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Market Incident

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AI compiled from Infoway · 3 analyzed stories

Rhythm Pharmaceuticals and LG Chem Enter into Amendment to Bivamelagon Exclusive License Agreement

Rhythm Pharmaceuticals amended its exclusive license agreement with LG Chem for bivamelagon. The royalty changed from low-to-mid single digits to 1% on global net sales of Rhythm MC4R agonists, including setmelanotide, bivamelagon and RM-718. Rhythm will pay LG Chem additional fixed payments totaling $350 million over four years.

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What happened

Rhythm Pharma reported a narrower-than-expected quarterly net loss as product revenue rose 29% from the prior quarter on IMCIVREE demand. It amended its LG Chem license for bivamelagon, changing royalties to 1% and adding $350 million in fixed payments over four years, and secured access to up to $750 million in financing.

Global impact / market context

A smaller loss and higher product sales suggest the core business is doing better than expected. The amended deal lowers ongoing royalty costs but adds large fixed payments that use cash. The new financing gives the company money to fund those payments and its obesity pipeline. The key question for ordinary investors is whether sales growth and the new funds are enough to cover the added costs.

What to watch

  1. Check how much of the up-to-$750 million financing is actually used and on what terms, because that shows the real cash available after the $350 million in fixed payments.
  2. Track IMCIVREE product revenue in the next quarter to see if the 29% quarter-over-quarter growth continues, since that growth is the main driver of the narrower loss.
  3. Watch for progress on bivamelagon, the experimental oral obesity therapy, because the amended LG Chem deal ties large payments to this pipeline.

Affected assets

  • LG Chem, Ltd.
  • Rhythm Pharmaceuticals, Inc.

Evidence