Rhythm Pharmaceuticals, a US-based developer of treatments for metabolic disorders, raised $120m yesterday from an initial public offering that provided exits for pharmaceutical companies Pfizer and Ipsen.
The company priced its shares at $17 each on Wednesday, above the IPO’s $14 to $16 range, and increased the number of shares it planned to issue from 6.7 million to 7.05 million. Its stock opened at $23.21 on its first day of trading on the Nasdaq Global Market yesterday and closed at $30.00.
Rhythm is working on peptide drugs that can combat life-threatening metabolic diseases by treating rare genetic deficiencies. Its lead product candidate, setmelanotide, has completed phase 2 proof-of-concept trials for three disorders that cause extreme appetite, leading to obesity.
The funding will be used for additional phase 2 and 3 clinical trials for setmelanotide, and to scale up manufacturing as Rhythm prepares for its commercialisation. It also intends to initiate research on the diagnosis of genetic obesity.
The offering followed $154m in funding, including a $41m round in February this year that included Pfizer Venture Investments, the investment arm of Pfizer, as well as Ipsen, Deerfield Management, OrbiMed, MPM Capital, New Enterprise Associates (NEA) and Third Rock Ventures.
Rhythm had secured $33m in a 2012 series B round featuring Ipsen, Pfizer Venture Investments, MPM Capital, NEA and Third Rock, the last four of which returned for a $40m round, which closed in December 2015 according to the IPO filing, alongside OrbiMed and Baker Brothers Life Sciences.
Pfizer held a 7.2% stake in Rhythm that was diluted to 5.3% in the offering. Other notable shareholders include NEA (a 16.7% stake post-IPO), Third Rock (15.2%), MPM (9.9%), OrbiMed (9.7%) and Baker Brothers (4.4%), while Ipsen retains a 1.9% stake.
Morgan Stanley, BofA Merrill Lynch and Cowen are lead book-running managers for the IPO while Needham & Company is co-manager. They have a 30-day option to buy a further 1.06 million shares, which would increase the size of the offering to almost $138m.