Rhythm Pharma draws bullish view at JMP on opportunity in rare genetic obesities

Shares of Rhythm Pharmaceuticals (NASDAQ:RYTM) traded higher on Tuesday after JMP Securities launched its coverage with a Market Outperform recommendation citing its potential against rare genetic obesities, a market that popular GLP-1 class of weight loss drugs have yet to target.

Rhythm’s (RYTM) lead product, Imcivree, is approved in the U.S. for chronic weight management in adults aged six years and older with certain rare genetic diseases of obesity.

With a $64 price target on TYRM, JMP analyst Jonathan Wolleben argued that Imcivree is designed to address a market that weight loss surgery or GLP-1 receptor agonists such as Novo Nordisk’s (NVO) Wegovy (semaglutide) and Eli Lilly’s (LLY) Zepbound are unable to address.

The injection, also known as setmelanotide, is under the FDA’s priority review for obesity associated with a rare genetic disorder called Bardet-Biedl syndrome with a target action date of Dec. 26, 2024.

“RYTM is targeting genetic subsets of obesity with high unmet need that are not addressed with drugs approved for general obesity such as semaglutide (GLP-1 agonist) and tirzepatide (GLP-1/GIP agonist), or even bariatric surgery,” Wolleben wrote.

As key differences with GLP-1s, analysts pointed to Imcivree’s premium pricing and Medicaid coverage for the drug.

Wolleben also cited RYTM management’s track record in rare disease drug development and upcoming Phase 3 data for Imcivree in hypothalamic obesity in H1 2025 as other reasons behind his bullish view.