Rhythm Pharmaceuticals and LG Chem have rewritten the terms of their licensing agreement for the oral obesity and hyperphagia drug bivamelagon, growing the milestone-based deal to $855 million from an earlier limit of $305 million.
The new arrangement, which sets tiered payments and a $3 billion sales benchmark, reflects growing confidence in future sales of the treatment, according to William Blair analyst Alethia Young suggested in a Nov. 3 note.
Originally, Rhythm licensed the melanocortin 4 receptor (MC4R) candidate, known at the time as LB54640, from LG for $80 million in upfront cash, $20 million in Rhythm stock and milestone payments worth as much as $205 million. That deal also included low-to-mid-single-digit royalties on global net sales.
Now, under the new terms, Rhythm has agreed to pour $350 million more into the deal, including $70 million this month, $100 million in September 2027, $100 million in September 2028 and $80 million in September 2029. Meanwhile, the companies agreed to lower royalties of 1% beginning in 2029 or upon the first commercial sale of bivamelagon.
Additionally, the agreement includes a potential $200 million payout for LG if the MC4R portfolio reaches $3 billion in sales. The deal “suggests both parties see that level as a realistic target,” William Blair's Young said.
“Both companies would only do a deal like this if they believed the MC4R franchise has multibillion-dollar potential and a long runway of revenues,” Young said, noting that Rhythm’s approved injectable MC4R drug Imcivree has a patent runway into 2034, with bivamelagon’s potentially extending into the 2040s.
“Essentially, Rhythm is paying more up front to lower its long-term costs on a platform it believes is highly valuable,” the analyst concluded.
Phase 2 results last year revealed that patients receiving bivamelagon lost 9.3% of BMI compared with 2.2% in the placebo arm. The study also demonstrated that the results were comparable to Imcivree’s BMI reduction. Imcivree, which is marketed for hyperphagia and severe obesity, grew sales 29% to $92.1 million in the third quarter of this year, according to Rhythm’s earnings report this morning.
“With its deep scientific expertise, LG Chem succeeded where many failed in developing the first oral MC4R agonist in bivamelagon, which has been shown to achieve clinically meaningful weight loss in patients living with acquired hypothalamic obesity,” Rhythm CEO David Meeker, M.D., said in a release.
Rhythm plans to begin a phase 3 pivotal trial of bivamelagon in hypothalamic obesity by the end of this year, as well as a study in Prader-Willi syndrome in 2027.
To finance the deal as well as ongoing commercialization and R&D efforts, Rhythm entered into a term-loan facility with KKR’s HealthCare Royalty in partnership with Blackstone to the tune of $750 million, with $500 million committed.
“Smart deals and financing like this support our view that this is a top-tier management team,” Young said.
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