AstraZeneca PLC has offered to buy Rhythm Pharmaceuticals Inc. for about $10 billion, according to people familiar with the matter, in a bid to add a fast-growing treatment for rare forms of severe obesity to its rare-disease business.
The British drugmaker proposed $124 a share in cash last month, the people said, and the nonbinding offer is worth as much as $134 a share once payments tied to future milestones are included. The cash portion is about 43% above Rhythm’s closing price of $86.44 on Tuesday. Rhythm shares jumped 28% Wednesday to $110.68 after the approach was reported, giving the Boston company a market value of about $7.6 billion.
A rare-disease fit
Any acquisition would be run through Alexion, the rare-disease unit AstraZeneca bought for $39 billion in 2021, two of the people said. Rhythm’s drug Imcivree treats obesity and insatiable hunger caused by rare genetic conditions and, since a U.S. approval in March, obesity caused by damage to the hypothalamus. That approval broadened the drug’s reach, and Rhythm’s global product revenue rose 29% from the prior quarter to $92.1 million in the third quarter. The company is also developing an oral follow-on drug licensed from LG Chem and a weekly injection.
Obesity has become one of the most contested areas in pharmaceuticals, with forecasts that annual sales across the category could top $100 billion within a decade. Rhythm’s drugs target narrower, genetically defined patient groups than the blockbuster weight-loss shots, but a deal would give AstraZeneca a commercial product in the field while it builds its own obesity pipeline.
Pressure to grow
AstraZeneca, valued at about $292 billion, has had a bumpy few months, with clinical setbacks and speculation about a much larger combination with a U.S. rival weighing on its shares. Chief Executive Pascal Soriot has been trying to turn investors’ attention back to growth.
AstraZeneca declined to comment, and Rhythm didn’t respond to requests for comment. The proposal is nonbinding, and there is no assurance a deal will be reached.
