Rhythm Pharmaceuticals secures $150 million in funding

BOSTON - Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), a biopharmaceutical company dedicated to rare neuroendocrine diseases, has announced a $150 million investment agreement for the sale of its series A convertible preferred stock. The funding, provided by Perceptive Advisors LLC and other institutional investors, is intended to support clinical development programs, commercial activities, and general corporate purposes.

The transaction is set to close on or about April 15, 2024, with the expectation that the proceeds, along with existing capital, will sustain the company's operations into 2026. This financial boost aims to propel the company past several key milestones, including phase 3 trial results for hypothalamic obesity treatment expected in the first half of 2025.

David Meeker, M.D., Chairman, CEO, and President of Rhythm, expressed gratitude for the continued support from shareholders and confidence in the extended cash runway provided by this financing. Konstantin Poukalov, Managing Director at Perceptive Advisors, praised Rhythm's execution of its development and commercial strategies, particularly with its lead asset, IMCIVREE® (setmelanotide), now approved in 14 countries.

The preferred stock will be convertible into common stock at a premium, with conditions allowing for mandatory conversion by the company under certain circumstances. Additionally, the preferred stock comes with a 6% cumulative annual dividend and certain registration rights for investors.

Rhythm's lead asset, IMCIVREE®, is an FDA-approved treatment for obesity-related to certain genetic disorders and is advancing in clinical development for other rare diseases. The company warns that setmelanotide is not indicated for all types of obesity, and it comes with contraindications and potential adverse reactions.

This funding announcement is based on a press release statement.

Rhythm Pharmaceuticals' recent investment agreement for $150 million in series A convertible preferred stock is a significant step to support its clinical development and commercial activities. The company's financial strategy appears to be robust, as evidenced by the InvestingPro Data, which shows a market capitalization of $2.61 billion. This demonstrates the substantial size of the company within its sector. Moreover, the company has shown an impressive revenue growth of 227.56% over the last twelve months as of Q1 2023, underscoring the potential of its commercial strategies and product offerings.

InvestingPro Tips highlight that Rhythm Pharmaceuticals has an outstanding gross profit margin of 87.99%, reflecting efficient operations and a strong pricing strategy for its products. However, it's important to note that analysts have revised their earnings downwards for the upcoming period, which could be a point of concern for investors looking at long-term profitability. Additionally, Rhythm's stock price has experienced significant volatility, with a high return over the last year of 142.88%, but also a notable price uptick over the last six months of 89.01%. This suggests that while the company's stock has been performing well, investors should be prepared for potential fluctuations in the market.

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For those interested in a deeper analysis, InvestingPro offers additional insights and metrics. There are 13 more InvestingPro Tips available for Rhythm Pharmaceuticals, which can be found at https://www.investing.com/pro/RYTM. Investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing them with a wealth of information to make informed decisions.

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