Goldman Sachs says it’s time for investors to put their money into Rhythm Pharmaceuticals, as its shares could rise nearly 40% on evidence of success for its anti-obesity drug. “We believe that Imcivree’s prospects were transformed by initial [phase 2] data in patients with hypothalamic obesity (HO), pointing to a high probability of clinical success in this indication where we also see a significantly higher peak sales opportunity compared to other indications where Imcivree is in development,” wrote the analyst Corinne Jenkins in a note to clients as she upgraded the stock to buy from a neutral rating.Hypothalamic obesity refers to weight gain that occurs after injury to the hypothalamus, a critical part of of the brain.Although the stock is up more than 320% since the Data release, Jenkins sees further upside in the stock if Rhythm continues to succeed in clinical trials and in developing a weekly formulation of Imcivree , which extends patent protections until 2038. “We also look forward to the cadence of European reimbursement decisions and approval in [Bardet-Biedl Syndrome] to boost earnings in the medium term, complementing our positive view on the trajectory of higher stocks from here,” Jenkins wrote. Bardet-Biedl is a genetic disease that affects several parts of the body, particularly those linked to vision. In the absence of approved therapies for patients with hypothalamic obesity, Jenkins believes Rhythm’s drug Imcivree could reach a peak penetration of 60% in patients. Rhythm shares have risen nearly 103% this year and 61 % in August, but could gain 38% from Friday’s close, according to Goldman’s new price target of $28. — CNBC’s Michael Bloom contributed to the report.
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