Rhythm Pharmaceuticals Surges 13.5% on Breakthrough PWS Trial Data: Is This the Catalyst for a Biotech Revolution?

Summary
• Rhythm Pharmaceuticals (RYTM) rockets 13.5% to $118.915, breaching 52-week high of $122.20
• Preliminary Phase 2 data shows 6/8 patients achieved BMI reductions at Month 3; 3/5 at Month 6
• 17/18 patients remain on therapy; Phase 3 trial plans announced

Rhythm Pharmaceuticals ignited a market frenzy as its stock surged over 13% intraday following the release of promising Phase 2 trial data for setmelanotide in Prader-Willi Syndrome (PWS). The biotech giant’s shares traded between $111.00 and $122.20, with the 52-week high reached as investors reacted to the company’s announcement of advancing setmelanotide into a registrational Phase 3 trial. The move underscores the growing optimism around RYTM’s potential to redefine obesity treatment in rare genetic disorders.

PWS Trial Results Ignite Biotech Sector Optimism
Rhythm Pharmaceuticals’ 13.5% surge stems from groundbreaking preliminary data in its Phase 2 trial of setmelanotide for Prader-Willi Syndrome (PWS). The trial demonstrated BMI reductions in 6 of 8 patients at Month 3 and 3 of 5 at Month 6, alongside significant hyperphagia score improvements. With 17 of 18 patients remaining on therapy and safety profiles aligning with established data, the company announced plans to advance setmelanotide into a Phase 3 trial. This momentum is amplified by the initiation of a Part D arm in the RM-718 Phase 1 trial, positioning RYTM as a leader in MC4R agonist development for rare neuroendocrine diseases.

Biotech Sector Rally: AMGN’s Modest Gains Highlight RYTM’s Outperformance
While the broader biotech sector saw mixed performance, Rhythm Pharmaceuticals outpaced peers like Amgen (AMGN), which rose 0.06%. The rally in RYTM reflects investor appetite for high-conviction biotech plays with clear regulatory pathways. With setmelanotide already approved for Bardet-Biedl and POMC deficiency, RYTM’s PWS expansion taps into a $400M global market, contrasting with AMGN’s more diversified but slower-moving oncology pipeline.

Options Playbook: Leveraging RYTM’s Volatility with Gamma-Driven Contracts
• 200-day average: $81.11 (well below current price)
• RSI: 52.26 (neutral)
• MACD: 0.098 (bullish divergence)
• Bollinger Bands: Price at $118.915 vs. upper band $110.33 (overextended)

RHYTM’s technicals suggest a continuation of its breakout, with key support at $104.53 and resistance at $122.20. The 52.26 RSI indicates balanced momentum, while the MACD histogram’s -0.0413 contraction hints at waning short-term bearish pressure. For options traders, the RYTM20251219C115 and RYTM20260116C125 contracts stand out:

• RYTM20251219C115 (Call, $115 strike, Dec 19 expiry):
- IV: 63.09% (high)
- Delta: 0.6038 (moderate sensitivity)
- Theta: -0.5468 (rapid time decay)
- Gamma: 0.03315 (strong price sensitivity)
- Turnover: 132,476 (high liquidity)
- Leverage: 19.82% (moderate)
- Payoff at 5% upside ($125.36): $10.36/share
- Ideal for capitalizing on short-term volatility with high gamma to benefit from price swings.

• RYTM20260116C125 (Call, $125 strike, Jan 16 expiry):
- IV: 55.62% (mid-range)
- Delta: 0.4033 (balanced exposure)
- Theta: -0.1555 (moderate decay)
- Gamma: 0.01863 (modest sensitivity)
- Turnover: 99,070 (high liquidity)
- Leverage: 21.61% (attractive)
- Payoff at 5% upside ($125.36): $0.36/share
- Offers a safer, longer-dated play on RYTM’s potential to test $125.20 resistance.

Action: Aggressive bulls may consider RYTM20251219C115 into a bounce above $115, while conservative traders should target RYTM20260116C125 for a measured breakout above $122.20.

Backtest Rhythm Stock Performance
The iPath RSY Total Market Index ETN (RYTM) experienced a notable intraday surge of 14% on December 11, 2025. Backtesting the performance of RYTM following this event reveals a positive short-to-medium-term trend. Here's a detailed analysis:1. Frequency and Win Rates: The 14% intraday increase event occurred 474 times over the backtested period. The 3-day win rate was 52.74%, the 10-day win rate was 57.38%, and the 30-day win rate was 64.77%. This indicates a higher probability of positive returns in the immediate aftermath of the event, with the win rates increasing as the time horizon expands.2. Returns: The average 3-day return following the event was 1.32%, the 10-day return was 4.47%, and the 30-day return was 12.25%. These returns suggest that while the immediate post-event gains may be modest, there is still a positive trend that can persist over a longer period.3. Maximum Return: The maximum return observed following the event was 18.71%, which occurred on day 59. This highlights the potential for significant gains if held for an extended period after the intraday surge.In conclusion, while the immediate response to an intraday surge like the one experienced by RYTM in December 2025 may not always result in immediate large gains, backtesting suggests that holding the instrument for a short-to-medium term can lead to positive returns. The 30-day win rate of 64.77% and the corresponding return of 12.25% indicate that there is a good chance of capturing gains if invested wisely after such events.

RYTM’s PWS Play: A Biotech Breakout or a Volatility Trap?
Rhythm Pharmaceuticals’ 13.5% surge is a testament to the power of clinical milestones in rare disease biotech. With setmelanotide’s PWS data validating its MC4R agonist platform and RM-718 trials on the horizon, RYTM is positioned to capitalize on a $400M market. However, the stock’s 4.35% turnover rate and -38.88 P/E ratio highlight its speculative nature. Investors should monitor the Dec 19 options expiry for liquidity clues and watch Amgen (AMGN)’s 0.06% gains for sector sentiment. For now, RYTM20251219C115 offers the highest gamma-driven reward for those betting on a $122.20 breakout.