Rhythm Grabs A New Obesity Approval; How It Edged In Where Lilly, Novo 'Have Fallen Flat'

Rhythm Pharmaceuticals (RYTM) stock initially surged, but then tumbled, Friday after the Food and Drug Administration signed off on its obesity drug for patients with a rare, hunger-spiking disease.

The company’s Imcivree already has approval for a pool of roughly 7,500 patients in the U.S. with genetically driven forms of obesity. Now, the new approval in patients with acquired hypothalamic obesity, or aHO, expands the patient population for Imcivree to around 17,500 in the U.S., RBC Capital Markets analyst Brian Abrahams said in a report.

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With the approval, Rhythm has unlocked a “sizable” market opportunity, Leerink Partners analyst Thomas Smith said in a client note.

“Overall, we believe the FDA’s approval of Imcivree in aHO reinforces RYTM’s leadership position in the genetically linked obesity space, and see strong potential for future franchise growth in the quarters ahead,” he said.

But on today’s stock market, shares of Rhythm Pharmaceuticals fell 3.2%, closing at 87.45 after earlier rising as much as 10.7% to 100.

Rhythm Pharmaceuticals’ Imcivree Market

Needham analyst Joseph Stringer projects $30 million in 2026 sales of Imcivree for aHO patients. More broadly, analysts project $41 million in sales. He notes Imcivree is now the only approved drug for aHO, a patient population where GLP-1 drugs from Novo Nordisk (NVO) and Eli Lilly (LLY) “have fallen flat.”

RBC’s Abrahams sees a peak of 3,500 patients with aHO on Imcivree, leading to an additional $1.3 billion in revenue.

In testing, patients had an 18.4% reduction in their body mass index, or BMI, after a year of treatment. BMI, which doctors acknowledge is an imperfect tool, measures body fat based on height and weight. As expected, the label doesn’t suggest Imcivree can treat hyperphagia, or excessive hunger. But data from that part of Rhythm’s testing is in the label.

The approval comes several days after Rhythm Pharmaceuticals said Imcivree missed its mark in another genetically driven form of obesity. Shares also pulled back after the drug showed lackluster results in Prader-Willi syndrome, a condition that causes hyperphagia.

“We can see shares up 20% from current levels, trading around $105-$110, as this regulatory overhang is now removed and investors can focus on the drug launch,” said Abrahams, the RBC analyst.

He rates Rhythm stock an outperform with a 130 price target.

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Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.

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