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On Thursday, Citizens JMP analyst Jonathan Wolleben increased the price target on Rhythm Pharmaceuticals (NASDAQ:RYTM) to $81.00, up from the previous $75.00, while retaining a Market Outperform rating on the stock. Currently trading at $53.32 with a market capitalization of $3.28 billion, RYTM has experienced a 7.66% decline over the past week. According to InvestingPro analysis, the company shows impressive gross profit margins and strong revenue growth potential. The revision follows Rhythm’s positive commercial dynamics for Imcivree™ and its steady growth projections in approved indications.
Wolleben expressed optimism for the drug Imcivree™, citing the company’s efforts to broaden its use into new indications. With an impressive gross profit margin of 89.73% and revenue growth of 68.06% in the last twelve months, the company demonstrates strong commercial execution. He specifically noted the anticipation for Phase 3 data on setmelanotide in the treatment of acquired hypothalamic obesity (HO), a condition that could significantly enlarge the potential market for the drug. The analyst highlighted an expected increase in the addressable patient population in the U.S. by 5,000 to 10,000 individuals, with similar figures projected in Europe and a range of 5,000 to 8,000 in Japan. For detailed valuation metrics and growth potential analysis, visit InvestingPro.
The confidence in setmelanotide’s efficacy for HO patients is supported by positive results from the open-label Phase 2 trial, where all 12 participants saw clinically significant reductions in body mass index (BMI). Wolleben underscored the high probability (80%) of the drug working in HO, based on the consistent BMI benefit observed in the trial.
Furthermore, the analyst pointed out the low dropout rate in the trial, with less than 10% of participants leaving and nearly all continuing into the open-label extension. This suggests strong patient interest in setmelanotide. Wolleben also anticipates the Phase 3 results will positively influence the perception of Rhythm’s next-generation MC4R agonists.
Looking ahead, Wolleben mentioned the expected Phase 2 data for oral candidate bivamelagon in HO, set to be released in the second half of 2025, and the likelihood of data from weekly subcutaneous candidate RM-718 emerging within the year. With analyst price targets ranging from $60 to $84 and a consensus recommendation leaning strongly bullish, market expectations align with the company’s potential. He concluded by reiterating the firm’s high conviction in setmelanotide’s success and Rhythm Pharmaceuticals’ status as a favored company in 2025, given the progress across its pipeline and the multiple near-term catalysts. For comprehensive analysis and additional insights, access the full Pro Research Report available on InvestingPro.
In other recent news, Rhythm Pharmaceuticals reported its fourth-quarter 2024 earnings, showcasing a narrower-than-anticipated loss per share and a revenue beat. The company posted an actual EPS of -$0.72, surpassing the forecasted -$0.74, while revenue reached $41.8 million, exceeding expectations of $36.04 million. The revenue increase reflects strong sales growth, particularly in global sales of IMCIVRI, which rose to $41.8 million from $24.2 million in the previous year. For the full year, sales reached $130.1 million, up from $77.4 million in 2023. Additionally, Rhythm Pharmaceuticals raised $75 million through an ATM equity offering, and cash reserves are expected to fund operations into 2027.
These recent developments have been supported by the company’s strategic moves, including expanded indications for its key product, IMCIVRI. Furthermore, the company is preparing for significant milestones, such as the Phase III hypothalamic obesity trial readout anticipated in the second quarter of 2025. Analyst firms have not reported any upgrades or downgrades for Rhythm Pharmaceuticals in the recent period. The company continues to expand its international presence, now operating in over 15 countries, and has announced a new strategic partnership in Turkey.
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