2023 Q2 Form 10-Q Financial Statement

#000155837023007675 Filed on May 02, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 Q1
Revenue $19.22M $11.47M
YoY Change 112.01% 665.62%
Cost Of Revenue $2.236M $1.421M
YoY Change 491.53% 517.83%
Gross Profit $16.99M $10.05M
YoY Change 95.5% 692.43%
Gross Profit Margin 88.37% 87.61%
Selling, General & Admin $30.05M $24.63M
YoY Change 34.57% 14.85%
% of Gross Profit 176.9% 245.16%
Research & Development $33.54M $37.95M
YoY Change 6.63% 16.72%
% of Gross Profit 197.49% 377.64%
Depreciation & Amortization $442.0K $457.0K
YoY Change 0.91% 30.57%
% of Gross Profit 2.6% 4.55%
Operating Expenses $63.59M $62.58M
YoY Change 18.23% 15.98%
Operating Profit -$46.60M -$52.53M
YoY Change 3.34% -0.3%
Interest Expense -$82.00K $3.061M
YoY Change -186.32% -4293.15%
% of Operating Profit
Other Income/Expense, Net -$17.00K $352.0K
YoY Change -117.89% -582.19%
Pretax Income -$46.70M -$52.18M
YoY Change 3.78% -1.11%
Income Tax $0.00
% Of Pretax Income
Net Earnings -$46.70M -$52.18M
YoY Change 3.78% -1.11%
Net Earnings / Revenue -242.98% -454.96%
Basic Earnings Per Share -$0.82 -$0.92
Diluted Earnings Per Share -$0.82 -$0.92
COMMON SHARES
Basic Shares Outstanding 56.85M 56.75M
Diluted Shares Outstanding 56.87M 56.71M

Balance Sheet

Concept 2023 Q2 2023 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $253.6M $294.6M
YoY Change 7.64% 22.25%
Cash & Equivalents $115.7M $109.7M
Short-Term Investments $137.9M $184.9M
Other Short-Term Assets $10.27M $9.652M
YoY Change -14.65% -16.96%
Inventory $6.178M $5.487M
Prepaid Expenses
Receivables $13.83M $8.117M
Other Receivables $0.00 $0.00
Total Short-Term Assets $283.9M $317.8M
YoY Change 13.86% 25.41%
LONG-TERM ASSETS
Property, Plant & Equipment $2.763M $2.001M
YoY Change 7.97% -26.49%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $15.85M $17.08M
YoY Change -1.66% -8.57%
Total Long-Term Assets $26.07M $27.84M
YoY Change -8.04% -11.27%
TOTAL ASSETS
Total Short-Term Assets $283.9M $317.8M
Total Long-Term Assets $26.07M $27.84M
Total Assets $309.9M $345.7M
YoY Change 11.62% 21.37%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $8.383M $13.35M
YoY Change 39.44% 11.13%
Accrued Expenses $30.39M $30.55M
YoY Change -14.66% 21.23%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $46.10M $46.03M
YoY Change 3.44% -2.63%
LONG-TERM LIABILITIES
Long-Term Debt $79.35M $77.52M
YoY Change 131.51%
Other Long-Term Liabilities $2.208M $2.366M
YoY Change -31.09% 32.85%
Total Long-Term Liabilities $81.56M $79.89M
YoY Change 117.61% 4385.46%
TOTAL LIABILITIES
Total Short-Term Liabilities $46.10M $46.03M
Total Long-Term Liabilities $81.56M $79.89M
Total Liabilities $127.7M $125.9M
YoY Change 55.59% 156.68%
SHAREHOLDERS EQUITY
Retained Earnings -$808.9M -$762.2M
YoY Change 29.08% 31.04%
Common Stock $57.00K $56.00K
YoY Change 14.0% 12.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $182.3M $219.8M
YoY Change
Total Liabilities & Shareholders Equity $309.9M $345.7M
YoY Change 11.62% 21.37%

Cashflow Statement

Concept 2023 Q2 2023 Q1
OPERATING ACTIVITIES
Net Income -$46.70M -$52.18M
YoY Change 3.78% -1.11%
Depreciation, Depletion And Amortization $442.0K $457.0K
YoY Change 0.91% 30.57%
Cash From Operating Activities -$41.09M -$36.43M
YoY Change 5.88% -32.07%
INVESTING ACTIVITIES
Capital Expenditures $0.00 $47.00K
YoY Change -100.0% -62.99%
Acquisitions
YoY Change
Other Investing Activities $48.19M $18.51M
YoY Change 33.72% -74.52%
Cash From Investing Activities $48.19M $18.46M
YoY Change 33.94% -74.54%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net $1.351M
YoY Change
Cash From Financing Activities -965.0K -133.0K
YoY Change -102.57% -133.33%
NET CHANGE
Cash From Operating Activities -41.09M -36.43M
Cash From Investing Activities 48.19M 18.46M
Cash From Financing Activities -965.0K -133.0K
Net Change In Cash 6.136M -18.02M
YoY Change -82.3% -193.4%
FREE CASH FLOW
Cash From Operating Activities -$41.09M -$36.43M
Capital Expenditures $0.00 $47.00K
Free Cash Flow -$41.09M -$36.48M
YoY Change 6.04% -32.14%

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CY2022Q4 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
0
CY2023Q1 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Period Increase Decrease Including Exchange Rate Effect
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect
-18016000
CY2022Q1 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Period Increase Decrease Including Exchange Rate Effect
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect
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CY2022Q4 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Including Disposal Group And Discontinued Operations
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations
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CY2021Q4 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Including Disposal Group And Discontinued Operations
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations
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CY2023Q1 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Including Disposal Group And Discontinued Operations
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations
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CY2022Q1 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Including Disposal Group And Discontinued Operations
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations
78865000
CY2023Q1 rytm Holdback Payable Associated With Acquisition In Accrued Expenses Non Cash Investing Activities
HoldbackPayableAssociatedWithAcquisitionInAccruedExpensesNonCashInvestingActivities
500000
CY2023Q1 rytm Transaction Costs Associated With Acquisition In Accounts Payable Non Cash Investing Activities
TransactionCostsAssociatedWithAcquisitionInAccountsPayableNonCashInvestingActivities
375000
CY2023Q1 us-gaap Nature Of Operations
NatureOfOperations
<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;font-weight:bold;margin:0pt 0pt 12pt 0pt;">1. Nature of Business</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;">Rhythm Pharmaceuticals, Inc. (the “Company” or “we”) is a global, commercial-stage biopharmaceutical company dedicated to transforming the lives of patients and their families living with rare diseases. We are focused on advancing our lead asset, IMCIVREE<sup style="font-size:7.5pt;line-height:100%;top:0pt;vertical-align:top;">®</sup> (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<sup style="font-size:7.5pt;line-height:100%;top:0pt;vertical-align:top;">®</sup> (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 (US), European Union (EU) and Great Britain.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;">The Company is a Delaware corporation organized in February 2013 under the name Rhythm Metabolic, Inc., and as of October 2015, under the name Rhythm Pharmaceuticals, Inc. The Company has wholly owned subsidiaries in the US, Ireland, the United Kingdom, the Netherlands, France, Germany, Italy, Spain and Canada.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;"><span style="background:#ffffff;">The Company is subject to risks and uncertainties common to commercial-stage companies in the biotechnology industry, including but not limited to, risks associated with the commercialization of approved products, completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Commercialization of approved products will require significant resources and in order to market IMCIVREE, the Company must continue to build its sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. </span></p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;">There are many uncertainties regarding the COVID-19 pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how the pandemic may continue to impact its patients, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company's financial results and business operations for the three months ended March 31, 2023, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results in future periods due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;font-style:italic;font-weight:bold;margin:0pt 0pt 12pt 0pt;">Liquidity</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt;">The Company has incurred operating losses and negative cash flows from operations since inception. As of March 31, 2023, the Company had an accumulated deficit of $762,237.  The Company has primarily funded these losses through the proceeds from the sales of common and preferred stock, asset sales, royalty financing, out-license arrangements, as well as capital contributions received from the former parent company, Rhythm Holdings LLC. To date, the Company has minimal product revenue and management expects operating losses to continue for the foreseeable future. The Company has devoted substantially all of its resources to its drug development efforts, comprising of research and development, manufacturing, conducting clinical trials for its product candidates, protecting its intellectual property, commercialization activities and general and administrative functions relating to these operations. The future success of </p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;">the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations.</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;">At March 31, 2023, the Company had $294,582 of cash and cash equivalents and short-term investments on hand.  In the future, the Company will be dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale of equity, product sales and funded research and development programs to maintain the Company's operations and meet the Company's obligations. There is no guarantee that additional equity or other financings will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back, terminate its operations or seek to merge with or be acquired by another company. Management believes that the Company's existing cash and cash equivalents and short-term investments will be sufficient to fund the Company’s operations <span style="background:#ffffff;">through at least the next twelve months from the filing of this Quarterly Report on Form 10-Q with the SEC</span>.</p>
CY2023Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-762237000
CY2023Q1 us-gaap Cash Cash Equivalents And Short Term Investments
CashCashEquivalentsAndShortTermInvestments
294582000
CY2023Q1 us-gaap Use Of Estimates
UseOfEstimates
<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;font-style:italic;font-weight:bold;margin:0pt 0pt 12pt 0pt;">Use of Estimates </p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt;">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates relied upon in preparing these financial statements include estimates related to determining our net product revenue, license revenue, accruals related to research and development expenses, assumptions used to record stock-based compensation expense, interest expense on our deferred royalty obligation, assumptions used to value the embedded derivative in our deferred royalty obligation, assumptions used to value the common stock received from RareStone Group </p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;margin:0pt 0pt 12pt 0pt;">Ltd., or RareStone, and the valuation allowance on the Company's deferred tax assets.  Estimates are periodically reviewed in light of changes in circumstances, facts and experience.  Changes in estimates are recorded in the period in which they become known.  Actual results could differ materially from those estimates.</p>
CY2023Q1 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<p style="font-family:'Times New Roman','Times','serif';font-size:10pt;font-style:italic;font-weight:bold;margin:0pt 0pt 12pt 0pt;">Reclassification of Prior Year Balances</p><p style="font-family:'Times New Roman','Times','serif';font-size:10pt;text-align:justify;text-indent:36pt;margin:0pt 0pt 12pt 0pt;">Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations or cash flows. Specifically, in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022, the Company has reclassified $160 of interest income which was previously recorded within other (expense) income, net to interest income.</p>
CY2023Q1 us-gaap Number Of Operating Segments
NumberOfOperatingSegments
1
CY2023Q1 us-gaap Number Of Reportable Segments
NumberOfReportableSegments
1
CY2023Q1 rytm Number Of Federally Insured Financial Institutions
NumberOfFederallyInsuredFinancialInstitutions
2
CY2023Q1 rytm Number Of Federally Insured Financial Institutions
NumberOfFederallyInsuredFinancialInstitutions
2
CY2023Q1 us-gaap Revenue From Contract With Customer Including Assessed Tax
RevenueFromContractWithCustomerIncludingAssessedTax
11469000
CY2022Q1 us-gaap Revenue From Contract With Customer Including Assessed Tax
RevenueFromContractWithCustomerIncludingAssessedTax
1498000
CY2023Q1 us-gaap Available For Sale Debt Securities Amortized Cost Basis
AvailableForSaleDebtSecuritiesAmortizedCostBasis
184948000
CY2023Q1 us-gaap Available For Sale Debt Securities Accumulated Gross Unrealized Loss Before Tax
AvailableForSaleDebtSecuritiesAccumulatedGrossUnrealizedLossBeforeTax
27000
CY2022Q1 us-gaap Tangible Asset Impairment Charges
TangibleAssetImpairmentCharges
0
CY2023Q1 us-gaap Tangible Asset Impairment Charges
TangibleAssetImpairmentCharges
0
CY2023Q1 us-gaap Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount
AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount
8632792
CY2022Q1 us-gaap Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount
AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount
8968037
CY2023Q1 us-gaap Inventory Raw Materials And Supplies
InventoryRawMaterialsAndSupplies
4696000
CY2023Q1 rytm Accrued Research And Development Costs
AccruedResearchAndDevelopmentCosts
13956000
CY2022Q4 rytm Accrued Research And Development Costs
AccruedResearchAndDevelopmentCosts
11379000
CY2023Q1 us-gaap Accrued Professional Fees Current
AccruedProfessionalFeesCurrent
3417000
CY2022Q4 us-gaap Accrued Professional Fees Current
AccruedProfessionalFeesCurrent
4502000
CY2023Q1 rytm Accrued Payroll Related Expense Current
AccruedPayrollRelatedExpenseCurrent
5501000
CY2022Q4 rytm Accrued Payroll Related Expense Current
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11444000
CY2023Q1 rytm Royalties Current
RoyaltiesCurrent
586000
CY2022Q4 rytm Royalties Current
RoyaltiesCurrent
440000
CY2023Q1 rytm Sales Allowances Accrued Current
SalesAllowancesAccruedCurrent
4265000
CY2022Q4 rytm Sales Allowances Accrued Current
SalesAllowancesAccruedCurrent
2710000
CY2023Q1 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
2824000
CY2022Q4 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
2419000
CY2023Q1 us-gaap Accrued Liabilities Current
AccruedLiabilitiesCurrent
30549000
CY2022Q4 us-gaap Accrued Liabilities Current
AccruedLiabilitiesCurrent
32894000
CY2023Q1 us-gaap Cash Cash Equivalents And Short Term Investments
CashCashEquivalentsAndShortTermInvestments
294582000
CY2022Q4 us-gaap Cash Cash Equivalents And Short Term Investments
CashCashEquivalentsAndShortTermInvestments
333288000
CY2023Q1 us-gaap Available For Sale Securities Debt Securities
AvailableForSaleSecuritiesDebtSecurities
184921000
CY2022Q4 us-gaap Available For Sale Debt Securities Amortized Cost Basis
AvailableForSaleDebtSecuritiesAmortizedCostBasis
205702000
CY2022Q4 us-gaap Available For Sale Debt Securities Accumulated Gross Unrealized Loss Before Tax
AvailableForSaleDebtSecuritiesAccumulatedGrossUnrealizedLossBeforeTax
91000
CY2022Q4 us-gaap Available For Sale Securities Debt Securities
AvailableForSaleSecuritiesDebtSecurities
205611000
CY2023Q1 us-gaap Lessee Operating Lease Remaining Lease Term
LesseeOperatingLeaseRemainingLeaseTerm
P2Y3M18D
CY2023Q1 us-gaap Lessee Operating Lease Discount Rate
LesseeOperatingLeaseDiscountRate
0.10
CY2023Q1 us-gaap Lessee Operating Lease Term Of Contract
LesseeOperatingLeaseTermOfContract
P6Y
CY2023Q1 us-gaap Lessee Operating Lease Renewal Term
LesseeOperatingLeaseRenewalTerm
P5Y
CY2023Q1 us-gaap Lessee Operating Lease Existence Of Option To Extend
LesseeOperatingLeaseExistenceOfOptionToExtend
true
CY2023Q1 us-gaap Lessee Operating Lease Renewal Term
LesseeOperatingLeaseRenewalTerm
P5Y
CY2023Q1 us-gaap Lessee Operating Lease Liability Payments Remainder Of Fiscal Year
LesseeOperatingLeaseLiabilityPaymentsRemainderOfFiscalYear
627000
CY2023Q1 us-gaap Lessee Operating Lease Liability Payments Due Next Twelve Months
LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths
851000
CY2023Q1 us-gaap Lessee Operating Lease Liability Payments Due Year Two
LesseeOperatingLeaseLiabilityPaymentsDueYearTwo
502000
CY2023Q1 us-gaap Lessee Operating Lease Liability Payments Due
LesseeOperatingLeaseLiabilityPaymentsDue
1980000
CY2023Q1 us-gaap Lessee Operating Lease Liability Undiscounted Excess Amount
LesseeOperatingLeaseLiabilityUndiscountedExcessAmount
199000
CY2023Q1 us-gaap Operating Lease Liability
OperatingLeaseLiability
1781000
CY2023Q1 us-gaap Finite Lived Intangible Assets Net
FiniteLivedIntangibleAssetsNet
7669000
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Remainder Of Fiscal Year
FiniteLivedIntangibleAssetsAmortizationExpenseRemainderOfFiscalYear
641000
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Next Twelve Months
FiniteLivedIntangibleAssetsAmortizationExpenseNextTwelveMonths
855000
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Year Two
FiniteLivedIntangibleAssetsAmortizationExpenseYearTwo
855000
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Year Three
FiniteLivedIntangibleAssetsAmortizationExpenseYearThree
855000
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Year Four
FiniteLivedIntangibleAssetsAmortizationExpenseYearFour
855000
CY2023Q1 rytm Finite Lived Intangible Asset Expected Amortization After Year Four
FiniteLivedIntangibleAssetExpectedAmortizationAfterYearFour
3608000
CY2023Q1 us-gaap Finite Lived Intangible Assets Net
FiniteLivedIntangibleAssetsNet
7669000
CY2022Q1 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
0
CY2023Q1 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
0

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