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Rhythm Stock Up as FDA Accepts Obesity Drug sNDA for Younger Kids

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Rhythm Pharmaceuticals’ (RYTM - Free Report) shares gained 8.4% on Aug. 26 after announcing the FDA’s acceptance of the supplemental new drug application (sNDA) for its only marketed drug, Imcivree (setmelanotide), to treat obesity in children as young as two years old, under the Priority Review pathway. A filing designated as a Priority Review reduces the review period to four months. A final decision from the FDA is expected on Dec. 26, 2024.

Imcivree, an MC4R agonist, is already approved in the United States and EU for chronic weight management in adult and pediatric patients aged six years and older. The eligible patient population includes those with monogenic or syndromic obesity due toBardet-Biedl syndrome (BBS) or pro-opiomelanocortin (POMC), including proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR) deficiency.

Rhythm’s sNDA is looking to expand the eligible patient population for the drug by lowering the minimum required age to receive Imcivree treatment to two years in the United States. In July 2024, the drug’s label was expanded in the EU to include children aged two years with obesity due to BBS or POMC/PCSK1, or LEPR deficiency. 

Year to date, shares of RYTM have gained 8.8% against the industry’s 0.2% decline.

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Subject to the approval of the sNDA, Rhythm believes that Imcivree has the potential to become a precision therapy option for younger patients in the United States experiencing hyperphagia and severe obesity caused by rare MC4R pathway diseases. Hyperphagia is an abnormally increased appetite for food, often leading to excessive eating and thereby, obesity.

The sNDA submission for Imcivree was based on positive data from the company’s late-stage study of the drug in patients aged two to six years with obesity due to biallelic POMC/PCSK1 or LEPR deficiency or a clinical diagnosis of BBS. Per the data readout from the study, treatment with Imcivree showed potential efficacy in controlling hyperphagia and reducing severe obesity in the enrolled patient population. 

Rhythm’s phase III obesity study for the label expansion of Imcivree met its primary endpoint achieving a 3.04 mean reduction in BMI-Z score (a measure of body mass index deviations from what is considered normal) and an 18.4% mean reduction in BMI. 

RYTM also has a broad clinical development program for setmelanotide in other rare diseases, as well as other investigational MC4R agonists in its pipeline like LB54640 and RM-718. 

Zacks Rank & Key Picks

Rhythm currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the overall healthcare sector include Arcturus Therapeutics (ARCT - Free Report) , Bioventus (BVS - Free Report) and Fulcrum Therapeutics (FULC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, the consensus estimate for Arcturus Therapeutics’ 2024 loss per share has narrowed from $4.39 to $2.60. The estimate for 2025 is currently pegged at an earnings of 21 cents per share. Year to date, shares of Arcturus Therapeutics have lost 32%.

Earnings of Arcturus Therapeutics beat estimates in each of the last four quarters. ARCT delivered a four-quarter average earnings surprise of 56.73%.

In the past 60 days, the consensus estimate for Bioventus’ 2024 earnings per share has risen from 27 cents to 40 cents. The estimate for 2025 has increased from 43 cents to 45 cents during the same period. Year to date, shares of Bioventus have surged 89.6%.

BVS beat estimates in three of the last four quarters and missed the mark on one occasion, delivering an average earnings surprise of 102.86%.

In the past 60 days, the consensus estimate for Fulcrum Therapeutics’ 2024 loss per share has narrowed from $1.24 to 48 cents. The loss estimate for 2025 has narrowed from $1.71 to $1.51 during the same period. Year to date, shares of Fulcrum Therapeutics have jumped 39.6%.

FULC beat estimates in each of the last four quarters, delivering an average earnings surprise of 393.18%.

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