Rhythm, a Boston biotech developing drugs for rare, life-threatening metabolic disorders, has raised $41 million from a group of crossover investors, a signal that an initial public offering could be on the way.
Rhythm plans to use the new funding to push testing of its drug, setmelanotide, into Phase 3 clinical trials for two different metabolic diseases: pro-opiomelanocortin (POMC) deficiency obesity, and leptin receptor (LEPR) deficiency obesity. The company released data from small Phase 2 trials for both conditions in 2016, indicating that the drug was able to meet goals of reducing patients’ hunger and weight.
The $41 million mezzanine round came from existing investors Deerfield Management, Ipsen, OrbiMed, MPM Capital, New Enterprise Associates, Pfizer Venture Investments, Third Rock Ventures, and an unnamed public healthcare investment fund. In October 2014, Rhythm withdrew plans for an IPO a week after Actavis , the Dublin-based drug maker that merged with Allergan (NYSE: AGN) in 2015, bought an option to acquire a subsidiary of Rhythm called Motus Therapeutics. Allergan snagged Motus and a stomach drug it was developing last year for $200 million. Rhythm’s new round, from a mix of venture firms, corporate venture arms, and “crossover” investors that back both private and publicly traded companies, could signal that the company is gearing up at another run at the Nasdaq.
Rhythm’s setmelanotide is a peptide drug that targets a protein called melanocortin 4 receptor, or MC4, which plays a key role in weight and appetite regulation in the brain and doesn’t function properly in people with POMC and LEPR. Rhythm is also studying its use in Prader-Willi syndrome—a condition that can cause an insatiable desire to eat, like LEPR and POMC, as well as other health problems—in a Phase 2 trial.
The company says it plans to develop Phase 2 proof-of-concept studies for other conditions in 2017, including Bardet-Biedl syndrome, Alström syndrome, and POMC heterozygous deficiency obesity.