Rhythm Pharmaceuticals Revises Royalty Deal with LG Chem for Bivamelagon, Adding $350M in Fixed Payments
Rhythm Pharmaceuticals has amended its exclusive license agreement with LG Chem for bivamelagon, replacing portfolio royalties with a 1% royalty rate and adding $350 million in fixed payments by September 2029. A new $200 million sales milestone tied to $3 billion in annual net sales was also introduced, supported by a $750 million loan facility from KKR and Blackstone.
Rhythm Pharmaceuticals has amended its exclusive license agreement with LG Chem for bivamelagon, a drug targeting melanocortin-4 receptor (MC4R) pathway disorders, effective November 2, 2026. Under the revised terms, Rhythm will replace prior variable portfolio royalties—previously set at low-to-mid-single digits—with a fixed 1% royalty on global net sales of its MC4R portfolio, beginning January 1, 2029, or upon first commercial sale of bivamelagon, whichever comes earlier. In exchange, Rhythm will make $350 million in fixed payments to LG Chem: $70 million within 15 business days of the amendment’s effective date, followed by $100 million each in September 2027 and 2028, and $80 million in September 2029. A new performance milestone of up to $200 million is tied to achieving $3 billion in annual net sales across the MC4R portfolio. The agreement is backed by a $750 million five-year term loan facility led by KKR’s HealthCare Royalty and Blackstone, with $500 million committed and an initial draw of $250 million expected at closing on November 6, 2026. Interest will be SOFR plus 4.60%, with no scheduled principal repayments before maturity and no equity component.
The change reflects a strategic shift from variable royalty income to upfront cash flow, likely driven by Rhythm’s need for liquidity to support commercialization and research. The prior revenue-interest agreement with HealthCare Royalty is being amended simultaneously to remove debt-like covenants and default p
This amendment signals a broader trend in biopharma financing: companies increasingly trade future royalty upside for immediate liquidity to fund development and commercialization. Rhythm’s shift from variable royalties to fixed payments reflects growing pressure to deliver near-term financial stability, especially amid uncertain regulatory and market outcomes for niche therapies like bivamelagon. The involvement of major private equity players—KKR and Blackstone—highlights how institutional capital is increasingly shaping the commercialization pathways of rare disease drugs, potentially accelerating time-to-market but also increasing financial risk if milestones are missed. A comparable precedent is the 2018 deal between Vertex Pharmaceuticals and Pfizer, where Vertex secured upfront payments for cystic fibrosis assets in exchange for future royalties, illustrating how such structures can balance innovation with capital needs. The impact on patients may be dual: faster access to treat