Rhythm 2025 Q1 Earnings Narrowed Losses with 65% Net Income Improvement

Rhythm Pharmaceuticals, Inc. reported its fiscal 2025 Q1 earnings on May 7, 2025, showcasing a significant improvement in net losses compared to the previous year. The company narrowed its net loss to $49.50 million, marking a 65% reduction from the $141.37 million net loss reported in Q1 2024. Revenue increased by 25.9% to $32.70 million, driven by strong product sales. Regulatory submissions for setmelanotide are on track for completion in the third quarter of 2025, and the company anticipates cash sufficiency to support operations through 2027.

Revenue

Rhythm Pharmaceuticals saw a 25.9% increase in total revenue, reaching $32.70 million for Q1 2025, compared to $25.97 million in the same quarter of the previous year. The net product revenue stood at $37.72 million, reflecting global sales of IMCIVREE®, while the license revenue declined by $5.01 million due to the termination of a license agreement.

Earnings/Net Income

Rhythm Pharmaceuticals reduced its loss per share to $0.81 from $2.35, indicating a 65.5% improvement. The company's net loss of $49.50 million shows a substantial reduction in losses, suggesting positive earnings progress.

Price Action

The stock price of Rhythm Pharmaceuticals rose by 5.83% during the latest trading day, dipped slightly by 0.86% over the past week, and increased by 37.66% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of purchasing Rhythm (RYTM) shares following a revenue increase and holding for 30 days has yielded a 15.23% return, notably underperforming the benchmark's 84.08% return. This strategy's Sharpe ratio was 0.34, indicating modest risk-adjusted returns. The maximum drawdown reached -10.66%, while the volatility stood at 8.58%. Despite these figures, the strategy's performance reflects cautious investment behavior, emphasizing the importance of risk management and market analysis.

CEO Commentary

“Following compelling topline results from our pivotal Phase 3 trial of setmelanotide in acquired hypothalamic obesity (HO), we look forward to completing U.S. and EU regulatory submissions in the third quarter of 2025 and, pending approval, bringing the first-ever known approved therapy for this serious disease to patients,” said David Meeker, M.D., Chairman, Chief Executive Officer and President of Rhythm. “In addition, we are advancing our next-generation MC4R agonists as we are on track to read out topline data from the Phase 2 trial evaluating the oral-daily bivamelagon in patients with HO in the third quarter of 2025.” Dr. Meeker expressed optimism about the growth in patients on reimbursed therapy and Rhythm's financial positioning, noting the company's cash runway extending into 2027, enabling the pursuit of multiple upcoming clinical and regulatory milestones.

Guidance

Rhythm expects to complete U.S. and EU regulatory submissions for setmelanotide in acquired hypothalamic obesity by the third quarter of 2025. The company is also on track to announce topline data from the Phase 2 trial of oral MC4R agonist bivamelagon in the third quarter of 2025. Additionally, management anticipates that cash on hand will support planned operations into 2027, which includes navigating through several clinical and regulatory milestones expected this year and early next year.

Additional News

Rhythm Pharmaceuticals recently announced its acquisition of the rights to IMCIVREE in China, including mainland China, Hong Kong, and Macau, following the termination of its licensing agreement with RareStone Group Ltd. Additionally, the company received orphan drug designation from Japan's Ministry of Health, Labour and Welfare for setmelanotide as a treatment for acquired hypothalamic obesity. Rhythm also initiated a new research collaboration with the Raymond A. Wood Foundation to study the impact of fatigue on persons with craniopharyngioma, focusing on survivors of hypothalamic-pituitary brain tumors. These strategic moves align with the company's commitment to expanding its global presence and enhancing its research capabilities in rare neuroendocrine diseases.