Shares of Rhythm Pharmaceuticals jumped 24% after rumors surfaced that AstraZeneca had put in a $10 billion proposal to acquire the biotech, which specializes in rare neuroendocrine diseases.
The Wall Street Journal quoted sources familiar with the situation on the possible deal. Sources say AstraZeneca has reportedly offered $124 per share for Rhythm.
Strategic Fit in the Metabolic Space
William Blair said that he thought this company would be a good strategic pickup for AstraZeneca. The company had identified Rhythm as a potential target for takeover earlier this year, and several companies were identified for its metabolic focus.
Any large-cap biopharma company with a metabolic (diabetes, obesity, etc.) interest could be interested in this company, the firm said. Of course, in our opinion, that’s pretty much all the biopharma companies in the world.
Imcivree Drives Growth and Revenue Expectations
The buyout’s doctor of the moment would be the injectable weight loss drug, Imcivree, which was approved in March for its third indication by the FDA, this time for acquired hypothalamic obesity (aHO). William Blair anticipated that the drug could hit $3.6 billion in sales by 2032, not including the potential for an approval in Prader-Willi syndrome. The company says it will conduct a Phase 3 study of that relatively uncommon disease later this year.
Rhythm earlier this week said it had sold $92.1 million of Imcivree worldwide in the third quarter, up 29% from the last quarter. As of the end of September, the company had received more than 700 patient start forms for the drug from more than 500 prescribers, the earnings report said.
Strong Market Position in Rare Indications
One of the most promising indications is aHO, or accelerated and sustained weight gain resulting from hypothalamic injury or dysfunction, in which up to 28,000 patients in the U.S., Europe and Japan (where the drug is being introduced) could be treated, said William Blair. Imcivree, also approved in 2020, is also approved for chronic weight management in people who have a certain type of genetic mutation/s, and Bardet-Biedl syndrome.
Much of what we have always loved about the aHO opportunity is that we do not see any competition ahead or behind it, William Blair wrote. “GLPs don’t work there, and setmelanotide [Imcivree] Phase 3 failed to meet primary endpoint.”
But Imcivree’s journey hasn’t been an easy one. The drug was initially tested in a Phase 3 basket trial of various genetic obesities that was unsuccessful earlier this year, before it was approved by the FDA as an aHO. The trial had featured patients with rare, genetically-driven obesities of the MC4R pathway. All four genetic sub-studies failed, and analysts said at least one would make it. Stifel was forecasting $300 million in sales of these genetic indications by 2034.
Next-Generation Pipeline & Clinical Milestones
More drugs are coming behind Imcivree, such as the MC4R-specific agonist bivamelagon for aHO and a Prader-Willi-specific drug called RM-718 for aHO. The company also has a program in discovery for congenital hyperinsulinism.
Bivamelagon will enter a Phase 3 study, and enrollment in a Phase 1/2 study of RM-718 is expected to be finished by the end of the year, the company said in its earnings. In 2027, Rhythm also intends to conduct a study of bivamelagon for hyperphagia related to PWS.
AstraZeneca reported its earnings, and its CEO Pascal Soriot is searching for business development opportunities in oncology, cardiovascular, rare disease, immunology, and respiratory disease. Leerink Partners recently indicated that the U.K. pharma company could be a $10 billion acquisition.
AstraZeneca Reportedly Targets Rhythm Pharmaceuticals
AstraZeneca has reportedly made an offer worth around $10 billion to acquire Rhythm Pharmaceuticals, a company focused on rare metabolic disorders and severe forms of obesity. The reported proposal could strengthen AstraZeneca’s position in the growing metabolic medicine market while expanding its rare disease portfolio. The offer has been reported as non-binding, and neither company has confirmed a completed transaction. Reuters
Why Rhythm Is a Valuable Metabolic Asset
Rhythm Pharmaceuticals develops treatments for rare genetic and neuroendocrine forms of obesity. Its lead product, Imcivree, has gained expanded approval for acquired hypothalamic obesity. For AstraZeneca, acquiring Rhythm could provide an established presence in specialized obesity care and complement its rare disease business through Alexion.
