UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549


SCHEDULE 13D

Under the Securities Exchange Act of 1934

RHYTHM PHARMACEUTICALS, INC.

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(Name of Issuer)

COMMON STOCK

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(Title of Class of Securities)

76243J105

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(CUSIP Number)

OrbiMed Advisors LLC
OrbiMed Capital GP V LLC
Samuel D. Isaly


601 Lexington Avenue, 54th Floor
New York, NY 10022
Telephone:  (212) 739-6400

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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

October 10, 2017

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(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of § 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ☐.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7(b) for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

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(1)

This percentage is calculated based upon 27,131,484 outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Rhythm Pharmaceuticals, Inc. (the “Issuer”), as set forth in the Issuer’s Form 424B4, filed with the Securities and Exchange Commission on October 5, 2017.

 

             

(1)

This percentage is calculated based upon 27,131,484 outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Rhythm Pharmaceuticals, Inc. (the “Issuer”), as set forth in the Issuer’s Form 424B4, filed with the Securities and Exchange Commission on October 5, 2017.

 

          

(1)

This percentage is calculated based upon 27,131,484 outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Rhythm Pharmaceuticals, Inc. (the “Issuer”), as set forth in the Issuer’s Form 424B4, filed with the Securities and Exchange Commission on October 5, 2017.

                   

Item 1.

Security and Issuer

This Schedule 13D (this “Statement”) relates to the common stock, par value $0.001 per share (the “Shares”), of Rhythm Pharmaceuticals, Inc., a corporation organized under the laws of Delaware (the “Issuer”), with its principal executive offices located at 500 Boylston Street, 11^th floor, Boston, MA 02116.  The common stock is listed on the NASDAQ Global Market under the ticker symbol “RYTM”.  Information given in response to each item shall be deemed incorporated by reference in all other items, as applicable.

On October 10, 2017, the Issuer completed its initial public offering pursuant to which the Issuer agreed to issue and sell to the participants 8,107,500 Shares (the “IPO”).  The purchase price for each Share was $17.00.  As a result of the IPO, the Issuer’s total number of outstanding Shares increased to 27,131,484.

Item 2.

Identity and Background

(a)            This Statement is being filed by OrbiMed Advisors LLC (“Advisors”), a limited liability company organized under the laws of Delaware, OrbiMed Capital GP V LLC (“GP V”), a limited liability company organized under the laws of Delaware, and Samuel D. Isaly (“Isaly”), an individual (collectively, the “Reporting Persons”).

(b) – (c)  Advisors, a registered investment adviser under the Investment Advisers Act of 1940, as amended, is the sole managing member of GP V, which is the sole general partner of OrbiMed Private Investments V, LP (“OPI V”).  OPI V holds Shares as described herein.  Advisors, GP V, and Isaly have their principal offices at 601 Lexington Avenue, 54th Floor, New York, New York 10022.

The directors and executive officers of Advisors and GP V are set forth on Schedules I and II, attached hereto.  Schedules I and II set forth the following information with respect to each such person:

(i)

name;

(ii)

business address;

(iii)

present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted;

(iv)

citizenship.

(d) – (e)   During the last five years, neither the Reporting Persons nor any Person named in Schedule I or II have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)          Isaly is a citizen of the United States.

Item 3.

Source and Amount of Funds or Other Consideration

On and prior to the close of August 3, 2015, Advisors and GP V, pursuant to their authority under the limited partnership agreement of OPI V, as more particularly referred to in Item 6 below, caused OPI V to purchase 10,937,500 shares of Series A Preferred Stock of the Issuer.  Upon closing of the Issuer’s initial public offering, each share of Series A Preferred Stock converted into Shares on the basis of one Share for each 9.17 shares of Series A Preferred Stock.

 

 

On and prior to the close of December 1, 2015, Advisors and GP V, pursuant to their authority under the limited partnership agreement of OPI V, as more particularly referred to in Item 6 below, caused OPI V to purchase 6,562,500 shares of Series A Preferred Stock of the Issuer.  Upon closing of the Issuer’s initial public offering, each share of Series A Preferred Stock converted into Shares on the basis of one Share for each 9.17 shares of Series A Preferred Stock.

On and prior to the close of January 6, 2017, Advisors and GP V, pursuant to their authority under the limited partnership agreement of OPI V, as more particularly referred to in Item 6 below, caused OPI V to purchase 2,924,766 shares of Series A Preferred Stock of the Issuer.  Upon closing of the Issuer’s initial public offering, each share of Series A Preferred Stock converted into Shares on the basis of one Share for each 9.17 shares of Series A Preferred Stock.

On and prior to the close of August 18, 2017, Advisors and GPV, pursuant to their authority under the limited partnership agreement of OPI V, as more particularly referred to in Item 6 below, caused OPI V to purchase 2,924,765 shares of Series A Preferred Stock of the Issuer.  Upon closing of the Issuer’s initial public offering, each share of Series A Preferred Stock converted into Shares on the basis of one Share for each 9.17 shares of Series A Preferred Stock.

On and prior to the close of October 10, 2017, Advisors and GP V, pursuant to their authority under the limited partnership agreement of OPI V, as more particularly referred to in Item 6 below, caused OPI V to purchase 355,000 Shares.

The source of funds for such purchases was the working capital of OPI V and capital contributions made to OPI V.

As a result of the transactions described in this Item 3, the Reporting Persons may be deemed to be the beneficial owners of approximately 10.7% of the outstanding Shares.  GP V, as the general partner of OPI V, may be deemed to be the beneficial owner of approximately 10.7% of the outstanding Shares.  Advisors, as the managing member of GP V, may be deemed to be the beneficial owner of approximately 10.7% of the outstanding Shares.  Isaly, as the managing member of Advisors and the owner of a controlling interest in Advisors, may be deemed to be the beneficial owner of approximately 10.7% of the outstanding Shares.  None of the Reporting Persons have acquired or disposed of any additional Shares since October 10, 2017.
 

Item 4.

Purpose of Transaction

The Shares initially have been acquired by the Reporting Persons for the purpose of making an investment in the Issuer and not with the intention of acquiring control of the Issuer’s business on behalf of OPI V.

The Reporting Persons from time to time intend to review their investment in the Issuer on the basis of various factors, including the Issuer’s business, financial condition, results of operations and prospects, general economic and industry conditions, the securities markets in general and those for the Issuer’s Shares in particular, as well as other developments and other investment opportunities.  Based upon such review, the Reporting Persons will take such actions in the future as the Reporting Persons may deem appropriate in light of the circumstances existing from time to time.  If the Reporting Persons believe that further investment in the Issuer is attractive, whether because of the market price of the Shares or otherwise, they may acquire Shares or other securities of the Issuer either in the open market or in privately negotiated transactions.  Similarly, depending on market and other factors, the Reporting Persons may determine to dispose of some or all of the Shares currently owned by the Reporting Persons or otherwise acquired by the Reporting Persons either in the open market or in privately negotiated transactions.

 

 

Except as set forth in this Statement, the Reporting Persons have not formulated any plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Issuer or the disposition of securities of the Issuer, (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries, (c) a sale or transfer of a material amount of the assets of the Issuer or any of its subsidiaries, (d) any change in the present Board of Directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board, (e) any material change in the Issuer’s capitalization or dividend policy of the Issuer, (f) any other material change in the Issuer’s business or corporate structure, (g) any change in the Issuer’s charter or bylaws or other instrument corresponding thereto or other action which may impede the acquisition of control of the Issuer by any person, (h) causing a class of the Issuer’s securities to be deregistered or delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act or (j) any action similar to any of those enumerated above.

Item 5.

Interest in Securities of the Issuer

(a) — (b) As of the date of this filing, the Reporting Persons may be deemed, for purposes of Rule 13d-3 of the Act, directly or indirectly, including by reason of their mutual affiliation, to be the beneficial owners of 2,901,295 Shares held of record by OPI V.  Based upon information contained in the Issuer’s Form 424B4, filed with the Securities and Exchange Commission (the “SEC”) on October 5, 2017, such Shares constitutes approximately 10.7% of the issued and outstanding Shares.  Advisors, pursuant to its authority as the sole managing member of GP V, which is the sole general partner of OPI V, may be deemed to indirectly beneficially own the Shares held by OPI V.  GP V, pursuant to its authority as the general partner of OPI V, may be deemed to indirectly beneficially own the Shares held by OPI V.  Isaly, pursuant to his authority as the managing member of Advisors and owner of a controlling interest in Advisors, pursuant to its limited liability company agreement, may be deemed to also indirectly beneficially own the Shares attributable to Advisors.  As a result, Isaly, Advisors and GP V share the power to direct the vote and the disposition of the Shares held of record by OPI V.

In addition, Advisors and GP V, pursuant to their authority under the limited partnership agreement of OPI V, prior to the date of this filing, caused OPI V to enter into the agreements referred to in Item 6 below.

(c)          Except as disclosed in Item 3, none of the Reporting Persons has effected any transaction during the past sixty (60) days in any Shares.  As a result of several transactions effected between 2015 and 2017, prior to OPI V’s purchase of 335,000 Shares in the IPO, OPI V held 23,349,531 shares of Series A Preferred Stock, beneficial ownership of which was attributable to the Reporting Persons as described in Item 5(a)-(b).

(d)          Not applicable.

(e)          Not applicable.

 

 

Item 6.

Contracts, Arrangements, Understandings or Relationship with Respect to Securities of the Issuer

In addition to the relationships between the Reporting Persons described in Items 2, 3 and 5 above, GP V is the sole general partner of OPI V, pursuant to the terms of the limited partnership agreement of OPI V.  Advisors is the sole managing member of GP V, pursuant to the terms of the limited liability company agreement of GP V.  Pursuant to these agreements and relationships, Advisors and GP V have discretionary investment management authority with respect to the assets of OPI V.  Such authority includes the power of GP V and Advisors to vote and otherwise dispose of securities purchased by OPI V.  The number of outstanding Shares held of record by OPI V is 2,901,295.  Advisors and GP V may be considered to hold indirectly 2,901,295 Shares.

Jonathan Silverstein (“Silverstein”), an employee of Advisors, had been a member of the Board of Directors of the Issuer since August 2015. Silverstein stepped down from the board as of the closing of the IPO.

Lock-Up Agreement

In connection with the IPO, OPI V entered into a lock-up agreement with the Issuer (the “Lock-Up Agreement”).  The Lock-Up Agreement provides that, subject to limited exceptions, OPI V will not, during the period ending 180 days after the date of the IPO (the “Lock-Up Period”), directly or indirectly (1) sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any Shares or securities convertible into or exercisable or exchangeable for Shares with respect to which OPI V has or acquires the power of disposition or (2) enter into any swap or other agreement that transfers, in whole or in part, the economic risk of ownership of any such Shares.

After the Lock-Up Period expires, the Reporting Persons’ Shares will be eligible for sale in the public market, subject to any applicable limitations under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), and other applicable U.S. securities laws.

The foregoing description of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Lock-Up Agreement, a copy of which is filed as Exhibit 2 and incorporated herein by reference.

In addition, OPI V and certain other stockholders of the Issuer entered into an amended and restated investors’ rights agreement with the Issuer (the “Investors Rights Agreement”), dated as of August 21, 2017.  Pursuant to the Investor Rights Agreement and subject to the terms and conditions therein, the parties agreed that:

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Piggyback Registration Rights

Form S-3 Registration Rights

Expenses of Registration

Indemnification

Termination of Registration Rights.

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EXHIBIT 1

JOINT FILING AGREEMENT

 

The undersigned hereby agree that the Statement on this Schedule 13D, dated October 20, 2017 (the “Schedule 13D”), with respect to the Shares of Rhythm Pharmaceuticals, Inc. is filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and that this Agreement shall be included as an Exhibit to this Schedule 13D.  Each of the undersigned agrees to be responsible for the timely filing of the Schedule 13D, and for the completeness and accuracy of the information concerning itself contained therein.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 20^th day of October, 2017.

EXHIBIT 2

Lock-Up Agreement

Rhythm Pharmaceuticals, Inc.
Public Offering of Common Stock

May ___, 2017

Morgan Stanley & Co. LLC

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

As Representatives of the several Underwriters,
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, NY 10036

Ladies and Gentlemen:

This letter is being delivered to you in connection with the proposed Underwriting Agreement (the “Underwriting Agreement”), between Rhythm Pharmaceuticals, Inc., a Delaware corporation, including any predecessor or successor company, as the case may be (the “Company”), and each of you as representatives of a group of Underwriters named therein (the “Underwriters”), relating to an underwritten public offering of shares of common stock (“Common Stock”), of the Company (the “Offering”).

In order to induce you and the other Underwriters to enter into the Underwriting Agreement, the undersigned will not, without the prior written consent of the Representatives, offer, sell, contract to sell, pledge or otherwise dispose of, (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any affiliate of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned), directly or indirectly, including the filing (or participation in the filing) of a registration statement (other than a registration statement on Form S-8) with the Securities and Exchange Commission (the “SEC”) in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC promulgated thereunder with respect to, any capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock, or publicly announce an intention to effect any such transaction, for a period from the date hereof until 180 days after the date of the Underwriting Agreement (the “Lock-up Period”).  If the undersigned is an officer or director of the Company, the undersigned further agrees that the foregoing restrictions shall be equally applicable to any issuer-directed shares of Common Stock the undersigned may purchase in the Offering.

The provisions of the immediately preceding paragraph shall not apply to (i) the sale of shares of Common Stock by the undersigned to the Underwriters pursuant to the Underwriting Agreement, (ii) transfers of shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock as a bona fide gift or gifts, (iii) transfers or dispositions of shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned in transactions not involving a disposition for value; (iv) transfers or dispositions of shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests of which are held by the undersigned or the immediate family of the undersigned in a transaction not involving a disposition for value; (v) transfers or dispositions of shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the undersigned;

 

or (vi) distributions of shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for such capital stock to partners, members or stockholders of the undersigned; provided, that in the case of any transfer, disposition or distribution pursuant to clause (ii), (iii), (iv), (v) or (vi), each transferee, donee or distributee shall execute and deliver to the Representatives a lock-up letter in the form of this letter; and provided further, that in the case of any transfer, disposition or distribution pursuant to clause (ii), (iii), (iv) or (vi), no filing by any party (donor, donee, transferor or transferee) under the Exchange Act or other public announcement reporting a reduction in the beneficial ownership of Common Stock held by the undersigned shall be required or shall be made voluntarily in connection with such transfer, disposition or distribution (other than a filing on a Form 5 made after the expiration of the 180-day period referred to in the immediately preceding paragraph).  For purposes of this letter, “immediate family” shall mean any relationship by blood, marriage, domestic partnership, or adoption, not more remote than first cousin.  Furthermore, notwithstanding the restrictions imposed by this letter, the undersigned may, without the prior written consent of the Representatives, (a) exercise an option to purchase shares of Common Stock granted under any equity incentive plan or equity purchase plan of the Company which is described in the registration statement relating to the Offering, provided that the underlying equity securities shall continue to be subject to the restrictions on transfer set forth in this letter, (b) establish a trading plan pursuant to Rule 10b5-l under the Exchange Act for the transfer of shares of Common Stock, provided that such plan does not provide for any transfers of Common Stock, and no filing with the SEC or other public announcement shall be required or voluntarily made by the undersigned or any other person in connection therewith, in each case during the 180-day period referred to in the immediately preceding paragraph, (c) transfer shares of Common Stock to the Company in connection with the termination of the undersigned’s employment with the Company, and (d) transfer or dispose of shares of Common Stock purchased in the Offering from the Underwriters (other than any issuer-directed shares of Common Stock purchased in the Offering by an officer or director of the Company) or on the open market following the Offering; provided that, in the case of clauses (b), (c) and (d) above, no filing with the SEC or other public announcement shall be required or voluntarily made by the undersigned or any other person in connection therewith, in each case during the 180-day period referred to in the immediately preceding paragraph, other than in the case of clause (c) to the extent such filing is required and the employment termination is footnoted or otherwise disclosed therein.

If the undersigned is an officer or director of the Company, (i) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of shares of Common Stock, the Representatives will notify the Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.  Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release.  The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this letter to the extent and for the duration that such terms remain in effect at the time of the transfer.

This letter shall automatically terminate and the undersigned shall be released from all obligations under this letter upon the earliest to occur, if any, of (i) either the Company, on the one hand, or the Representatives, on the other hand, advising the other in writing, prior to the execution of the Underwriting Agreement, that they have determined not to proceed with the Offering, (ii) the Underwriting Agreement being terminated prior to the Closing Date (as defined in the Underwriting Agreement), (iii) the registration statement filed with the SEC with respect to the Offering being withdrawn and (iv) December 31, 2017, in the event that the Underwriting Agreement has not been executed by such date.

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