Rhythm Pharmaceuticals (RYTM) Q2 2025: International Revenue Jumps 24% as HO Pipeline and Global Expansion Accelerate
Rhythm Pharmaceuticals’ second quarter showcased a pivotal inflection, with international growth and pipeline momentum redefining its long-term trajectory. The company delivered strong BBS franchise expansion and made regulatory strides in hypothalamic obesity (HO), while reinforcing its balance sheet and extending operational runway. With multiple late-stage readouts and launches on deck, Rhythm is strategically positioned for durable, multi-year growth across rare disease markets.
Summary
- Global Franchise Expansion: International patient uptake and early access HO programs are accelerating Rhythm’s growth profile.
- Pipeline Milestones Catalyze Next Phase: Late-stage results and regulatory filings in HO set up new market opportunities.
- Durability Through Patent Life and Next-Gen Assets: Patent runway and new compounds extend Rhythm’s rare disease leadership into the next decade.
Performance Analysis
Rhythm posted robust Q2 revenue growth, with net product sales up sharply versus both prior quarter and year-ago periods. US revenue contributed 66% of the total, while international revenue accounted for 34%, reflecting a meaningful uptick in ex-US patient access and early HO launches in France and Italy. Patient growth in reimbursed indications (BBS, POMC, LEPR) remained steady, but the most rapid sequential increase stemmed from HO early access programs, which now represent a significant share of reimbursed international patients.
Operating expenses rose due to increased R&D for next-generation MC4R agonists (such as Bivomelagon and RM718) and commercial scale-up for anticipated HO launches. Currency tailwinds contributed to international revenue, but underlying demand was the primary growth driver. Gross margin and cost of sales ratios remained stable, with management reiterating its full-year non-GAAP operating expense guidance. The recent $189M equity raise, combined with growing revenues, extends the cash runway to at least 24 months, supporting continued pipeline and commercial investments.
- International Momentum: Paid HO access in France and Italy led to the largest percentage increase in international patient growth.
- Prescription Mix Shift: US label expansion to younger patients drove higher pediatric and adolescent prescription rates.
- R&D Investment Upcycle: Formulation, auto-injector, and next-gen trials fueled a 14% sequential rise in R&D expense.
Inventory and specialty pharmacy dynamics normalized in the US, with inventory days stabilizing and sequential revenue growth tracking closely with underlying patient demand. Management expects international growth to continue, albeit with typical Q3 seasonality and variability from named-patient sales.
Executive Commentary
"In terms of significance, I don't think we have had a more impactful quarter. The phase three readout of set melanotide and acquired hypothalamic obesity and the phase three readout of the first of our two next generation compounds sets us on course for our next phase of growth."
David Meager, Chairman, Chief Executive Officer and President
"Rhythm's cash on hand, combined with the net proceeds from last month's stock offering, forecasted revenues from the anticipated launch of MCIVRI and acquired HO, as well as ongoing revenue from approved indications, and currently planned R&D and commercial activity, provides cash runway of at least 24 months. This level of liquidity indicates that Rhythm's balance sheet is the strongest in its history."
Hunter Smith, Chief Financial Officer
Strategic Positioning
1. BBS Franchise as Durable Growth Engine
Bardet-Biedl Syndrome (BBS), a rare genetic disorder, remains Rhythm’s commercial foundation. The company’s focused efforts in patient identification, prescriber engagement, and payer education have translated into steady, multi-year growth in both the US and international markets. The label expansion to patients as young as two years old has increased pediatric uptake, though management expects incremental gains here to moderate as the eligible pool is absorbed.
2. HO Opportunity Unlocks New Market Scale
Acquired hypothalamic obesity (HO), a rare condition caused by hypothalamic injury, is Rhythm’s next major commercial inflection point. With estimated prevalence of 5,000–10,000 patients in the US (and similar numbers in Europe), HO could ultimately rival or exceed BBS in commercial potential. Early access programs in Europe have validated real-world demand, and regulatory filings in both the US and EMEA are on track for Q3. Management is confident that the upper end of prevalence estimates is achievable, citing expanded field insights and claims data analysis.
3. Pipeline and Patent Durability Extend Leadership
Next-generation MC4R agonists, including Bivomelagon and RM718, are poised to refresh Rhythm’s portfolio and extend exclusivity. Formulation patents for setmelanotide run through 2034 in the US, and next-gen compounds could push protection to 2040 or beyond. The upcoming readout from the Prader-Willi syndrome trial and ongoing development in Japan and other geographies further reinforce Rhythm’s multi-decade growth horizon.
4. Global Infrastructure and Community Building
Rhythm’s international expansion is underpinned by deep engagement with rare disease specialists and payers. The company’s support of the IMPROVE meeting, attended by 150+ physicians from 19 countries, is strengthening clinical consensus and driving earlier diagnosis and treatment adoption. The company is also building out its Japanese team, signaling intent to capture additional global market share.
Key Considerations
This quarter marks a transition from survival mode to long-term strategic execution, with Rhythm leveraging its commercial base to unlock new rare disease opportunities and pipeline catalysts.
Key Considerations:
- Label Expansion Drives Pediatric Uptake: 40% of US prescriptions were for patients under 12, up from 27% in Q1, reflecting effective messaging and prescriber engagement.
- Early Access HO Programs Validate Demand: France and Italy’s early access programs have accelerated international HO patient growth and reimbursement.
- Pipeline Readouts as Near-Term Catalysts: Prader-Willi data (exploratory, 10–20 patients) and Japanese HO data are expected within two quarters, shaping future clinical and commercial strategy.
- Cash Runway Supports Aggressive Pipeline Investment: 24+ months of liquidity enables Rhythm to pursue multiple late-stage programs and launches without near-term financing risk.
Risks
Commercial execution in newly launched HO markets remains unproven, and rare disease epidemiology carries inherent uncertainty. Regulatory risk is material, especially as Rhythm seeks to leverage historical control arms and alternative trial designs for next-gen assets. R&D costs are rising, and stock-based compensation is trending above historical levels, potentially pressuring future operating leverage.
Forward Outlook
For Q3 2025, Rhythm guided to:
- Continued international revenue growth, with typical Q3 seasonality in Europe.
- Steady US BBS demand, with incremental benefit from younger patient uptake moderating.
For full-year 2025, management maintained guidance:
- Non-GAAP operating expenses of $285–$315 million, with R&D at $150–$170 million and SG&A at $135–$145 million.
Management highlighted several factors that will drive results:
- Regulatory filings for HO in the US and Europe remain on track for Q3 acceptance.
- Prader-Willi and Japanese HO data readouts are targeted for late 2025 and early 2026, respectively.
Takeaways
Rhythm’s Q2 results confirm the company’s transition to a multi-asset rare disease leader, with global expansion and pipeline execution driving long-term value.
- International and HO Expansion: Early HO launches and new country access are reshaping Rhythm’s revenue mix and market reach.
- Pipeline and Patent Leverage: Next-gen MC4R agonists and formulation IP provide strategic durability and future growth optionality.
- Execution Watchpoints: Investors should monitor HO commercial uptake, regulatory feedback on trial design, and Prader-Willi data for inflection signals.
Conclusion
Rhythm Pharmaceuticals is entering a new growth phase, leveraging its BBS foundation to unlock larger HO and international opportunities while advancing a robust, patent-protected pipeline. Execution in HO and next-gen programs will determine the magnitude and durability of future value creation.
Industry Read-Through
Rhythm’s experience in rare disease commercial scaling, especially through early access programs and payer engagement, offers a roadmap for other specialty pharma entrants. The company’s success in building clinical consensus and leveraging real-world data to support regulatory filings is increasingly relevant as rare disease trials become more global and decentralized. Rising R&D and SG&A investment levels signal a broader trend of biopharma companies extending patent life through next-generation assets and formulation innovation. Investors should watch for similar strategies across the rare disease and specialty pharma landscape as pipeline durability and global market access become critical differentiators.