase was offset by a reduction to product revenue, net of $3.8 million due to an increase in international government rebates, primarily related to growth of sales in France. We expect our sales of IMCIVREE to continue to increase. We have achieved market access or named patient sales for IMCIVREE for BBS or POMC and LEPR deficiencies, or both, in more than 25 countries outside the United States, and we continue to collaborate with authorities to achieve access in additional markets. For the three months ended June 30, 2026, and 2025, a substantial amount of our product revenue, or 72% and 66%, respectively, was generated from sales of our product to patients in the United States. Cost of sales. Cost of sales increased by $3.4 million to $8.9 million for the three months ended June 30, 2026, from $5.5 million for the three months ended June 30, 2025, an increase of 61%, which was driven by an increase in net product revenue in the three months ended June 30, 2026. Cost of sales is composed of royalty expense due to Ipsen Pharma S.A.S., or Ipsen, on our net product revenue, amortization of our capitalized sales-based milestone payment made to Ipsen upon our first commercial sale in the United States and EU, the cost of product, as well as costs associated with our patient assistance programs. Specifically, the $3.4 million increase in cost of sales in the three months ended June 30, 2026, from the same period in 2025, was due to $1.1 million of additional royalties due to our growth in net product revenue and $2.3 million attributed to increased product costs associated with higher net product revenue. We expect cost of sales as a percentage of revenue to continue to be in a range of 10% to 12% in the foreseeable future. Research and development expense. Research and development expense increased by $1.1 million to $43.4 million for the three months ended June 30, 2026, from $42.3 million for the three months ended June 30, 2025, an increase of 3%. The net increase was primarily due to the following: • an increase of $3.3 million related to personnel costs including $2.2 million in stock-based compensation, and $1.1 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees in order to support the growth of our research and development programs, • an increase of $1.4 million in data analytics primarily related to the company's sponsored genetic testing programs and 34 Table of Contents • an increase of $0.8 million in pre-clinical expenses due to an increase in CHI-related costs. The above increases were partially offset by: • a net decrease of $3.5 million due to phasing of spending associated with chemistry, manufacturing, and controls (CMC) costs for drug formulation and autoinjector development to support our ongoing clinical trials related to RM-718, • $1.0 million net decrease in clinical trial costs driven primarily by a $3.6 million decrease in clinical trial costs due to the wind-down of various studies including our EMANATE Phase 3, and Phase 3 HO Setmelanotide trial, offset by an increase of $2.0 million related to various Bivamelagon studies. Selling, general and administrative expense. Selling, general and administrative expense increased by $21.5 million to $67.4 million for the three months ended June 30, 2026, from $45.9 million for the three months ended June 30, 2025, an increase of 47%. The increase was primarily due to the following: • an increase of $18.7 million related to personnel costs including $7.9 million of stock-based compensation, and $10.8 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees to support our expanding business operations as well as to establish commercial operations in international regions, • an increase of $1.9 million related to increased marketing and promotion costs to support continued product revenue growth and our product launch for acquired Hypothalamic Obesity. Other income (expense), net. Other expense, net decreased by $0.7 million to $(0.3) million for the three months ended June 30, 2026 from $(1.0) million for the three months ended June 30, 2025. The decrease was primarily due to the following: • a decrease of $1.2 million of non-cash interest expense in the three months ended June 30, 2026, associated with the accretion of the LG Chem liability, which was fully settled in July 2025. The above decrease was partially offset by: • an increase in other expense of $0.7 million recognized on the change in fair value of the embedded derivative on our deferred royalty obligation. 35 Table of Contents Comparison of the six months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025, together with the changes in those items in dollars and as a percentage: Six Months Ended June 30, Change 2026 2025 $ % (in thousands) Statement of Operations Data: Product revenue, net $ 131,367 $ 86,220 $ 45,147 52 % License revenue — (5,014) 5,014 (100) % Total revenues 131,367 81,206 50,161 62 % Costs and expenses: Cost of sales 16,088 9,191 6,897 75 % Research and development 85,153 79,281 5,872 7 % Selling, general, and administrative 131,039 85,034 46,005 54 % Total costs and expenses 232,280 173,506 58,774 34 % Loss from operations (100,913) (92,300) (8,613) 9 % Other income (expense), net (3,035) (3,413) 378 (11) % Loss before income taxes (103,948) (95,713) (8,235) 9 % Provision for income taxes 989 417 572 137 % Net loss $ (104,937) $ (96,130) $ (8,807) 9 % Product revenue, net . Product revenue, net increased by $45.1 million to $131.4 million for the six months ended June 30, 2026, from $86.2 million for the six months ended June 30, 2025, an increase of 52% primarily due to higher volume of product sold both domestically and internationally. The increase was offset by a reduction to product revenue, net of $3.8 million due to an increase in international government rebates, primarily related to growth of sales in France. We expect our sales of IMCIVREE to continue to increase. We have achieved market access or named patient sales of IMCIVREE for BBS or POMC and LEPR deficiencies, or both, in more than 25 countries outside the United States, and we continue to collaborate with authorities to achieve access in additional markets. For the six months ended June 30, 2026, and 2025, the majority of our product revenue , or 67% and 65%, respectively, was generated from sales of our product to pharmacies for patients in the United States. License revenue . For the six months ended June 30, 2025 , we recognized a reduction of previously-recognized license revenue of $5.0 million in connection with the termination of our exclusive license agreement with RareStone. See Note 12, Significant Agreements , to the unaudited condensed consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q. Cost of sales. Cost of sales increased by $6.9 million to $16.1 million for the six months ended June 30, 2026 from $9.2 million for the six months ended June 30, 2025, an increase of 75%, which was driven by an increase in sales volume and net product revenue in the six months ended June 30, 2026. Cost of sales is composed of royalty expense due to Ipsen on our net product revenue; amortization of our capitalized sales-based milestone payment made to Ipsen, upon our first commercial sale in the United States and European Union, the cost of product, as well as costs associated with our patient assistance programs. Specifically, the $6.9 million increase in cost of sales in the six months ended June 30, 2026, from the same period in 2025 was due to $2.2 million of additional royalties due to our growth in sales and $4.7 million attributed to increased product costs associated with higher sales volume. We expect cost of sales as a percentage of revenue to continue to be in a range of 10% to 12% in the foreseeable future. 36 Table of Contents Research and development expense. Research and development expense increased by $5.9 million to $85.2 million for the six months ended June 30, 2026 from $79.3 million for the six months ended June 30, 2025, an increase of 7%. The net increase was primarily due to the following: • an increase of $10.4 million related to personnel costs, including $5.7 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees in order to support the growth of our research and development programs, and $4.7 million of stock-based compensation, • an increase of $1.2 million in data analytics primarily related to the Company's sponsored genetic testing program, • an increase of $1.0 million in non-clinical expenses due to an increase in CHI-related costs, and • an increase of $0.9 million in patents, licenses and other regulatory expenses. The above increases were partially offset by: • a decrease of $4.9 million due to phasing of spending associated with chemistry, manufacturing, and controls (CMC) costs for drug formulation and autoinjector development to support our ongoing RM-718 and bivamelagon trials, and • a net decrease of $2.6 million in our clinical trial costs due to the completion and wind down of various studies including our long-term extension trial, EMANATE phase 3, HO Phase 3, partially offset by an uptick in Bivamelagon-related clinical trials. Selling, general and administrative expense. Selling, general and administrative expense increased by $46.0 million to $131.0 million for the six months ended June 30, 2026 from $85.0 million for the six months ended June 30, 2025, an increase of 54%. The increase was primarily due to the following: • an increase of $38.8 million related to personnel costs including $15.7 million of stock-based compensation, and $23.2 million related to salaries, benefits and other compensation costs related to the hiring of additional full-time employees to support our expanding business operations both domestic and internationally, • an increase of $5.5 million related to increased marketing and promotion costs to support continued revenue growth, and our launch for acquired Hypothalamic Obesity, and • an increase of $1.8 million in market access and commercial services to support our expanding international business operations. Other income (expense), net. Other income (expense), net decreased by $0.4 million to $3.0 million for the six months ended June 30, 2026 from $3.4 million of other expense for the six months ended June 30, 2025. The decrease was primarily due to the following: • a decrease of $2.3 million of non-cash interest expense in the six months ended June 30, 2026, associated with the accretion of the LG Chem liability, which was paid in July 2025. The above decrease was partially offset by: • an increase of $1.0 million for the change in fair value of the embedded derivative of our deferred royalty obligation during as we recognized a loss of $0.6 million during the six months ended June 30, 2026 compared to a gain of $0.4 million during the six months ended June 30, 2025, and • an increase of $0.6 million in unrealized loss on foreign currency. Liquidity and Capital Resources As of June 30, 2026, our cash and cash equivalents and short-term investments were approximately $330.9 million. 37 Table of Contents Cash flows The following table provides information regarding our cash flows for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 (in thousands) Net cash (used in) provided by: Operating activities (53,337) (63,664) Investing activities 71,065 78,847 Financing activities (6,565) 31,610 Effect of exchange rates on cash 231 (281) Net increase (decrease) in cash, cash equivalents and restricted cash $ 11,394 $ 46,512 Net cash used in operating activities The use of cash in all periods resulted primarily from our net loss adjusted for non-cash charges and changes in components of operating assets and liabilities. Net cash used in operating activities was $53.3 million for the six months ended June 30, 2026 and consisted primarily of a net loss of $104.9 million adjusted for non-cash items of $58.0 million, which consisted of stock-based compensation, non-cash interest expense, non-cash accretion and amortization of short-term investments, depreciation and amortization, non-cash rent expense, the change in the fair value of our embedded derivative asset, and the foreign currency impacts. Additionally, the change in operating assets and liabilities used net cash of approximately $6.4 million and was primarily driven by net increases in accounts receivable of $14.3 million, primarily due to the increase in product revenue, the change in inventory of $5.4 million, and the change in deferred revenue of $0.2 million. These net uses of cash were offset by an increase in accounts payable, accrued expenses and other liabilities of $10.8 million, the change in prepaid expenses and other current assets of $2.3 million, and the change in other long-term assets of $0.4 million. Net cash used in operating activities was $63.7 million for the six months ended June 30, 2025 and consisted primarily of a net loss of $96.1 million adjusted for non-cash items of $35.9 million, which consisted of stock-based compensation, non-cash interest expense, non-cash accretion and amortization of short-term investments, depreciation and amortization, rent expense, the change in the fair value of our embedded derivative asset, and the change in unrealized gain on foreign currency. The change in operating assets and liabilities used net cash of approximately $3.4 million and was primarily driven by net increases in prepaid expenses and other current assets of $10.0 million, the change in accounts receivable of $7.1 million, and the change in deferred revenue of $1.3 million. These net uses of cash were offset by an increase in accounts payable, accrued expenses and other liabilities of $9.6 million, and net decreases in other long-term assets of $5.5 million. Net cash provided by investing activities Net cash provided by investing activities was $71.1 million for the six months ending June 30, 2026 and relates to purchases of short-term investments for $85.7 million, offset by gross maturities of short-term investments of $156.8 million. Net cash provided by investing activities was $78.8 million for the six months ended June 30, 2025 and relates to gross maturities of short-term investments of $139.3 million , offset by purchases of short-term investments for $60.5 million . Net cash (used in) provided by financing activities Net cash used in financing activities was $6.6 million for the six months ended June 30, 2026, and consisted of $11.2 million of repayments of our deferred royalty obligation and $9.7 million for the net settlement of equity awards. These uses of cash were offset by proceeds of $14.3 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan. 38 Table of Contents Net cash provided by financing activities was $31.6 million for the six months ended June 30, 2025, and consisted of net proceeds of $34.0 million from our ATM equity offering, as well as proceeds of $6.5 million from the exercise of stock options and the issuance of common stock from our Employee Stock Purchase Plan. These proceeds were offset by $8.9 million of repayments of our deferred royalty obligation. Funding requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the clinical development of and seek marketing approval for setmelanotide for future indications, continue the clinical development of our other product candidates and build out our global organization. In addition, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. We also expect to incur additional costs associated with operating as a public company. We expect that our cash and cash equivalents and short-term investments as of June 30, 2026 will be sufficient to fund our planned operations for at least 24 months. Our cash and cash equivalents are maintained at financial institutions in amounts that exceed federally-insured limits. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. We expect we may need to obtain substantial additional funding in connection with our research and development activities and any continuing operations thereafter. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. Our future capital requirements will depend on many factors, including: • the cost to continue to commercialize setmelanotide, by growing our internal sales force or entering into collaborations with third parties and providing support services for patients; • the scope, progress, results and costs of clinical trials for our setmelanotide program as well as for RM-718 and bivamelagon, and in connection with a therapeutic product candidate for CHI ; • the costs, timing and outcome of regulatory review of our setmelanotide program as well as for RM-718 and bivamelagon, and in connection with a therapeutic product candidate for CHI ; • the obligations owed to Ipsen, Camurus AB, and LGC pursuant to our license agreements; • the extent to which we acquire or in-license other product candidates and technologies; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish and maintain additional collaborations on favorable terms, if at all; and • the costs of operating as a public company. Although IMCIVREE has been approved by the FDA in certain indications, and became commercially available in the first quarter of 2021, IMCIVREE may not achieve commercial success. In addition, developing our setmelanotide program is a time-consuming, expensive and uncertain process that may take years to complete, and we may never generate the necessary data or results required to obtain future marketing approvals and achieve product sales. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. 39 Table of Contents Further, the global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines and fluctuations in consumer confidence and economic growth, increases in unemployment rates, the imposition of tariffs and other trade barriers, uncertainty about economic stability, and rising political uncertainty. Any of these factors could impact our liquidity and future funding requirements, including but not limited to our ability to raise additional capital when needed on acceptable terms, if at all. The duration of this economic slowdown is uncertain and the impact on our business is difficult to predict. See “Risk Factors— Unfavorable global political or economic conditions could adversely affect our business, financial condition or results of operations.” Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, involves agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our setmelanotide program on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our setmelanotide program that we would otherwise prefer to develop and market ourselves. ATM Program On November 2, 2021, we entered into a Sales Agreement (the "Prior Sales Agreement") with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we may issue and sell shares of our 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 TD Cowen acts as sales agent (the “ATM Program”). Between August 10, 2023 and August 21, 2023, we sold approximately two million shares of our common stock in the ATM Program for net proceeds of approximately $48.9 million. On February 29, 2024, the Company and TD 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 Prior Sales Agreement to $200.0 million (excluding the aggregate offering price of shares of common stock issued and sold pursuant to the Prior Sales Agreement prior to February 29, 2024). In connection with the Amendment, on February 29, 2024, we filed with the SEC a prospectus supplement, dated February 29, 2024, related to the issuances and sales under the Prior Sales Agreement, as amended by the Amendment. From December 10, 2024 to December 31, 2024, the Company sold 744,595 shares of common stock in the ATM Program for net proceeds of $41.2 million as of December 31, 2024. The Company sold an additional 587,510 shares of common stock in the ATM Program from January 1, 2025 through January 21, 2025 for net proceeds of approximately $32.1 million in the quarter ending March 31, 2025. On February 26, 2026, the Company and TD Cowen entered into a new Sales Agreement (the “Sales Agreement”) pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $200.0 million, through its ATM Program. The Sales Agreement supersedes the Prior Sales Agreement between TD Cowen and the Company, dated November 2, 2021, as amended on February 29, 2024, and the Prior Sales Agreement terminated upon the effectiveness of the Sales Agreement. In connection with the Sales Agreement, on February 26, 2026, the Company filed with the SEC a registration statement on Form S-3ASR containing a base prospectus and a prospectus supplement, each dated February 26, 2026, pursuant to which issuances and sales under the Sales Agreement will be made. 40 Table of Contents Contractual obligations As previously disclosed in Note 14, Commitment and Contingencies, as of June 30, 2026, we estimate that potential milestone payments of up to $18 million could become payable by the Company during the next 12 months depending on the achievement and timing of specified milestones. Other than the above, there were no other material changes to our principal contractual obligations and commitments as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Item 3. Quantitative and Qualitative Disclosures About Market Risk As of June 30, 2026, there were no material changes to our quantitative and qualitative disclosures about market risks as reported in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risks” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.