Full Press Release Details
Rhythm Pharmaceuticals
Secures $150 Million in Convertible Preferred Stock Financing
financing and existing cash on-hand sufficient to fund planned operations into 2026 --
BOSTON, April 1, 2024 - 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.
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 provide the capital we need to execute our corporate strategy through
multiple potentially value-creating milestones, with sufficient cash runway well beyond our anticipated 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 Pharmaceuticals
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 Indication
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.
Setmelanotide is not
indicated for the treatment of patients with the following conditions as setmelanotide would not be expected to be effective:
Prior serious hypersensitivity
to setmelanotide or any of the excipients in IMCIVREE. Serious hypersensitivity reactions (e.g., anaphylaxis) have been reported.
WARNINGS AND PRECAUTIONS
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.
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.
reactions (incidence 20%) included skin hyperpigmentation, injection site reactions, nausea, headache, diarrhea, abdominal pain,