Rhythm Pharmaceuticals Surges 15.7% on Breakthrough PWS Trial Data: Is This the Start of a Biotech Powerhouse?

Summary
• Rhythm Pharmaceuticals (RYTM) rockets 15.7% to $121.24, hitting its 52-week high of $122.025
• Positive Phase 2 trial data for setmelanotide in Prader-Willi syndrome (PWS) sparks market optimism
• 18-patient trial shows BMI and hyperphagia reductions, with 17 of 18 patients remaining on therapy
• Company initiates Phase 1 Part D study for RM-718, a weekly MC4R agonist, in PWS

Rhythm Pharmaceuticals has ignited a market frenzy with a 15.7% intraday surge, driven by groundbreaking Phase 2 trial results for setmelanotide in treating Prader-Willi syndrome (PWS). The stock’s meteoric rise—from a morning open of $111.0 to an intraday high of $122.025—reflects investor confidence in the company’s potential to address a critical unmet medical need. With 17 of 18 patients remaining on therapy and promising BMI/hyperphagia reductions, RYTM’s momentum is poised to test long-term technical levels as it advances toward a Phase 3 registrational trial.

Breakthrough PWS Trial Data Ignites RYTM’s Bull Run
Rhythm Pharmaceuticals’ 15.7% surge is directly tied to its announcement of positive preliminary results from a Phase 2 trial of setmelanotide in Prader-Willi syndrome (PWS). The trial, which enrolled 18 patients aged 6–65, demonstrated BMI reductions in 6 of 8 patients at Month 3 and 3 of 5 patients at Month 6, alongside meaningful hyperphagia score improvements. These results, coupled with the company’s initiation of a Phase 1 Part D study for its weekly MC4R agonist RM-718, have positioned RYTM as a key player in a rare disease space with limited therapeutic options. The data’s alignment with regulatory pathways for a Phase 3 trial has galvanized investor sentiment, propelling the stock to its 52-week high.

Biotech Sector Mixed as RYTM Outpaces Peers
While the broader biotech sector remains fragmented, RYTM’s performance starkly contrasts with peers like Amgen (AMGN), which rose 0.9% on the day. The sector’s mixed tone reflects divergent clinical outcomes and regulatory risks, but RYTM’s PWS trial data—targeting a $400M global market—has created a unique catalyst. Unlike Roche’s SERD trial or AstraZeneca’s baxdrostat NDA, RYTM’s focus on a rare genetic disorder with high unmet need positions it for accelerated growth, particularly as its Phase 3 trial timeline becomes clearer.

Options and ETF Plays for RYTM’s Volatile Momentum
• 200-day average: $81.11 (well below current price)
• RSI: 52.26 (neutral, suggesting potential for further upside)
• MACD: 0.098 (bullish divergence from signal line at 0.139)
• Bollinger Bands: Price at $121.24 exceeds upper band of $110.33, indicating overbought conditions

RHYTM’s technicals suggest a continuation of its bullish momentum, with key resistance at its 52-week high of $122.025 and support near the 30-day moving average of $103.93. The stock’s short-term bearish trend clashes with its long-term bullish setup, creating a high-volatility environment. For leveraged exposure, consider bold ETFs if available, though none are listed here. Instead, focus on options with high gamma and theta to capitalize on rapid price swings.

Top Options Picks:
• RYTM20251219C115 (Call, $115 strike, 2025-12-19):
- IV: 32.92% (moderate)
- Delta: 0.8186 (high sensitivity to price moves)
- Theta: -0.5153 (rapid time decay)
- Gamma: 0.0424 (strong sensitivity to price changes)
- Turnover: $128,250 (high liquidity)
- LVR: 20.04% (moderate leverage)
- Payoff at 5% upside ($127.30): $12.30 per contract
- This call option is ideal for capturing RYTM’s short-term volatility, with high delta and gamma amplifying gains if the stock breaks above $122.025.

• RYTM20251219C120 (Call, $120 strike, 2025-12-19):
- IV: 52.51% (elevated but not extreme)
- Delta: 0.5316 (moderate sensitivity)
- Theta: -0.4934 (rapid decay)
- Gamma: 0.0401 (strong responsiveness)
- Turnover: $7,756 (adequate liquidity)
- LVR: 29.05% (attractive leverage)
- Payoff at 5% upside ($127.30): $7.30 per contract
- This strike balances risk and reward, offering leveraged exposure to a potential breakout above $120, with high gamma ensuring amplified returns if the stock accelerates.

Trading Insight: Aggressive bulls should target RYTM20251219C115 for a breakout above $122.025, while conservative traders may use RYTM20251219C120 as a hedge against volatility. Both contracts benefit from RYTM’s technical setup and the catalyst of its Phase 3 trial announcement.

Backtest Rhythm Stock Performance
The iPath® S&P 500 VIX Short-Term Futures ETN (RYTM) has demonstrated positive performance following a 16% intraday increase from 2022 to the present date. The backtest data reveals a 3-day win rate of 52.48%, a 10-day win rate of 57.02%, and a 30-day win rate of 64.26%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 18.52%, which occurred on day 59, suggesting that RYTM can capitalize on intraday surges effectively.

RYTM’s PWS Breakthrough: A Catalyst for Sustained Gains
Rhythm Pharmaceuticals’ 15.7% surge is not a fleeting rally but a strategic inflection point driven by its PWS trial data and RM-718 pipeline. With technicals favoring a continuation above $122.025 and options like RYTM20251219C115 offering leveraged exposure, the stock is positioned for momentum-driven gains. Investors should monitor the 200-day average ($81.11) as a critical support level and watch for a breakout above $122.025 to confirm the long-term bullish trend. Meanwhile, Amgen’s 0.9% rise underscores the sector’s mixed performance, but RYTM’s unique value proposition in rare diseases makes it a standout play. Act now: Buy RYTM20251219C115 for a high-gamma, high-theta bet on a potential $127.30 price target.