Startups focused on treatments for metabolic disorders - one of the key contributing factors in obesity - have raised significant sums of venture capital in recent months.

For these startups, developing treatments for weight disorders is less about controlling the calories consumed and more about focusing on the metabolic systems that regulate how the body uses food.

Last week, Boston-based Rhythm Pharmaceuticals, another new entrant to the obesity field, announced that it has raised $21 million in a Series A funding round from MPM Capital and New Enterprise Associates.

Rhythm is developing treatments for metabolic diseases based on peptide hormones, protein compounds instrumental in introducing changes to a cell’s metabolism. President Bart Henderson said that the company plans to begin clinical trials of two peptide-based treatments in the next two years.

“The obesity pipeline has been relatively thin,” said Henderson, who incubated the company while he was an entrepreneur-in-residence at MPM. “Since obesity and diabetes together are such important health priorities, the clinical development pipeline is in dire need of new approaches.”

Rhythm also announced last week that it licensed compounds and intellectual property related to two peptide hormones from Paris-based biotech company Ipsen. The compounds, ghrelin and melanocyte-stimulating hormone (MSH), are involved in regulating food intake, energy levels, and gastrointestinal function. Henderson said MSH-related therapeutics, linked to signaling systems in the body that regulate appetite and energy, will be targeted to patients suffering from both obesity and diabetes.

Pharmaceuticals tied to ghrelin, which is involved in regulating nutrient uptake and gastrointestinal activity, will focus on potential treatments for gastrointestinal disorders, including diabetic gastroparesis, a condition in which food remains in the stomach for longer than normal, according to Henderson.

Under the terms of the license agreement, Ipsen will receive up to $80 million in payments upon achievement of certain clinical milestones and in royalties on future products. Ipsen will also acquire 17 percent of equity in Rhythm and have a seat on its board of directors.

Given the high and growing global incidence of obesity, it’s no surprise that startups developing new treatments are seeing interest growing from investors.

GROSS STATISTICS

The World Health Organization projects that by 2015, about 2.3 billion adults will be overweight and more than 700 million will be obese. As of 2005, the WHO estimated that at least 400 million adults worldwide were obese, defined as having a body mass index (BMI) of more than 30. (BMI equals weight in kilograms divided by the square of height in meters.)

In addition to Rhythm, other companies that have raised sizeable venture rounds in the past several months for obesity treatments include:

* GI Dynamics, based in Lexington, Massachusetts, raised $15 million in late stage funding in January, according to a securities filing. The company, which develops devices for treatment of obesity and diabetes that can be delivered into the gastrointestinal tract using minimally invasive techniques, has raised $76 million since 2003. Backers include Advanced Technology Ventures, Johnson & Johnson Development Corp., Domain Associates, Medtronic Inc., Polaris Venture Partners, Catalyst Health and Technology Partners and Technology Partners and Cutlass Capital.

* Satiety, based in Palo Alto, California, raised $25 million in late stage funding in September, according to a regulatory filing. The company, which develops minimally invasive treatments for obesity and tools used in weight loss surgery, has raised $86 million since 2001 from Morgenthaler Ventures, Venrock Associates, HLM Venture Partners, Three Arch Partners, Skyline Ventures and Pinnacle Ventures.

* Elixir Pharmaceuticals, based in Cambridge, Massachusetts, raised $12 million in late stage funding in May to develop pharmaceuticals for the treatment of metabolic diseases based on compounds that stimulate interactions between genes and enzymes. Backers in the last round include MPM, ARCH Venture Partners, Oxford Bioscience Partners, the Omega Fund and Physic Ventures. The company has raised $115 million since 2000.

* ValenTX, based in Carpinteria, California, raised $22 million in September to develop an implantable medical device to treat morbid obesity. The company has raised $28 million since 2002 from SV Life Sciences Advisors, EDF Ventures, Affinity Capital Management, Kaiser Permanente Ventures, Sapient Capital Management, TGap Ventures and Covidien Ventures.

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Joanna Glasner
SAN FRANCISCO (Private Equity Week)