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Investing.com - Goldman Sachs has resumed coverage on Rhythm Pharmaceuticals (NASDAQ:RYTM) with a Buy rating and a price target of $97.00. The stock, currently trading at $89, has shown remarkable momentum with a 100% return over the past year and is approaching its 52-week high of $89.05.
The investment bank expressed optimism about the size of the Hypothalamic Obesity (HO) market, estimating a peak sales opportunity of $1.9 billion for Rhythm Pharmaceuticals based on physician feedback and Phase 3 study data quality. The company, now valued at $5.66 billion, maintains impressive gross profit margins of nearly 90%.
Goldman Sachs acknowledged ongoing debates regarding market size, treatment willingness (particularly for adults), and penetration pace will likely remain unresolved over the next year as the company pursues regulatory approval for this expansion indication.
The firm highlighted multiple potential de-risking events expected by year-end, including updates for next-generation agents bivamelagon (Phase 3 alignment) and RM-718 (initial clinical data), plus setmelanotide developments in Prader-Willi syndrome.
Goldman Sachs noted that patent protection for next-generation agents extends until the mid-2040s, creating significant potential value for Rhythm shares, especially as the composition of matter patent for Imcivree expires in 2032, with formulation patents lasting until 2034.
In other recent news, Rhythm Pharmaceuticals announced an upsized public offering of 2,058,824 shares of common stock at $85 per share, aiming to raise approximately $175 million in gross proceeds. This offering is part of the company’s ongoing financial activities, with Morgan Stanley (NYSE:MS), BofA Securities, Stifel, and Wells Fargo (NYSE:WFC) Securities acting as joint book-running managers. Meanwhile, Oppenheimer has increased its price target for Rhythm Pharmaceuticals to $110, maintaining an Outperform rating, following positive Phase 2 results for bivamelagon. The drug candidate is seen as a promising alternative to setmelanotide for acquired hypothalamic obesity, with its patent protection expected to extend beyond 2040. Additionally, Leerink Partners raised its price target to $102, citing positive trial data as a significant milestone for the company’s MC4R franchise. Stifel also increased its price target to $123, highlighting the derisked nature of bivamelagon on efficacy and safety fronts. These developments reflect growing confidence in Rhythm Pharmaceuticals’ drug pipeline and future prospects.
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