This High-Flying Growth Stock Is Hiding in Plain Sight

There's a growth stock that has skyrocketed more than Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Nvidia (NASDAQ: NVDA) over the last 12 months. Wall Street loves this stock, with the consensus price target reflecting a potential upside of around 40%.

But I suspect you've never heard of it. Based on its average trading volume of under 770,000 shares per day, many investors aren't familiar with it.

What is this high-flying growth stock that's seemingly hiding in plain sight? Rhythm Pharmaceuticals (NASDAQ: RYTM).

Image source: Getty Images.

Catching the rhythm

One reason why Rhythm Pharmaceuticals is flying under the radar for many investors is its size. The biotech stock's market cap is only $6.8 billion. At the beginning of 2025, Rhythm was even smaller.

Another factor behind Rhythm's relative anonymity with investors is that it doesn't target high-profile indications that affect millions of people. Instead, the company focuses on developing therapies that treat rare genetic obesity disorders.

Rhythm's only approved drug is Imcivree. The therapy is a first-in-class melanocortin-4 receptor (MC4R) agonist that treats obesity due to POMC, PCSK1, or LEPR deficiency and Bardet-Biedl syndrome, an ultra-rare genetic obesity disease. Sales for Imcivree soared roughly 50% year over year in 2025 to $194 million, based on Rhythm's preliminary, unaudited figures.

However, the drugmaker may not remain a one-trick pony for too much longer. Rhythm expects to advance its oral MC4R agonist bivamelagon into Phase 3 clinical testing in 2026. Its pipeline also includes another experimental MC4R agonist, RM-718, in Phase 1 testing.

Competition isn't a big worry for Rhythm. The only rival in the picture is Palatin Technologies (NYSEMKT: PTN), a nanocap biotech company that's also developing MC4R agonists. However, Palatin's primary pipeline candidate, PL7737, advances to Phase 1 clinical testing in the first half of 2026. Rhythm has a huge headstart over this potential competitor.

Upcoming catalysts

Wall Street is bullish about Rhythm Pharmaceuticals in large part because the company has multiple upcoming catalysts. The most important is an anticipated approval of Imcivree in treating acquired hypothalamic obesity (HO). The U.S. Food and Drug Administration (FDA) set a PDUFA date of March 20, 2026, for this decision.

Acquired HO affects an estimated 10,000 patients in the U.S. In addition, another 10,000 patients in Europe and up to 8,000 patients in Japan have the disease. While those numbers may not sound overly impressive, they represent a total that's at least 3.7 times higher than the combined patient population for Imcivree's current approved indications.

This pending FDA approval isn't the only big news on the way for Rhythm. The company plans to report results from two Phase 3 studies of Imcivree in the first quarter of 2026.

In addition, Rhythm expects to announce results from another Phase 2 study of Imcivree in treating Prader-Willi Syndrome sometime in the first half of the year. This disease affects roughly 20,000 people in the U.S. and around 400,000 people worldwide. The chances that Rhythm will have good news appear to be pretty good, considering the company already reported positive preliminary results from the Phase 2 study in December 2025.

Three key risks

You won't find a biotech stock (or any stock, for that matter) that don't come with risks. Three risks especially stand out for Rhythm Pharmaceuticals.

First, the company faces the threat that the FDA won't approve Imcivree in the acquired HO indication. The agency has delayed its approval decision once, requesting additional sensitivity analysis on Rhythm's Phase 3 data. I don't think this delay presents a serious concern, but FDA approval isn't a slam dunk.

Second, Rhythm could experience failures with its clinical studies. I'm cautiously optimistic that the results scheduled to be announced this year will be positive. However, there's no guarantee that will be the case.

Finally, Rhythm remains unprofitable. The good news on this front is that the company's cash position should be sufficient to fund operations for another 24 months or so. And if the FDA approves Imcivree in treating acquired HO, Rhythm's path to profitability will become much easier.

Keith Speights has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.