Rhythm Pharmaceuticals shares surged to a record high Wednesday on promising results for a drug that could treat a rare form of obesity. After the close, Rhythm said it would sell $150 million of its shares in a public offering.
The biotech company is hoping to treat acquired hypothalamic obesity, or aHO. In this condition, damage to the hypothalamus causes uncontrolled hunger and a reduced metabolic rate.
Over the course of 14 weeks, patients who received a low dose of Rhythm's drug had a 7.7% reduction in their body mass index, or BMI. The higher dose led to a 9.3% cut in BMI. BMI is an estimate of body fat based on weight and height. Placebo recipients experienced a 2.18% increase in their BMI.
Leerink Partners analyst Faisal Khurshid said some patients experienced skin discoloration known as hyperpigmentation. But that also shows up with Imcivree, another drug from Rhythm that treats other weight conditions. Both Imcivree and Rhythm's new drug, bivamelagon, impact a receptor called MC4R. MC4R is tied to hunger and weight regulation.
"Overall, this is a major positive for the longer-term RYTM story as it extends the durability of the MC4R franchise beyond the Imcivree IP (intellectual property) window," he said in a report.
Rhythm Pharmaceuticals stock jumped 36.6% to 89. In after-hours trades, Rhythm shares dipped 1.1% to 88.
Rhythm Pharmaceuticals' 'Impressive' Results
Rhythm is now planning its Phase 3 study.
"We are excited by these results, which suggest bivamelagon has the potential to treat patients with acquired hypothalamic obesity, and has established an appropriate dose range for future clinical evaluation," Chief Executive David Meeker said in a statement.
Leerink's Khurshid reiterated his outperform rating on Rhythm stock.
He says the results were "impressive overall, especially in the context of several caveats to consider."
At the lower 400-milligram dose, 14.3% of patients had at least a 10% reduction in BMI. In the higher 600-milligram dose group, 37.5% of patients met the same bar. Investors expected a high single-digit percentage. Approaching and exceeding 10% is "thoroughly impressive," he said.
The study enrolled patients age 12 and older. It's important to note, weight loss improves over time and younger patients tend to lose more weight. In testing, Imcivree patients age 12 and older had BMI reductions of 9.7% and 10.5% after 12 weeks and 16 weeks, respectively.
"We see the bivamelagon results as roughly comparable, which is highly encouraging for a daily oral vs. a daily injectable," he said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
