Rhythm Pharmaceuticals' Obesity Treatments Target Less Crowded Space, Analyst Sees Long-Term Potential

Oppenheimer initiated coverage on Rhythm Pharmaceuticals Inc. RYTM, a developer of treatment for rare obesity disorders.

The pharmaceutical industry’s focus on weight management is drawing strong investor interest, with Rhythm Pharmaceuticals standing out for targeting rare obesity disorders that standard treatments often fail to address.

The company is steadily growing its business through the global rollout of Imcivree, a drug designed for several genetic obesity conditions.

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Revenue from global sales of IMCIVREE was $33.3 million for the third quarter of 2024, an increase of 14% on a sequential basis, primarily driven by sales for BBS.

In the third quarter of 2024, revenue of $23.3 million, or 70% of product revenue, was generated in the U.S.

Oppenheimer is optimistic about its progress in treating hypothalamic obesity, an acquired condition with high development potential, as Phase 3 trial results are expected in the first half of 2025.

Oppenheimer initiated coverage on Rhythm Pharmaceuticals with an Outperform rating and a price target of $76.

Rhythm’s expertise in MC4 biology positions it for long-term success as Imcivree’s approved uses expand, new pipeline drugs with improved efficacy and convenience advance, and the company enhances its efforts to identify patients with genetic obesity.

The analyst anticipates significant growth opportunities in 2025 and beyond as Rhythm taps into a multi-billion-dollar total addressable market.

The analyst highlights that severe obesity caused by MC4R pathway defects doesn’t respond well to popular GLP-1 drugs like Novo Nordisk A/S’  Wegovy or Eli Lilly And Co’s Zepbound, noting the experts and studies.

The MC4R drug market has little competition. Palatin Technologies Inc. markets Vyleesi (bremelanotide) for sexual disorders and is testing it with Zepbound for general obesity, with results expected in early 2025. Palatin is also developing oral MC4R drugs.

Price Action: RYTM stock is up 1.71% at $56.43 at last check Friday.

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