Why Rhythm Pharmaceuticals Stock Triumphed on Tuesday
Key Points
The biotech was in the headlines recently after the FDA approved a new indication for its single commercialized drug.
There might be more where that came from with Imcivree.
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Rhythm Pharmaceuticals (NASDAQ: RYTM) was a healthcare company perfectly in tune with investor goals on Tuesday. Shares of the commercial-stage biotech soared to close almost 8% higher in value, thanks to a very well-received quarterly earnings report.
Imcivree for the win
Rhythm, which rose to prominence thanks to its highly specialized weight-loss drug Imcivree, reported its first-quarter results that morning. Thanks to Imcivree, its only Food and Drug Administration (FDA)-approved product, its revenue nearly doubled year over year. It came in at $60.1 million, compared with $32.7 million in the first quarter of 2025. The consensus analyst estimate was $57 million.
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On the bottom line, Rhythm's net loss under generally accepted accounting practices (GAAP) deepened to $56.7 million, or $0.83 per share, from the year-ago deficit of $50.8 million. This was slightly better than the average pundit projection of $0.86.
Not surprisingly, this was due in no small part to a sharp increase in selling, general, and administrative expenses -- in March, Imcivree earned approval for a new indication (acquired hypothalamic obesity, or HO); fresh approvals tend to be followed by concentrated marketing pushes.
In the earnings release, Rhythm said the drug was off to a roaring start with its latest indication. It wrote that it had received over 150 patient start forms for Imcivree to treat HO within six weeks of the FDA's approval.
Overseas success
Outside the encouraging Imcivree news, Rhythm reported developments that provided fresh encouragement for shareholders. Among these was a sales spike in Europe, where revenue jumped 27% quarter over quarter, driven by strong demand in major markets like Germany and France.
Imcivree obviously has flexibility and durability, given that it earned its first FDA nod in 2020. That, plus the company's pipeline (centered on the continued development of Imcivree for other indications), loads it with good potential for the future. I think Mr. Market's bullish reaction to Rhythm's latest update was entirely appropriate.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rhythm Pharmaceuticals. The Motley Fool has a disclosure policy.
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