Rhythm Pharma strikes a chord with oversubscribed $120M IPO

The company will use some of the funds to start building commercial operations.

Rhythm Pharmaceuticals has topped its expectations in its IPO, selling more shares—at a higher price—than expected when it announced its intention to go public a few weeks back.

The IPO topped the expected range of $14 to $16, riding the favorable market to be priced at $17 per share, and raised $120 million from the sale of a little over 7 million shares. That came in ahead of Rhythm’s earlier expectation of $115 million.

Boston-based Rhythm—whose shares rocketed after their debut and are now trading on the Nasdaq at $30 under the RYTM ticker—could also add to that tally as underwriters have an option to purchase another block of shares within the next 30 days.

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The successful IPO is another boost for the 2016 Fierce 15 winner as it forges ahead with its lead drug candidate, setmelanotide, for two rare genetic diseases, pro-opiomelanocortin (POMC) deficiency obesity and Prader-Willi syndrome, that cause life-threatening obesity.

In June, Rhythm reported positive results from a phase 2 trial of setmelanotide showing that the melanocortin-4 receptor agonist can be delivered as a once-weekly subcutaneous injection. It also reported some very preliminary data on the drug last year showing that in two POMC patients, it was able to cut body weight down by around four pounds per week over a 42-week period. The two patients—both in their 20s—weighed around 340 lbs. on enrollment into the study.

Setmelanotide is currently in a phase 3 trial in POMC, which is vanishingly rare and only affects around 50 people. With such a tiny patient population, the company is hoping for a short and swift path to registration, aiming to complete enrollment before the end of the year and report data in the first half of 2019.

The biotech also says it plans to devote some of the proceeds of its IPO to start preparing for a commercial launch, along with funding trials of the drug in leptin receptor deficiency obesity and Bardet-Biedl syndrome, another genetic condition characterized by overweight.