You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and related
notes appearing elsewhere in this Annual Report. In addition to historical
information, this discussion and analysis contains forward-looking statements
that involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as
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a result of certain factors. We discuss factors that we believe could cause or
contribute to these differences below and elsewhere in this report, including
those set forth under Item 1A. "Risk Factors" and under "Cautionary Note
Regarding Forward-Looking Statements" in this Annual Report.
In this Item 7, we discuss the results of operations for the years ended
December 31, 2022 and 2021 and comparisons of the year ended December 31, 2022
to the year ended December 31, 2021. Discussion and analysis of our 2020 fiscal
year specifically, as well as the year-over-year comparison of our 2021
financial performance to 2020, are located in Part II, Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed
with the SEC on March 1, 2022.

Przegląd

We are a global, commercial-stage biopharmaceutical company dedicated to
transforming the lives of patients and their families living with rare diseases.
We are focused on advancing our lead asset, IMCIVREE® (setmelanotide), as a
precision medicine designed to treat hyperphagia and severe obesity caused by
rare melanocortin-4 receptor (MC4R) pathway diseases. While obesity affects
hundreds of millions of people worldwide, we are advancing IMCIVREE®
(setmelanotide) for a subset of individuals who have hyperphagia, a pathological
hunger, and severe obesity due to an impaired MC4R pathway, which may be caused
by traumatic injury or genetic variants. The MC4R pathway is an endocrine
pathway in the brain that is responsible for regulating hunger, caloric intake
and energy expenditure, which consequently affect body weight. IMCIVREE, an MC4R
agonist for which we hold worldwide rights, is the first-ever therapy developed
for patients with certain ultra-rare diseases that is approved or authorized in
the United States, European Union (EU) and Great Britain. IMCIVREE 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: (i) proopiomelanocortin (POMC), proprotein convertase
subtilisin/kexin type 1 (PCSK1) or leptin receptor (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 (ii) Bardet-Biedl syndrome (BBS). The European
Commission (EC) and Great Britain's Medicines & Healthcare Products Regulatory
Agency (MHRA) have authorized IMCIVREE 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. In
addition to the United States, we have achieved market access for IMCIVREE for
BBS or POMC and LEPR deficiencies, or both, in eight countries outside the
United States, and we continue to collaborate with authorities to achieve access
in additional markets.
In addition to initial commercial efforts, we are advancing what we believe is
the most comprehensive clinical research program ever initiated in MC4R pathway
diseases, with multiple ongoing and planned Phase 2 and Phase 3 clinical trials
evaluating setmelanotide. We are developing IMCIVREE to address additional
patients with acquired hypothalamic obesity and additional MC4R pathway diseases
caused by genetic variants in an effort to expand the approved indications and
to bring this potential therapy to approximately 53,000 estimated patients in
the United States and a similarly-sized patient population in Europe. Following
a Phase 2 trial in which 16 of 18 patients with hypothalamic obesity achieved
the primary endpoint with a body mass index (BMI) decrease greater than 5
percent on setmelanotide therapy, and in which we observed a 14.5 mean percent
reduction in BMI across all patients, we initiated a Phase 3 trial in early
2023. The ongoing pivotal Phase 3 EMANATE trial and Phase 2 DAYBREAK trial are
designed to evaluate setmelanotide in several distinct, genetically defined MC4R
pathway diseases. We also are conducting a Phase 3 pediatrics trial evaluating
daily setmelanotide in patients between the ages of 2 and 6 and a Phase 3 switch
trial evaluating a weekly formulation of setmelanotide.
We are leveraging what we believe is the largest known DNA database focused on
obesity - with approximately 60,000 sequencing samples as of December 31, 2022 -
to improve the understanding, diagnosis and care of people living with severe
obesity due to certain variants in genes associated with the MC4R pathway. Our
sequencing-based epidemiology estimates show that each of these
genetically-defined MC4R pathway deficiencies number in the rare or ultra-rare
category, according to established definitions of rare disease patient
populations. Our epidemiology estimates are approximately 4,600 to 7,500 for
U.S. patients in initial indications, including obesity due to biallelic POMC,
PCSK1 or LEPR deficiencies, and BBS. Epidemiology estimates based on our
analysis of the literature for patients with hypothalamic obesity is between
5,000 and 10,000 in the United States, and our epidemiology estimates for the
indications
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being studied in our Phase 3 EMANATE trial suggest that approximately 53,000
U.S. patients with one of these genetically driven obesities have the potential
to respond to setmelanotide. These patients face similar challenges as other
patients with rare diseases, namely lack of awareness, resources, tests, tools
and especially therapeutic options.
We are working to expand access to IMCIVREE globally. Our disease awareness and
patient finding efforts are aligned with a singular focus on building a
community of caregivers and health care providers focused on transforming the
treatment of these diseases. We have multiple teams in the field in the United
States and Europe engaging with physicians who treat patients with severe
obesity. We continue to bring together health care providers, patients and
families with educational and awareness events. Our sequencing efforts, now
primarily focused on our Uncovering Rare Obesity™ (URO) sponsored genetic
testing program, fuel MC4R pathway research, disease education and awareness and
patient finding.
On February 27, 2023, we completed the acquisition of Xinvento B.V. (Xinvento),
a Netherlands-based biotech company focused on developing therapies for
congenital hyperinsulinism (CHI). At closing, Rhythm BV, pursuant to a Share
Purchase Agreement, or the Purchase Agreement, with Xinvento, acquired all of
the issued and outstanding shares of Xinvento for aggregate consideration of $5
million, as adjusted pursuant to the terms of the Purchase Agreement and subject
to the distribution and payment terms set forth therein. In addition, the
Purchase Agreement provides for the payment of additional consideration totaling
up to $206.0 million upon achievement of certain development, regulatory and
commercial milestones by Xinvento. CHI is a rare genetic disease in which cells
secrete excess insulin, causing hypoglycemia, which can result in serious health
outcomes including seizures, coma, permanent brain damage and death. We plan to
expand our pipeline into CHI, a rare disease that is well aligned with our
corporate strategy and our focus on rare endocrinology indications. We aim to
develop treatment options for these individuals and expect to initiate clinical
development of a new therapeutic candidate in 2024. For more information about
the acquisition of Xinvento, see Part II, Item 9B. "Other Information."
On September 19, 2022, the Company completed a public offering of
4,800,000 shares of common stock at a price to the public of $26.00 per share.
The Company received $116.9 million in net proceeds after deducting underwriting
discounts, commissions and offering expenses. In addition, the Company granted
the underwriters a 30-day option to purchase up to an additional 720,000 shares
of its common stock at the price to the public, less underwriting discounts and
commissions. On October 18, 2022, the Company completed the sale of an
additional 580,000 shares of common stock at a price to the public of $26.00 per
share pursuant to the partial exercise of the underwriters' option to purchase
additional shares, for aggregate net proceeds of approximately $14.2 million,
after deducting underwriting discounts, commissions and offering expenses.
On June 16, 2022, we announced a non-dilutive revenue interest financing
agreement, or RIFA, with HealthCare Royalty Partners, LLC, or HealthCare
Royalty, for a total investment amount of up to $100 million. In exchange for
the total investment amount to be received by Rhythm, HealthCare Royalty will
receive a tiered royalty based on global net product sales generated by
IMCIVREE. For additional information, see Note 10, "Long-term Obligations" to
the consolidated financial statements included elsewhere in this Annual Report.
Our operations to date have been limited primarily to conducting
research and development activities for setmelanotide. To date, we have not
generated sufficient cash flow from product sales and have financed our
operations primarily through the proceeds received from the sales of common and
preferred stock, royalty interest financing, asset sales, as well as capital
contributions from the former parent company, Rhythm Holdings LLC. From August
2015 through August 2017, we raised aggregate net proceeds of $80.8 million
through our issuance of series A preferred stock.  Since our initial public
offering, or IPO, on October 10, 2017 and our underwritten follow-on offerings
through October 2022, we have raised aggregate net proceeds of approximately
$742.5 million through the issuance of our common stock after deducting
underwriting discounts, commissions and offering related transaction costs. We
also received $100.0 million from the sale of our Rare Pediatric Disease
Priority Review Voucher, or PRV, to Alexion Pharmaceuticals, Inc. in February
2021.  In June 2022, we entered into the RIFA with entities managed by
HealthCare Royalty Partners and received cumulative proceeds of $73.2 million,
net of certain transaction costs at closing.  Additionally there is $25.0
million of additional proceeds available to us under our RIFA if certain sales
based milestone is achieved during 2023. In December 2021, we entered into an
Exclusive License Agreement with RareStone Group Ltd., or RareStone, and
received $7.0 million from the execution of that agreement.
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We have built a US marketing and commercialization infrastructure to support our
U.S. launch of IMCIVREE, and are building a comparable infrastructure in Canada
and certain European countries as we achieve approval and reimbursement
authorization.  IMCIVREE became commercially available to patients 6 years of
age and older with obesity due to POMC, PCSK1 or LEPR deficiency in the U.S. in
the first quarter of 2021.  We launched IMCIVREE for patients 6 years of age and
older with obesity due to BBS during June 2022. Following marketing
authorizations in the EU and Great Britain, we are pursuing a country-by-country
strategy to establish market access and reimbursement for IMCIVREE in several
countries. During March 2022, we treated the first patients with IMCIVREE in
France under the paid early access program and we treated the first patients
with IMCIVREE in Germany during June 2022.  Additionally, we have treated our
initial patients in the United Kingdom, Italy, The Netherlands and Turkey during
the fourth quarter of 2022. We expect to continue to fund our operations through
the sale of equity, debt financings or other sources. We intend to build our own
marketing and commercial sales infrastructure and we may enter into
collaborations with other parties for certain markets outside the United States.
However, we may be unable to raise additional funds or enter into such other
arrangements when needed on favorable terms, or at all. If we fail to raise
capital or enter into such other arrangements as, and when, needed, we may have
to significantly delay, scale back or discontinue the development or
commercialization of setmelanotide.
As of December 31, 2022 we had an accumulated deficit of $710.1 million. Our net
losses were $181.1 million and $69.6 million, for the years ended December 31,
2022 and 2021, respectively. We expect to continue to incur significant expenses
and increasing operating losses over the foreseeable future. We expect our
expenses will increase substantially in connection with our ongoing activities,
as we:

? kontynuować badania kliniczne setmelanotydu;

? angażować organizacje produkujące na zlecenie lub OZZ do produkcji

melanotyd klasy klinicznej i komercyjnej;

? uzyskać zgodę organów regulacyjnych na stosowanie setmelanotydu w przyszłych wskazaniach;

? rozszerzyć naszą działalność kliniczną i finansową oraz zbudować marketing i

infrastruktura komercjalizacyjna;

? angażować się w działania sprzedażowe i marketingowe niezbędne do wspierania kontynuacji

wysiłki komercyjne IMCIVREE na całym świecie;

? wziąć pod uwagę poziomy, terminy i pobór uzyskanych przychodów

sprzedaż IMCIVREE i innych produktów zatwierdzonych w przyszłości, jeśli takie istnieją; I

? kontynuować działalność jako spółka jawna.

As of December 31, 2022, our cash and cash equivalents and short-term
investments were approximately $333.3 million.  We expect that our cash and cash
equivalents and short-term investments as of December 31, 2022, will enable us
to fund our operating expenses into 2025.

Tło korporacyjne

Jesteśmy korporacją Delaware utworzoną w lutym 2013 roku pod nazwą Rhythm
Metabolic, Inc., a od października 2015 pod nazwą Rhythm
Farmaceutyki, Inc.

Wpływ COVID-19

We are monitoring the continued impact of COVID-19 on our employees, business,
preclinical studies and clinical trials. Based on current information we do not
currently anticipate any disruption in the clinical supply of setmelanotide. Our
CMOs have indicated that they have appropriate plans and procedures in place to
ensure uninterrupted
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future supply of clinical and commercial-grade setmelanotide, subject to
potential limitations on their operations due to COVID-19.  As a result, we do
not currently expect that the COVID-19 pandemic will have a material impact on
our business, results of operations and financial condition. In 2020, we
experienced interruption of key clinical trial activities, such as patient
attendance and clinical trial site monitoring, in our Phase 3 clinical trial
evaluating setmelanotide for the treatment of insatiable hunger and severe
obesity in individuals with BBS or Alström syndrome. The impact of COVID-19 on
our future results will largely depend on future developments, which are highly
uncertain and cannot be predicted with confidence, such as the duration of the
pandemic, the impact of variants, evolving travel restrictions and social
distancing in the United States and other countries, business closures or
business disruptions, the ultimate impact on financial markets and the global
economy, the effectiveness of vaccines and vaccine distribution efforts and the
effectiveness of other actions taken in the United States and other countries to
contain and treat the disease.  See "Risk Factors-The COVID-19 pandemic has and
may continue to adversely impact our business, including our preclinical
studies, clinical trials and our commercialization prospects." in Part I, Item
1A of this Annual Report.
Financial Operations Overview
Revenue

To date, we have generated less than $25.0 million of revenue from product
sales. Our lead product candidate, IMCIVREE, was approved by the FDA in November
2020 for chronic weight management in adult and pediatric patients six years of
age and older with obesity due to POMC, PCSK1 or LEPR deficiency confirmed by
genetic testing. IMCIVREE became commercially available in the United States in
the first quarter of 2021. We recorded our first sales of IMCIVREE in the United
States in March 2021 and we made our first sales in France in March 2022 under
the paid early access program. IMCIVREE was approval by the FDA and the EC in
adult and pediatric patients six years of age and older with obesity due to BBS
in June and September 2022, respectively. Following these approvals for BBS, we
expect our sales of IMCIVREE will continue to grow as we identify and treat more
patients with this disease and obtain reimbursement throughout the international
markets in which we operate.
Cost of sales
All of our inventory of IMCIVREE produced prior to FDA approval is available for
commercial or clinical use.  Most of the manufacturing costs have been recorded
as research and development expenses in prior periods.  Accordingly, the costs
for IMCIVREE included in our cost of sales for the year ended December 31, 2022
were insignificant.  We expect cost of sales to increase in 2023 as we have
begun to sell inventory produced after we began capitalizing manufacturing costs
for IMCIVREE commercial inventory. We continue to evaluate the impact of this
previously expensed inventory on the future cost of product sales, however we do
not expect there to be a significant impact based on the cost structure of the
product.

Wydatki na badania i rozwój

Na wydatki na badania i rozwój składają się przede wszystkim koszty poniesione na nasze potrzeby
działalność badawcza, w tym odkrywanie leków i sekwencjonowanie genetyczne
wysiłki i rozwój kliniczny setmelanotydu, który obejmuje:

wydatki poniesione w ramach umów ze stronami trzecimi, w tym CRO, które

? prowadzenia w naszym imieniu działań badawczo-rozwojowych i przedklinicznych oraz

koszt konsultantów i CMO, którzy wytwarzają produkty lecznicze do użytku w naszym

badania przedkliniczne i próby kliniczne;

? wydatki związane z pracownikami, w tym wynagrodzenia, świadczenia i akcje

koszt odszkodowania;

? koszt materiałów laboratoryjnych oraz nabycie, rozwój i produkcję

materiały do ​​badań przedklinicznych i klinicznych;

? koszt sekwencjonowania genetycznego potencjalnych pacjentów w badaniach klinicznych; I

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? wyposażenie, amortyzacja i inne wydatki, w tym czynsz i

utrzymanie obiektów, ubezpieczenie i inne koszty operacyjne.

Koszty badań i rozwoju obciążamy operacje w momencie ich poniesienia.
Bezzwrotne zaliczki za towary lub usługi do odbioru w
przyszłe do wykorzystania w działalności badawczo-rozwojowej ujmowane są jako rozliczenia międzyokresowe
wydatki. Skapitalizowane kwoty są ujmowane w kosztach, podobnie jak powiązane towary
dostarczone lub usługi są wykonane.

Poniższa tabela podsumowuje nasze bieżące wydatki na badania i rozwój:

December 31,

Podsumowanie prac badawczo-rozwojowych 2022 2021
Wydatki na badania i rozwój 108 630 USD 104 128 USD

We are unable to predict the duration and costs of the current or future
clinical trials of our product candidates. The duration, costs, and timing of
clinical trials and development of setmelanotide will depend on a variety of
factors, including:

? zakres, tempo postępu i koszt naszych bieżących, jak również wszelkich

dodatkowe badania kliniczne i inne działania badawczo-rozwojowe;

? wskaźnik naboru do badań klinicznych;

? bezpieczeństwo i skuteczność wykazane przez setmelanotyd w przyszłych badaniach klinicznych

próby;

? zmiany wymagań regulacyjnych;

? zmiany w projekcie badania klinicznego; I

? czas i otrzymanie wszelkich zezwoleń regulacyjnych.

Zmiana wyniku którejkolwiek z tych zmiennych w odniesieniu do
rozwój naszych kandydatów na produkty znacząco zmieniłby koszty i
czas związany z jego rozwojem i potencjalną komercjalizacją.

Research and development activities are central to our business model. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect research and development costs to increase significantly for the
foreseeable future as our setmelanotide and other development programs progress.
However, we do not believe that it is possible at this time to accurately
project total program-specific expenses to commercialization and there can be no
guarantee that we can meet the funding needs associated with these expenses.

Koszty sprzedaży, ogólne i administracyjne

Selling expenses consist of professional fees related to preparation for the
commercialization of setmelanotide as well as salaries and related benefits for
commercial employees, including stock-based compensation.  As we further
implement and execute our commercialization plans to market setmelanotide in new
territories and as we explore new collaborations to develop and commercialize
setmelanotide, we anticipate that these expenses will materially increase.
General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, relating to our full-time
employees not involved in R&D or commercial activities. Other significant costs
include rent, legal fees relating to patent and corporate matters and fees for
accounting and consulting services.
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Poniższa tabela podsumowuje naszą obecną sprzedaż, ogólną i administracyjną
wydatki.

December 31,

Podsumowanie sprzedażowe, ogólne i administracyjne 2022 2021
Koszty sprzedaży, ogólne i administracyjne 92 032 USD 68 486 USD

We anticipate that our selling, general and administrative expenses will
increase in the future to support continued and expanding commercialization
efforts for IMCIVREE in the United States and the European Union as well as
increased costs of operating as a global commercial stage biopharmaceutical
public company. These increases will likely include increased costs related to
the hiring of additional personnel and fees to outside consultants, lawyers and
accountants, compliance with local rules and regulations in the United States
and foreign jurisdictions, exchange listing and SEC expenses, insurance and
investor relations costs, among other expenses.

Krytyczne zasady rachunkowości i szacunki

Our management's discussion and analysis of our financial condition and results
of operations are based on our financial statements, which we have prepared in
accordance with accounting principles generally accepted in the United States,
or GAAP. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the reported amounts of revenues and
expenses during the reporting periods. These items are monitored and analyzed by
us for changes in facts and circumstances on an ongoing basis, and material
changes in these estimates could occur in the future.  We base our estimates on
historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the
notes to our financial statements included elsewhere in this Annual Report, we
believe that the following accounting policies are the most critical to aid in
fully understanding and evaluating our financial condition and results of
operations.

Rozliczenia międzyokresowe kosztów badań i rozwoju

As part of the process of preparing our financial statements, we are required to
estimate the value associated with goods and services received in the period in
connection with research and development activities. This process involves
reviewing quotations and contracts, identifying services that have been
performed on our behalf and estimating the level of service performed and the
associated cost incurred for the service when we have not yet been invoiced or
otherwise notified of the actual cost, or alternatively, the deferral of amounts
paid for goods or services to be incurred in the future. The majority of our
service providers invoice us monthly in arrears for services performed or when
contractual milestones are met. We make estimates of our accrued expenses or
prepaid expenses as of each balance sheet date in our financial statements based
on facts and circumstances known to us at the time those financial statements
are prepared. We periodically confirm the accuracy of our estimates with the
service providers and make adjustments if necessary. The significant estimates
in our accrued research and development expenses include fees paid to CROs, CMOs
and consultants in connection with research and development activities.
We accrue our expenses related to CROs, CMOs and consultants based on our
estimates of the services received and efforts expended pursuant to quotes and
contracts with CROs, CMOs and consultants that conduct research and development
and manufacturing on our behalf. The financial terms of these agreements are
subject to negotiation, vary from contract to contract and may result in uneven
payment flows. The allocation of CRO upfront expenses for both clinical trials
and preclinical studies generally tracks actual work activity. However, there
may be instances in which payments made to our vendors will exceed the level of
services provided and result in a prepayment of the research and development
expense. In accruing service fees delivered over a period of time, we estimate
the time period over which services will be performed and the level of effort to
be expended in each period. If the actual timing of the performance of services
or the level of effort varies from our estimate, we adjust accrued or prepaid
expense accordingly. Although we do
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not expect our estimates to be materially different from amounts actually
incurred, if our estimates of the status and timing of services performed differ
from the actual status and timing of services performed, it could result in us
reporting amounts that are too high or too low in any particular period. To
date, there have been no material differences between our estimates of such
expenses and the amounts actually incurred.

Wynagrodzenie w formie akcji

We maintain the Rhythm Pharmaceuticals, Inc. 2017 Equity Incentive Plan, (the
"2017 Plan") which provides for the grant of incentive stock options,
non-qualified stock options, stock appreciation rights, performance units,
restricted stock awards, restricted stock units and stock grants to employees,
consultants, advisors and directors, as determined by the board of directors. As
of December 31, 2022, we had reserved 10,149,772 shares of common stock under
the 2017 Plan. Shares of common stock issued pursuant to awards are generally
issued from authorized but unissued shares. The 2017 Plan provides that the
exercise price of incentive stock options cannot be less than 100% of the fair
market value of the common stock on the date of the award for participants who
own less than 10% of the total combined voting power of stock, and not less than
110% for participants who own more than 10% of the voting power. Awards granted
under the 2017 Plan will vest over periods as determined by our Compensation
Committee and approved by our board of directors.
On February 9, 2022, our board of directors adopted the Rhythm Pharmaceuticals,
Inc. 2022 Employment Inducement Plan (the "2022 Inducement Plan"), which became
effective on such date without stockholder approval pursuant to Rule 5635(c)(4)
of the Nasdaq Stock Market LLC listing rules ("Rule 5635(c)(4)").  The 2022
Inducement Plan provides for the grant of non-qualified stock options, stock
appreciation rights, performance units, restricted stock awards, restricted
stock units and stock grants. In accordance with Rule 5635(c)(4), awards under
the 2022 Inducement Plan may only be made to a newly hired employee who has not
previously been a member of our board of directors, or an employee who is being
rehired following a bona fide period of non-employment by the Company or a
subsidiary, as a material inducement to the employee's entering into employment
with the Company or its subsidiary. An aggregate of 1,000,000 shares of our
common stock have been reserved for issuance under the 2022 Inducement Plan.
The exercise price of stock options granted under the 2022 Inducement Plan will
not be less than the fair market value of a share of our common stock on the
grant date. Other terms of awards, including vesting requirements, are
determined by our board of directors and are subject to the provisions of the
2022 Inducement Plan. Stock options granted to employees generally vest over a
four-year period but may be granted with different vesting terms. Certain
options may provide for accelerated vesting in the event of a change in control.
Stock options granted under the 2022 Inducement Plan expire no more than 10
years from the date of grant. As of December 31, 2022, there were 336,780 stock
option awards outstanding, 173,135 restricted stock unit awards outstanding and
490,085 shares of common stock available for future grant under the 2022
Inducement Plan.
We estimate the fair value of our stock option awards to employees and
non-employees using the Black-Scholes option-pricing model, which requires the
input of subjective assumptions, including (a) the expected volatility of our
stock, (b) the expected term of the award, (c) the risk-free interest rate, and
(d) expected dividends. Due to the lack of a public market for the trading of
our common stock and a lack of company-specific historical and implied
volatility data, we previously based our estimate of expected volatility on the
historical volatility of a group of companies in the pharmaceutical and
biotechnology industries in a similar stage of development as us and that are
publicly traded. For these analyses, we selected companies with comparable
characteristics to ours including enterprise value, risk profiles and with
historical share price information sufficient to meet the expected life of the
stock-based awards. We computed the historical volatility data using the daily
closing prices for the selected companies' shares during the equivalent period
of the calculated expected term of our stock-based awards. During 2020, we began
to estimate volatility by using a blend of our stock price history for the
length of time we have market data for our stock and the historical volatility
of similar public companies for the expected term of each grant.  We will
continue to apply this process until a sufficient amount of historical
information regarding the volatility of our own stock price becomes available.

Oszacowaliśmy oczekiwany czas życia naszych pracowniczych opcji na akcje za pomocą
metoda „uproszczona”, zgodnie z którą oczekiwany czas życia jest równy średniej z
okres nabywania uprawnień i pierwotny umowny okres obowiązywania opcji. Bez ryzyka
oparte są stopy procentowe dla okresów w ramach oczekiwanego okresu życia opcji
krzywą rentowności obligacji skarbowych Stanów Zjednoczonych obowiązującą w okresie, w którym były opcje
nadany. Zdecydowaliśmy się rozliczać z przepadków w miarę ich występowania. Od
przyjęcie Standardów Rachunkowości

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Aktualizacja 2018-07, Ulepszenia rozliczania płatności w formie akcji dla osób niebędących pracownikami
(Temat 718) 1 lipca 2018 r. wybraliśmy, że nierozliczone nagrody
do osób niebędących pracownikami, dla których data wyceny nie została ustalona
wyceniane według wartości godziwej na dzień przyjęcia.

Podatki dochodowe

We account for uncertain tax positions in accordance with the provisions of
Accounting Standards Codification, or ASC, Topic 740, Accounting for Income
Taxes, or ASC 740. When uncertain tax positions exist, we recognize the tax
benefit of tax positions to the extent that the benefit will more likely than
not be realized. The determination as to whether the tax benefit will more
likely than not be realized is based upon the technical merits of the tax
position as well as consideration of the available facts and circumstances. As
of December 31, 2022, we did not have any uncertain tax positions.
Income taxes are recorded in accordance with ASC 740, which provides for
deferred taxes using an asset and liability approach. We recognize deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. We determine our
deferred tax assets and liabilities based on differences between financial
reporting and tax bases of assets and liabilities, which are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are provided, if based upon the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
As of December 31, 2022, we had net operating loss carryforwards to reduce
federal and state incomes taxes of approximately $494.5 million and $484.6
million, respectively. If not utilized, these carryforwards begin to expire in
2033. Of the federal net operating loss carryforwards at December 31, 2022,
$421.3 million can be carried forward indefinitely.  At December 31, 2022, we
also had available research and development tax credits for federal and state
income tax purposes of approximately $11.6 million and $3.6 million,
respectively.  Additionally, as of December 31, 2022, we had federal orphan drug
credits related to qualifying research of $19.3 million.  These tax credit
carryforwards begin to expire in 2033 for federal purposes and 2028 for state
purposes.
Utilization of the net operating loss and tax credit carryforwards may be
subject to a substantial annual limitation due to ownership change limitations
that have occurred previously or that could occur in the future, as provided by
Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, or
Section 382, as well as similar state provisions and other provisions of the
Code. Ownership changes may limit the amount of net operating losses and tax
credit carryforwards that can be utilized annually to offset future taxable
income and tax, respectively. In general, an ownership change, as defined by
Section 382, results from transactions that increase the ownership of 5.0%
stockholders in the stock of a corporation by more than 50% in the aggregate
over a three-year period.
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Results of Operations

Porównanie lat zakończonych 31 grudnia 2022 i 2021 r

The following table summarizes our results of operations for the years ended
December 31, 2022 and 2021, together with the changes in those items in dollars
and as a percentage:
Year Ended
December 31,                   Change
2022           2021             $           %
(in thousands)
Statement of Operations Data:
Revenues:
Product revenue, net                              $    16,884    $     3,154    $    13,730      435 %
License revenue                                         6,754              -          6,754       NM
Total revenues                                         23,638          3,154         20,484      649 %
Costs and expenses:
Cost of sales                                           2,133            599          1,534      256 %
Research and development                              108,630        104,128          4,502        4 %
Selling, general, and administrative                   92,032         68,486         23,546       34 %
Total costs and expenses                              202,795        173,213         29,582       17 %
Loss from operations                                (179,157)      (170,059)        (9,098)        5 %
Other (expense) income, net                           (1,962)        100,447      (102,409)    (102) %
Net loss                                          $ (181,119)    $  (69,612)    $ (111,507)      160 %
NM=Not meaningful
Product revenue, net increased by $13.7 million to $16.9 million in 2022 from
$3.2 million in 2021 an increase of 435%. We recorded our first sales of
IMCIVREE in March 2021 and the year ended December 31, 2021 represented our
first year of sales subsequent to the approval of IMCIVREE in November 2020. We
expect our sales of IMCIVREE to continue to increase following the FDA approval
for the treatment of patients with BBS in the United States during June 2022 and
by the EC in September 2022. For the years ended December 31, 2022 and 2021, 85%
and 100%, respectively, of our product revenue was generated in the United
States.

Przychody z licencji. Przychody z licencji wyniosły 6,8 miliona dolarów w 2022 roku i były w całości
związane z umową licencyjną RareStone. Zawarliśmy umowę licencyjną
z RareStone w grudniu 2021 roku i zakończyliśmy wymagane działania
przeniesienia licencji do RareStone w drugim kwartale 2022 r
skutkowało rozpoznaniem przychodów z tytułu licencji.

Cost of sales. Cost of sales increased by $1.5 million to $2.1 million in 2022
from $0.6 million in 2021, an increase of 256%.  Most of the IMCIVREE
manufacturing costs have been recorded as research and development expenses in
prior periods.  Accordingly, the product cost component related for IMCIVREE
included in our cost of sales for the year ended December 31, 2022 was
insignificant and cost of sales primarily reflects a royalty due to Ipsen Pharma
S.A.S., or Ipsen, on our net product sales and the amortization of our
capitalized sales based milestone payment made to Ipsen, upon our first
commercial sale in the U.S.and EU.  Specifically, the $1.5 million increase in
cost of sales for the year ended December 31, 2022 was due to $0.7 million of
additional royalties due to our growth in sales, $0.5 million attributed to
product cost primarily associated with higher sales volume and product
distributed four our patient assistance program, and $0.3 million of additional
amortization.  We expect cost of sales to increase overtime as we sell inventory
that is produced after we began capitalizing IMCIVREE commercial inventory.
Research and development expense. Research and development expense increased by
$4.5 million to $108.6 million in 2022 from $104.1 million in 2021, an increase
of 4%. The increase was primarily due to the following:
? an increase of $2.9 million due to increased purchases of clinical supply
material;
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? wzrost kosztów sekwencjonowania genów o 2,8 miliona USD w celu wsparcia naszej rozszerzonej działalności

programy kliniczne;

wzrost kosztów naszych badań klinicznych o 2,4 miliona USD związany z nowymi i

planowanych badań klinicznych, w tym fazy 2 DAYBREAK i fazy 3 EMANATE

badania, Faza 3 badanie pediatryczne, Faza 2 badanie otyłości podwzgórza, Faza 3

badanie otyłości podwzgórza i zwiększona liczba zapisów w naszym długoterminowym przedłużeniu

? i zmień wersję próbną. Wzrosty te zostały częściowo zrekompensowane spadkiem aktywności

do zakończenia i zakończenia naszych badań Fazy 3 POMC i LEPR, QTc

próba, próba BBS, próba fazy 2 Basket i nasze badanie dotyczące nerek. Te wzrosty

zostały dodatkowo skompensowane zwrotem w wysokości 2,3 miliona USD należnym nam po zamknięciu i

pogodzenie badania GO-ID, z których wszystkie dały wynik nieistotny

zmiana naszego kosztu badania klinicznego;

wzrost o 2,1 miliona USD wynagrodzeń, świadczeń i wynagrodzeń w formie akcji

? związane z zatrudnieniem dodatkowych pracowników etatowych w celu obsługi

rozwój naszych programów badawczo-rozwojowych;

wzrost kamieni milowych rozwoju o 1,0 miliona dolarów uzyskanych przez Camurus AB, lub

? Camurus, związany z osiągniętym kamieniem milowym w rozwoju związanym z naszym tygodnikiem

sformułowanie; I

? wzrost o 0,9 miliona USD związany ze zgłoszeniami dotyczącymi własności intelektualnej i patentów
zajęcia.

Powyższe wzrosty zostały częściowo skompensowane przez:

? zmniejszenie o 4,0 mln USD kosztów związanych ze sprawami medycznymi; I

? spadek kosztów związanych z badaniami nowej generacji o 0,9 miliona dolarów

i działalności deweloperskiej.

Selling, general and administrative expense. Selling, general and administrative
expense increased by $23.5 million to $92.0 million in 2022 from $68.5 million
in 2021, an increase of 34%. The increase was primarily due to the following:

wzrost o 9,6 mln USD w związku ze wzrostem odszkodowań i związanych z nimi świadczeń

? koszty związane z dodatkowym zatrudnieniem w celu wsparcia naszej rozwijającej się działalności

działalności, jak również w celu ustanowienia operacji handlowych w Stanach Zjednoczonych

i międzynarodowo;

wzrost o 8,6 mln USD związany ze zwiększonymi kosztami związanymi z

? operacje handlowe, działania sprzedażowe i marketingowe na rzecz IMCIVREE w

w związku z przygotowaniami do amerykańskiej zgody na BBS uzyskaną w czerwcu 2022 r

i zatwierdzenie WE we wrześniu 2022 r.;

wzrost o 5,0 mln USD z powodu zwiększonych kosztów związanych z informacjami

? technologia, międzynarodowa przestrzeń biurowa, sponsoring i ogólne korporacyjne

wydatki związane z podróżami dla naszej rosnącej siły roboczej.

Other (expense) income, net.  Other (expense) income, net decreased by $102.4
million to ($2.0) million in 2022, a decrease of 102%. The decrease was
primarily due to the sale of our PRV in February 2021. The sale of our PRV in
the prior year was a non-recurring transaction, which resulted in $100.0 million
of other income during the prior year. Other (expense) income, net consists of
$5.2 million of interest expense related to our RIFA (including amortization of
debt discount and deferred financing fees) and a $1.0 million other than
temporary impairment of our RareStone equity, partially offset by $4.0 million
of interest income and $0.3 million of other income resulting from the
remeasurement of our embedded derivative related to our RIFA.
Net loss. Net loss increased by $111.5 million to $181.1 million in 2022, from
net loss of $69.6 million in 2021. The increase in net loss was primarily a
result of the non-recurring nature of our PRV sale in 2021, which resulted in
$100.0 million of other income during the prior year , as well as higher costs
as discussed above partially offset by product and license revenue in the
current year as noted above.
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Płynność i zasoby kapitałowe

Na dzień 31 grudnia 2022 r. nasze środki pieniężne i ich ekwiwalenty oraz krótkoterminowe
inwestycje wyniosły około 333,3 miliona dolarów.

Przepływy środków pieniężnych

Poniższa tabela zawiera informacje dotyczące naszych przepływów pieniężnych za lata
zakończony 31 grudnia 2022 i 2021:

Year Ended December 31,
2022            2021
(in thousands)
Net cash provided by (used in):
Operating activities                                            $   (173,428)    $ (146,003)
Investing activities                                                   28,029       (62,159)
Financing activities                                                 

213 828 166 481
Zwiększenie (zmniejszenie) netto stanu środków pieniężnych i ich ekwiwalentów
o ograniczonej możliwości dysponowania

                                                 $      

68429 (41681)

Środki pieniężne netto wykorzystane w działalności operacyjnej

Wykorzystanie środków pieniężnych we wszystkich okresach wynikało przede wszystkim z skorygowanych strat netto
na odpisy niepieniężne oraz zmiany składników kapitału obrotowego.

Net cash used in operating activities was $173.4 million for the year ended
December 31, 2022, and consisted primarily of a net loss of $153.7 million
adjusted for non-cash items, which consisted of stock-based compensation,
depreciation and amortization, non-cash rent expense, the change in the fair
value of our embedded derrivative liability, and the impairment of RareStone
equity. The change in operating assets and liabilities reflected a total use of
cash of approximately $19.7 million primarily driven by a decrease of  $14.7
million in accounts receivable, inventory, prepaid expenses, other current and
other long term assets coupled with a decrease in accounts payable, accrued
expenses, and deferred revenue of $5.1 million due to the timing of payments.
Net cash used in operating activities was $146.0 million for the year ended
December 31, 2021, and consisted primarily of a net loss of $147.9 million
adjusted for non-cash items, which consisted of the gain on the sale of the PRV,
non-cash stock-based compensation, depreciation and amortization and rent
expense. The change in operating assets and liabilities reflected a total source
of cash of approximately $1.9 million primarily driven by an increase in
accounts payable and accrued expenses of $18.3 million due to the timing of
payments, partially offset by an increase of $16.4 million in prepaid expenses,
other current and other long term assets.

Środki pieniężne netto dostarczone (wykorzystane w) działalności inwestycyjnej

Net cash provided by investing activities was $28.0 million for the year ended
December 31, 2022 which relates to the proceeds from short-term investments of
$32.2 million, partially offset by $0.3 million related to the purchase of
property plant and equipment and $4.0 million for the acquisition of an
intangible asset.
Net cash used in investing activities was $62.2 million for the year ended
December 31, 2021 which relates to the purchases of short-term investments, net
of maturities, of $163.7 million, $0.4 million related to the purchase of
property plant and equipment and  $5.0 million for the acquisition of an
intangible asset, partially offset by the $100.0 million in proceeds from the
sale of the PRV and $7.0 million in proceeds from an out-license agreement.
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Środki pieniężne netto z działalności finansowej

Net cash provided by financing activities was $213.8 million for the year ended
December 31, 2022, which represents the net proceeds of $131.1 million from our
common stock offering in September 2022, $72.3 million of aggregate proceeds,
net of issuance costs from the RIFA, and $10.4 million of cash proceeds from the
exercise of stock options and the issuance of common stock from our 2017
Employee Stock Purchase Plan, or the ESPP.
Net cash provided by financing activities was $166.5 million for the year ended
December 31, 2021, which represents the net proceeds of $161.7 million from our
common stock offering in February 2022 and $4.8 million of cash proceeds from
the exercise of stock options and the issuance of common stock from our 2017
Employee Stock Purchase Plan, or the ESPP.

Umowa finansowania odsetek od przychodów

On June 16, 2022, we entered into the RIFA, with HealthCare Royalty, for a total
investment amount of up to $100 million. In exchange for the total investment
amount to be received by Rhythm, HealthCare Royalty will receive a tiered
royalty based on global net product sales generated by IMCIVREE. For additional
information, see Note 10, "Long-term Obligations" to the consolidated financial
statements included elsewhere in this Annual Report.

Wymagania dotyczące finansowania

We expect our expenses to increase in connection with our ongoing activities,
particularly as we continue the clinical development of and seek marketing
approval for setmelanotide for future indications, and build out our global
organization. In addition, we expect to incur significant commercialization
expenses related to product sales, marketing, manufacturing and distribution to
the extent that such sales, marketing and distribution are not the
responsibility of potential collaborators. We also expect to incur additional
costs associated with operating as a public company. As a result of the
acquisition of Xinvento, we expect to devote substantial financial resources to
the research and development and potential commercialization of a therapeutic
product candidate for CHI.
We expect that our $333.3 million of cash and cash equivalents and short-term
investments as of December 31, 2022, will enable us to fund our operating
expenses into 2025. We may need to obtain substantial additional funding in
connection with our research and development activities and any continuing
operations thereafter. If we are unable to raise capital when needed or on
favorable terms, we would be forced to delay, reduce or eliminate our research
and development programs or future commercialization efforts.

Nasze przyszłe wymagania kapitałowe będą zależeć od wielu czynników, w tym:

kosztów komercjalizacji setmelanotydu, budując wewnętrzne siły sprzedaży

? lub nawiązywania współpracy z osobami trzecimi i udzielania wsparcia

usługi dla pacjentów;

? zakres, przebieg, wyniki i koszty badań klinicznych naszego setmelanotydu

program;

? koszty, czas i wynik przeglądu regulacyjnego naszego setmelanotydu

program;

koszty związane z nabyciem, integracją, badaniami i rozwojem oraz

? działania komercjalizacyjne związane z przejęciem Xinvento BV i wszelkie

pokrewni kandydaci na produkt terapeutyczny;

? zobowiązań wobec Ipsen, Camurus i Takeda Pharmaceutical Company

Limited lub Takeda, zgodnie z naszymi umowami licencyjnymi;

? the extent to which we acquire or in-license other product candidates and
technologies;
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koszty przygotowania, złożenia i ścigania wniosków patentowych, utrzymanie

? oraz egzekwowanie naszych praw własności intelektualnej i obrona własności intelektualnej

roszczenia majątkowe;

? naszą zdolność do nawiązywania i utrzymywania dodatkowej współpracy na korzystnych warunkach

warunki, jeśli w ogóle; I

? koszty funkcjonowania jako spółka publiczna i utraty wschodzącego wzrostu

stan firmy.

Although IMCIVREE has been approved by the FDA in certain indications, and
became commercially available in the first quarter of 2021, IMCIVREE may not
achieve commercial success. In addition, developing our setmelanotide program is
a time-consuming, expensive and uncertain process that may take years to
complete, and we may never generate the necessary data or results required to
obtain future marketing approvals and achieve product sales. Accordingly, we
will need to continue to rely on additional financing to achieve our business
objectives. Adequate additional financing may not be available to us on
acceptable terms, or at all.
In addition, the magnitude and duration of the COVID-19 pandemic and its impact
on our liquidity and future funding requirements is uncertain as of the filing
date of this Annual Report as this continues to evolve globally. See "Impact of
COVID-19" above and "Risk Factors- The COVID-19 pandemic has and may continue to
adversely impact our business, including our preclinical studies, clinical
trials and our commercialization prospects." in Part I, Item 1A of this Annual
Report for a further discussion of the possible impact of the COVID-19 pandemic
on our business.
Further, the global economy, including credit and financial markets, has
recently experienced extreme volatility and disruptions, including severely
diminished liquidity and credit availability, rising interest and inflation
rates, declines in consumer confidence, declines in economic growth, increases
in unemployment rates and uncertainty about economic stability. All of these
factors could impact our liquidity and future funding requirements, including
but not limited to our ability to raise additional capital when needed on
acceptable terms, if at all. The duration of this economic slowdown is uncertain
and the impact on our business is difficult to predict. See "Risk Factors-
Unfavorable global political or economic conditions could adversely affect our
business, financial condition or results of operations."
Until such time, if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of equity offerings, debt
financings, collaborations, strategic alliances and licensing arrangements.
To the extent that we raise additional capital through the sale of equity or
convertible debt securities, the ownership interest of our stockholders will be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of our common stockholders. Debt
financing, if available, involves agreements that include covenants limiting or
restricting our ability to take specific actions, such as incurring additional
debt, making capital expenditures or declaring dividends.
If we raise funds through additional collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our setmelanotide program on terms that may not be favorable to us. If
we are unable to raise additional funds through equity or debt financings when
needed, we may be required to delay, limit, reduce or terminate our product
development or future commercialization efforts or grant rights to develop and
market our setmelanotide program that we would otherwise prefer to develop

and
market ourselves.
Contractual obligations
We enter into agreements in the normal course of business with CROs and CMOs for
clinical trials and clinical supply manufacturing and with vendors for clinical
research studies and other services and products for operating purposes. We do
not classify these as contractual obligations where the contracts are cancelable
at any time by us, generally upon 30 days' prior written notice to the vendor.
Milestone and royalty payments associated with our license agreements with
Ipsen, Camurus and Takeda, have not been included as contractual obligations as
we cannot reasonably estimate if or when they will occur. Under the terms of the
Ipsen license agreement, assuming that setmelanotide is successfully developed,
receives regulatory approval and is commercialized, Ipsen may receive aggregate
payments of up to $40.0 million upon the achievement of certain
122

Spis treści

development and commercial milestones under the license agreement and royalties
on future product sales and at December 31, 2022 there were $27.0 million of
remaining milestones that may be achieved and due to Ipsen at a future date.
During 2022, we paid Ipsen a $4.0 million milestone upon our first commercial
sale of IMCIVREE in Europe.  We do not expect to make additional milestone
payments to Ipsen during 2023.  In the event that we enter into a sublicense
agreement, we will make payments to Ipsen, depending on the date of the
sublicense agreement, ranging from 10% to 20% of all revenues actually received
under the sublicense agreement.
Under the terms of the Camurus license agreement, assuming that the weekly
formulation of setmelanotide is successfully developed, receives regulatory
approval and is commercialized, Camurus may receive aggregate payments of up to
$64.75 million upon the achievement of certain development and commercial
milestones under the license agreement and royalties on future product sales and
at December 31, 2022 there were $62.5 million of remaining milestones that may
be achieved and due to Camurus at a future date. We paid Camurus a $1.0 million
milestone in 2022 upon the achievement of a development milestone.  We do not
expect to make any milestone payments to Camurus during 2023. The majority of
the aggregate payments under the Camurus license agreement are for milestones
that may be achieved no earlier than first commercial sale of this weekly
formulation of setmelanotide.
Under the terms of the Takeda license agreement, assuming that RM-853, is
successfully developed, receives regulatory approval and is commercialized,
Takeda may receive aggregate payments of up to $140.0 million upon the
achievement of certain development and commercial milestones under the license
agreement and royalties on future product sales. The majority of the aggregate
payments under the Takeda license agreement are for milestones that may be
achieved no earlier than first commercial sale of the RM-853. We have notified
Takeda that we have halted development activities related to RM-853. We do not
expect to make milestone payments to Takeda during 2023 or for the foreseeable
future.
Based on  our  current  development  plans as of December 31, 2022,  we do not
expect to make payments to third parties, during  the  next  12  months  from
the  filing  of  this  Annual  Report. Milestones generally become  due  and
payable  upon achievement of such milestones or sales.  When the achievement of
these milestones or sales have not occurred, such contingencies are not recorded
in our financial statements and are excluded from the table below.

W sierpniu 2018 r. zmieniliśmy naszą obecną umowę najmu naszej siedziby
placówkę w Bostonie w stanie Massachusetts. Nowy okres najmu rozpoczął się w maju 2019 r
ma sześcioletnią kadencję z opcją przedłużenia najmu o pięć lat.

 The new lease includes approximately 13,600 square feet of office space.

Najnowsze komunikaty księgowe

For a discussion of pending and recently adopted accounting pronouncements, see
Note 2 to our audited consolidated financial statements included elsewhere in
this Annual Report.

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