Boston-based Rhythm Pharmaceuticals is announcing today it has raised $25 million in a Series B financing round, bringing the total amount of capital hauled in by the two-year-old company to $65 million. Existing investors MPM Capital, New Enterprise Associates, and Third Rock Ventures participated in the funding, along with new investor Ipsen, the Paris-based drugmaker.
Rhythm was founded on two compounds licensed from Ipsen—one to treat a digestion-related complication of diabetes, and another to treat severe obesity in people who have diabetes or are at risk of developing it. CEO Keith Gottesdiener says Ipsen’s decision to sign on as an investor “shows what looks to them like a lot of progress with these compounds.”
Rhythm’s lead compound, RM-131, is in mid-stage trials to treat diabetic gastroparesis, a disorder marked by the delayed emptying of food from the stomach, which causes abdominal pain and bloating. Rhythm estimates that about one-third of the 24 million Americans with diabetes suffer from gastroparesis. There is one treatment—the generic drug metoclopramide—but it can cause a dangerous muscle disorder and therefore is not widely used. RM-131 is derived from ghrelin, a hormone in the stomach that promotes the movement of food through the digestive tract.
On May 22, Rhythm announced that in an early trial, RM-131 reduced gastric emptying time by 66 percent. “That effect is the strongest seen with any drug that has effects on gastric mobility in diabetes,” Gottesdiener says. “That was the data that really encouraged us to go forward [with the trials] and convincing people to invest in the Series B.”
A couple weeks later, Rhythm initiated mid-stage trials of RM-131. If all goes well, Gottesdiener says, those trials will wrap up by mid-2013 and the company will begin discussions with the FDA about an appropriate design for the pivotal trials necessary to gain market approval.
The company’s second compound, RM-493, is now in early-stage testing for the treatment of obesity related to diabetes. The drug targets a protein called melanocortin type 4 (MC4) receptor, and in so doing, it is designed to curb appetite. In animal models, the drug produced weight-loss results similar to those seen in patients who have gastric-bypass surgery. “Gastric bypass has been a particular focus for potential new targets because of its effects on both weight loss and insulin sensitivity,” says Bart Henderson, co-founder and president of Rhythm.
Henderson says the new funding will support both compounds through mid-stage trials, after which Rhythm will seek out development partnerships.
Working with deep-pocketed pharma partners will help Rhythm navigate what has become an increasingly challenging regulatory environment in diabetes and obesity. A few years back, the FDA began requiring large and expensive trials for diabetes drugmakers, insisting they show their drugs don’t raise the risk of heart attack or stroke. The higher regulatory hurdles forced many to abandon the field. San Diego-based Phenomix had to shut down because it couldn’t afford to run trials of its experimental diabetes drug. Companies working on obesity, including Mountain View, CA-based Vivus (NASDAQ: VVUS) and San Diego-based Orexigen (NASDAQ: OREX), have seen significant delays in their efforts to get their drugs through the FDA.
Gottesdiener says he’s optimistic about the future of research in both obesity and diabetes. “I think we’ll learn more in the next six or 12 months as some of the [obesity] compounds before the FDA move forward,” he says. “Diabetes is a little more complicated. We think the regulatory environment is challenging, but it may also relate to the fact that coming up with new mechanisms has been extremely difficult.”
Gottesdiener joined Rhythm as CEO last November after 16 years at Merck (NYSE: MRK), where he developed drugs to treat diabetes and obesity. “I really wanted to be involved in a company that was working on new mechanisms,” he says. “That’s what drew me here. There’s been a damper on research in the past couple of years, but I think the need for new therapies is incredibly compelling.”