BOSTON - Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) received a positive opinion from the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) for extending the use of its obesity drug, IMCIVREE® (setmelanotide), to include children aged 2 to 6 years with certain rare genetic disorders.
The company announced today that the CHMP recommends marketing authorization for IMCIVREE® to treat obesity due to Bardet Biedl syndrome (BBS) or deficiencies in pro-opiomelanocortin (POMC), proprotein convertase subtilisin/kexin type 1 (PCSK1), or leptin receptor (LEPR).
The positive CHMP opinion is now under review by the European Commission (EC), which is expected to make a final decision on the expanded use of setmelanotide in the latter half of 2024. Currently, IMCIVREE® is approved in the European Union for the treatment of obesity and control of hunger in adults and children over 6 years of age with the aforementioned genetic conditions.
Yann Mazabraud, Executive Vice President, Head of International at Rhythm Pharmaceuticals, emphasized the importance of early diagnosis and treatment for young children with these rare neuroendocrine diseases to prevent severe obesity and its comorbidities.
Setmelanotide is the first authorized treatment in the EU for controlling hunger and treating obesity in patients with BBS or deficiencies in POMC, PCSK1, or LEPR. It is also approved by the U.S. Food and Drug Administration (FDA) for chronic weight management in patients 6 years and older with these conditions.
The drug acts as an MC4R agonist, targeting hyperphagia and severe obesity. Rhythm Pharmaceuticals is also advancing clinical development programs for setmelanotide in other rare diseases and investigational MC4R agonists.
The safety profile of setmelanotide includes monitoring for skin pigmentation changes, heart rate, blood pressure, disturbance in sexual arousal, depression, and suicidal ideation. The most common adverse reactions reported are skin hyperpigmentation, injection site reactions, nausea, and headache.
The information in this article is based on a press release statement from Rhythm Pharmaceuticals.
In other recent news, BofA Securities recently downgraded Rhythm Pharmaceuticals from 'Buy' to 'Neutral' due to slower-than-anticipated sales of Imcivree, particularly for Bardet-Biedl Syndrome.
The firm's revised outlook aligns with the company's estimation of generating at least $300 million in sales from these indications. The next significant growth phase for the company is expected with the launch of a treatment for hypothalamic obesity around late 2026, which could potentially reach peak sales of approximately $1 billion.
Rhythm Pharmaceuticals has also reported a strong first quarter in 2024, with consistent demand for IMCIVREE and an increase in prescriptions and reimbursement approvals. Despite challenges such as Medicaid plan changes and patient discontinuations, the company remains optimistic about its business growth and expansion.
Rhythm raised $150 million through convertible preferred shares, extending its financial runway into 2026. These are the recent developments in Rhythm Pharmaceuticals.
InvestingPro Insights
As Rhythm Pharmaceuticals (NASDAQ:RYTM) anticipates the European Commission's decision on the expanded use of its obesity drug IMCIVREE®, the company's financial health and market performance provide a mixed picture. According to InvestingPro data, Rhythm boasts an impressive gross profit margin of 88.37% for the last twelve months as of Q1 2024. This high margin is indicative of the company's ability to maintain profitability on its products, which could be a positive sign for investors considering the potential market expansion of IMCIVREE®.
However, the company is currently trading at a high Price / Book multiple of 39.73, suggesting a premium valuation compared to its book value. This may reflect market optimism about the company's growth prospects, particularly in light of the recent positive opinion from the CHMP. Additionally, the company's revenue has seen a substantial increase, with a growth rate of 173.52% over the last twelve months as of Q1 2024.
In terms of InvestingPro Tips, analysts have revised their earnings upwards for the upcoming period, which could signal confidence in the company's future performance. Yet, they do not expect the company to be profitable this year, and the stock price has been quite volatile, with a 1-year price total return of 120.86% as of mid-2024. This volatility may present both opportunities and risks for investors.
Rhythm's market cap stands at a robust $2.45 billion, reflecting its position in the market and investor interest. Moreover, the company has more liquid assets than short-term obligations, indicating a strong short-term financial position.
For those looking to delve deeper into Rhythm Pharmaceuticals' financials and market performance, InvestingPro offers additional insights and tips. There are currently 11 additional InvestingPro Tips available for Rhythm Pharmaceuticals, which can be accessed at https://www.investing.com/pro/RYTM. Readers interested in leveraging these insights can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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