Building up its rare obesity pipeline, Rhythm Pharma to raise $150M

With fresh data in-hand for a slew of late-stage clinical trials in rare obesity diseases, Rhythm Pharma $RYTM signaled plans today to raise $150 million in a follow-on offering.

Although investors aren’t thrilled with the dilution (an offering of this size will make a dent, considering Rhythm’s market cap is only $850 million), the cash sets the company up for years of R&D, clinical work, and commercialization.

Keith Gottesdiener

Just yesterday, the company reported out updated data on its lead drug setmelanotide, a melanocortin-4 receptor (MC4R) agonist being tested against several rare obesity diseases. The company’s most advanced programs are in POMC deficiency obesity and LepR deficiency obesity — both of which are in Phase III trials. Rhythm’s SEC filing noted that $42 million of the company’s total raise is planned for these two indications, taking both through FDA approval and commercialization.

Rhythm’s also shared updated data from the very few patients being studied in the Bardet-Biedl Syndrome trial. Back in October, Rhythm announced proof-of-concept in BBS from five patients. Since then, all four patients who were categorized as weight loss responders in the initial readout continue to lose weight. At 46-60 weeks, patients achieved an average weight loss of 18.5% and an average hunger score decrease of 74.2%. Four additional patients were enrolled in the study and have been on the treatment for “a short duration.” Two are showing promising responses, the third is too early to tell, and the fourth showed no improvement, the company said.

Rhythm also reported that it’s achieved proof-of-concept in Alström syndrome, a rare autosomal recessive disease in which childhood obesity occurs. Again, the trial involved very few patients. The first patient experienced weight loss of 23.2% and a 45.5% decrease in hunger score after 38 weeks of treatment with setmelanotide. Three more patients were enrolled in the study and have been on the drug for a short period. One is showing a good response, one is too early, and the third didn’t show any improvement.

About $10 million from the company’s new offering is dedicated to pushing forward the BBS and Alström programs to Phase III trials.

The remaining cash will go toward R&D, the rest of the company’s pipeline, and general corporate purposes.

Keith Gottesdiener, the company’s CEO, had this to say in a statement:

These new clinical data build upon prior clinical experience and reinforce our confidence in setmelanotide as a potentially transformative treatment option. With these results in hand, we are advancing our broad clinical development program for setmelanotide with optimism. We are particularly pleased to progress setmelanotide into a combined Phase III program in BBS and Alström Syndrome, which joins our fully-enrolled POMC and leptin receptor (LEPR) deficiency obesity trials as our third pivotal-stage trial. Based on recent interactions with the U.S. Food and Drug Administration (FDA), we have guidance for a combined trial in BBS and Alström Syndrome. This will enable us to evaluate setmelanotide simultaneously in these two rare genetic disorders of obesity that we believe share a similar pathophysiology and clinical presentation, which could potentially enable a more rapid path to regulatory filing.

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