Stifel reiterates Buy rating on Rhythm Pharmaceuticals stock after positive trial data

Investing.com - Stifel maintained its Buy rating and $94.00 price target on Rhythm Pharmaceuticals (NASDAQ:RYTM), which currently trades at $82.20 and sports a $5.19 billion market cap, following positive Phase 2 trial results for bivamelagon in Hypothalamic Obesity (HO). The company maintains impressive gross profit margins of 89.62% and strong liquidity with a current ratio of 3.3. According to InvestingPro, analysts are notably bullish on the stock, with price targets ranging from $72 to $94.

The research firm highlighted that the clinical data "clearly show bivamelagon is a drug with efficacy that is in the ballpark of setmelanotide," providing Rhythm with an opportunity to extend its MC4R franchise intellectual property from approximately 2034 to beyond 2040. With revenue growth of nearly 49% in the last twelve months, the company shows strong commercial momentum. Discover more insights about RYTM’s growth potential in the comprehensive InvestingPro Research Report, which includes 12 key ProTips and detailed financial analysis.

Stifel had previously established that bivamelagon would need to demonstrate at least 75% of setmelanotide’s efficacy while offering oral administration and comparable safety profiles to be considered successful.

The trial results exceeded these expectations, with bivamelagon showing efficacy "within the setmelanotide margin" while demonstrating lower pigmentation rates and high study retention rates.

The extended patent protection through 2040 could provide "substantial upside" to Stifel’s discounted cash flow analysis while enhancing Rhythm Pharmaceuticals’ strategic value in the marketplace.

In other recent news, Rhythm Pharmaceuticals reported positive results from its Phase 2 trial of bivamelagon, an investigational oral drug for acquired hypothalamic obesity. The trial demonstrated significant reductions in body mass index (BMI), with the 600mg dose cohort achieving a 9.3% reduction, and the 400mg cohort showing a 7.7% reduction, while the placebo group experienced a 2.2% increase. Additionally, patients reported meaningful reductions in hunger scores, with the 600mg and 400mg doses leading to greater than 2.8-point reductions on a 10-point scale. Rhythm plans to consult with the FDA and European regulators regarding a Phase 3 trial design. Leerink Partners has initiated coverage on Rhythm Pharmaceuticals with an Outperform rating, citing the company’s strategy focused on rare genetic obesity treatments as a driver for revenue expansion. Citizens JMP also reiterated a Market Outperform rating, noting the potential of bivamelagon and other investigational drugs to expand Rhythm’s treatment options. These developments highlight Rhythm’s ongoing efforts to advance its pipeline of treatments for rare metabolic disorders.

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