Rhythm Pharma Gets $21M A Round to Target Obesity, Diabetes

3/15/10

The potential riches for makers of obesity and diabetes treatments are irresistible to biotech entrepreneurs and investors. Rhythm Pharmaceuticals, a drug developer focused on these multibillion-dollar markets, has closed a $21 million Series A round of funding, according to the firm.

Rhythm has been quietly incubating at the Boston offices of MPM Capital. Then on Friday, the startup made some news when it revealed an exclusive licensing deal with the rising French biotech power Ipsen, which is supplying Rhythm with molecules based on two hormones that play roles in regulating metabolic functions. Paris-based Ipsen is a fast-growing biotech that pulled in about $1.4 billion in revenue last year.

Rhythm president and co-founder Bart Henderson, who was previously an entrepreneur-in-residence at MPM, tells Xconomy that the Ipsen molecules, or peptides, compose the entirety of his young startup’s pipeline. The first-round financing, led by MPM and the venture firm New Enterprise Associates, will fund the firm’s first two clinical trials slated to begin this year and in 2011. Ipsen owns a 17-percent stake in Rhythm, and has a seat on the startup’s board of directors.

Henderson says he was familiar with the technology from Paris-based Ipsen from his tenure as chief dealmaker for Cambridge, MA-based Radius Health (another firm backed by MPM), which licensed a modified hormone drug from Ipsen as a treatment for osteoporosis in 2005. Rhythm was formed in 2008 to apply Ipsen’s technology to treating metabolic disorders like diabetes and obesity, he says.

The obesity market is huge. About two-thirds of Americans are considered overweight or obese, according to the Centers of Disease Control and Prevention. What’s more, there are few pharmaceutical options for treating obesity, and the appetite suppressants that are often prescribed today can disrupt peoples’ sleep and cause other side effects. And the fact that so many Americans are overweight is a big reason that there are more than 24 million diabetics in the U.S.

Rhythm has licensed genetically modified versions of the ghrelin and melanocyte-stimulating hormones from Ipsen. The melanocyte-stimulating hormone (MSH) regulates appetite and energy homeostasis in cells, Henderson says, and the startup plans to begin a Phase I clinical trial next year with a compound based on this hormone to treat diabetes and obesity. The firm’s lead compound derived from ghrelin, a hunger-stimulating hormone, will be tested in humans to treat the digestive slowdowns that occur in diabetics and people who undergo abdominal surgeries. For the latter group, that drug could shorten hospital stays, Henderson says.

There’s definitely precedence for using genetically modified hormones for treating obesity and diabetes. San Diego-based Amylin Pharmaceuticals (NASDAQ:AMLN), for instance, is developing a modified hormone—a combination of pramlintide and metreleptin—for treating obesity in partnership with Japanese drug giant Takeda. That drug is now in late-stage clinical development. Swiss drug powerhouse Roche is making progress with the development of a hormone-related compound licensed from Ipsen for treating diabetes. These drugs have caught on after earlier small molecules have failed to deliver results, particularly in the obesity arena.

“Your starting point is the human messenger hormone,” Henderson says, “so you’re making a bet on what Mother Nature has crafted rather than starting de novo with a small molecule.”

Henderson is still operating Rhythm from MPM’s Boston offices along with his co-founder, Elizabeth Stoner, an MPM managing director, who is serving as chief development officer of the startup. They’ve also recruited Harvard Medical School professor Lee Kaplan, who heads obesity research at Massachusetts General Hospital, to serve as a scientific advisor to the company.

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