Rhythm Pharmaceuticals has announced a steady drumbeat of good news for its obesity treatment, leading RYTM stock to triple in a week.
The biotech is working on a treatment for hypothalamic obesity, a form of weight gain that follows an injury to the hypothalamus. The hypothalamus is a region in the brain that controls hunger. Patients with this disorder have abnormally increased appetites.
Patients took Rhythm's treatment for 16 weeks and experienced an average 15.8% decrease in body weight — or 35.1 pounds, the company said earlier this month. That led RYTM stock to surge more than 42% in a day, though from a low base price, below 5.
On Thursday, Rhythm extended its run. Shares soared another 11.7% to 14.75 on today's stock market. At its highest point, RYTM stock hit 15.25. That's more than triple its closing price at 4.69 on July 11, the day before the company announced its obesity treatment results. Shares have quintupled from a low point at 3.04 in May when the biotech stocks group slumped.
RYTM Stock: Drug Available Abroad
This week, Stifel analyst Dae Gon Ha raised his price target on RYTM stock to 37 from 25.
The raise comes alongside news the National Institute for Health and Care Excellence recommended Rhythm's treatment, branded Imcivree, as an option for treating obesity and controlling hunger in a specific group of patients.
With this recommendation, Imcivree will hit the market in England and Wales within 90 days.
Further, officials in France granted early access to Imcivree for patients with a genetic disorder that results in obesity and increased appetite. The early access isn't an approval. But it will allow Rhythm to launch the drug and patients to receive insurance reimbursement due to the drug's benefits so far. The European Medicines Agency will make its final decision on Imcivree in the third quarter.
One endocrinologist interviewed by Stifel's Ha said test results for Imcivree were "fantastic." Two endocrinologists estimated 20%-25% of patients with hypothalamic obesity would take Imcivree today, if approved in the U.S. Under more accommodating insurance coverage, the drug could reach 33%-50%. Imcivree is already approved for other types of obesity treatment in the U.S.
It's possible Rhythm's drug could face pressure from an already approved obesity treatment called Wegovy. Novo Nordisk makes the drug. Eli Lilly is also testing a drug called tirzepatide in patients with obesity or who are overweight.
But Ha kept his buy rating on RYTM stock.
Highly Rated Biotech Stock
Bullishly, RYTM stock has a Relative Strength Rating of 98 out of a best-possible 99. This puts shares in the top 2% of all stocks in IBD's database, in terms of 12-month price performance, according to IBD Digital.
On July 15, shares surged above their 200-day moving average for the first time since early 2021, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
