Amendment revised royalty structure from low-to-mid-single digits to 1% on global net sales of Rhythm MC4R agonists, including setmelanotide, bivamelagon and RM-718

Rhythm to pay LG Chem additional fixed payments totaling $350 million over four years

Rhythm secures $750 million term-loan facility led by KKR’s HealthCare Royalty in partnership with Blackstone to support the amended LG Chem agreement, global commercialization efforts and continued pipeline investmen

Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM) announced an amendment to the global exclusive license agreement with LG Chem, Ltd. for bivamelagon, an investigational oral small-molecule melanocortin-4 receptor (MC4R) agonist. The Company also announced a five-year term loan facility led by KKR’s HealthCare Royalty (“HealthCare Royalty”) in partnership with funds managed by Blackstone (“Blackstone”), providing access to up to $750 million of capital.

“MC4R agonism has been shown to achieve a profound impact on patients living with hyperphagia and severe obesity associated with rare MC4R pathway diseases,” said David Meeker, M.D., Chairman, President and Chief Executive Officer of Rhythm. “With its deep scientific expertise, LG Chem succeeded where many failed in developing the first oral MC4R agonist in bivamelagon, which has been shown to achieve clinically meaningful weight loss in patients living with acquired hypothalamic obesity (HO). Our commitment to this program reflects our confidence in bivamelagon’s potential to deliver meaningful benefits for patients and create substantial long-term value for shareholders.”

“This amendment reflects the strong confidence both companies have in the value and potential of bivamelagon,” said Jeewoong Son, President of LG Chem Life Sciences Company. “By expanding global development efforts, we hope to accelerate patient access to an innovative treatment option for rare obesity diseases.”

Bivamelagon Licensing Agreement
In January 2024, Rhythm entered into a global licensing agreement with LG Chem for exclusive worldwide rights to develop and commercialize bivamelagon, then known as LB54640. Under the original agreement, Rhythm paid LG Chem a total of $80 million in cash and $20 million in Rhythm common stock and agreed to potential regulatory and sales milestone payments of up to $205 million, as well as commercial sales royalties of low-to-mid-single digits on global net sales of products within Rhythm’s MC4R portfolio, dependent upon the number of indications approved by regulatory authorities.

Under the terms of the amended agreement, Rhythm will make additional fixed payments totaling $350 million to LG Chem in four installments: $70 million within 15 business days following the effective date of the Amendment, which is Nov. 2, 2026; $100 million in September 2027; $100 million in September 2028; and $80 million in September 2029. In addition, the variable royalty structure in the original agreement will be replaced with a 1% royalty on global net sales of products within Rhythm’s MC4R portfolio, beginning on January 1, 2029, or upon the first commercial sale of bivamelagon, if earlier.

With LG Chem's agreement, Rhythm may satisfy certain of the foregoing fixed payment obligations through additional royalties.

In addition to potential development, regulatory and commercial milestone payments totaling up to $205 million in the original agreement, the amendment includes an additional milestone payment of up to $200 million based on achievement of $3 billion in annual global net sales of its MC4R portfolio.

Term Loan Facility Highlights:
Today, Rhythm also announced that it has entered into a $750 million term-loan facility, with $500 million committed, led by KKR’s HealthCare Royalty in partnership with Blackstone, to support the amended licensing agreement with LG Chem as well as ongoing global commercialization efforts and R&D programs.

The five-year term loan facility includes an initial $250 million draw at closing, which is expected to occur on November 6, 2026, subject to the satisfaction of customary closing conditions, and up to $250 million of additional committed capital through June 30, 2028 at Rhythm’s option, in three delayed-draw tranches consisting of two tranches of $100 million and one tranche of $50 million. In addition, Rhythm has access to an additional $250 million by mutual agreement. Borrowings under the facility will bear interest at the Secured Overnight Financing Rate, or SOFR, plus 4.60%. The five-year loan has no scheduled principal amortization prior to maturity and no equity component. The facility includes customary prepayment premiums that decline over the term of the loan.

In connection with the term loan, Rhythm and HealthCare Royalty have agreed to amend the Company’s existing revenue interest financing agreement, with the amendment expected to become effective upon the closing of the term loan. The amendments remove the debt-like covenants and default provisions, limit the collateral securing the agreement and modify the agreement’s material adverse effect provisions.

“We value our partnership with HealthCare Royalty and welcome our new partnership with Blackstone. We believe the mutually beneficial terms of this financing agreement enhance our financial flexibility while positioning us to create meaningful long-term shareholder value,” said Hunter C. Smith, Chief Financial Officer of Rhythm.

“Rhythm has established a clear leadership position in MC4R pathway diseases, supported by a growing commercial foundation and a differentiated pipeline spanning multiple potential indications,” said Clarke B. Futch, Chairman and Chief Executive Officer of HealthCare Royalty.

M. Craig Shepherd, Senior Managing Director, Blackstone, added, “We are pleased to partner with Rhythm and HealthCare Royalty through a financing structure that supports the Company’s long-term strategy and reflects our shared confidence in the value and potential of its MC4R portfolio.”

J. Wood Capital Advisors served as financial advisor to Rhythm in connection with the financing.