Rhythm Pharmaceuticals announces $150 million common stock offering

BOSTON - Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), currently valued at $5.59 billion with an impressive 89.62% gross profit margin, announced Wednesday its proposed public offering of $150 million of common stock. The biopharmaceutical company, which focuses on rare neuroendocrine diseases and has shown strong revenue growth of 48.88% over the last twelve months, also plans to grant underwriters a 30-day option to purchase up to an additional $22.5 million of shares.

Morgan Stanley, BofA Securities, Stifel and Wells Fargo Securities will serve as joint book-running managers for the offering, with Canaccord Genuity and Citizens Capital Markets acting as lead managers. According to InvestingPro, the company maintains a healthy financial position with a current ratio of 3.3, indicating strong liquidity to meet its short-term obligations.

The company noted that the offering is subject to market and other customary closing conditions, with no guarantee regarding completion timing or final terms.

The proposed offering will be made through a shelf registration statement on Form S-3 that became effective on March 2, 2023. A preliminary prospectus supplement related to the offering will be filed with the Securities and Exchange Commission.

Rhythm Pharmaceuticals specializes in developing treatments for patients with rare neuroendocrine diseases. The company did not specify how it intends to use the proceeds from the offering in its press release statement.

The announcement comes as part of the company’s ongoing financial activities, though the offering’s completion remains contingent on market conditions and other factors.

In other recent news, Rhythm Pharmaceuticals reported positive results from its Phase 2 trial of bivamelagon, an investigational oral melanocortin-4 receptor agonist, for treating acquired hypothalamic obesity. The trial demonstrated statistically significant reductions in body mass index (BMI) for patients in the 600mg and 400mg cohorts, with reductions of 9.3% and 7.7% respectively, while the placebo group saw a 2.2% increase. Additionally, patients reported meaningful reductions in hunger scores, with the 600mg and 400mg cohorts achieving reductions greater than 2.8 points on a 10-point scale. Rhythm Pharmaceuticals plans to seek regulatory input on a Phase 3 trial design and is working on refining the drug’s formulation for improved tolerability.

Analysts have responded positively to these developments. Stifel raised its price target for Rhythm Pharmaceuticals to $123, highlighting the potential for bivamelagon to extend the company’s MC4R franchise beyond 2040. BofA Securities also increased its price target to $95 following the promising Phase 2 trial results, noting that bivamelagon could offer similar efficacy to setmelanotide with more convenient once-daily oral dosing. Both firms maintained a Buy rating on the stock, reflecting confidence in the drug’s prospects. The company is preparing for discussions with the FDA and European regulators to advance to Phase 3 trials.

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