Rhythm Pharmaceuticals Is Well-Positioned, Analyst Says Could Capture Big Share Of Rare Obesity Market

RBC Capital Markets initiated coverage on Rhythm Pharmaceuticals Inc. (NASDAQ:RYTM), citing it as a commercial-stage biotech pioneering the rare genetic obesity market.

Analyst Lisa Walter wrote on Wednesday that Rhythm Pharmaceuticals’ Phase 3 success in hypothalamic obesity (HO) in 2025 led to a stock rally and a ~$3.5 billion market-cap gain.

Hypothalamic obesity is a rare type of obesity resulting from damage to the hypothalamus, a brain region that regulates appetite and metabolism.

Rare Obesity Opportunity

In April 2025, Rhythm Pharmaceuticals released topline results from the pivotal Phase 3 TRANSCEND trial evaluating setmelanotide, a melanocortin-4 receptor (MC4R) agonist, for this rare type of obesity.

The trial met its primary endpoint with a statistically significant and clinically meaningful reduction in body mass index (BMI) with setmelanotide in adult and pediatric patients versus placebo, showing -19.8% placebo-adjusted difference in BMI reduction (N=120).

The company sells setmelanotide under the Imcivree brand for syndromic or monogenic obesity due to Bardet-Biedl syndrome for patients two years and older. Third quarter sales reached $51.3 million.

Analyst Walter said available data indicate Imcivree can meaningfully reduce BMI both as a standalone therapy and in combination with GLP-1s, while also managing hunger — a key symptom.

RBC initiated with an Outperform rating with a price forecast of $145.

Citing a survey, RBC noted that on average, 56% expect to initiate Imcivree in HO patients within a year of approval, with 50% planning to use it alongside GLP-1s.

With an estimated ~27,000 additional global patients potentially expanding the current Imcivree addressable market of ~10,000–12,000 — and no approved therapies or meaningful competition — Walter sees a path for Imcivree revenue to exceed $2 billion by 2030 through HO expansion.

FDA Update

In November 2025, the U.S. Food and Drug Administration (FDA) extended by three months the review period for the supplemental New Drug Application for setmelanotide for acquired hypothalamic obesity, from Dec. 20, 2025, to March 20, 2026.

Analyst Walter wrote, “RYTM is well-positioned for future growth with next-gen assets, which can increase convenience and improve upon Imcivree’s tolerability profile.”

Rhythm is also developing setmelanotide for Prader-Willi Syndrome (PWS), another rare type of obesity.

While Soleno Therapeutics Inc.’s (NASDAQ:SLNO) Vykat XR reduces hunger, RBC Capital analyst says Rhythm has an opportunity to capture a large share of the market after the recent Phase 2 results demonstrated both a BMI and hunger reduction, with a more favorable safety profile.

RBC models up to 20% U.S. market penetration and $1.3 billion peak sales by 2034.

RYTM Price Action: Rhythm shares are trading down 0.64% at $100.65 at the time of publication on Thursday, sitting about 18.2% below its 52-week high, according to Benzinga Pro data.