LG Chem has announced on Tuesday that it has expanded its technology export contract for the rare obesity treatment Bivamelagon with the U.S.-based rare disease specialist Rhythm Pharmaceuticals. The deal has grown from the original 305 million USD to 855 million USD.
Bivamelagon, developed in-house by LG Chem, is an innovative drug candidate licensed globally to Rhythm in January 2024 during its Phase 1 clinical trial. It’s being developed to treat rare obesity conditions, including hypothalamic obesity.
Rhythm has reported positive results from a Phase 2 clinical trial for patients with hypothalamic obesity (HO) and is gearing up to launch a global Phase 3 trial within the year.
MC4R is a receptor in the brain’s hypothalamus that regulates appetite and energy balance. MC4R agonists work by activating this receptor, increasing satiety and suppressing excessive appetite.
The initial agreement between the two companies included a 100 million USD upfront payment, totaling $305 million. It also featured a separate sales royalty structure based on Rhythm’s entire MC4R portfolio (RM-718) sales, with rates increasing according to the number of approved indications for Bivamelagon.
With this contract revision, the total deal value has been boosted to 855 million USD, and the sales royalty structure has been streamlined.
LG Chem is set to receive an additional upfront payment of 350 million USD over the next four years. The companies have agreed to allow the annual conversion of upfront payments into royalties by mutual consent. They’ve also eased the criteria for achieving development, approval, and sales milestones to enhance revenue potential, adding 200 million USD to the milestone payments from the original contract.
While maintaining the existing royalty structure based on the total sales of Rhythm’s MC4R portfolio, they’ve simplified the rate from a tiered structure (low to mid-single digits) based on the number of approved indications to a fixed 1% rate.
Royalty payments are scheduled to begin in January 2029, or earlier if Bivamelagon launches before then, starting from the date of first sales.
Son Ji-woong, President of LG Chem’s Life Sciences Division, stated that this revised agreement underscores both companies’ confidence in Bivamelagon’s value and potential. It’s optimistic that through expanded global development, it’ll be able to offer innovative treatment options to patients with rare obesity sooner rather than later.
