Rhythm Pharmaceuticals' (RYTM) setmelanotide may represent another potential opportunity following "encouraging" preliminary results from a phase 2 trial in Prader-Willi syndrome, or PWS, Morgan Stanley said.
The company said earlier that initial results from the study of setmelanotide in PWS showed body mass index and hyperphagia reductions at three and six months in patients. Rhythm added that it plans to move setmelanotide into a phase 3 registrational trial, pending completion of the ongoing trial.
Management and the trial's lead investigator highlighted on an investor call that individual patients experienced benefits beyond weight-related measures. These included better diabetes control, improved mobility and body composition, and improved satiety while on treatment, the investment firm said in a note Thursday.
"Although results are early and in a small group of patients, we view early activity in compliant patients as encouraging, particularly given the challenging PWS population," analysts said, adding that they expect a US launch in 2029, followed by Europe in 2030, with pricing in line with current approved uses.
The analysts also said that they model peak worldwide unadjusted sales of about $1.8 billion in 2035 with a conservative 20% probability of success, reflecting the early stage of development and historical difficulty of treating PWS.
Morgan Stanley raised its price target on the company to $150 from $129 and reiterated its overweight rating.
Shares of Rhythm Pharmaceuticals were down more than 4% in recent Friday trading.
Price: 112.42, Change: -5.20, Percent Change: -4.42
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