Rhythm Pharmaceuticals Netherlands BV

-- First quarter 2024 net revenue from global sales of IMCIVREE® (setmelanotide) of $26.0 million -- -- On track to submit sNDA to the FDA to treat pediatric patients between 2 and younger than 6 years old in approved indications in second quarter of 2024 -- -- Phase 3 trial evaluating setmelanotide in hypothalamic obesity remains on track for topline data readout in 1H 2025; dosing of first patients in Japan anticipated in 2Q 2024 -- -- Secured $150 million in convertible preferred stock financing, funding planned operations into 2026 -- -- Management to host conference call today at 8:00 a.m. ET -- BOSTON, May 07, 2024 (GLOBE NEWSWIRE) -- Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM), a global commercial-stage biopharmaceutical company focused on transforming the lives of patients and their families living with rare neuroendocrine diseases, today reported financial results and provided a business update for the first quarter ended March 31, 2024. “We continue to execute our global strategy of delivering IMCIVREE® (setmelanotide) to patients with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) pathway diseases,” said David Meeker, M.D., Chair, President and Chief Executive Officer of Rhythm. “We had another solid quarter marked by steady growth in global sales of IMCIVREE, which is now available in 14 markets.” Dr. Meeker continued, “We remain focused on expanding the global opportunity for setmelanotide in additional indications, most notably in hypothalamic obesity with our ongoing, global Phase 3 trial. This pivotal trial is progressing as planned, and we anticipate dosing the first patients with hypothalamic obesity in Japan in the second quarter of 2024. In addition, we expect to submit a supplementary New Drug Application (sNDA) to the FDA seeking a label expansion for IMCIVREE to treat pediatric patients between 2 and younger than 6 years old in approved indications in the second quarter of 2024. While we work to maximize the setmelanotide opportunity, we are also advancing our broader MC4R portfolio with continued progress with our RM-718 and LB54640 programs.” First Quarter and Recent Business Highlights Today, Rhythm announced that approximately 100 new prescriptions for IMCIVREE for Bardet-Biedl syndrome (BBS) were written by U.S. prescribers and that the Company has received payor approval for reimbursement for approximately 70 prescriptions during the first quarter of 2024.On May 2, Rhythm and its collaborators delivered one oral presentation and two posters at The Pediatric Endocrine Society’s (PES) Annual Meeting May 2-5, 2024 in Chicago, IL, which highlighted previously disclosed data that showed setmelanotide achieved clinically meaningful weight reduction in pediatric patients with hypothalamic obesity, BBS or POMC and LEPR deficiency obesities.On April 29, the Company announced the publication of results from its Phase 2 study of setmelanotide for the treatment of hypothalamic obesity in the peer-reviewed journal The Lancet Diabetes & Endocrinology. The publication highlights that setmelanotide achieved a mean percent reduction in BMI of 15% from baseline at 16 weeks of therapy (N=18), and preliminary data from Rhythm’s long-term extension study showing setmelanotide achieved mean BMI reduction of approximately 26% at one year (n=12).On April 1, 2024, Rhythm announced an investment agreement with current shareholders, led by Perceptive Advisors LLC and its Discovery Fund and a life-sciences focused institutional investor, for the sale of its series A convertible preferred stock (“Preferred Stock”) for gross proceeds of $150 million to the Company. This transaction closed on April 15, 2024.On March 25, Rhythm announced that the first patients had been dosed in the Company’s Phase 1 clinical trial of RM-718, an investigational, weekly MC4R agonist designed to be MC1R-sparing and to potentially avoid hyperpigmentation. Anticipated Upcoming Milestones Rhythm expects to achieve the following near-term milestones: Complete submission of a supplementary New Drug Application (sNDA) to the FDA seeking a label expansion to treat pediatric patients between 2 and younger than 6 years old in approved indications in the second quarter of 2024, with EMA approval for this pediatric expansion potentially in the fourth quarter of 2024;Begin dosing patients in the Japanese, 12-patient supplemental cohort of the Phase 3 trial evaluating setmelanotide in hypothalamic obesity in the second quarter of 2024;Begin dosing the first patients in the Phase 2 SIGNAL trial evaluating LB54640, an investigational oral small molecule MC4R agonist, in patients with hypothalamic obesity, in the third quarter of 2024. The 28-patient SIGNAL trial is a randomized, placebo-controlled, double-blind study designed to evaluate three dose levels of LB54640. The primary endpoint of the study is the change from baseline in body mass index after 14 weeks of treatment, and patients may continue on therapy for up to 52 weeks;Announce data from stage 2 of the exploratory Phase 2 DAYBREAK study evaluating setmelanotide in certain genetically-caused MC4R pathway diseases in the third quarter of 2024;Complete enrollment in two or more substudies in the Phase 3 EMANATE trial evaluating setmelanotide in a total of four genetically caused MC4R pathway diseases in the second half of 2024;Complete the Company’s Phase 1 clinical trial of RM-718, an investigational, weekly MC4R-specific agonist, and announce data from this trial – including data from a planned cohort of patients with hypothalamic obesity - in the first half of 2025; andAnnounce top-line data in the Phase 3 trial evaluating setmelanotide in hypothalamic obesity in the first half of 2025. First Quarter and Full Year 2023 Financial Results: Cash Position: As of March 31, 2024, cash, cash equivalents and short-term investments were approximately $201 million, as compared to $275.8 million as of December 31, 2023. This decrease in cash during the quarter included $40 million for an up-front payment to LG Chem for global rights to LB-54640 paid in January 2024. This cash on-hand amount does not include gross proceeds of $150 million from the sale of preferred stock during the second quarter.Revenue: Net product revenues relating to sales of IMCIVREE were $26.0 million for the three months ended March 31, 2024, as compared to $11.5 million for the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023, a substantial amount of our product revenue, or 74% and 83%, respectively, was generated from sales of our product in the United States.R&D Expenses: R&D expenses were $128.7 million for the three months ended March 31, 2024, as compared to $37.9 million for the three months ended March 31, 2023. The year-over-year increase was primarily due to in-process research and development costs totaling $92.4 million associated with the acquisition of LG Chem’s proprietary compound LB54640. Additional increased costs were associated with salaries, benefits and stock-based compensation related to the hiring of additional full-time employees, and clinical trial activities. These increases were partially offset by the one-time costs recorded in the three months ended March 31, 2023, for the purchase of research and development assets from Xinvento, BV. S,G&A Expenses: S,G&A expenses were $34.4 million for the three months ended March 31, 2024, as compared to $24.6 million for the three months ended March 31, 2023. The year-over-year increase was primarily due to increased compensation and benefits related costs associated with additional headcount to support our expanding business operations and commercial operations, increases in professional services and consulting costs and increases in costs associated with ongoing sales and marketing activities.Other income (expense), net: Other income (expense), net decreased by $1.6 million to ($1.2) million for the three months ended March 31, 2024, from $0.4 million for the three months ended March 31, 2023, primarily due to an increase in non-cash interest expense from amortization of debt discount and deferred financing fees associated with a higher deferred royalty obligation balance, and recognition of non-cash interest expense associated with accretion of the non-current liability payable to LG Chem in July 2025; this decrease was partially offset by an increase in other income from the change in fair value of the embedded derivative of $0.5 million associated with the Revenue Interest Financing Agreement, or RIFA, entered into with HealthCare Royalty Partners in June 2022.Net Loss: Net loss was $(141.4) million for the three months ended March 31, 2024, or a net loss per basic and diluted share of ($2.35), as compared to a net loss of ($52.2) million for the three months ended March 31, 2023, or a net loss per basic and diluted share of ($0.92). Financial Guidance: For the year ending December 31, 2024, Rhythm anticipates approximately $250 million to $270 million in Non-GAAP Operating Expenses. Non-GAAP Operating Expenses are derived from: GAAP total operating expenses, inclusive of: SG&A expenses of $105 million to $110 million; andR&D expenses of $145 million to $160 million, inclusive of $10 million to $15 million of LB54640 development costs; but which excludes: Stock-based compensation, and$92.4 million in fixed consideration related to in-licensing of global rights to LB54640, which was recognized in the first quarter of 2024. Non-GAAP Operating Expenses is defined as GAAP operating expenses excluding stock-based compensation and fixed consideration related to in-licensing (see below under "Non-GAAP Financial Measures" for more details). Based on its current operating plans, Rhythm expects that its existing cash, cash equivalents and short-term investments as of March 31, 2024 along with the proceeds from the sale of $150 million in preferred stock, will be sufficient to fund its operating expenses and capital expenditure requirements into 2026. Conference Call InformationRhythm Pharmaceuticals will host a live conference call and webcast at 8:00 a.m. ET today to review its first quarter 2024 financial results and recent business activities. Participants may register for the conference call here. It is recommended that participants join the call ten minutes prior to the scheduled start. A live webcast of the call will also be available under "Events and Presentations" in the Investor Relations section of the Rhythm Pharmaceuticals website at https://ir.rhythmtx.com/. The archived webcast will be available on Rhythm Pharmaceuticals’ website approximately two hours after the conference call and will be available for 30 days following the call. About Rhythm PharmaceuticalsRhythm is a commercial-stage biopharmaceutical company committed to transforming the lives of patients and their families living with rare neuroendocrine diseases. Rhythm’s lead asset, IMCIVREE® (setmelanotide), an MC4R agonist designed to treat hyperphagia and severe obesity, is approved by the U.S. Food and Drug Administration (FDA) for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to proopiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1) or leptin receptor (LEPR) deficiency confirmed by genetic testing, or patients with a clinical diagnosis of Bardet-Biedl syndrome (BBS). Both the European Commission (EC) and the UK’s Medicines & Healthcare Products Regulatory Agency (MHRA) have authorized setmelanotide for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or genetically confirmed loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 6 years of age and above. Additionally, Rhythm is advancing a broad clinical development program for setmelanotide in other rare diseases, as well as RM-718 and a preclinical suite of small molecules for the treatment of congenital hyperinsulinism. Rhythm’s headquarters is in Boston, MA. Setmelanotide IndicationIn the United States, setmelanotide is indicated for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to POMC, PCSK1 or LEPR deficiency as determined by an FDA-approved test demonstrating variants in POMC, PCSK1 or LEPR genes that are interpreted as pathogenic, likely pathogenic, or of uncertain significance (VUS) or BBS. In the European Union, setmelanotide is indicated for the treatment of obesity and the control of hunger associated with genetically confirmed Bardet-Biedl syndrome (BBS) or genetically confirmed loss-of-function biallelic proopiomelanocortin (POMC), including PCSK1, deficiency or biallelic leptin receptor (LEPR) deficiency in adults and children 6 years of age and above. Limitations of UseIn the United States and Europe, Setmelanotide should be prescribed and supervised by a physician with expertise in obesity with underlying genetic etiology. Setmelanotide is not indicated for the treatment of patients with the following conditions as setmelanotide would not be expected to be effective: Obesity due to suspected POMC, PCSK1 or LEPR deficiency with POMC, PCSK1 or LEPR variants classified as benign or likely benignOther types of obesity not related to POMC, PCSK1 or LEPR deficiency, or BBS, including obesity associated with other genetic syndromes and general (polygenic) obesity. WARNINGS AND PRECAUTIONS Skin Monitoring: Setmelanotide may lead to generalized increased skin pigmentation and darkening of pre-existing naevi because of its pharmacologic effect. Full body skin examinations should be conducted annually to monitor pre-existing and new skin pigmentary lesions before and during treatment with setmelanotide. Heart rate and blood pressure monitoring: Heart rate and blood pressure should be monitored as part of standard clinical practice at each medical visit (at least every 6 months) for patients treated with setmelanotide. Prolonged penile erection: Spontaneous penile erections have been reported in clinical trials with setmelanotide. Patients who have a penile erection lasting longer than 4 hours should be instructed to seek emergency medical attention for potential treatment of priapism. Depression: In clinical trials, depression has been reported in patients treated with setmelanotide. Patients with depression should be monitored at each medical visit during treatment with setmelanotide. Consideration should be given to discontinuing setmelanotide if patients experience suicidal thoughts or behaviors. Pediatric Population: The prescribing physician should periodically assess response to setmelanotide therapy. In growing children, the impact of weight loss on growth and maturation should be evaluated. The prescribing physician should monitor growth (height and weight) using age- and sex-appropriate growth curves. Excipients: This medicinal product contains 10 mg benzyl alcohol in each ml. Benzyl alcohol may cause allergic reactions. Patients who are pregnant or breastfeeding should be advised of the potential risk from the excipient benzyl alcohol, which might accumulate over time and cause metabolic acidosis. This medicinal product should be used with caution in patients with hepatic or renal impairment, because of the potential risk from the excipient benzyl alcohol which might accumulate over time and cause metabolic acidosis. Sodium: This medicinal product contains less than 1 mmol sodium (23 mg) per dose, that is to say essentially “sodium-free.” ADVERSE REACTIONSThe most frequent adverse reactions are hyperpigmentation (51%), injection site reaction (39%), nausea (33%), and headache (26%). USE IN SPECIFIC POPULATIONS PregnancyThere are no data from the use of setmelanotide in pregnant women. Animal studies do not indicate direct harmful effects with respect to reproductive toxicity. However, administration of setmelanotide to pregnant rabbits resulted in decreased maternal food consumption leading to embryo-fetal effects. As a precautionary measure, setmelanotide should not be started during pregnancy or while attempting to get pregnant as weight loss during pregnancy may result in fetal harm. If a patient who is taking setmelanotide has reached a stable weight and becomes pregnant, consideration should be given to maintaining setmelanotide treatment as there was no proof of teratogenicity in the nonclinical data. If a patient who is taking setmelanotide and still losing weight gets pregnant, setmelanotide should either be discontinued, or the dose reduced while monitoring for the recommended weight gain during pregnancy. The treating physician should carefully monitor weight during pregnancy in a patient taking setmelanotide. Breast-feedingIt is unknown whether setmelanotide is excreted in human milk. A nonclinical study showed that setmelanotide is excreted in the milk of nursing rats. No quantifiable setmelanotide concentrations were detected in plasma from nursing pups. A risk to the newborn/infant cannot be excluded. A decision must be made whether to discontinue breastfeeding or to discontinue/abstain from setmelanotide therapy taking into account the benefit of breastfeeding for the child and the benefit of therapy for the mother. FertilityNo human data on the effect of setmelanotide on fertility are available. Animal studies did not indicate harmful effects with respect to fertility. To report SUSPECTED ADVERSE REACTIONS, contact Rhythm Pharmaceuticals at +1 (833) 789-6337. See Summary of Product Characteristics’ APPENDIX V for a list of European national reporting systems to communicate adverse reactions. Please see the full Prescribing Information for additional Important Safety Information. Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the safety, efficacy, and regulatory and clinical design or progress, potential regulatory submissions, approvals and timing thereof of setmelanotide and LB54640, including our Phase 3 trial of setmelanotide for patients with hypothalamic obesity and Phase 2 SIGNAL trial, the potential benefits of setmelanotide for patients with hypothalamic obesity, our expectations surrounding potential regulatory submissions, approvals and timing thereof, including the sNDA for the label expansion of IMCIVREE, the Company’s business strategy and plans, including regarding commercialization of setmelanotide, our anticipated financial performance and financial position, including estimated Non-GAAP Operating Expenses for the year ending December 31, 2024, and the sufficiency of our cash, cash equivalents and short-term investments to fund our operations. Statements using words such as “expect”, “anticipate”, “believe”, “may”, “will”, “aim” and similar terms are also forward-looking statements. Such statements are subject to numerous risks and uncertainties, including, but not limited to, our ability to enroll patients in clinical trials, the design and outcome of clinical trials, the ability to achieve necessary regulatory approvals, risks associated with data analysis and reporting, failure to identify and develop additional product candidates, unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, risks associated with the laws and regulations governing our international operations and the costs of any related compliance programs, the impact of competition, risks relating to product liability lawsuits, inability to maintain collaborations, or the failure of these collaborations, our reliance on third parties, risks relating to intellectual property, our ability to hire and retain necessary personnel, general economic conditions, risks related to internal control over financial reporting, and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the Securities and Exchange Commission. Except as required by law, we undertake no obligations to make any revisions to the forward-looking statements contained in this press release or to update them to reflect events or circumstances occurring after the date of this press release, whether as a result of new information, future developments or otherwise. Non-GAAP Financial MeasuresThis press release includes Non-GAAP Operating Expenses, a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP and should not be considered as an alternative to operating expenses or any other performance measure derived in accordance with GAAP. We define Non-GAAP Operating Expenses as GAAP operating expenses excluding stock-based compensation and fixed consideration related to in-licensing. We caution investors that amounts presented in accordance with our definition of Non-GAAP Operating Expenses may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate this non-GAAP financial measure in the same manner. We present this non-GAAP financial measure because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Management uses this non-GAAP financial measure for planning purposes, including the preparation of our internal annual operating budget and financial projections; to evaluate the performance and effectiveness of our operational strategies; and to evaluate our capacity to expand our business. This non-GAAP financial measure has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for operating expenses or other financial statement data presented in accordance with GAAP in our consolidated financial statements. Rhythm has not provided a quantitative reconciliation of forecasted Non-GAAP Operating Expenses to forecasted GAAP operating expenses because the Company is unable, without making unreasonable efforts, to calculate stock-based compensation expenses. These items, which could materially affect the computation of forward-looking GAAP operating expenses, are inherently uncertain and depends on various factors, some of which are outside of Rhythm's control. Corporate Contact:David ConnollyExecutive Director, Investor Relations and Corporate CommunicationsRhythm Pharmaceuticals, Inc.857-264-4280dconnolly@rhythmtx.com Media Contact:Adam DaleyBerry & Company Public Relations212-253-8881adaley@berrypr.com Rhythm Pharmaceuticals, Inc.Condensed Consolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share data)(Unaudited) Three months ended March 31, 2024 2023 Revenues: Product revenue, net $25,967 $11,469 License revenue — — Total revenues 25,967 11,469 Costs and expenses: Cost of sales 2,807 1,421 Research and development 128,665 37,945 Selling, general, and administrative 34,382 24,634 Total costs and expenses 165,854 64,000 Loss from operations (139,887) (52,531)Other income (expense): Other income (expense), net 524 (27)Interest expense (4,755) (3,061)Interest income 3,046 3,440 Total other income (expense), net (1,185) 352 Loss before income taxes (141,072) (52,179)Provision for income taxes 300 — Net loss $(141,372) $(52,179)Net loss per share, basic and diluted $(2.35) $(0.92)Weighted-average common shares outstanding, basic and diluted 60,143,558 56,708,975 Other comprehensive loss: Net loss $(141,372) $(52,179)Foreign currency translation adjustment (71) 21 Unrealized gain (loss), net on marketable securities (244) 65 Comprehensive loss $(141,687) $(52,093) Rhythm Pharmaceuticals, Inc.Condensed Consolidated Balance Sheets(in thousands, except share and per share data)(Unaudited) March 31, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $53,428 $60,081 Short-term investments 147,771 215,765 Accounts receivable, net 14,695 14,867 Inventory 8,507 8,624 Prepaid expenses and other current assets 11,352 8,931 Total current assets 235,753 308,268 Property and equipment, net 1,149 1,341 Right-of-use asset 670 781 Intangible assets, net 6,815 7,028 Restricted cash 460 328 Other long-term assets 13,804 14,999 Total assets $258,651 $332,745 Liabilities and stockholders’ equity Current liabilities: Accounts payable $7,550 $4,885 Accrued expenses and other current liabilities 44,545 48,262 Deferred revenue 1,286 1,286 Lease liability 793 770 Total current liabilities 54,174 55,203 Long-term liabilities: Deferred royalty obligation 107,355 106,143 Lease liability, non-current 284 490 Derivative liability 660 1,150 Other Long Term Liabilities 34,597 — Total liabilities 197,070 162,986 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2024 and December 31, 2023 — — Common stock, $0.001 par value: 120,000,000 shares authorized; 60,964,468 and 59,426,559 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 60 59 Additional paid-in capital 1,097,810 1,064,302 Accumulated other comprehensive income (loss) (181) 134 Accumulated deficit (1,036,108) (894,736)Total stockholders’ equity 61,581 169,759 Total liabilities and stockholders’ equity $258,651 $332,745

-- Fourth quarter 2023 net revenue from global sales of IMCIVREE® (setmelanotide) of $24.2 million -- -- Enrollment completed in 120-patient, pivotal cohort of Phase 3 setmelanotide trial in hypothalamic obesity; top-line data on track for 1H2025 -- -- Announced Phase 3 development plans for setmelanotide in hypothalamic obesity in Japan -- -- Spain and Italy authorities approve reimbursement for IMCIVREE to treat patients with Bardet-Biedl syndrome – -- Acquired global rights to oral MC4R agonist LB54640 from LG Chem -- -- IND application for RM-718 accepted by the FDA – -- Management to host conference call today at 8:00 a.m. ET -- BOSTON, Feb. 22, 2024 (GLOBE NEWSWIRE) -- Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM), a global commercial-stage biopharmaceutical company focused on transforming the lives of patients and their families living with rare neuroendocrine diseases, today reported financial results and provided a business update for the fourth quarter and full year ended December 31, 2023. “2023 was a strong year for us as we delivered IMCIVREE® (setmelanotide) and provided support for patients and families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) pathway diseases in 14 countries, including the United States,” said David Meeker, M.D., Chair, President and Chief Executive Officer of Rhythm. “We began this year by meaningfully strengthening our pipeline with RM-718 ready to enter the clinic and with the acquisition of the global rights to LB54640.” He continued, “Importantly, we remain focused on developing setmelanotide to treat patients with hypothalamic obesity, for whom there are no approved therapies. We are pleased to have completed enrollment in our global Phase 3 trial in hypothalamic obesity and to have achieved alignment with Japanese authorities on an efficient path to develop setmelanotide for patients with hypothalamic obesity.” Fourth Quarter and Recent Business Highlights Corporate and Commercial Updates Today, Rhythm announced that more than 100 new prescriptions for IMCIVREE for Bardet-Biedl syndrome (BBS) were written by U.S. prescribers and that the Company has received payor approval for reimbursement for 70 prescriptions during the fourth quarter of 2023.On February 7, 2024, the Company announced the Italian Medicine Agency (AIFA) approved reimbursement for IMCIVREE) for the treatment of obesity and control of hunger associated with BBS.On January 4, 2024, Rhythm announced it entered into a global licensing agreement with LG Chem, Ltd. ("LG Chem") for LB54640, an investigational oral small molecule MC4R agonist in Phase 2 clinical trials.On January 4, 2024, the Company also announced that federal healthcare authorities in Spain approved reimbursement for IMCIVREE for the treatment of obesity and control of hunger associated with BBS or biallelic POMC, PCSK1 or LEPR deficiency. Clinical, Research and Regulatory Updates Today, Rhythm also announced that it completed enrollment in the pivotal, 120-patient cohort in its global Phase 3 trial of setmelanotide in hypothalamic obesity with patients, aged 4 years or older with hypothalamic obesity randomized 2:1 to setmelanotide therapy or placebo for a total of 60 weeks, including up to eight weeks for dose titration. As agreed to with both the United States Food and Drug Administration (FDA) and the European Medicines Agency (EMA), Rhythm’s regulatory submissions would be based on data from this cohort. The Company remains on track to obtain top-line study results in the first half of 2025.Rhythm today also announced its clinical development plan of setmelanotide for hypothalamic obesity in Japan. The Company will add a supplemental Japanese patient cohort – designed to enable registration there - to its Phase 3 trial following an agreement with Japan’s Pharmaceuticals and Medical Devices Agency (PMDA), with first patients expected to be dosed during the third quarter of 2024. Rhythm estimates that hypothalamic obesity has a prevalence of 5,000 to 8000 patients in Japan.On January 4, 2024, Rhythm announced it submitted a Type II variation application to the EMA seeking regulatory approval and authorization for setmelanotide to treat obesity and control hunger in pediatric patients between 2 and younger than 6 years old with BBS or POMC, PCSK1 or LEPR deficiency in the European Union.On January 4, 2024, Rhythm also announced that the FDA accepted the Company’s Investigational New Drug (IND) application for RM-718 for administration as a weekly therapy treatment. RM-718 is designed to be more targeted and potent than setmelanotide with the potential to not cause hyperpigmentation.On December 6, 2023, Rhythm announced new data from its 52-week, Phase 3 pediatrics trial in patients between 2 and younger than 6 years old (N=12) that showed setmelanotide achieved the primary endpoint with a 3.04 mean reduction in BMI-Z score (a measure of body mass index deviations from what is considered normal) and 18.4 percent mean reduction in BMI.On December 6, 2023, the Company also announced data from the open-label part of its exploratory Phase 2 DAYBREAK trial that demonstrated potential efficacy in patients in multiple genetically-defined cohorts. A total of 49 patients who completed Stage 1 with a response to setmelanotide were randomized into Stage 2 of the trial, a 24-week, double-blind, placebo-controlled withdrawal study. These patients were stratified into genetically defined cohorts and randomized 2:1 to receive setmelanotide or placebo. Corporate and Anticipated Upcoming Milestones Rhythm expects to achieve the following near-term milestones: Complete submission of a supplementary New Drug Application (sNDA) to the FDA seeking a label expansion to treat pediatric patients between 2 and younger than 6 years old in approved indications in the first half of 2024;Initiate Phase 1 trial of RM-718 in the first half of 2024;Announce DAYBREAK Stage 2 data in the second half of 2024;Complete enrollment in two or more substudies in the Phase 3 EMANATE trial evaluating setmelanotide in genetically caused MC4R pathway diseases in the second half of 2024; andAnnounce top-line data in the Phase 3 trial evaluating setmelanotide in hypothalamic obesity in the first half of 2025. Fourth Quarter and Full Year 2023 Financial Results: Cash Position: As of December 31, 2023, cash, cash equivalents and short-term investments were approximately $275.8 million, as compared to $333.3 million as of December 31, 2022.Revenue: Net product revenues relating to sales of IMCIVREE were $24.2 million in the fourth quarter of 2023 and $77.4 million for the year ended December 31, 2023, as compared to $8.8 million for the fourth quarter of 2022 and $16.9 million for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, 81% and 85%, respectively, of the Company’s product revenue was generated in the United States. For the fourth quarter ended December 31, 2023, 76% of net product revenue was generated in the United States. Fourth quarter product revenue was affected by a single state Medicaid program change to documentation requirements for reimbursement that resulted in some patients transitioning to the Company’s free-drug bridging program.License Revenue: The Company did not recognize license revenue in 2023, as compared to $6.8 million in 2022 entirely related to the RareStone license agreement. Rhythm entered into a license agreement with RareStone in December 2021 and completed activities required to transfer the license to RareStone during the second quarter of 2022, which resulted in the recognition of the license revenue.R&D Expenses: R&D expenses were $29.9 million in the fourth quarter of 2023 and $135.0 million for the year ended December 31, 2023, as compared to $23.5 million in the fourth quarter of 2022 and $108.6 million for the year ended December 31, 2022. The year-over-year increase was primarily due to increased costs associated with salaries, benefits and stock-based compensation related to the hiring of additional full-time employees, increases in clinical trial costs, the purchase of research and development assets from Xinvento, BV, as well as increased pre-clinical and gene sequencing costs.S,G&A Expenses: S,G&A expenses were $32.4 million in the fourth quarter of 2023 and $117.5 million for the year ended December 31, 2023, compared to $26.3 million in the fourth quarter of 2022 and $92.0 million for the year ended December 31, 2022. The year-over-year increase was primarily due to increased compensation and benefits related costs associated with additional headcount to support our expanding business operations and commercial operations, as well as increases in professional services and consulting costs. These increases were partially offset by decreased costs associated with the IMCIVREE launch for BBS in 2022 and a decrease in value-added tax expense.Other (expense) income, net: Other (expense) income, net increased by $2.2 million to $0.2 million in 2023, an increase of 112%, primarily due to higher interest income and changes in fair value of the embedded derivative liability associated with deferred royalty obligation, partially offset by an increase in non-cash interest expense related to amortization of debt discount and deferred financing fees associated with the deferred royalty obligation.Net Loss: Net loss was $41.6 million for the fourth quarter of 2023 and $184.7 million for the year ended December 31, 2023, or a net loss per basic and diluted share of ($0.70) and ($3.20), respectively, as compared to $42.5 million for the fourth quarter of 2022 and $181.1 million for the year ended December 31, 2022, or a net loss per basic and diluted share of ($0.75) and ($3.47), respectively. Financial Guidance: For the year ended December 2023, the Company had GAAP total operating expenses of $261.8 million. The Company today reported non-GAAP Operating Expenses for the year ended December 31, 2023 of $219.9 million, which is derived from GAAP total costs and expenses of $261.8 million less $9.3 million in cost of sales and less $32.6 million in stock-based compensation. For the year ending December 31, 2024, Rhythm anticipates approximately $250 million to $270 million in Non-GAAP Operating Expenses. Non-GAAP Operating Expenses are derived from: GAAP total operating expenses, inclusive of: SG&A expenses of $105 million to $110 million; andR&D expenses of $145 million to $160 million, inclusive of $10 million to $15 million of LB54640 development costs; but which excludes: Stock-based compensation, and$100 million in fixed consideration related to in-licensing of global rights to LB54640, which will be recognized in the first quarter of 2024. Non-GAAP Operating Expenses is defined as GAAP operating expenses excluding stock-based compensation and fixed consideration related to in-licensing (see below under "Non-GAAP Financial Measures" for more details). Based on its current operating plans, Rhythm expects that its existing cash, cash equivalents and short-term investments as of December 31, 2023, will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2025. Conference Call InformationRhythm Pharmaceuticals will host a live conference call and webcast at 8:00 a.m. ET today to review its fourth quarter and year end 2023 financial results and recent business activities. Participants may register for the conference call here. It is recommended that participants join the call ten minutes prior to the scheduled start. A live webcast of the call will also be available under "Events and Presentations" in the Investor Relations section of the Rhythm Pharmaceuticals website at https://ir.rhythmtx.com/. The archived webcast will be available on Rhythm Pharmaceuticals’ website approximately two hours after the conference call and will be available for 30 days following the call. About Rhythm PharmaceuticalsRhythm is a commercial-stage biopharmaceutical company committed to transforming the lives of patients and their families living with rare neuroendocrine diseases. Rhythm’s lead asset, IMCIVREE® (setmelanotide), an MC4R agonist designed to treat hyperphagia and severe obesity, is approved by the U.S. Food and Drug Administration (FDA) for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1) or leptin receptor (LEPR) deficiency confirmed by genetic testing, or patients with a clinical diagnosis of Bardet-Biedl syndrome (BBS). Both the European Commission (EC) and the UK’s Medicines & Healthcare Products Regulatory Agency (MHRA) have authorized setmelanotide for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or genetically confirmed loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 6 years of age and above. Additionally, Rhythm is advancing a broad clinical development program for setmelanotide in other rare diseases, as well as RM-718 and a preclinical suite of small molecules for the treatment of congenital hyperinsulinism. Rhythm’s headquarters is in Boston, MA. Setmelanotide IndicationIn the United States, setmelanotide is indicated for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to POMC, PCSK1 or LEPR deficiency as determined by an FDA-approved test demonstrating variants in POMC, PCSK1 or LEPR genes that are interpreted as pathogenic, likely pathogenic, or of uncertain significance (VUS) or BBS. In the European Union, setmelanotide is indicated for the treatment of obesity and the control of hunger associated with genetically confirmed Bardet-Biedl syndrome (BBS) or genetically confirmed loss-of-function biallelic proopiomelanocortin (POMC), including PCSK1, deficiency or biallelic leptin receptor (LEPR) deficiency in adults and children 6 years of age and above. Limitations of UseIn the United States and Europe, Setmelanotide should be prescribed and supervised by a physician with expertise in obesity with underlying genetic etiology. Setmelanotide is not indicated for the treatment of patients with the following conditions as setmelanotide would not be expected to be effective: Obesity due to suspected POMC, PCSK1 or LEPR deficiency with POMC, PCSK1 or LEPR variants classified as benign or likely benignOther types of obesity not related to POMC, PCSK1 or LEPR deficiency, or BBS, including obesity associated with other genetic syndromes and general (polygenic) obesity. WARNINGS AND PRECAUTIONS Skin Monitoring: Setmelanotide may lead to generalized increased skin pigmentation and darkening of pre-existing naevi because of its pharmacologic effect. Full body skin examinations should be conducted annually to monitor pre-existing and new skin pigmentary lesions before and during treatment with setmelanotide. Heart rate and blood pressure monitoring: Heart rate and blood pressure should be monitored as part of standard clinical practice at each medical visit (at least every 6 months) for patients treated with setmelanotide. Prolonged penile erection: Spontaneous penile erections have been reported in clinical trials with setmelanotide. Patients who have a penile erection lasting longer than 4 hours should be instructed to seek emergency medical attention for potential treatment of priapism. Depression: In clinical trials, depression has been reported in patients treated with setmelanotide. Patients with depression should be monitored at each medical visit during treatment with setmelanotide. Consideration should be given to discontinuing setmelanotide if patients experience suicidal thoughts or behaviors. Pediatric Population: The prescribing physician should periodically assess response to setmelanotide therapy. In growing children, the impact of weight loss on growth and maturation should be evaluated. The prescribing physician should monitor growth (height and weight) using age- and sex-appropriate growth curves. Excipients: This medicinal product contains 10 mg benzyl alcohol in each ml. Benzyl alcohol may cause allergic reactions. Patients who are pregnant or breastfeeding should be advised of the potential risk from the excipient benzyl alcohol, which might accumulate over time and cause metabolic acidosis. This medicinal product should be used with caution in patients with hepatic or renal impairment, because of the potential risk from the excipient benzyl alcohol which might accumulate over time and cause metabolic acidosis. Sodium: This medicinal product contains less than 1 mmol sodium (23 mg) per dose, that is to say essentially “sodium-free.” ADVERSE REACTIONSThe most frequent adverse reactions are hyperpigmentation (51%), injection site reaction (39%), nausea (33%), and headache (26%). USE IN SPECIFIC POPULATIONS PregnancyThere are no data from the use of setmelanotide in pregnant women. Animal studies do not indicate direct harmful effects with respect to reproductive toxicity. However, administration of setmelanotide to pregnant rabbits resulted in decreased maternal food consumption leading to embryo-fetal effects. As a precautionary measure, setmelanotide should not be started during pregnancy or while attempting to get pregnant as weight loss during pregnancy may result in fetal harm. If a patient who is taking setmelanotide has reached a stable weight and becomes pregnant, consideration should be given to maintaining setmelanotide treatment as there was no proof of teratogenicity in the nonclinical data. If a patient who is taking setmelanotide and still losing weight gets pregnant, setmelanotide should either be discontinued, or the dose reduced while monitoring for the recommended weight gain during pregnancy. The treating physician should carefully monitor weight during pregnancy in a patient taking setmelanotide. Breast-feedingIt is unknown whether setmelanotide is excreted in human milk. A nonclinical study showed that setmelanotide is excreted in the milk of nursing rats. No quantifiable setmelanotide concentrations were detected in plasma from nursing pups. A risk to the newborn/infant cannot be excluded. A decision must be made whether to discontinue breastfeeding or to discontinue/abstain from setmelanotide therapy taking into account the benefit of breastfeeding for the child and the benefit of therapy for the mother. FertilityNo human data on the effect of setmelanotide on fertility are available. Animal studies did not indicate harmful effects with respect to fertility. To report SUSPECTED ADVERSE REACTIONS, contact Rhythm Pharmaceuticals at +1 (833) 789-6337. See Summary of Product Characteristics’ APPENDIX V for a list of European national reporting systems to communicate adverse reactions. Please see the full Prescribing Information for additional Important Safety Information. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the safety, efficacy, and regulatory and clinical design or progress, potential regulatory submissions, approvals and timing thereof of setmelanotide and LB54640, including our Phase 3 trial of setmelanotide for patients with hypothalamic obesity in Japan, the United States or in Europe, the potential benefits of setmelanotide for patients with hypothalamic obesity, our expectations surrounding potential regulatory submissions, approvals and timing thereof, including the IND application for RM-718, the Company’s business strategy and plans, including regarding commercialization of setmelanotide, expectations surrounding sales and reimbursement of IMCIVREE, our anticipated financial performance and financial position, including estimated Non-GAAP Operating Expenses for the year ending December 31, 2024, the sufficiency of our cash, cash equivalents and short-term investments to fund our operations. Statements using words such as “expect”, “anticipate”, “believe”, “may”, “will”, “aim” and similar terms are also forward-looking statements. Such statements are subject to numerous risks and uncertainties, including, but not limited to, our ability to enroll patients in clinical trials, the design and outcome of clinical trials, the ability to achieve necessary regulatory approvals, risks associated with data analysis and reporting, failure to identify and develop additional product candidates, unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, risks associated with the laws and regulations governing our international operations and the costs of any related compliance programs, the impact of competition, risks relating to product liability lawsuits, inability to maintain collaborations, or the failure of these collaborations, our reliance on third parties, risks relating to intellectual property, our ability to hire and retain necessary personnel, general economic conditions, risks related to internal control over financial reporting, and the other important factors discussed under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and our other filings with the Securities and Exchange Commission. Except as required by law, we undertake no obligations to make any revisions to the forward-looking statements contained in this press release or to update them to reflect events or circumstances occurring after the date of this press release, whether as a result of new information, future developments or otherwise. Non-GAAP Financial MeasuresThis press release includes Non-GAAP Operating Expenses, a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP and should not be considered as an alternative to operating expenses or any other performance measure derived in accordance with GAAP. We define Non-GAAP Operating Expenses as GAAP operating expenses excluding stock-based compensation and fixed consideration related to in-licensing. We caution investors that amounts presented in accordance with our definition of Non-GAAP Operating Expenses may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate this non-GAAP financial measure in the same manner. We present this non-GAAP financial measure because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Management uses this non-GAAP financial measure for planning purposes, including the preparation of our internal annual operating budget and financial projections; to evaluate the performance and effectiveness of our operational strategies; and to evaluate our capacity to expand our business. This non-GAAP financial measure has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for operating expenses or other financial statement data presented in accordance with GAAP in our consolidated financial statements. Rhythm has not provided a quantitative reconciliation of forecasted Non-GAAP Operating Expenses to forecasted GAAP operating expenses because the Company is unable, without making unreasonable efforts, to calculate the reconciling items, stock-based compensation expenses and fixed consideration related to in-licensing, with confidence. These items, which could materially affect the computation of forward-looking GAAP operating expenses, are inherently uncertain and depends on various factors, some of which are outside of Rhythm's control. Corporate Contact:David ConnollyExecutive Director, Investor Relations and Corporate CommunicationsRhythm Pharmaceuticals, Inc.857-264-4280dconnolly@rhythmtx.com Media Contact:Adam DaleyBerry & Company Public Relations212-253-8881adaley@berrypr.com Rhythm Pharmaceuticals, Inc.Condensed Consolidated Statements of Operations(in thousands, except share and per share data)(Unaudited) Three months ended December 31,Twelve months ended December 31, 2023 2022 2023 2022 Revenues: Product revenue, net$24,234 $8,790 $77,428 $16,884 License revenue -- - - 6,754 Costs and expenses: Cost of sales 3,233 1,028 9,302 2,133 Research and development 29,892 23,548 134,951 108,630 Selling, general, and administrative 32,374 26,318 117,532 92,032 Total Costs and expenses 65,499 50,894 261,785 202,795 Loss from operations (41,265) (42,104) (184,357) (179,157)Other income (expense): Other income (expense), net 39 (420) 190 (790)Interest expense (4,018) (3,010) (13,892) (5,201)Interest income 3,819 3,040 13,945 4,029 Total other income (expense): (160) (390) 243 (1,962)Net loss before taxes (41,425) (42,494) (184,114) (181,119)Provision for taxes 196 564 -- Net loss$(41,621) $(42,494) $(184,678) $(181,119)Net loss per share, basic and diluted$(0.70) $(0.75) $(3.20) $(3.47)Weighted-average common shares outstanding, basic and diluted 59,211,199 56,299,525 57,673,128 52,120,701 RHYTHM PHARMACEUTICALS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)Unaudited December 31, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $60,081 $127,677 Short-term investments 215,765 205,611 Accounts receivable, net 14,867 6,224 Inventory 8,624 2,917 Prepaid expenses and other current assets 8,931 11,807 Total current assets 308,268 354,236 Property and equipment, net 1,341 2,197 Right-of-use asset 781 1,182 Intangible assets, net 7,028 7,883 Restricted cash 328 328 Other long-term assets 14,999 16,655 Total assets $332,745 $382,481 Liabilities and stockholders’ equity Current liabilities: Accounts payable $4,885 $4,797 Accrued expenses and other current liabilities 48,262 32,894 Deferred revenue 1,286 1,434 Lease liability 770 684 Total current liabilities 55,203 39,809 Long-term liabilities: Other long-term liabilities 106,143 75,810 Lease liability 490 1,260 Derivative liability 1,150 1,340 Total liabilities 162,986 118,219 Stockholders’ equity: Preferred Stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at December 31, 2023 and December 31, 2022 — — Common stock, $0.001 par value: 120,000,000 shares authorized; 59,426,559 and 56,612,429 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 59 56 Additional paid-in capital 1,064,302 974,356 Accumulated other comprehensive loss 134 (92)Accumulated deficit (894,736) (710,058)Total stockholders’ equity 169,759 264,262 Total liabilities and stockholders’ equity $332,745 $382,481

-- Second quarter 2023 net revenue of $19.2 million from global sales of IMCIVREE® (setmelanotide) -- -- Strong U.S. commercial progress continues with more than 125 new prescriptions for Bardet-Biedl syndrome (BBS) in 2Q 2023, more than 425 since FDA approval -- -- Achieved commercial sales milestone and now eligible to receive third investment tranche of $25 million from Healthcare Royalty Partners -- -- Announced plans to submit an investigational new drug application for RM-718, a new, weekly, MC4R-specific agonist, by end of 2023 -- -- Enrollment ongoing in pivotal Phase 3 trial evaluating setmelanotide in hypothalamic obesity; based on rapid progress, study now expected to be fully enrolled by the end of 2023 -- -- Management to host conference call today at 8:00 a.m. ET -- BOSTON, Aug. 01, 2023 (GLOBE NEWSWIRE) -- Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM), a global commercial-stage biopharmaceutical company focused on transforming the lives of patients and their families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) pathway diseases, today reported financial results and provided a business update for the second quarter ended June 30, 2023. “The first half of 2023 was marked by strong execution across global commercial and clinical development programs. Our strong revenue performance was supported by robust patient demand for IMCIVREE® (setmelanotide) in the U.S. with more than 125 Bardet-Biedl syndrome (BBS) prescriptions written in the second quarter of 2023. Globally, we have expanded our footprint with IMCIVREE to include Canada and in Gulf Cooperation Council (GCC) countries,” said David Meeker, M.D., Chair, President and Chief Executive Officer of Rhythm. “And in July, we achieved the specified sales milestone under our Revenue Interest Financing Agreement (RIFA) with Healthcare Royalty Partners, making us eligible to receive an additional investment of $25 million in non-dilutive capital.” “Based on rapid progress and substantial patient and physician interest in our ongoing pivotal Phase 3 clinical trial of setmelanotide in hypothalamic obesity, we now expect to complete enrollment by the end of 2023. Finally, we look forward to providing additional details on our pre-clinical development programs later this year, including RM-718, a new weekly, MC4R-specific agonist designed not to cause hyperpigmentation. This program is on track for an IND submission by the end of this year.” Second Quarter and Recent Business Highlights Commercial Updates Today, Rhythm announced that more than 125 new prescriptions for IMCIVREE for BBS have been written in the second quarter of 2023 and more than 425 in the United States since U.S. Food and Drug Administration (FDA) approval on June 16, 2022 through June 30, 2023. More than 250 physicians have written prescriptions since launch, and the Company has received payor approval for reimbursement for more than 250 of those prescriptions, as of June 30, 2023.Today, Rhythm announced that IMCIVREE is now commercially available in Canada following the May 5, 2023 approval by Health Canada of IMCIVREE for weight management in adult and pediatric patients 6 years of age and older with obesity due to BBS or genetically-confirmed biallelic pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency due to variants interpreted as pathogenic, likely pathogenic or of uncertain significance.In May 2023, Rhythm announced a collaboration with Genpharm Services FZ LLC (Genpharm) to commercialize IMCIVREE in GCC countries, including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain. Under the terms of this exclusive agreement, Genpharm will distribute IMCIVREE to patients in GCC countries for the treatment of hyperphagia and obesity due to BBS or genetically-confirmed biallelic POMC, PCSK1 or LEPR deficiency. Providers in the region now have the ability to prescribe IMCIVREE to qualifying patients. Clinical Development Updates Today, Rhythm provided an update on progress of its pivotal, Phase 3 clinical trial evaluating setmelanotide in patients with acquired hypothalamic obesity. Based on the initial pace of patient screening and site activations, Rhythm now expects to complete enrollment in the fourth quarter of 2023. This Phase 3 trial is designed to enroll 120 patients aged 4 years or older randomized 2:1 to setmelanotide therapy or placebo for a total of 60 weeks, including up to eight weeks for dose titration.Today, Rhythm announced that it anticipates submitting an investigational new drug application for RM-718, a new, weekly, MC4R-specific agonist, by the end of 2023. RM-718 is designed to be more targeted and potent than setmelanotide, and designed to be MC1R sparing, with the potential to not cause hyperpigmentation. This new product candidate is being developed as an injection administered through an autoinjector, for which Rhythm has patent protection into 2041, including patent term adjustment and patent term extension.On July 19, the Company announced two new publications detailing the burden of hyperphagia and obesity for adult caregivers, families and patients living with BBS based on results of The CAREgiver Burden in BBS (CARE-BBS) study were published in the peer-reviewed journal, The Orphanet Journal of Rare Diseases.In June 2023 at the Endocrine Society Annual Meeting & Expo (ENDO), Rhythm and its collaborators presented new data from the long-term extension portion of Rhythm’s Phase 2 trial evaluating setmelanotide in patients with hypothalamic obesity. The data showed sustained and deepening reductions in weight and body mass index (BMI) in patients receiving at least six months of setmelanotide therapy. As of a data cutoff of November 30, 2022, 13 patients who had reached the 6-month point had achieved a 21.0 mean percent reduction in BMI from baseline, which progressed from a 16.8 mean percent reduction at week 16 across these 13 patients. Corporate Today, Rhythm announced that in July 2023 it achieved a commercial sales milestone under the RIFA with HealthCare Royalty Partners entered into in June 2022. In connection with the achievement of the milestone, Rhythm became eligible for a final investment tranche of $25.0 million from HealthCare Royalty Partners. Rhythm previously received two tranches totaling $75.0 million under the RIFA. Anticipated Upcoming Milestones Rhythm expects to achieve the following near-term milestones: Present data analysis from the Phase 2 and long-term extension trials in hypothalamic obesity at a medical conference in the fall of 2023;Announce preliminary data from the open-label part of the Phase 2 DAYBREAK trial from one or more genetically-defined cohorts in the second half of 2023;Announce topline data from the ongoing Phase 3, open-label pediatrics trial evaluating one year of setmelanotide therapy in patients with MC4R pathway deficiencies between the ages of 2 and 6 years old in the second half of 2023;Provide pharmacokinetic and tolerability data from the ongoing Phase 3 switch trial evaluating a weekly formulation of setmelanotide in the second half of 2023;Complete patient enrollment in the pivotal Phase 3 clinical trial in hypothalamic obesity in the fourth quarter of 2023;Provide an update on pre-clinical development programs, including RM-718 and the Company’s congenital hyperinsulinism (CHI) program, in the fourth quarter of 2023; andInitiate a Phase 3, randomized, double-blind trial in patients naïve to setmelanotide therapy (“de novo study”) to evaluate the weekly formulation of setmelanotide in patients with BBS in 2024. Second Quarter 2023 Financial Results: Cash Position: As of June 30, 2023, cash, cash equivalents and short-term investments were approximately $253.6 million, as compared to $333.3 million as of December 31, 2022. The June 30, 2023 cash position does not include the anticipated commercial sales milestone payment from HealthCare Royalty Partners of $24.4 million of proceeds, net of debt issuance costs.Revenue: Net product revenues relating to global sales of IMCIVREE were $19.2 million for the second quarter of 2023, as compared to $2.3 million for the second quarter of 2022. For the second quarter ended June 30, 2023, 86% of the Company’s product revenue was generated in the United States.License Revenue: The Company did not record license revenue relating to out-license arrangements in the second quarter of 2023, following the termination of its agreement with RareStone Group Ltd. (RareStone) in October 2022. License revenue relating to the Company’s out-license arrangement with RareStone was $6.8 million for the second quarter of 2022.R&D Expenses: R&D expenses were $33.5 million in the second quarter of 2023, as compared to $31.5 million in the second quarter of 2022. The year-over-year increase was primarily due to increased costs associated with certain clinical trials and pre-clinical studies and increased headcount. This was partially offset by decreased costs associated with certain trials and manufacturing of clinical material.S,G&A Expenses: S,G&A expenses were $30.0 million for the second quarter of 2023, as compared to $22.3 million for the second quarter of 2022. The year-over-year increase was primarily due to increased headcount in the United States and internationally, professional services and other expenses. This increase was partially offset by decreased marketing activities associated with the U.S. BBS launch.Other income (expense), net. Other income (expense), net decreased by $0.2 million from the second quarter of 2022 to the second quarter of 2023, primarily due to $3.3 million of interest expense related to the RIFA with HealthCare Royalty and a $0.1 million fair market value adjustment related to the RIFA embedded derivative, offset by interest income of $3.3 million earned on our short-term investments.Net Loss: Net loss was ($46.7) million for the second quarter of 2023, or a net loss per basic and diluted share of ($0.82), as compared to a net loss of ($45.0) million for the second quarter of 2022, or a net loss per basic and diluted share of ($0.89). Year to Date 2023 Financial Results: Revenue: Net product revenues relating to sales of IMCIVREE were $30.7 million for the six months ended June 30, 2023, as compared to $3.8 million for the six months ended June 30, 2022. License Revenue: The Company did not report license revenue relating to out-license arrangements in the six months ended June 30, 2023, following the termination of its agreement with RareStone in October 2022. License revenue relating to the Company’s out-license arrangement with RareStone was $6.8 million for the six months ended June 30, 2022.R&D Expenses: R&D expenses were $71.5 million for the six months ended June 30, 2023, as compared to $64.0 million for the six months ended June 30, 2022. This increase was primarily due to the acquisition of Xinvento B.V. and increased costs associated with headcount, certain clinical trials, pre-clinical studies and gene sequencing and was partially offset by decreased costs associated with manufacturing of clinical material, certain clinical trials and a development milestone payment associated with the weekly formulation paid to Camurus AB in 2022.S,G&A Expenses: S,G&A expenses were $54.7 million for the six months ended June 30, 2023, as compared to $43.8 million for the six months ended June 30, 2022. The increase was primarily due to increased headcount to support business and commercial operations in the United Sates and internationally, professional services and other expenses and was partially offset by decreased marketing activities associated with the BBS U.S. launch.Other income (expense), net: Other (income)/ expense, net increased by $0.2 million to $0.2 million for the six months ended June 30, 2023. Total other (income)/ expense, net for the six months ended June 30, 2023 consists of interest income of $6.7 million primarily due to higher interest rates, partially offset by $6.4 million of interest expense related to our RIFA with HealthCare Royalty. The fair market value adjustment related to our RIFA embedded derivative for the six months ended June 30, 2023 was de minimis.Net Loss: Net loss was ($98.9) million for the six months ended June 30, 2023, or a net loss per basic and diluted share of $(1.74), as compared to a net loss of ($97.8) million for the six months ended June 30, 2022, or a net loss per basic and diluted share of ($1.94). Financial Guidance: For the year ending December 31, 2023, Rhythm continues to anticipate approximately $200 million to $220 million in Non-GAAP Operating Expenses (see below under "Non-GAAP Financial Measures" for more details), comprised of $120 million to $130 million from R&D expenses and $80 million to $90 million from S,G&A expenses. Based on its current operating plans, Rhythm expects that its existing cash, cash equivalents and short-term investments as of June 30, 2023, together with the anticipated $25 million milestone payment based on commercial sales from Healthcare Royalty Partners, will be sufficient to fund its operating expenses and capital expenditure requirements into 2025. Conference Call InformationRhythm Pharmaceuticals will host a live conference call and webcast at 8:00 a.m. ET today to review its second quarter 2023 financial results and recent business activities. Participants may register for the conference call here. It is recommended that participants join the call ten minutes prior to the scheduled start. A live webcast of the call will also be available under "Events and Presentations" in the Investor Relations section of the Rhythm Pharmaceuticals website at https://ir.rhythmtx.com/. The archived webcast will be available on Rhythm Pharmaceuticals’ website approximately two hours after the conference call and will be available for 30 days following the call. About Rhythm PharmaceuticalsRhythm is a commercial-stage biopharmaceutical company committed to transforming the lives of patients and their families living with hyperphagia and severe obesity caused by rare melanocortin-4 receptor (MC4R) diseases. Rhythm’s lead asset, IMCIVREE (setmelanotide), an MC4R agonist designed to treat hyperphagia and severe obesity caused by rare MC4R pathway diseases, is approved by the U.S. Food and Drug Administration (FDA) for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1) or leptin receptor (LEPR) deficiency confirmed by genetic testing, or patients with a clinical diagnosis of Bardet-Biedl syndrome (BBS). Both the European Commission (EC) and the UK’s Medicines & Healthcare Products Regulatory Agency (MHRA) have authorized setmelanotide for the treatment of obesity and the control of hunger associated with genetically confirmed BBS or genetically confirmed loss-of-function biallelic POMC, including PCSK1, deficiency or biallelic LEPR deficiency in adults and children 6 years of age and above. Additionally, Rhythm is advancing a broad clinical development program for setmelanotide in other rare MC4R pathway diseases, as well as a preclinical suite of small molecules for the treatment of congenital hyperinsulinism. Rhythm’s headquarters is in Boston, MA. Setmelanotide IndicationIn the United States, setmelanotide is indicated for chronic weight management in adult and pediatric patients 6 years of age and older with monogenic or syndromic obesity due to POMC, PCSK1 or LEPR deficiency as determined by an FDA-approved test demonstrating variants in POMC, PCSK1 or LEPR genes that are interpreted as pathogenic, likely pathogenic, or of uncertain significance (VUS) or BBS. In the European Union, setmelanotide is indicated for the treatment of obesity and the control of hunger associated with genetically confirmed Bardet-Biedl syndrome (BBS) or genetically confirmed loss-of-function biallelic proopiomelanocortin (POMC), including PCSK1, deficiency or biallelic leptin receptor (LEPR) deficiency in adults and children 6 years of age and above. Limitations of UseIn the United States and Europe, Setmelanotide should be prescribed and supervised by a physician with expertise in obesity with underlying genetic etiology. Setmelanotide is not indicated for the treatment of patients with the following conditions as setmelanotide would not be expected to be effective: Obesity due to suspected POMC, PCSK1 or LEPR deficiency with POMC, PCSK1 or LEPR variants classified as benign or likely benignOther types of obesity not related to POMC, PCSK1 or LEPR deficiency, or BBS, including obesity associated with other genetic syndromes and general (polygenic) obesity. WARNINGS AND PRECAUTIONS Skin Monitoring: Setmelanotide may lead to generalized increased skin pigmentation and darkening of pre-existing naevi because of its pharmacologic effect. Full body skin examinations should be conducted annually to monitor pre-existing and new skin pigmentary lesions before and during treatment with setmelanotide. Heart rate and blood pressure monitoring: Heart rate and blood pressure should be monitored as part of standard clinical practice at each medical visit (at least every 6 months) for patients treated with setmelanotide. Prolonged penile erection: Spontaneous penile erections have been reported in clinical trials with setmelanotide. Patients who have a penile erection lasting longer than 4 hours should be instructed to seek emergency medical attention for potential treatment of priapism. Depression: In clinical trials, depression has been reported in patients treated with setmelanotide. Patients with depression should be monitored at each medical visit during treatment with setmelanotide. Consideration should be given to discontinuing setmelanotide if patients experience suicidal thoughts or behaviors. Pediatric Population: The prescribing physician should periodically assess response to setmelanotide therapy. In growing children, the impact of weight loss on growth and maturation should be evaluated. The prescribing physician should monitor growth (height and weight) using age- and sex-appropriate growth curves. Excipients: This medicinal product contains 10 mg benzyl alcohol in each ml. Benzyl alcohol may cause allergic reactions. Patients who are pregnant or breastfeeding should be advised of the potential risk from the excipient benzyl alcohol, which might accumulate over time and cause metabolic acidosis. This medicinal product should be used with caution in patients with hepatic or renal impairment, because of the potential risk from the excipient benzyl alcohol which might accumulate over time and cause metabolic acidosis. Sodium: This medicinal product contains less than 1 mmol sodium (23 mg) per dose, that is to say essentially “sodium-free.” ADVERSE REACTIONSThe most frequent adverse reactions are hyperpigmentation (51%), injection site reaction (39%), nausea (33%), and headache (26%). USE IN SPECIFIC POPULATIONS PregnancyThere are no data from the use of setmelanotide in pregnant women. Animal studies do not indicate direct harmful effects with respect to reproductive toxicity. However, administration of setmelanotide to pregnant rabbits resulted in decreased maternal food consumption leading to embryo-fetal effects. As a precautionary measure, setmelanotide should not be started during pregnancy or while attempting to get pregnant as weight loss during pregnancy may result in fetal harm. If a patient who is taking setmelanotide has reached a stable weight and becomes pregnant, consideration should be given to maintaining setmelanotide treatment as there was no proof of teratogenicity in the nonclinical data. If a patient who is taking setmelanotide and still losing weight gets pregnant, setmelanotide should either be discontinued, or the dose reduced while monitoring for the recommended weight gain during pregnancy. The treating physician should carefully monitor weight during pregnancy in a patient taking setmelanotide. Breast-feedingIt is unknown whether setmelanotide is excreted in human milk. A nonclinical study showed that setmelanotide is excreted in the milk of nursing rats. No quantifiable setmelanotide concentrations were detected in plasma from nursing pups. A risk to the newborn/infant cannot be excluded. A decision must be made whether to discontinue breastfeeding or to discontinue/abstain from setmelanotide therapy taking into account the benefit of breastfeeding for the child and the benefit of therapy for the mother. FertilityNo human data on the effect of setmelanotide on fertility are available. Animal studies did not indicate harmful effects with respect to fertility. To report SUSPECTED ADVERSE REACTIONS, contact Rhythm Pharmaceuticals at +1 (833) 789-6337. See Summary of Product Characteristics’ APPENDIX V for a list of European national reporting systems to communicate adverse reactions. Please see the full Prescribing Information for additional Important Safety Information. Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the potential, safety, efficacy, and regulatory and clinical progress of setmelanotide, including the anticipated timing for initiation of clinical trials and release of clinical trial data, our expectations surrounding potential regulatory submissions, approvals and timing thereof, our business strategy and plans, including regarding commercialization of setmelanotide in certain international regions, expectations surrounding sales and reimbursement of IMCIVREE, the potential financial impact, growth prospects and benefits of our acquisition of Xinvento B.V., expectations surrounding lead development candidate selection for the treatment of CHI and related timing, our anticipated financial performance and financial position, including estimated Non-GAAP Operating Expenses for the year ending December 31, 2023, the sufficiency of our cash, cash equivalents and short-term investments to fund our operations and the anticipated commercial sales milestone payment from Healthcare Royalty Partners, and our participation in upcoming events and presentations. Statements using word such as “expect”, “anticipate”, “believe”, “may”, “will”, "aim" and similar terms are also forward-looking statements. Such statements are subject to numerous risks and uncertainties, including, but not limited to, risks relating to our liquidity and expenses, our ability to enroll patients in clinical trials, the design and outcome of clinical trials, the ability to achieve necessary regulatory approvals, risks associated with data analysis and reporting, failure to identify and develop additional product candidates, unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, risks associated with the laws and regulations governing our international operations and the costs of any related compliance programs, the impact of competition, risks relating to product liability lawsuits, inability to maintain our collaborations, or the failure of these collaborations, our reliance on third parties, risks relating to intellectual property, our ability to hire and retain necessary personnel, the impact of the COVID-19 pandemic and general economic conditions on our business and operations, including our preclinical studies, clinical trials and commercialization prospects, failure to realize the anticipated benefits of our acquisition of Xinvento B.V. or significant integration difficulties related to the acquisition, and the other important factors discussed under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and our other filings with the Securities and Exchange Commission. Except as required by law, we undertake no obligations to make any revisions to the forward-looking statements contained in this release or to update them to reflect events or circumstances occurring after the date of this release, whether as a result of new information, future developments or otherwise. Non-GAAP Financial MeasuresThis press release includes Non-GAAP Operating Expenses, a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP and should not be considered as an alternative to operating expenses or any other performance measure derived in accordance with GAAP. We define Non-GAAP Operating Expenses as GAAP operating expenses excluding stock-based compensation. We caution investors that amounts presented in accordance with our definition of Non-GAAP Operating Expenses may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate this non-GAAP financial measure in the same manner. We present this non-GAAP financial measure because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Management uses this non-GAAP financial measure for planning purposes, including the preparation of our internal annual operating budget and financial projections; to evaluate the performance and effectiveness of our operational strategies; and to evaluate our capacity to expand our business. This non-GAAP financial measure has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for operating expenses or other financial statement data presented in accordance with GAAP in our consolidated financial statements. Rhythm has not provided a quantitative reconciliation of forecasted Non-GAAP Operating Expenses to forecasted GAAP operating expenses because the Company is unable, without making unreasonable efforts, to calculate the reconciling item, stock-based compensation expenses, with confidence. This item, which could materially affect the computation of forward-looking GAAP operating expenses, is inherently uncertain and depends on various factors, some of which are outside of Rhythm's control. Corporate Contact:David ConnollyExecutive Director, Investor Relations and Corporate CommunicationsRhythm Pharmaceuticals, Inc.857-264-4280dconnolly@rhythmtx.com Media Contact:Adam DaleyBerry & Company Public Relations212-253-8881adaley@berrypr.com Rhythm Pharmaceuticals, Inc.Condensed Consolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share data)(Unaudited) Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Revenues: Product revenue, net$19,221 $2,312 $30,691 $3,810 License revenue — 6,754 — 6,754 Total revenues 19,221 9,066 30,691 10,564 Costs and expenses: Cost of sales 2,236 378 3,657 608 Research and development 33,543 31,456 71,487 63,966 Selling, general, and administrative 30,046 22,328 54,674 43,777 Total costs and expenses 65,825 54,162 129,818 108,351 Loss from operations (46,604) (45,096) (99,127) (97,787)Other income (expense): Other income, net (17) (133) 34 (366)Interest expense (3,303) (46) (6,449) (46)Interest income 3,221 274 6,660 434 Total other (expense) income, net (99) 95 245 22 Net loss$(46,703) $(45,001) $(98,882) $(97,765)Net loss per share, basic and diluted$(0.82) $(0.89) $(1.74) $(1.94)Weighted-average common shares outstanding, basic and diluted 56,867,662 50,398,003 56,788,757 50,362,512 Other comprehensive loss: Net loss$(46,703) $(45,001) $(98,882) $(97,765)Foreign currency translation adjustment (48) — (27) — Unrealized gain (loss), net on short-term investments 40 (277) 105 (905)Comprehensive loss$(46,711) $(45,278) $(98,804) $(98,670) Condensed Consolidated Balance Sheets(in thousands, except share and per share data)(Unaudited) June 30, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents$115,684 $127,677 Short-term investments 137,918 205,611 Accounts receivable, net 13,831 6,224 Inventory 6,178 2,917 Prepaid expenses and other current assets 10,267 11,807 Total current assets 283,878 354,236 Property and equipment, net 1,773 2,197 Right-of-use asset 990 1,182 Intangible assets, net 7,456 7,883 Restricted cash 328 328 Other long-term assets 15,518 16,655 Total assets$309,943 $382,481 Liabilities and stockholders’ equity Current liabilities: Accounts payable$8,383 $4,797 Accrued expenses and other current liabilities 35,708 32,894 Deferred revenue 1,286 1,434 Lease liability 726 684 Total current liabilities 46,103 39,809 Long-term liabilities: Deferred royalty obligation 79,347 75,810 Lease liability 888 1,260 Derivative liability 1,320 1,340 Total liabilities 127,658 118,219 Stockholders’ equity: Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 and December 31, 2022 — — Common stock, $0.001 par value: 120,000,000 shares authorized; 56,896,068 and 56,612,429 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively 57 56 Additional paid-in capital 991,182 974,356 Accumulated other comprehensive loss (14) (92)Accumulated deficit (808,940) (710,058)Total stockholders’ equity 182,285 264,262 Total liabilities and stockholders’ equity$309,943 $382,481