Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM), a commercial-stage
biopharmaceutical company focused on transforming the lives of
patients and their families living with rare neuroendocrine
diseases, today announced that it has signed 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.
The Company intends to use the proceeds from the offering to
fund its clinical development programs and commercialization
activities, for working capital, and for general corporate
purposes. The transaction is expected to close on or about April
15, 2024, subject to the satisfaction of customary closing
conditions.
Based on its current operating plans, Rhythm expects the net
proceeds from the sale of Preferred Stock, in addition to its 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 2026.
“We are pleased to announce this convertible preferred stock
offering, led by Perceptive Advisors and its Discovery Fund, and we
are pleased to receive continued support from a second, existing
shareholder who chose to participate in this financing,” said David
Meeker, M.D., Chairman, Chief Executive Officer and President of
Rhythm. “This financing is expected to extend our cash runway well
into 2026 and beyond multiple potentially value-creating milestones
including the topline data readout from our phase 3 trial in
hypothalamic obesity in the first half of 2025.”
“Rhythm – with its lead asset IMCIVREE® (setmelanotide) approved
and available in 14 countries, including the United States, to
treat certain rare melanocortin-4 receptor diseases – has executed
very well against its development, regulatory and commercial
strategies on a global level,” said Konstantin Poukalov, Managing
Director and Perceptive Discovery Co-Head. “We believe the Company
has a clear and achievable global vision to address the unmet needs
in additional rare MC4R pathway diseases, including hypothalamic
obesity, with setmelanotide and its additional pipeline
assets.”
Following the expiration or termination of any applicable
waiting period under the HSR Act, the Preferred Stock will be
convertible into common stock at any time at an initial conversion
rate of 20.8333 shares of common stock per $1,000 of liquidation
preference, implying a conversion price of $48 per share, which is
a 19% premium to the Company’s 10-day trailing volume weighted
average price. The conversion rate is subject to customary
adjustments, and adjustment in respect of certain dilutive
issuances. The Company also can require conversion if the price of
its common stock exceeds 250% of the implied conversion price for
20 trading days in a 30-trading day period, subject to certain
requirements.
The Company has the right to redeem all, but not less than all,
of the Preferred Stock for the then applicable liquidation
preference, which is initially par, on and after the five-year
anniversary of its issuance.
Holders of the Preferred Stock will be entitled to a 6%
cumulative annual dividend, commencing on the second anniversary of
closing. Dividends will be compounded quarterly, and payable
in cash or in kind at the Company’s option. The Preferred Stock
will vote with the common stock on an as-converted basis, subject
to satisfaction of certain antitrust-related conditions.
Holders of the Preferred Stock are entitled to 175% of the
liquidation preference upon certain corporate events, including a
change of control or liquidation of the Company.
The Company has agreed to grant the investors certain
registration rights with respect to the common stock underlying the
Preferred Stock.
J. Wood Capital Advisors acted as financial advisor and Latham
& Watkins LLP acted as legal counsel to the Company on the
transaction. Ropes & Gray LLP acted as legal counsel to
Perceptive Advisors.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the Preferred Stock, nor shall
there be any sale of the Preferred Stock in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful under the securities laws of any such state or
jurisdiction.
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
investigational MC4R agonists LB54640 and 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 BBS or loss-of-function biallelic POMC,
including PCSK1, deficiency or biallelic LEPR deficiency in adults
and children 6 years of age and above. In Europe, setmelanotide
should be prescribed and supervised by a physician with expertise
in obesity with underlying genetic etiology.
Limitations of UseSetmelanotide 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
benign
- Other types of obesity not related to POMC, PCSK1 or LEPR
deficiency, or BBS, including obesity associated with other genetic
syndromes and general (polygenic) obesity.
ContraindicationPrior serious hypersensitivity
to setmelanotide or any of the excipients in IMCIVREE. Serious
hypersensitivity reactions (e.g., anaphylaxis) have been
reported.
WARNINGS AND PRECAUTIONS
Skin Pigmentation and Darkening of Pre-Existing
Nevi: Generalized increased skin pigmentation and
darkening of pre-existing nevi have occurred because of its
pharmacologic effect. Full body skin examinations prior to
initiation and periodically during treatment should be conducted to
monitor pre-existing and new pigmentary lesions.
Heart rate and blood pressure monitoring: In
Europe, 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.
Disturbance in Sexual Arousal: Spontaneous
penile erections in males and sexual adverse reactions in females
have occurred. Patients who have an erection lasting longer than 4
hours should seek emergency medical attention.
Depression and Suicidal Ideation: Depression
and suicidal ideation have occurred. Patients should be monitored
for new onset or worsening depression or suicidal thoughts or
behaviors. Consideration should be given to discontinuing
setmelanotide if patients experience suicidal thoughts or
behaviors, or clinically significant or persistent depression
symptoms occur.
Hypersensitivity Reactions: Serious
hypersensitivity reactions (e.g., anaphylaxis) have been reported.
If suspected, advise patients to promptly seek medical attention
and discontinue setmelanotide.
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. In Europe, the prescribing
physician should monitor growth (height and weight) using age- and
sex-appropriate growth curves.
Risk of Serious Adverse Reactions Due to Benzyl Alcohol
Preservative in Neonates and Low Birth Weight Infants:
Setmelanotide is not approved for use in neonates or infants.
Serious and fatal adverse reactions including “gasping syndrome”
can occur in neonates and low birth weight infants treated with
benzyl alcohol-preserved drugs.
ADVERSE REACTIONS
Most common adverse reactions (incidence ≥20%) included skin
hyperpigmentation, injection site reactions, nausea, headache,
diarrhea, abdominal pain, vomiting, depression, and spontaneous
penile erection.
USE IN SPECIFIC POPULATIONS
Lactation: Not recommended when
breastfeeding.
To report SUSPECTED ADVERSE REACTIONS, contact Rhythm
Pharmaceuticals at +1 (833) 789-6337 or FDA at 1-800-FDA-1088 or
www.fda.gov/medwatch. See section 4.8 of the Summary of Product
Characteristics for information on reporting suspected adverse
reactions in Europe.
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 potential, safety, efficacy, and regulatory and
clinical progress of, and our business strategy and plans for, our
drug products, the anticipated benefits of and activities under the
investment transaction with Perceptive, our use of proceeds from
the transaction with Perceptive, the expected timing for closing of
the transaction, our expectation that the transaction with
Perceptive will provide us capital to execute our corporate
strategy in 2024 and 2025; and the issuance of dividends, and the
sufficiency of our cash, cash equivalents and short-term
investments to fund our operations. Statements using word such as
“expect”, “anticipate”, “believe”, “may”, “will” and similar terms
are also forward-looking statements. Such statements are subject to
numerous risks and uncertainties, including, but not limited to,
whether the conditions for the closing of the investment
transaction; our ability to enroll patients in clinical trials, the
design and outcome of clinical trials, the impact of competition,
the ability to achieve or obtain necessary regulatory approvals,
risks associated with data analysis and reporting, our ability to
successfully commercialize setmelanotide, our liquidity and
expenses, our ability to retain our key employees and consultants,
and to attract, retain and motivate qualified personnel, and
general economic conditions, 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 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.
Corporate
Contact:David ConnollyHead of 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 (NASDAQ:RYTM)
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Rhythm Pharmaceuticals (NASDAQ:RYTM)
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