Group 1 - The presentation is part of the Morgan Stanley Global Healthcare Conference, highlighting the participation of Rhythm Pharmaceuticals [1] - David Meeker, President and CEO of Rhythm Pharmaceuticals, is introduced as a key speaker [1][2]

Company Overview - Rhythm Pharmaceuticals is led by David Meeker, who serves as the President and CEO [1]. - The company is being presented at the Morgan Stanley Global Healthcare Conference, indicating its engagement with investors and the healthcare community [1]. Conference Context - The presentation is part of a larger event, the Morgan Stanley Global Healthcare Conference, which focuses on biotech and healthcare sectors [1][2]. - The introduction of David Meeker suggests a focus on sharing insights about the company's strategy and performance to an audience that may not be familiar with Rhythm Pharmaceuticals [2].

Rhythm Pharmaceuticals FY Conference Summary Company Overview - **Company**: Rhythm Pharmaceuticals (NasdaqGM:RYTM) - **Event**: FY Conference held on September 09, 2025 Key Industry Insights - **Focus on Melanocortin-4 Pathway**: The company emphasizes the significance of the melanocortin-4 (MC4) pathway in regulating satiety and energy expenditure, particularly in patients with genetic defects affecting this pathway [2][3] - **Rare Disease Market**: Rhythm Pharmaceuticals is targeting rare diseases, specifically Bardet-Biedl syndrome (BBS) and acquired hypothalamic obesity (HO), with a focus on understanding and diagnosing these conditions [3][4] Core Points and Arguments - **Bardet-Biedl Syndrome (BBS)**: - Approved in June 2022, with an estimated patient population of 4,000 to 5,000 in the U.S. - Potential revenue opportunity estimated at $300 million to $500 million based on patient uptake [8][9] - **Acquired Hypothalamic Obesity (HO)**: - Estimated patient population of 5,000 to 10,000 in the U.S., with growing confidence in these numbers due to fieldwork and claims analysis [9][10] - Japan shows a higher prevalence of HO, with an estimated 5,000 to 8,000 patients, presenting a significant growth opportunity [9][14] - **Clinical Trial Results**: - The phase 3 TRANSCEND study showed a 16% decrease in BMI in the treated group, with a placebo-adjusted effect of 19.8% [19][20] - Consistent responses across different age groups, indicating the treatment's effectiveness regardless of the time since the initial injury [21] - **Regulatory Engagement**: - Positive interactions with the FDA, with a PDUFA date set for December 2025, indicating a strong likelihood of approval [26] Additional Important Insights - **Next-Generation MC4 Receptor Agonists**: - Two new programs are in development: an oral formulation (bivamelagon) and a weekly injectable (RM-718), both designed to minimize side effects like hyperpigmentation [36][39] - The company aims to provide a comprehensive portfolio of treatment options for patients [39] - **Prader-Willi Syndrome**: - Ongoing phase 2 study with a focus on weight loss as the primary endpoint, aiming for a 5% weight loss target based on FDA guidelines [48][55] - The trial design considers the unique challenges of Prader-Willi, including behavioral aspects that may affect treatment outcomes [49][50] - **Market Dynamics**: - The company is building its sales force and increasing disease awareness among healthcare providers to support upcoming product launches [28][31] - The Japanese market is becoming increasingly accessible due to regulatory changes, enhancing the potential for quicker patient access to new treatments [14][15] Conclusion Rhythm Pharmaceuticals is strategically positioned in the rare disease market, focusing on innovative treatments for conditions linked to the melanocortin-4 pathway. The company is optimistic about its growth prospects, driven by strong clinical data, regulatory support, and expanding market opportunities in both the U.S. and Japan.

Financial Data and Key Metrics Changes - Rhythm Pharmaceuticals reported a strong year, with significant advancements in their drug development pipeline, particularly for IMCIVREE, which addresses obesity and hyperphagia [2][4] - The company has a solid patent position, with composition of matter patents expiring in 2032 and formulation patents extending to 2034 in the U.S. [4] Business Line Data and Key Metrics Changes - The company has successfully launched IMCIVREE for Bardet-Biedl syndrome (BBS) and is preparing for the launch of IMCIVREE for hypothalamic obesity (HO) [2][6] - The management expressed optimism about the potential for IMCIVREE in HO, anticipating a more gradual launch compared to BBS due to the nature of the patient population [10][12] Market Data and Key Metrics Changes - The management highlighted the difference in patient demographics between BBS and HO, noting that HO patients are more likely to be treated by endocrinologists, which could facilitate a quicker adoption of the drug [10][12] - The potential market for HO is significant, with estimates suggesting a population size of 5,000 to 10,000 patients, leaning towards the higher end of that range [15] Company Strategy and Development Direction - Rhythm Pharmaceuticals is focused on expanding its drug development pipeline, including next-generation compounds like bivamelagon and RM-718, while also exploring other genetic conditions [5][49] - The company aims to leverage its existing knowledge and experience from BBS to enhance the launch and adoption of IMCIVREE in HO [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing development of treatments for complex conditions like Prader-Willi syndrome, despite the challenges associated with the patient population [8][34] - The company is optimistic about the future of its drug pipeline, particularly in the context of addressing unmet medical needs in rare diseases [6][58] Other Important Information - The management is actively engaging with payers to ensure smooth reimbursement processes for IMCIVREE, building on the positive experiences from BBS [26][27] - There is a focus on understanding the complexities of patient backgrounds in ongoing trials, particularly for Prader-Willi syndrome, to ensure effective treatment outcomes [44][45] Q&A Session Summary Question: What is the trajectory of the launch for IMCIVREE in HO compared to other indications? - Management indicated that the launch for HO may be more gradual than for BBS, but the overall opportunity remains significant due to the concentrated patient population [10][12] Question: Are there any label considerations for IMCIVREE in HO? - Management noted that including hyperphagia in the label is critical for differentiating the drug, especially for Medicare coverage [21][22] Question: How is the company preparing for the upcoming analyst day? - The company plans to share insights from experts and provide updates on patient numbers and market potential for HO [31][32] Question: What are the challenges faced in the Prader-Willi trials? - Management acknowledged the complexity of the Prader-Willi patient population and the need for a robust study design to capture the drug's efficacy [34][36] Question: How does the company view the potential of next-generation compounds? - Management expressed a commitment to advancing both bivamelagon and RM-718, with plans to initiate phase 3 trials as soon as possible [49][50]

Financial Data and Key Metrics Changes - Rhythm Pharmaceuticals reported a strong year, emphasizing the positive developments in their science and biology over the past 12 months [2] - The company highlighted the importance of their formulation patents, which extend to 2034 in the U.S., providing a competitive edge [4] Business Line Data and Key Metrics Changes - The approval of IMCIVREE for Bardet-Biedl syndrome (BBS) in June 2022 has created a profitable business opportunity, with expectations of steady revenue from this ultra-rare disease [3] - The company is optimistic about the launch of IMCIVREE for hypothalamic obesity (HO), anticipating a more rapid uptake compared to BBS due to the concentration of patients with endocrinologists [8][11] Market Data and Key Metrics Changes - The management noted that the HO patient population is expected to be larger than initially estimated, with growing confidence in the higher end of the prevalence range [13][31] - The competitive landscape for Prader-Willi syndrome is highlighted, with the recent approval of DCCR creating a well-organized patient community eager for effective treatments [10][11] Company Strategy and Development Direction - Rhythm Pharmaceuticals plans to continue executing on current business lines while exploring new genetic opportunities and other avenues for drug development [6][48] - The company is focused on developing next-generation drugs, including bivamelagon and RM-718, with plans to enter phase 3 trials for HO as soon as possible [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, emphasizing the need to educate and energize the medical community around HO treatment options [9][12] - The company is aware of the challenges in developing drugs for complex conditions like Prader-Willi syndrome but remains committed to pursuing these opportunities [7][32] Other Important Information - The management is actively working on pre-commercial activities with payers, indicating a smooth interaction thus far with no anticipated pushback [25][26] - The company is also exploring the potential for new treatment centers for HO, similar to existing centers for other rare diseases [15][16] Q&A Session Summary Question: What is the expected trajectory for the launch of IMCIVREE for HO? - Management anticipates a more gradual launch compared to BBS but believes the overall opportunity is significant due to the concentration of patients with endocrinologists [8][11] Question: Are there any label considerations for the HO approval? - Management is hopeful to include hyperphagia in the indication statement, which could enhance the drug's marketability, especially with Medicare considerations [19][20] Question: How is the company preparing for the upcoming analyst day? - The company plans to share insights from experts and provide updates on patient numbers and market dynamics for HO [30][31] Question: What are the challenges faced in the Prader-Willi trials? - Management acknowledged the complexity of the Prader-Willi population and the need for a robust development plan to address these challenges [32][41] Question: How does the company view the competitive landscape for hyperphagia treatments? - Management believes that while there are multiple companies pursuing hyperphagia treatments, their focus will remain on weight loss as the primary endpoint [44]

Financial Data and Key Metrics Changes - Rhythm Pharmaceuticals reported a strong year, with significant advancements in their drug development pipeline, particularly for IMCIVREE, which addresses obesity and hyperphagia [2][6] - The company highlighted the importance of their formulation patents, which extend to 2034 in the U.S., providing a competitive edge against generics [4] Business Line Data and Key Metrics Changes - The approval of IMCIVREE for Bardet-Biedl syndrome (BBS) in June 2022 has created a profitable business opportunity, with expectations of steady revenue from this ultra-rare disease [3] - The company is optimistic about the launch of IMCIVREE for hypothalamic obesity (HO), anticipating a more rapid uptake compared to BBS due to the concentration of patients with endocrinologists [8][11] Market Data and Key Metrics Changes - The management noted that the HO patient population is expected to be larger than initially estimated, with growing confidence in the higher end of the prevalence range [13][31] - The competitive landscape for Prader-Willi syndrome is highlighted, with the recent approval of DCCR creating a well-organized patient community primed for new treatments [10][11] Company Strategy and Development Direction - Rhythm Pharmaceuticals plans to continue executing on current business lines while exploring new genetic opportunities and other avenues for drug development [6][48] - The company is focused on developing next-generation drugs, including bivamelagon and RM-718, with plans to enter Phase 3 trials for HO as soon as possible [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, emphasizing the importance of ongoing education and awareness in the medical community regarding HO and its treatment [9][12] - The company is committed to addressing the unmet medical needs in the obesity treatment landscape, particularly for complex conditions like Prader-Willi syndrome [38][41] Other Important Information - The management is actively working to include hyperphagia in the label for IMCIVREE, which could enhance its marketability and reimbursement potential [19][20] - The company is also exploring the development of centers of excellence for HO treatment, particularly in Europe, to facilitate better patient management [15][16] Q&A Session Summary Question: What is the expected trajectory for the launch of IMCIVREE for HO? - Management anticipates a more gradual launch compared to BBS, but with significant overall opportunity due to the concentration of patients with endocrinologists [8][11] Question: How does the company plan to address the overlap between physicians treating BBS and HO? - Awareness is growing, and management believes there will be a bolus effect as patients are identified and treated [13] Question: What are the label considerations for IMCIVREE in HO? - Management is hopeful to include hyperphagia in the indication statement, which is critical for differentiating the drug in the market [19][20] Question: How is the company preparing for payer interactions regarding HO? - Early interactions with payers have been smooth, and management is confident in the clear unmet medical need for HO treatment [25][26] Question: What is the strategy for the development of next-generation drugs? - The company plans to develop both bivamelagon and RM-718 for HO, with a focus on leveraging existing data and safety profiles [46][47]

Core Insights - Rhythm Pharmaceuticals has received acceptance for its supplemental New Drug Application (sNDA) for setmelanotide from the U.S. FDA, with a PDUFA goal date set for December 20, 2025, indicating a priority review status [1] - The European Medicines Agency (EMA) has also validated a Type II variation submission for setmelanotide for the treatment of acquired hypothalamic obesity, with the review process initiated on August 16, 2025 [2] - Setmelanotide is already approved for other obesity-related conditions and is a melanocortin-4 receptor (MC4R) agonist, highlighting its potential in treating rare neuroendocrine diseases [3] Company Developments - Rhythm Pharmaceuticals will host an event titled "Commercial Readiness for Acquired Hypothalamic Obesity" on September 24, 2025, to discuss U.S. launch plans and the urgent need for treatment in this patient population [5] - The company emphasizes its commitment to expediting the availability of setmelanotide for patients suffering from acquired hypothalamic obesity, which presents unique challenges compared to general obesity [4] Clinical Trial Insights - The pivotal Phase 3 TRANSCEND trial involved 120 patients and demonstrated a statistically significant -19.8% placebo-adjusted reduction in body mass index (BMI) after 52 weeks of treatment with setmelanotide [4] - In the TRANSCEND trial, participants on setmelanotide achieved a -16.5% reduction in mean BMI compared to a +3.3% increase in the placebo group, with significant results across both adult and pediatric populations [4] Market Potential - Rhythm estimates that there are between 5,000 to 10,000 individuals in the U.S. and 3,500 to 10,000 in the EU living with acquired hypothalamic obesity, indicating a targeted market for setmelanotide [10]

[PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | **Assets** | | | | Cash and cash equivalents | $135,586 | $89,137 | | Short-term investments | 155,444 | 231,428 | | Accounts receivable, net | 26,122 | 18,512 | | Inventory | 18,872 | 18,741 | | Prepaid expenses and other current assets | 24,656 | 16,382 | | Total current assets | 360,680 | 374,200 | | Property and equipment, net | 297 | 632 | | Right-of-use asset | 3,262 | 3,477 | | Intangible assets, net | 5,747 | 6,174 | | Restricted cash | 527 | 464 | | Other long-term assets | 2,220 | 7,326 | | **Total assets** | **$372,733** | **$392,273** | | **Liabilities, Convertible Preferred Stock and Stockholders' equity** | | | | Accounts payable | $15,982 | $12,328 | | Accrued expenses and other current liabilities | 69,185 | 62,658 | | Other current liability - LG Chem | 40,000 | 37,704 | | Lease liability (current) | 510 | — | | Deferred revenue | — | 1,286 | | Deferred royalty obligation, current | 3,778 | 1,541 | | Total current liabilities | 129,455 | 115,517 | | Deferred royalty obligation (long-term) | 106,014 | 108,269 | | Lease liability, non-current | 3,681 | 3,938 | | Total liabilities | 239,150 | 227,724 | | Series A convertible preferred stock | 145,491 | 142,820 | | Common stock | 64 | 61 | | Additional paid-in capital | 1,241,744 | 1,177,045 | | Accumulated other comprehensive (loss) | (2,248) | (39) | | Accumulated deficit | (1,251,468) | (1,155,338) | | Total stockholders' equity | (11,908) | 21,729 | | **Total liabilities, convertible preferred stock and stockholders' equity** | **$372,733** | **$392,273** | - Total assets decreased by **$19.54 million** from **$392.27 million** at December 31, 2024, to **$372.73 million** at June 30, 2025, primarily driven by a decrease in short-term investments and other long-term assets, partially offset by an increase in cash and cash equivalents and accounts receivable[10](index=10&type=chunk) - Total liabilities increased by **$11.43 million**, from **$227.72 million** at December 31, 2024, to **$239.15 million** at June 30, 2025, mainly due to increases in accounts payable, accrued expenses, and the LG Chem liability[10](index=10&type=chunk) - Total stockholders' equity shifted from a positive **$21.73 million** at December 31, 2024, to a deficit of **$11.91 million** at June 30, 2025, primarily due to an increased accumulated deficit[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenue, net | $48,502 | $29,078 | $86,220 | $55,045 | | License revenue | — | — | (5,014) | — | | Total revenues | 48,502 | 29,078 | 81,206 | 55,045 | | Cost of sales | 5,543 | 2,947 | 9,191 | 5,753 | | Research and development | 42,308 | 30,194 | 79,281 | 158,858 | | Selling, general, and administrative | 45,947 | 36,415 | 85,034 | 70,797 | | Total costs and expenses | 93,798 | 69,556 | 173,506 | 235,408 | | Loss from operations | (45,296) | (40,478) | (92,300) | (180,363) | | Net loss | $(46,632) | $(32,261) | $(96,130) | $(173,633) | | Net loss per share, basic and diluted | $(0.75) | $(0.55) | $(1.56) | $(2.89) | - Product revenue, net, increased by **67%** to **$48.50 million** for the three months ended June 30, 2025, from **$29.08 million** in the prior year period, and by **57%** to **$86.22 million** for the six months ended June 30, 2025, from **$55.05 million** in the prior year period[12](index=12&type=chunk) - Net loss for the three months ended June 30, 2025, was **$46.63 million**, an increase from **$32.26 million** in the same period of 2024, while for the six months ended June 30, 2025, net loss was **$96.13 million**, a significant improvement from **$173.63 million** in the prior year period, primarily due to lower R&D expenses[12](index=12&type=chunk) - Research and development expenses decreased by **50%** for the six months ended June 30, 2025, to **$79.28 million**, compared to **$158.86 million** in the same period of 2024, largely due to non-recurring acquired IPR&D costs in 2024[12](index=12&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) - Total stockholders' equity decreased from **$21.73 million** at December 31, 2024, to a deficit of **$11.91 million** at June 30, 2025, primarily driven by net loss and foreign currency translation adjustments[13](index=13&type=chunk) - Common stock shares outstanding increased from **62,390,654** at December 31, 2024, to **63,913,185** at June 30, 2025, due to stock compensation, ESPP, stock option exercises, and ATM equity offerings[13](index=13&type=chunk) - Accretion of preferred stock dividends totaled **$2.67 million** for the six months ended June 30, 2025, increasing the carrying value of Convertible Preferred Stock[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(63,664) | $(69,819) | | Net cash provided by investing activities | 78,847 | 21,488 | | Net cash provided by financing activities | 31,610 | 150,422 | | Effect of exchange rates on cash | (281) | (372) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $46,512 | $101,719 | | Cash, cash equivalents and restricted cash at end of period | $136,113 | $162,128 | - Net cash used in operating activities decreased to **$63.66 million** for the six months ended June 30, 2025, from **$69.82 million** in the prior year, primarily due to a lower net loss and favorable changes in operating assets and liabilities[16](index=16&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Net cash provided by investing activities significantly increased to **$78.85 million** in 2025 from **$21.49 million** in 2024, driven by higher maturities of short-term investments and no acquisition of IPR&D assets in 2025[16](index=16&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Net cash provided by financing activities decreased to **$31.61 million** in 2025 from **$150.42 million** in 2024, mainly due to the absence of proceeds from Series A Preferred Stock issuance in 2025, partially offset by proceeds from ATM equity offering[16](index=16&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of Business](index=8&type=section&id=1.%20Nature%20of%20Business) Rhythm Pharmaceuticals is a commercial-stage biopharmaceutical company focused on MC4R receptor agonists for rare neuroendocrine diseases - Rhythm Pharmaceuticals is a global, commercial-stage biopharmaceutical company focused on developing melanocortin-4 (MC4R) receptor agonists, with IMCIVREE (setmelanotide) as its lead asset, to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases[17](index=17&type=chunk) - The company has incurred operating losses and negative cash flows since inception, with an accumulated deficit of **$1.3 billion** as of June 30, 2025, and expects losses to continue[20](index=20&type=chunk) Cash and Short-Term Investments | As of | Amount (in millions) | | :---- | :------------------- | | June 30, 2025 | $291.0 | | December 31, 2024 | $320.6 | - Management believes existing cash resources will fund operations through at least the next twelve months from the 10-Q filing date[23](index=23&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines significant accounting policies for financial statements, including revenue recognition and inventory, with no material changes - The financial statements are prepared in conformity with GAAP and SEC interim reporting rules, with certain footnotes condensed or omitted[24](index=24&type=chunk) - The company operates and manages its business as one operating segment, with segment disclosures updated per ASU 2023-07[29](index=29&type=chunk)[30](index=30&type=chunk) - Revenue from product sales is recognized when the customer obtains control, with reserves for variable consideration (discounts, rebates, co-pay assistance) established as reductions of accounts receivable or current liabilities[42](index=42&type=chunk)[44](index=44&type=chunk) - Inventory is valued at the lower of cost or net realizable value, determined on a first-in, first-out basis, and includes raw materials, work in process, and finished goods[60](index=60&type=chunk) [3. Asset Acquisitions](index=23&type=section&id=3.%20Asset%20Acquisitions) Details the January 2024 acquisition of bivamelagon from LG Chem for $92.4 million, expensed as R&D - On January 4, 2024, Rhythm Pharmaceuticals acquired worldwide rights to LG Chem's (LGC) proprietary compound bivamelagon for a total purchase consideration of **$92.4 million**[76](index=76&type=chunk)[77](index=77&type=chunk) - The consideration included **$40.0 million** in cash, **$18.7 million** in common stock, and an additional **$40.0 million** license fee payable in 18 months (present value **$33.7 million** at closing), with the final **$40.0 million** payment made on July 1, 2025[77](index=77&type=chunk) - The **$92.4 million** purchase consideration was recognized as research and development expense in Q1 2024 because the acquired IPR&D assets had no alternative future use[79](index=79&type=chunk) [4. Inventory](index=25&type=section&id=4.%20Inventory) Inventory remained stable at $18.87 million at June 30, 2025, with finished goods increasing and raw materials decreasing Inventory Composition (in thousands) | | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :------------------ | | Raw Materials | $4,477 | $6,776 | | WIP | 767 | 1,250 | | Finished Goods | 13,628 | 10,715 | | **Total Inventory** | **$18,872** | **$18,741** | - Finished goods inventory increased by **$2.91 million (27.2%)** from December 31, 2024, to June 30, 2025, while raw materials decreased by **$2.30 million (34.0%)** and WIP decreased by **$0.48 million (38.6%)**[81](index=81&type=chunk) [5. Accrued Expenses and Other Current Liabilities](index=25&type=section&id=5.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses increased to $69.19 million at June 30, 2025, driven by higher sales allowances and R&D costs Accrued Expenses and Other Current Liabilities (in thousands) | | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Research and development costs | $21,725 | $17,871 | | Professional fees | 4,875 | 4,280 | | Payroll related | 13,261 | 18,216 | | Royalties | 2,425 | 2,091 | | Sales allowances | 22,522 | 15,850 | | Other | 4,377 | 4,350 | | **Total** | **$69,185** | **$62,658** | - Sales allowances increased by **$6.67 million (42.1%)** and research and development costs increased by **$3.85 million (21.5%)** from December 31, 2024, to June 30, 2025[82](index=82&type=chunk) - Payroll-related accruals decreased by **$4.96 million (27.2%)** over the same period[82](index=82&type=chunk) [6. Fair Value of Financial Assets and Liabilities](index=25&type=section&id=6.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) Financial assets at fair value decreased to $281.49 million at June 30, 2025, with the derivative asset increasing Fair Value Measurements of Financial Assets (in thousands) | | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | **Cash equivalents:** | | | | Commercial Paper | $27,907 | $2,984 | | Money market funds | 97,450 | 71,334 | | **Marketable securities:** | | | | US treasury securities | 53,409 | 65,118 | | Corporate debt securities and commercial paper | 102,035 | 166,310 | | Derivative asset | 690 | 270 | | **Total** | **$281,491** | **$306,016** | - The fair value of the embedded derivative asset related to the Royalty Interest Financing Agreement increased by **$0.42 million** for the six months ended June 30, 2025, from **$(0.27) million** to **$(0.69) million**[85](index=85&type=chunk)[86](index=86&type=chunk) - Marketable securities, primarily corporate debt and U.S. Treasury securities, decreased from **$231.43 million** at December 31, 2024, to **$155.44 million** at June 30, 2025[87](index=87&type=chunk) [7. Intangible Assets](index=29&type=section&id=7.%20Intangible%20Assets) Net intangible assets decreased to $5.75 million at June 30, 2025, due to amortization, with $0.4 million expense Intangible Assets (in thousands) | | As of June 30, 2025 | As of December 31, 2024 | | :------------------- | :-------------------- | :---------------------- | | Capitalized Milestones | $5,747 | $6,174 | - Amortization expense for intangible assets was **$0.2 million** for each of the three months ended June 30, 2025 and 2024, and **$0.4 million** for each of the six months ended June 30, 2025 and 2024[89](index=89&type=chunk) - Future amortization expense is projected to be **$0.43 million** for the remainder of 2025, and **$0.86 million** annually from 2026 to 2029[89](index=89&type=chunk) [8. Income Taxes](index=30&type=section&id=8.%20Income%20Taxes) Income tax provisions of $0.4 million for six months ended June 30, 2025, from foreign jurisdictions Income Tax Provision (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three months ended June 30, | $337 | $479 | | Six months ended June 30, | $417 | $779 | - The income tax provision is primarily due to taxable income from the company's foreign jurisdictions[90](index=90&type=chunk) - The company is evaluating the impact of the recently signed 'One Big Beautiful Bill' (OBBB) Act on its consolidated financial statements, effective for fiscal year ending December 31, 2025[91](index=91&type=chunk) [9. Series A Convertible Preferred Stock](index=30&type=section&id=9.%20Series%20A%20Convertible%20Preferred%20Stock) Issued 150,000 shares of Series A Convertible Preferred Stock for $147.8 million in April 2024, with 6% dividends - On April 1, 2024, the company issued **150,000 shares** of Series A Convertible Preferred Stock for an aggregate purchase price of **$147.8 million**, net of issuance costs[92](index=92&type=chunk) - The Convertible Preferred Stock ranks senior to common stock in liquidation, with holders entitled to the greater of **1.75 times** liquidation preference plus unpaid dividends or the as-converted common stock amount[95](index=95&type=chunk)[96](index=96&type=chunk) - Dividends accrue quarterly at a **6% annual rate** after the second anniversary of issuance and are accreted using the effective interest method, with accrued dividends for the six months ended June 30, 2025, totaling **$2.67 million**, increasing the carrying value to **$145.5 million**[103](index=103&type=chunk) - Holders have conversion options into common stock based on liquidation preference and a **$48.00 conversion price**, subject to certain ownership restrictions[104](index=104&type=chunk) [10. Common Stock](index=34&type=section&id=10.%20Common%20Stock) 16.17 million common shares reserved; $32.1 million net proceeds from ATM offering; shares issued for bivamelagon - As of June 30, 2025, **16,174,070 shares** of common stock were reserved for issuance under stock plans (**9,883,607 shares**) and for conversion of Series A convertible preferred stock (**3,124,995 shares**)[107](index=107&type=chunk)[109](index=109&type=chunk) - Between January 1, 2025, and January 21, 2025, the company sold **587,510 shares** of common stock through its ATM Program, generating approximately **$32.1 million** in net proceeds[110](index=110&type=chunk) - On January 4, 2024, **432,143 shares** of common stock were issued as partial consideration for the acquisition of bivamelagon from LGC[111](index=111&type=chunk) [11. Related-Party Transactions](index=36&type=section&id=11.%20Related-Party%20Transactions) Related-party expenses and outstanding payments were immaterial for the three and six months ended June 30, 2025 - Expenses paid directly to related parties and outstanding payments due to related parties were immaterial for the three and six months ended June 30, 2025 and 2024[114](index=114&type=chunk) [12. Significant Agreements](index=36&type=section&id=12.%20Significant%20Agreements) Terminated RareStone license and share purchase agreements in March 2025, reducing license revenue by $5.0 million - On March 14, 2025, Rhythm Pharmaceuticals terminated its Exclusive License Agreement and Share Purchase Agreement with RareStone Group Ltd[115](index=115&type=chunk) - The termination involved a **$6.3 million** repayment to RareStone and resulted in a net reduction in license revenue of **$5.0 million** for the six months ended June 30, 2025[117](index=117&type=chunk) - All rights and obligations under the RareStone Agreements ceased upon termination, and both parties released each other from all claims[118](index=118&type=chunk) [13. Long-Term Obligations](index=38&type=section&id=13.%20Long-Term%20Obligations) RIFA with HealthCare Royalty Management, LLC, totaling $100.0 million, with $29.4 million cumulative payments - The company entered into a Revenue Interest Financing Agreement (RIFA) for up to **$100.0 million**, with the full amount received by September 2023[119](index=119&type=chunk) - Under the RIFA, the company pays tiered royalties on annual net revenues (**11.5%** up to **$125M**, **7.5%** between **$125M-$300M**, **2.5%** over **$300M**)[120](index=120&type=chunk) - Cumulative payments made under the RIFA totaled **$29.4 million** as of June 30, 2025, including **$8.9 million** repaid in the six months ended June 30, 2025[120](index=120&type=chunk) - The obligation is accounted for as long-term debt with an embedded derivative, and the effective interest rate was **17.01%** as of June 30, 2025[126](index=126&type=chunk) [14. Commitments and Contingencies](index=40&type=section&id=14.%20Commitments%20and%20Contingencies) No material legal proceedings; future licensed technology payments are contingent and not probable within 12 months - The company is not currently subject to any pending or threatened litigation that would have a material adverse effect on its business or financial results[127](index=127&type=chunk) - Future payments for licensed technology milestones or royalties are contingent on achievement and sales, and no material milestone payments are deemed probable within the next 12 months[128](index=128&type=chunk)[129](index=129&type=chunk) [15. Segment and Geographic Information](index=42&type=section&id=15.%20Segment%20and%20Geographic%20Information) Operates as a single segment; net product revenue increased 57% to $86.22 million, with U.S. contributing 65% - The company operates in two business segments (U.S. and international) but meets aggregation criteria for ASC 280, reporting as one operating segment[130](index=130&type=chunk) Net Product Revenue by Geographic Area (in thousands) | Geographic Area | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | US | $31,982 | $21,637 | $56,352 | $41,080 | | International | 16,520 | 7,441 | 29,868 | 13,965 | | **Total product revenue, net** | **$48,502** | **$29,078** | **$86,220** | **$55,045** | - For the six months ended June 30, 2025, U.S. product revenue increased by **37.2% YoY** to **$56.35 million**, while international product revenue increased by **114% YoY** to **$29.87 million**[132](index=132&type=chunk) [16. Subsequent Events](index=43&type=section&id=16.%20Subsequent%20Events) Closed a public offering on July 11, 2025, raising approximately $189.2 million in net proceeds - On July 11, 2025, the company completed a public offering of **2,367,647 shares** of common stock at **$85.00 per share**[134](index=134&type=chunk) - The offering resulted in net proceeds of approximately **$189.2 million**, after deducting underwriting discounts and commissions[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, and outlook, covering revenue, expenses, liquidity, and capital [Overview](index=45&type=section&id=Overview) IMCIVREE approved for rare neuroendocrine diseases; positive Phase 3 results for setmelanotide; $48.5 million Q2 2025 sales - IMCIVREE (setmelanotide) is approved in the U.S., EU, UK, and Canada for specific rare neuroendocrine diseases causing hyperphagia and severe obesity, including Bardet-Biedl syndrome (BBS) and POMC/PCSK1/LEPR deficiencies[138](index=138&type=chunk)[139](index=139&type=chunk) - Positive topline results from the pivotal Phase 3 TRANSCEND trial for setmelanotide in acquired hypothalamic obesity were announced in April 2025, showing statistically significant BMI reduction[141](index=141&type=chunk)[142](index=142&type=chunk) - Global sales of IMCIVREE reached **$48.5 million** in Q2 2025, a **29% sequential increase**, with U.S. sales at **$32.0 million (66%)** and international sales at **$16.5 million (34%)**[146](index=146&type=chunk) - The company closed a public offering on July 11, 2025, raising approximately **$189.2 million** in net proceeds from the sale of **2,367,647 common shares**[147](index=147&type=chunk)[155](index=155&type=chunk) - Key near-term milestones include submitting regulatory applications for setmelanotide in acquired hypothalamic obesity in Q3 2025, disclosing Phase 2 Prader-Willi syndrome results in H2 2025, and announcing Phase 3 EMANATE trial data in Q1 2026[153](index=153&type=chunk) [Financial Operations Overview](index=53&type=section&id=Financial%20Operations%20Overview) Growing product revenue, one-time license revenue reduction, increasing cost of sales, and fluctuating R&D and SG&A [Product revenue, net](index=53&type=section&id=Product%20revenue%2C%20net) Product revenue increased by 67% to $48.5 million for three months and 57% to $86.2 million for six months Product Revenue, Net (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Three months ended June 30, | $48,502 | $29,078 | $19,424 | 67% | | Six months ended June 30, | $86,220 | $55,045 | $31,175 | 57% | - For the three months ended June 30, 2025, **66%** of product revenue was generated in the United States, compared to **74%** in the same period of 2024[179](index=179&type=chunk) - For the six months ended June 30, 2025, **65%** of product revenue was generated in the United States, compared to **75%** in the same period of 2024[184](index=184&type=chunk) [License revenue](index=55&type=section&id=License%20revenue) A $5.0 million reduction in license revenue for six months ended June 30, 2025, due to agreement termination - A **$5.0 million** reduction in previously-recognized license revenue was recorded for the six months ended June 30, 2025, due to the termination of the exclusive license agreement with RareStone[164](index=164&type=chunk)[185](index=185&type=chunk) [Cost of sales](index=55&type=section&id=Cost%20of%20sales) Cost of sales increased by 88% to $5.5 million for three months and 60% to $9.2 million for six months Cost of Sales (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Three months ended June 30, | $5,543 | $2,947 | $2,596 | 88% | | Six months ended June 30, | $9,191 | $5,753 | $3,438 | 60% | - The increase in cost of sales for the three months ended June 30, 2025, was driven by **$0.9 million** in additional royalties and **$1.6 million** in increased product costs due to higher sales volume[180](index=180&type=chunk) - The company expects cost of sales as a percentage of revenue to remain in a range of **10% to 12%** in the foreseeable future[180](index=180&type=chunk)[186](index=186&type=chunk) [Research and development expenses](index=55&type=section&id=Research%20and%20development%20expenses) R&D expenses increased 40% for three months but decreased 50% for six months due to non-recurring IPR&D costs Research and Development Expense (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Three months ended June 30, | $42,308 | $30,194 | $12,114 | 40% | | Six months ended June 30, | $79,281 | $158,858 | $(79,577) | (50)% | - The **50% decrease** in R&D for the six months ended June 30, 2025, was primarily due to a **$92.5 million** decrease in acquired IPR&D costs related to the LGC bivamelagon acquisition in 2024, which did not recur in 2025[187](index=187&type=chunk) - Offsetting decreases, R&D expenses for the six months ended June 30, 2025, saw increases of **$7.5 million** in CMC costs, **$6.6 million** in personnel costs (including **$3.2 million** in stock-based compensation), and **$0.7 million** in professional services[191](index=191&type=chunk) [Selling, general and administrative expenses](index=57&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) SG&A expenses increased by 26% for three months and 20% for six months, driven by personnel and marketing Selling, General and Administrative Expense (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Three months ended June 30, | $45,947 | $36,415 | $9,532 | 26% | | Six months ended June 30, | $85,034 | $70,797 | $14,237 | 20% | - For the three months ended June 30, 2025, the increase was primarily due to **$6.9 million** in personnel costs (including **$4.0 million** stock-based compensation), **$1.4 million** in marketing, and **$1.1 million** in professional services[181](index=181&type=chunk) - For the six months ended June 30, 2025, the increase was primarily due to **$13.0 million** in personnel costs (including **$7.4 million** stock-based compensation) and **$2.6 million** in marketing and promotion costs[191](index=191&type=chunk) [Critical Accounting Policies and Estimates](index=57&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on estimates for net product revenue and R&D accruals; no significant policy changes - Significant estimates are made for net product revenue and accruals related to research and development expenses[27](index=27&type=chunk) - No significant changes to critical accounting policies were reported since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[178](index=178&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Details financial performance for three and six months, highlighting product revenue growth and R&D decrease [Comparison of the three months ended June 30, 2025 and 2024](index=59&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20and%202024) Product revenue increased 67% to $48.5 million, leading to a $46.6 million net loss due to non-recurring gain Summary of Operations (Three Months Ended June 30, in thousands) | Statement of Operations Data: | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Product revenue, net | $48,502 | $29,078 | $19,424 | 67% | | Total costs and expenses | 93,798 | 69,556 | 24,242 | 35% | | Loss from operations | (45,296) | (40,478) | (4,818) | 12% | | Other income (expense), net | (999) | 8,696 | (9,695) | (111)% | | Net loss | $(46,632) | $(32,261) | $(14,371) | 45% | - Other income (expense), net, decreased by **$9.7 million** to **$(1.0) million**, primarily due to a non-recurring **$8.9 million** gain on settlement of a forward contract in Q2 2024[182](index=182&type=chunk) [Comparison of the six months ended June 30, 2025 and 2024](index=63&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Total revenues increased 48% to $81.2 million, costs decreased 26%, resulting in a $96.1 million net loss Summary of Operations (Six Months Ended June 30, in thousands) | Statement of Operations Data: | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Product revenue, net | $86,220 | $55,045 | $31,175 | 57% | | License revenue | (5,014) | — | (5,014) | (100)% | | Total revenues | 81,206 | 55,045 | 26,161 | 48% | | Total costs and expenses | 173,506 | 235,408 | (61,902) | (26)% | | Loss from operations | (92,300) | (180,363) | 88,063 | (49)% | | Other income (expense), net | (3,413) | 7,509 | (10,922) | (145)% | | Net loss | $(96,130) | $(173,633) | $77,503 | (45)% | - The **$79.6 million** decrease in R&D expense was primarily due to a **$92.5 million** decrease in acquired IPR&D costs in 2024 that did not recur in 2025, partially offset by increases in CMC, personnel, and professional services costs[187](index=187&type=chunk)[191](index=191&type=chunk) - Other income (expense), net, decreased by **$10.9 million** to **$(3.4) million**, mainly due to the non-recurring **$8.9 million** gain on forward contract settlement in 2024 and increased non-cash interest expense[192](index=192&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and investments of $291.0 million, plus $189.2 million from offering, expected to fund operations for 24 months [Cash flows](index=67&type=section&id=Cash%20flows) Operating cash burn decreased, investing cash increased, and financing cash decreased due to no preferred stock issuance Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net cash used in operating activities | $(63,664) | $(69,819) | | Net cash provided by investing activities | 78,847 | 21,488 | | Net cash provided by financing activities | 31,610 | 150,422 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $46,512 | $101,719 | - Net cash used in operating activities decreased by **$6.16 million**, driven by a lower net loss and favorable changes in operating assets and liabilities[195](index=195&type=chunk)[196](index=196&type=chunk) - Net cash provided by investing activities increased by **$57.36 million**, mainly from higher maturities of short-term investments and no IPR&D asset acquisition in 2025[197](index=197&type=chunk)[198](index=198&type=chunk) - Net cash provided by financing activities decreased by **$118.81 million**, primarily due to the **$147.8 million** net proceeds from Series A Preferred Stock issuance in 2024 not recurring in 2025, partially offset by **$34.0 million** from ATM equity offering in 2025[199](index=199&type=chunk)[200](index=200&type=chunk) [Funding requirements](index=69&type=section&id=Funding%20requirements) Existing cash and offering proceeds of $480.2 million expected to fund operations for 24 months - As of June 30, 2025, cash and cash equivalents and short-term investments were approximately **$291.0 million**[160](index=160&type=chunk)[190](index=190&type=chunk) - Combined with **$189.2 million** net proceeds from the July 2025 public offering, existing cash is expected to fund planned operations for at least **24 months**[160](index=160&type=chunk)[202](index=202&type=chunk) - Future capital requirements depend on factors such as commercialization costs for IMCIVREE, clinical trial expenses for product candidates (setmelanotide, RM-718, bivamelagon, CHI program), regulatory review costs, and potential acquisitions[204](index=204&type=chunk) - The company expects to finance cash needs through equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements[207](index=207&type=chunk) [ATM Program](index=71&type=section&id=ATM%20Program) ATM equity offering increased to $200.0 million; $32.1 million net proceeds from 587,510 shares sold in early 2025 - The ATM Program's aggregate offering price was increased to **$200.0 million** in February 2024[110](index=110&type=chunk)[211](index=211&type=chunk) - From January 1, 2025, through January 21, 2025, **587,510 shares** were sold in the ATM Program, yielding approximately **$32.1 million** in net proceeds[110](index=110&type=chunk)[212](index=212&type=chunk) [Contractual obligations](index=73&type=section&id=Contractual%20obligations) No material changes to principal contractual obligations and commitments since the December 31, 2024, 10-K - No material changes to principal contractual obligations and commitments were reported as of June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[213](index=213&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures since the December 31, 2024, Annual Report on Form 10-K - No material changes to quantitative and qualitative disclosures about market risks were reported as of June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[214](index=214&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025; no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[216](index=216&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[217](index=217&type=chunk) [PART II – OTHER INFORMATION](index=74&type=section&id=PART%20IIOTHER%20INFORMATION) [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[219](index=219&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) Outlines various risks including financial position, product development, commercialization, intellectual property, and regulatory [Risks Related to Our Financial Position and Need for Capital](index=74&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Capital) Limited operating history, significant losses, and $1.3 billion deficit necessitate additional funding, with RIFA restrictions - The company has a limited operating history, has incurred significant operating losses since inception, and had an accumulated deficit of **$1.3 billion** as of June 30, 2025[221](index=221&type=chunk)[226](index=226&type=chunk) - The company will need to raise additional funding, which may not be available on acceptable terms, and failure to obtain capital could force delays or termination of product development[229](index=229&type=chunk)[237](index=237&type=chunk) - The Revenue Interest Financing Agreement (RIFA) imposes tiered royalty payments on annual net revenues and minimum payment obligations, which could restrict the company's ability to commercialize IMCIVREE and limit cash flow[238](index=238&type=chunk)[239](index=239&type=chunk)[242](index=242&type=chunk) [Risks Related to the Development of Setmelanotide and Other Product Candidates and our CHI Program](index=82&type=section&id=Risks%20Related%20to%20the%20Development%20of%20Setmelanotide%20and%20Other%20Product%20Candidates%20and%20our%20CHI%20Program) Clinical trial unpredictability, small patient populations, enrollment delays, and side effects pose development risks - Positive results from earlier clinical trials of setmelanotide may not be predictive of later clinical trials, and not all trials have demonstrated statistically significant weight loss in all patient populations[243](index=243&type=chunk) - The number of patients with MC4R pathway variants is small and not precisely established, with estimates ranging from **100-500** for POMC deficiency obesity to **63,500** for SEMA3 family, PHIP, TBX3 or PLXNA family variants, impacting potential revenue[259](index=259&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - Delays or difficulties in patient enrollment and retention in clinical trials, or failures by third-party CROs, could delay regulatory submissions, increase costs, and prevent or limit commercialization[266](index=266&type=chunk)[275](index=275&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) - Setmelanotide, RM-718, or bivamelagon may cause undesirable side effects (e.g., cardiovascular effects, nausea, skin darkening) that could delay or prevent regulatory approvals, limit commercial labeling, or result in negative post-marketing consequences[294](index=294&type=chunk)[295](index=295&type=chunk) [Risks Related to the Commercialization of IMCIVREE and, if Approved, our Products Candidates](index=114&type=section&id=Risks%20Related%20to%20the%20Commercialization%20of%20IMCIVREE%20and%2C%20if%20Approved%2C%20our%20Products%20Candidates) Commercial success depends on reimbursement, sales, and competition; product liability and third-party manufacturing pose risks - Commercial success depends on obtaining and maintaining coverage and adequate reimbursement from governmental authorities and private health insurers, which is uncertain and subject to increasing efforts to cap or reduce healthcare costs[335](index=335&type=chunk)[337](index=337&type=chunk) - Failure to establish, maintain, or expand sales, marketing, and distribution capabilities, or to secure third-party agreements, could prevent revenue generation[344](index=344&type=chunk)[346](index=346&type=chunk) - The biotechnology and pharmaceutical industries are intensely competitive, with many competitors having greater resources, and new products or generic competition could reduce sales or force price reductions[351](index=351&type=chunk)[354](index=354&type=chunk) - The company relies completely on third-party suppliers for manufacturing clinical and commercial drug supplies, and any failure to comply with GMPs or supply disruptions could delay regulatory approval or commercialization[361](index=361&type=chunk)[363](index=363&type=chunk) [Risks Related to Our Intellectual Property Rights](index=128&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20Rights) Protecting IP and patents is critical; validity is uncertain, and reliance on licensed IP and generic competition pose risks - Failure to adequately protect proprietary technology or maintain issued patents for setmelanotide, RM-718, and bivamelagon could allow competitors to erode competitive advantage[369](index=369&type=chunk) - The issuance, scope, validity, and enforceability of patents are uncertain, and patents may be challenged, deemed unenforceable, invalidated, or circumvented, leading to costly proceedings[372](index=372&type=chunk)[373](index=373&type=chunk) - The company is dependent on licensed intellectual property from Ipsen and LGC; termination of these licenses would result in loss of rights to develop and commercialize setmelanotide and bivamelagon[395](index=395&type=chunk) - Failure to obtain patent term restoration under Hatch-Waxman Amendments or similar foreign legislation, or facing generic competition after data exclusivity, could materially and adversely impact future revenue[401](index=401&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk) [Risks Related to Regulatory Approval and Marketing of Setmelanotide and Other Legal and Compliance Matters](index=140&type=section&id=Risks%20Related%20to%20Regulatory%20Approval%20and%20Marketing%20of%20Setmelanotide%20and%20Other%20Legal%20and%20Compliance%20Matters) Regulatory approvals are uncertain; healthcare reform, compliance with laws, and evolving data/AI regulations pose significant risks - The regulatory and marketing approval process for product candidates is expensive, time-consuming, and uncertain, with potential for delays, denials, or conditional approvals[407](index=407&type=chunk)[409](index=409&type=chunk)[410](index=410&type=chunk) - Future healthcare reform legislation, such as the Inflation Reduction Act of 2022 (IRA) and the One Big Beautiful Bill Act, could increase costs, reduce reimbursement, and negatively impact drug pricing and sales[428](index=428&type=chunk)[431](index=431&type=chunk)[437](index=437&type=chunk) - Failure to comply with federal, state, and foreign healthcare laws and regulations, including fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act) and health information privacy laws (e.g., HIPAA, GDPR), could result in criminal sanctions, substantial civil penalties, and reputational harm[456](index=456&type=chunk)[458](index=458&type=chunk)[460](index=460&type=chunk)[466](index=466&type=chunk)[470](index=470&type=chunk) - The evolving regulatory framework for AI technologies, data protection, and privacy laws (e.g., GDPR, UK GDPR, CCPA) could increase compliance costs, limit business operations, and expose the company to liabilities[468](index=468&type=chunk)[470](index=470&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk) [Risks Related to Employee Matters and Managing Growth](index=174&type=section&id=Risks%20Related%20to%20Employee%20Matters%20and%20Managing%20Growth) Attracting personnel, managing growth, cybersecurity, and AI integration risks could disrupt operations and incur costs - The company's success is highly dependent on retaining key employees and attracting qualified scientific, technical, clinical development, regulatory, and sales and marketing personnel[489](index=489&type=chunk)[491](index=491&type=chunk) - Managing anticipated development and expansion, including the transition to a commercial-stage company and international operations, may lead to operational difficulties, increased expenses, and reduced revenue generation[492](index=492&type=chunk)[493](index=493&type=chunk) - Information technology systems are susceptible to security breaches and cyberattacks, which could result in material disruption of development programs, regulatory investigations, and significant financial and reputational harm[494](index=494&type=chunk)[495](index=495&type=chunk)[496](index=496&type=chunk)[499](index=499&type=chunk) - The increasing integration of AI technologies introduces risks such as inherent flaws in algorithms, insufficient or biased data, and inadvertent release of confidential information, which could lead to competitive disadvantages and legal liabilities[497](index=497&type=chunk) [Risks Related to Our Common Stock](index=180&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Stock price volatility, potential future sales, no dividends, and anti-takeover provisions could affect stock value - The market price for the company's common stock has been volatile and may fluctuate significantly due to factors such as clinical trial results, regulatory approvals, competitor announcements, and general market conditions[501](index=501&type=chunk) - Substantial future sales or perceived potential sales of common stock, including the conversion of **3,124,995 shares** underlying Convertible Preferred Stock, could cause the stock price to decline significantly[507](index=507&type=chunk) - The company does not intend to pay dividends on its common stock, meaning investment return depends solely on stock price appreciation[509](index=509&type=chunk)[510](index=510&type=chunk) - Provisions in the certificate of incorporation, bylaws, and Delaware law (e.g., classified board, blank check preferred stock, super-majority votes) could discourage, delay, or prevent a change in control[516](index=516&type=chunk)[517](index=517&type=chunk) [General Risk Factors](index=190&type=section&id=General%20Risk%20Factors) Acquisition benefits, global economic conditions, public company costs, internal controls, and short sellers are risks - The company may not realize the benefits of future acquisitions, strategic alliances, or joint ventures if integration is unsuccessful or expected synergies are not achieved[523](index=523&type=chunk) - Unfavorable global political or economic conditions, including volatility in financial markets, rising inflation/interest rates, and geopolitical conflicts, could adversely affect business, financial condition, and ability to raise capital[528](index=528&type=chunk) - Operating as a public company incurs substantial legal, accounting, and compliance costs, requiring significant management time and potentially diverting resources from core business activities[530](index=530&type=chunk)[532](index=532&type=chunk) - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reporting, fraud, and a decline in stock price, as experienced with a material weakness in 2023 and 2024[534](index=534&type=chunk)[535](index=535&type=chunk)[536](index=536&type=chunk) - Increasing focus on environmental sustainability and social initiatives could raise costs, harm reputation, and impact financial results, while short sellers may manipulate stock prices through negative information[537](index=537&type=chunk)[539](index=539&type=chunk)[541](index=541&type=chunk)[542](index=542&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=196&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities were reported[543](index=543&type=chunk) - No use of proceeds to report[544](index=544&type=chunk) [Item 3. Defaults Upon Senior Securities](index=196&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report for the period - No defaults upon senior securities were reported[546](index=546&type=chunk) [Item 4. Mine Safety Disclosure](index=198&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) Mine safety disclosure is not applicable to the company - Mine safety disclosure is not applicable[547](index=547&type=chunk) [Item 5. Other Information](index=198&type=section&id=Item%205.%20Other%20Information) No disclosures in lieu of Form 8-K, no material changes to board nominee procedures, and no Rule 10b5-1 arrangements - No disclosure in lieu of reporting on a Current Report on Form 8-K[548](index=548&type=chunk) - No material changes to procedures for security holders to recommend nominees to the board of directors[548](index=548&type=chunk) - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[548](index=548&type=chunk) [Item 6. Exhibits](index=198&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designations, Non-Employee Director Compensation Program, and various certifications (Section 302 and 906 of Sarbanes-Oxley Act)[549](index=549&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Presentation Linkbase Documents are also filed[550](index=550&type=chunk)[552](index=552&type=chunk) [SIGNATURES](index=201&type=section&id=SIGNATURES) Report signed on August 5, 2025, by the President and CEO, and the CFO and Treasurer - The report was signed on August 5, 2025, by David P. Meeker, M.D., President and Chief Executive Officer, and Hunter C. Smith, Chief Financial Officer and Treasurer[556](index=556&type=chunk)

Financial Data and Key Metrics Changes - The company reported global revenue of $48.5 million for Q2 2025, representing a 29% increase quarter over quarter [38] - U.S. revenue accounted for 66% of total revenue, amounting to $32 million, while international revenue was $16.5 million, making up 34% [38] - Year-over-year, net product revenues increased by $19.4 million or 67% compared to Q2 2024 [41] - The company ended Q2 2025 with $291 million in cash, following an oversubscribed equity offering that raised $189.2 million [35][37] Business Line Data and Key Metrics Changes - The company experienced solid growth in VVS sales, with a focus on BBS and acquired hypothalamic obesity [8][10] - The cumulative number of BBS prescribers grew by 38% from Q2 2024 to Q2 2025, with a 9% increase in cumulative prescribers from Q1 2025 [22] - The number of reimbursed patients on therapy in the U.S. grew at mid-single-digit percentage rates [38] Market Data and Key Metrics Changes - The international market saw a steady increase in patients on therapy, particularly in France and Italy, driven by early access programs for hypothalamic obesity [29][40] - The company is expanding its presence in new countries, including Poland and the Czech Republic, with ongoing efforts in Japan [30] Company Strategy and Development Direction - The company aims to leverage its learnings from the BBS launch to prepare for the launch of Encepria in hypothalamic obesity, pending FDA approval [25][27] - The company is focused on long-term growth, with confidence in the sustainability of its revenue streams from rare diseases [9][100] - The company plans to continue expanding its market presence globally, with a focus on both existing and new markets [98][100] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the importance of the recent quarter in laying the foundation for significant growth [7][10] - The company is confident in the projected epidemiology for acquired hypothalamic obesity, estimating a patient population of 5,000 to 10,000 in the U.S. [11][26] - Management noted that the company is well-capitalized and has a cash runway of at least 24 months, indicating strong financial health [37] Other Important Information - The company is on track for U.S. and European regulatory filings in Q3 for semolantide in hypothalamic obesity [18] - The company has a robust pipeline with multiple upcoming milestones, including data releases and trial enrollments planned for 2026 [18][19] Q&A Session Summary Question: Upcoming pipeline catalyst regarding Prader Willi data - Management characterized the Prader Willi study as exploratory, with a focus on higher dosing and longer duration compared to previous trials [49][50] Question: Expected follow-up for Prader Willi study - Management indicated that patients will continue treatment beyond the initial six months if they show benefits, emphasizing the importance of long-term data [58] Question: Confidence in higher prevalence estimates for hypothalamic obesity - Management noted ongoing fieldwork and claims data analysis to support confidence in the higher end of the prevalence range [75] Question: Growth expectations for international markets - Management highlighted that while recent growth has been strong, Q3 may see a quieter period due to seasonal factors [78] Question: Off-label usage in the U.S. for hypothalamic obesity - Management confirmed minimal off-label usage currently, with a focus on adhering to approved indications [86]

Financial Data and Key Metrics Changes - Global revenue for Q2 2025 was $48.5 million, representing a 29% increase quarter over quarter [38] - U.S. revenue accounted for 66% of total revenue, amounting to $32 million, while international revenue was $16.5 million, making up 34% [38] - Year-over-year, net product revenues increased by $19.4 million or 67% compared to Q2 2024 [41] Business Line Data and Key Metrics Changes - The number of reimbursed patients on therapy in the U.S. grew at mid-single-digit percentage rates, with a 12% increase in the global number of patients on therapy [38] - The cumulative number of BBS prescribers grew by 38% from Q2 2024 to Q2 2025, and there was a 9% growth in cumulative prescribers from Q1 2025 to Q2 2025 [22] - The FDA approved label expansion for Encepria down to two years of age, leading to increased prescriptions for younger patients [23] Market Data and Key Metrics Changes - International sales growth was primarily driven by increased sales in France, the UK, and Italy, with early access programs for hypothalamic obesity patients contributing to significant patient growth [40] - The appreciation of the euro and other currencies contributed approximately $1.2 million to the revenue increase [40] - The company is seeing a steady increase in the overall number of patients on therapy in the international region, particularly in countries with early access programs [28] Company Strategy and Development Direction - The company is focused on long-term growth, particularly in the BBS and acquired hypothalamic obesity markets, with expectations of sustained growth over the next 15 years [8] - The company plans to complete U.S. and European regulatory filings for cetaminotide in Q3 2025 and aims to launch Encepria in hypothalamic obesity pending FDA approval [9][26] - The company is building out its team in Japan and focusing on regulatory, medical affairs, marketing, and market access [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the projected epidemiology for acquired hypothalamic obesity, estimating 5,000 to 10,000 patients in the U.S. and similar numbers in Europe [10] - The management highlighted the importance of the recent oversubscribed equity raise, which strengthens the company's balance sheet and provides a cash runway of at least 24 months [37] - Management noted that the company is well-capitalized and positioned for future growth, with a focus on developing next-generation compounds [9][10] Other Important Information - The company reported a GAAP EPS net loss of $0.75 per share, including $0.02 per share from accrued dividends on convertible preferred stock [44] - R&D expenses for Q2 were $42.3 million, up from $30.2 million in the same quarter last year, primarily due to increased headcount and clinical trial costs [41][42] - The company is preparing for a significant launch in the hypothalamic obesity market, leveraging insights gained from the BBS launch [26] Q&A Session Summary Question: Upcoming pipeline catalyst regarding Prader Willi data - Management characterized the Prader Willi study as exploratory, with a focus on higher dosing and longer duration compared to previous trials [48][49] Question: Expected follow-up for Prader Willi study - Management indicated that patients will continue treatment beyond the six-month trial period for long-term data collection [56] Question: Confidence in higher prevalence estimates for hypothalamic obesity - Management expressed confidence in the higher end of the prevalence range based on claims data and field team insights [72] Question: Growth expectations for international revenue - Management noted that while currency effects contributed to recent growth, they expect continued strong performance in international markets despite potential seasonal fluctuations [75]