Total contract value rises by $550 million; global Phase 3 trial expected by year-end
LG Chem to receive $350 million in additional upfront payments over four years; milestones eased
Oral MC4R agonist Bivamelagon advances toward commercialization; royalty structure simplified
LG Chem has significantly expanded its global licensing agreement with US rare-disease biotech Rhythm Pharmaceuticals for the rare obesity treatment Bivamelagon, raising the total contract value to $855 million (about 1.1 trillion won).
LG Chem disclosed Tuesday that it had signed a license amendment with Rhythm covering the global development and commercialization of Bivamelagon, an oral melanocortin-4 receptor (MC4R) agonist.
Bivamelagon is an innovative new drug compound that LG Chem developed in-house and out-licensed to Rhythm at the Phase 1 trial stage in January 2024.
The compound targets rare obesity conditions including hypothalamic obesity. Rhythm recently obtained positive results from a Phase 2 trial in hypothalamic obesity patients, and the drug is now on track to enter a global Phase 3 trial before the end of the year.
The original agreement the two companies signed in 2024 was valued at $305 million, including a $100 million upfront payment. The amendment increases the total contract value by $550 million, bringing it to $855 million.
The revised terms are structured to improve LG Chem's cash inflows and the likelihood of revenue realization. LG Chem will receive $350 million in additional upfront payments in installments from 2026 through 2029, with an option each year to convert a portion of those payments into royalties by mutual agreement. Development, regulatory and sales milestones were also increased by $200 million from the original level, while achievement thresholds were eased to reduce uncertainty around revenue recognition.
The sales royalty structure was also simplified. The two companies agreed to retain the existing approach of calculating royalties based on total sales across Rhythm's MC4R portfolio, but replaced the previous tiered rate — which escalated in the low-to-mid single digits depending on the number of approved indications — with a flat 1 percent rate. Royalty payments will begin in January 2029, or immediately upon the first commercial sale if Bivamelagon launches ahead of schedule.
"LG Chem succeeded in developing an oral MC4R agonist where many companies have struggled, and Bivamelagon has demonstrated meaningful weight-loss effects in earlier clinical trials," Rhythm CEO David Meeker said. "This amendment is a strategic move to accelerate global development and commercialization, grounded in our conviction in Bivamelagon's therapeutic potential."
Son Ji-woong, president of LG Chem's Life Sciences division, said the agreement reflects both companies' confidence in Bivamelagon's value and its potential as a successful new drug. "We will strengthen our collaboration to bring an innovative treatment option to rare obesity patients as quickly as possible, including by advancing into a global Phase 3 trial," Son said.
silverpaper@heraldcorp.com
