Oppenheimer has initiated coverage on Rhythm Pharmaceuticals Inc. (NASDAQ:RYTM), highlighting the company's focus on developing treatments for rare obesity disorders, a niche yet crucial area in the pharmaceutical industry. Rhythm Pharmaceuticals distinguishes itself by addressing conditions that standard treatments often fail to manage effectively.
The company's growth is propelled by the global rollout of Imcivree, a drug designed for several genetic obesity conditions. In the third quarter of 2024, Rhythm Pharmaceuticals reported $33.3 million in revenue from global sales of IMCIVREE, marking a 14% increase sequentially. The U.S. market contributed $23.3 million, or 70% of the product revenue.
Oppenheimer is particularly optimistic about Rhythm's progress in treating hypothalamic obesity, an acquired condition with significant development potential. Phase 3 trial results are anticipated in the first half of 2025, which could further solidify the company's position in the market.
Rhythm Pharmaceuticals' expertise in MC4 biology is a key factor in its long-term success. As Imcivree's approved uses expand and new pipeline drugs with improved efficacy and convenience advance, the company is enhancing its efforts to identify patients with genetic obesity. The analyst anticipates significant growth opportunities for Rhythm in 2025 and beyond, tapping into a multi-billion-dollar total addressable market.
It's noted that severe obesity caused by MC4R pathway defects does not respond well to popular GLP-1 drugs, such as Novo Nordisk A/S’s Wegovy or Eli Lilly And Co’s Zepbound. This positions Rhythm's treatments in a less crowded space with little competition. Palatin Technologies Inc. is also active in this area, marketing Vyleesi for sexual disorders and testing it with Zepbound for general obesity, with results expected in early 2025.
At last check, RYTM stock was up 1.71% at $56.43, reflecting investor confidence in Rhythm Pharmaceuticals' innovative approach to tackling rare obesity disorders.
