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South Korean chemical company LG Chem on Friday signed a deal to sell the global licensing rights for an anti-obesity drug candidate named LB54640 to a US' Rhythm Pharmaceuticals for up to US$305 million, the media reported.

As per a company statement, LG Chem will initially receive $100 million and later up to $205 million depending on certain milestones in the process of the drug's development and commercialisation, Yonhap news reported.

In addition, LG Chem will receive royalties depending on the product sales from Rhythm Pharmaceuticals each year, it added.

The drug, an orally administered MC4R molecule, is currently in Phase 2 clinical trials. In the Phase 1 testing, LB54640 demonstrated dose-dependent weight reduction.

MC4R stands for melanocortin-4 receptor, which controls one's appetite.

Under the terms of the agreement, Rhythm will assume the sponsorship of two Phase 2 studies to evaluate the drug for weight loss, the statement said.