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Rhythm Pharmaceuticals Inc (RYTM)
NASDAQ:RYTM

Rhythm Pharmaceuticals (RYTM) AI Stock Analysis

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Rhythm Pharmaceuticals

(NASDAQ:RYTM)

54Neutral
Rhythm Pharmaceuticals shows strong revenue growth and strategic pipeline advancements, notably reflected in recent corporate events and a positive outlook from the earnings call. However, ongoing financial challenges, such as persistent losses and negative cash flows, weigh heavily on the overall assessment. Valuation remains difficult due to lack of profitability, and technical indicators are mixed, contributing to a moderate overall stock score.
Positive Factors
Market Expansion
The commercial expansion into HO is seen as an upside opportunity, with a well-identified patient population and potential for a strong launch trajectory.
Regulatory Approval
Management expects a priority review for the sNDA filing without the need for an advisory committee, indicating confidence in the approval process.
Negative Factors
Growth Challenges
The expectation for linear growth in the BBS launch highlights the challenges in patient identification and diagnosis, indicating slower growth.
Side Effects
Concerns were raised about the severity of GI side effects and their impact on the effectiveness of anti-seizure medications and other oral medications.

Rhythm Pharmaceuticals (RYTM) vs. S&P 500 (SPY)

Rhythm Pharmaceuticals Business Overview & Revenue Model

Company DescriptionRhythm Pharmaceuticals (RYTM) is a biopharmaceutical company focused on developing and commercializing therapies for the treatment of rare genetic disorders of obesity. The company aims to address unmet medical needs by targeting the melanocortin-4 receptor (MC4R) pathway, which plays a significant role in regulating hunger and energy expenditure. Rhythm's core product, IMCIVREE (setmelanotide), is designed to treat specific genetic obesity disorders caused by genetic variants along the MC4R pathway.
How the Company Makes MoneyRhythm Pharmaceuticals generates revenue primarily through the commercialization of its flagship product, IMCIVREE. The company earns money by selling this drug to healthcare providers, hospitals, and specialty pharmacies. The pricing of IMCIVREE reflects its status as a treatment for rare genetic disorders, which often allows for premium pricing due to the lack of alternative therapies. Rhythm also engages in strategic partnerships and collaborations that may provide additional revenue streams through research funding, milestone payments, and royalties. Furthermore, the company invests in expanding the indications for IMCIVREE, which could broaden its market and increase sales.

Rhythm Pharmaceuticals Financial Statement Overview

Summary
Rhythm Pharmaceuticals is experiencing robust revenue growth, which is a positive sign for a biotechnology firm. However, the company is still struggling to achieve profitability and positive cash flow. While the debt levels are low, the negative equity returns and persistent net losses highlight ongoing financial challenges. Continued focus on cost management and achieving cash flow positivity will be crucial for long-term sustainability.
Income Statement
45
Neutral
Rhythm Pharmaceuticals has shown significant revenue growth over the years, with an impressive increase from $3.15 million in 2021 to $130.13 million in 2024. However, profitability remains a concern as the company continues to report negative EBIT and net income, resulting in negative profit margins. The gross profit margin is relatively high at 89.71% for 2024, indicating efficient production, but the net profit margin is deeply negative due to substantial operating expenses.
Balance Sheet
50
Neutral
The company's balance sheet reveals a low debt-to-equity ratio of 0.18 in 2024, indicating a conservative leverage strategy. However, the return on equity is negative due to consistent net losses, which is a major concern. The equity ratio has declined over time, reflecting increasing liabilities relative to assets, which might pose risks if the trend continues.
Cash Flow
40
Negative
Rhythm Pharmaceuticals has a negative operating cash flow of -$113.88 million in 2024, which is an improvement from previous years but still a concern. The free cash flow is also negative, suggesting that the company is not generating enough cash from its operations to cover its capital expenditures. The operating cash flow to net income ratio is positive, indicating that cash losses are smaller than accounting losses, partially due to non-cash expenses.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
130.13M77.43M23.64M3.15M0.00
Gross Profit
116.76M68.13M21.50M2.56M-690.00K
EBIT
-265.50M-184.36M-179.16M-170.06M-136.57M
EBITDA
-238.09M-168.46M-174.51M-68.45M-135.88M
Net Income Common Stockholders
-260.60M-184.68M-183.08M-68.01M-130.73M
Balance SheetCash, Cash Equivalents and Short-Term Investments
320.56M275.85M333.29M294.86M172.79M
Total Assets
392.27M332.75M382.48M329.52M187.07M
Total Debt
3.94M1.26M1.94M2.55M3.09M
Net Debt
-85.20M-58.82M-125.73M-56.70M-97.77M
Total Liabilities
227.72M162.99M118.22M45.37M20.55M
Stockholders Equity
21.73M169.76M264.26M284.15M166.53M
Cash FlowFree Cash Flow
-113.88M-136.20M-177.71M-151.44M-122.19M
Operating Cash Flow
-113.88M-136.16M-173.43M-146.00M-121.98M
Investing Cash Flow
-48.17M-5.67M28.03M-62.16M158.53M
Financing Cash Flow
191.24M74.37M213.83M166.48M2.01M

Rhythm Pharmaceuticals Technical Analysis

Technical Analysis Sentiment
Positive
Last Price65.22
Price Trends
50DMA
55.17
Positive
100DMA
56.29
Positive
200DMA
53.67
Positive
Market Momentum
MACD
2.49
Negative
RSI
64.70
Neutral
STOCH
95.99
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RYTM, the sentiment is Positive. The current price of 65.22 is above the 20-day moving average (MA) of 57.90, above the 50-day MA of 55.17, and above the 200-day MA of 53.67, indicating a bullish trend. The MACD of 2.49 indicates Negative momentum. The RSI at 64.70 is Neutral, neither overbought nor oversold. The STOCH value of 95.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RYTM.

Rhythm Pharmaceuticals Risk Analysis

Rhythm Pharmaceuticals disclosed 73 risk factors in its most recent earnings report. Rhythm Pharmaceuticals reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Rhythm Pharmaceuticals Peers Comparison

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
60
Neutral
$3.36B-39.22%-31.37%
56
Neutral
$2.72B10.5554.39%624.05%
54
Neutral
$3.76B-272.15%68.06%-35.93%
54
Neutral
$3.46B-46.62%3417.33%30.06%
51
Neutral
$5.35B3.41-40.83%2.89%18.11%2.60%
50
Neutral
$3.27B-19.20%-89.95%-123.71%
RNRNA
46
Neutral
$3.75B-33.47%13.99%0.17%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RYTM
Rhythm Pharmaceuticals
65.22
23.79
57.42%
PTGX
Protagonist Therapeutics
45.62
20.06
78.48%
CRSP
Crispr Therapeutics AG
37.40
-16.41
-30.50%
AKRO
Akero Therapeutics
43.04
22.96
114.34%
SWTX
Springworks Therapeutics
46.24
-0.60
-1.28%
RNA
Avidity Biosciences
32.16
6.36
24.65%

Rhythm Pharmaceuticals Earnings Call Summary

Earnings Call Date:Feb 26, 2025
(Q4-2024)
|
% Change Since: 27.81%|
Next Earnings Date:May 07, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with strong financial positioning, robust sales growth, and significant pipeline advancements. However, there are concerns about high operating expenses and potential challenges in market uptake for new indications.
Q4-2024 Updates
Positive Updates
Strong Financial Position
Rhythm Pharmaceuticals raised $75 million in gross proceeds, extending their cash run rate into 2027, allowing them to fund operations through multiple inflection points.
Positive Growth in IMCIVREE Sales
U.S. sales of IMCIVREE were $31.7 million in Q4 2024, accounting for 76% of the quarter's revenue, marking a significant growth compared to previous periods.
Expansion of International Access
IMCIVREE has achieved access in more than 15 countries outside the U.S., contributing to steady growth in international markets.
Pipeline Advancements
Enrollment completed for Phase II oral bivamelagon study; Phase III trial of setmelanotide in acquired HO with a second-quarter readout expected.
FDA Label Expansion for IMCIVREE
The FDA approved a label expansion for IMCIVREE to include children as young as 2 years of age, broadening its applicability and potential impact.
Negative Updates
High Operating Expenses
Rhythm's operating expenses were $382.3 million for 2024, driven by increased R&D and SG&A expenses.
Potential Challenges in Market Uptake
There is uncertainty in market uptake for new indications and the impact of the FDA label expansion, which may not significantly affect revenue immediately.
Company Guidance
During the Rhythm Pharmaceuticals earnings call, the company provided several key metrics and guidance for the upcoming year. They reported entering 2025 well-capitalized with $320.6 million in cash, aided by a $75 million raise through their ATM program, extending their cash runway into 2027. The company completed enrollment in their Phase II daily oral bivamelagon study and achieved a dropout rate of below 10% in their Phase III trial of setmelanotide for acquired hypothalamic obesity (HO), with a second quarter 2025 readout expected. Revenue from global IMCIVREE sales reached $130.1 million in 2024, a significant increase from $77.4 million in 2023, with consistent growth in both the U.S. and international markets. Rhythm anticipates non-GAAP operating expenses for 2025 to be between $285 million and $315 million, with increased spending due to expansion plans and ongoing trials. The company also highlighted strategic partnerships, particularly in Turkey, to expand market reach, and emphasized the potential for growth in Japan, where the prevalence of hypothalamic obesity is higher than in the U.S. or Europe.

Rhythm Pharmaceuticals Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Rhythm Pharmaceuticals Announces Positive Phase 3 Trial Results
Positive
Apr 7, 2025

On April 7, 2025, Rhythm Pharmaceuticals announced positive topline results from its Phase 3 TRANSCEND clinical trial evaluating setmelanotide for acquired hypothalamic obesity. The trial met its primary endpoint, showing a significant reduction in BMI in both adult and pediatric patients compared to placebo. These results are seen as a potential milestone for the company, with plans to submit regulatory applications in the U.S. and EU by the third quarter of 2025. The trial’s success could position setmelanotide as the first approved therapy for this condition, impacting the company’s market and stakeholders positively.

Spark’s Take on RYTM Stock

According to Spark, TipRanks’ AI Analyst, (RYTM) is a Neutral.

Rhythm Pharmaceuticals demonstrates strong revenue growth and strategic pipeline advancements, which are significant positives. However, ongoing financial challenges, such as persistent losses and negative cash flow, weigh heavily on the overall assessment. The stock’s technical indicators present mixed signals, while valuation remains difficult due to lack of profitability. Recent corporate moves and the positive sentiment from the earnings call offer some optimism but are offset by high operating expenses and market uptake uncertainties.

To see Spark’s full report on (RYTM) stock, click here.

Product-Related AnnouncementsBusiness Operations and Strategy
Rhythm Pharmaceuticals Reacquires Setmelanotide Rights in Asia
Positive
Mar 20, 2025

On March 14, 2025, Rhythm Pharmaceuticals announced the termination of its licensing and share purchase agreements with RareStone Group Ltd., reacquiring the rights to IMCIVREE® (setmelanotide) in China, Hong Kong, and Macau. This strategic move allows Rhythm to own the global franchise for setmelanotide, aligning with its strategy to develop and commercialize treatments for rare neuroendocrine diseases worldwide. The termination agreement includes a repayment of $6.3 million to RareStone and the return of acquired shares without additional consideration, releasing all parties from any claims related to the previous agreements.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.