This article was originally posted on August 27, when we first saw these ads circulating… apparently lots of folks missed it, and the ads are running hot and heavy again, so we’re re-posting it here to help answer a flood of new reader questions. The stock teased has popped 40-50% or so on the Stansberry attention, but we have not updated or revised what follows since 8/27:
Well, there’s no question about which teaser pitch Gumshoe readers want me to cover today — the tsunami of requests for coverage of Dave Lashmet’s “20X gains” pitch for a weight loss drug is a little overwhelming.
And we aim to please, so let’s put the Thinkolator to work for you. The ads are from Lashmet’s Stansberry Venture Technology newsletter, which generally focuses on tech and biotech names… and Lashmet is apparently riding high from some big gains in Inovio (INO) due to the COVID-19 vaccine race, so he’s got some past 1,000%+ gains to use in bolstering his claim that this obesity treatment is going to turn into 2,000% gains. The offer is for what they say is an unusual “sale” price of $2,500/yr, and like most high-end letters that’s completely nonrefundable. So let’s look into it and see if you want to think over the stock before you make that kind of nonrefundable commitment, shall we?
Here’s how the pitch is introduced, with talk about a “disease spreading across the nation”…
“I’m not talking about COVID-19. This disease leads to 10 times as many deaths every year.
“And despite the fact some of the biggest drug companies in the world have poured billions into finding a cure…
“The breakthrough from one tiny drug company is set to take the prize.
“This company – which is a fraction the size of big pharma competitors – is on-track to be the first drug maker to enter this market with a unique product.
“They have the only drug that can treat this disease at the source of the problem.”
That disease, of course, is “obesity,” which probably shouldn’t be thought of as a single disease but is certainly a dangerous condition that impacts health in many ways. And we all know the size and scope of the problem, of course, we see it when we walk the streets — and some of us see it in the mirror, particularly after being cooped up with easy access to the solace of junk food and beer for the last five months. I know I’ve put on my ten pounds during these “stay at home” coronavirus months.
Then the ad itself launches, this is from the beginning of their long sales presentation…
“One company’s product will fulfill a fantasy shared by nearly every American. (You may want it yourself, if you can get your hands on it.) That’s why a 2,000% gain could be low.
“But once this hits mainstream headlines, this opportunity will likely disappear overnight.”
So what clues do we gather from the presentation?
That the stock is under, or at worst somewhere near $50 a share, and is considered “small,” at least compared to big pharma.
And that their clinical trial results have been phenomenal…
“Over 80% of patients in one study saw life-changing results. And their families were amazed.
“One medical write-up called the results ‘unprecedented’ in ‘natural history.'”
And there’s a little veritas added by some brand-name science authorities…
“The New England Journal of Medicine and Nature ran feature stories on this breakthrough, calling the results “profound.”
“But the news was hidden behind scientific headlines like this: ‘Melanocortin 4 Receptor'”
Lashmet says that there are a few factors making this story fly below the radar for investors … it uses those scientific terms like that above and people have grown more skeptical of weight-loss drugs, it isn’t approved yet, and they have intentionally targeted a small subset of the market to start. Here’s a bit more from the ad:
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“Outside of a few researchers, doctors, and a small group of lucky patients, almost no one knows about this new drug yet… or how it’s about to change the world.
“The fact is, no drug ever created has been able to do what this one can.
“With almost no side effects… especially compared to the severity of this condition.
“By our calculations, up to 70% of the United States population could soon be prescribed this medication.
“That’s 38 times more than the single most-prescribed drug in the world today, the arthritis drug Humira.”
And on that skepticism:
“… tapeworms, fad diets and supplements all have one thing in common. They pretend to treat what research firm McKinsey has dubbed “a critical global issue”: obesity.
“None of these alleged obesity cures have any basis in science, of course. They are not rational.
“It seems generous to call them a fiction, instead of simply a scam.
“The truth is, they’ve done untold damage.
“A popular drug in the ’90s, Fen-Phen, was found to cause heart damage in many patients. The drug maker ended up paying out $3.75 billion in legal claims.
“But as sad as it is, all of these ineffective and false claims actually give us a huge advantage today.
“They’re part of the reason why almost nobody’s paying attention now, when a real science-based cure for obesity has finally arrived.”
And on the FDA timeline…
“… it’s weeks away from FDA approval. So, when MarketWatch reviewed the top drug makers for anti-obesity pills this past May… this small biotech didn’t make the list.”
And then on that targeted group, which Lashmet implies is essentially making the company seem like it’s hiding this anti-obesity secret…
“You won’t find the words ‘general obesity’ anywhere on this company’s website.
“In fact, they added words like ‘rare genetic deficiencies’ and ‘rare genetic disorders’ to their company slogan and About Us page.
“Because they report that their drug only treats around 2,500 children with a rare genetic condition.
“Why would a drug company go to such efforts to hide the fact their drug could cure hundreds of millions of people?
“As it turns out, there are 350 million reasons why.”
That’s a reference to the priority review voucher this company received for targeting a rare pediatric disease — apparently AbbVie once bought one of these “golden tickets” for $350 million, so it’s a valuable hidden asset of this secret company now. And as we’ve seen from other drug companies plenty of times, it’s fairly common for a drug to be tried out first in a very targeted population, where clinical trials can be relatively small and inexpensive and where the pathway to approval is seen as easier, since the unmet need is high for those patients… then, once the drug is approved, it can be prescribed off-label if it’s seen as safe and effective for other patients, and they can use their initial success to fund more clinical trials that expand the universe of possible customers for that medicine.
What else does Lashmet say to get our clues going?
“… after months of studying this company and their miracle drug… I can say: FDA approval is practically guaranteed.
“The FDA is expected to rule any day now.
“How do I know this?
“Because even regulators called this drug a “breakthrough.”
“And the FDA doesn’t use that word casually. It comes with a special drug designation that guarantees a ruling within six months…”
How about some hints about the actual clinical trial results?
“… this new discovery has yielded weight loss results never before seen in the 50-year history of biotech.
“On average, obese patients in trials lost around 25% of their weight in 12 months.
“Meaning a 250-pound man could lose more than 50 pounds in a year and a half. Using a simple drug with virtually NO side effects – no sweating or sacrifice.
“In fact, the patients in one drug study each lost an average of 70 pounds.”
OK, that’s impressive. What else?
“This drug essentially gives you a higher metabolism… meaning you can suddenly burn more fat while doing absolutely nothing.”
I don’t know if I’ll buy this stock — but that makes me want to try to drug, for sure. Other clues?
Well, it’s not Ozempic…
“To be fair, there’s one other competitor in the works – an injectable drug called Ozempic. But that’s not FDA approved either. In fact, we think our drug will be first…
“For investors, the important part is, the little company we found is 100 times smaller than the company behind Ozempic.”
Ozempic is owned by Novo Nordisk (NVO), so now we know that we’re dealing with a market cap below $1.5 billion or so (NVO is a $150 billion company), with a drug that helps with weight loss and that has the FDA’s Breakthrough Therapy designation… and with some sort of catalyst point coming soon, presumably in the form of an FDA decision. Enough?
Indeed, the Thinkolator sez this is Rhythm Pharmaceuticals (RYTM). Which seems like a personal affront, because there’s no way I’m going to be able to type Rhythm a few dozen more times without misspelling it at least once.
Rhythm is a fairly new company to the public markets, they went public in late 2017 on the strength of their early clinical trials for their obesity drug, Setmelanotide, and they do indeed have a FDA decision coming — the PDUFA date for their first indications is November 27. This is how Rhythm describes itself:
“Rhythm is a late-stage biopharmaceutical company focused on the development and commercialization of therapies for the treatment of rare genetic disorders of obesity. The FDA has accepted for filing an NDA for setmelanotide for the treatment of POMC deficiency obesity and LEPR deficiency obesity with Priority Review and assigned a PDUFA goal date of November 27, 2020. Rhythm also submitted an MAA for setmelanotide to treat individuals living with POMC deficiency obesity or LEPR deficiency obesity to the EMA in June 2020. Rhythm is also evaluating setmelanotide for reduction in hunger and body weight in a pivotal Phase 3 trial in people living with Bardet-Biedl and Alström syndromes, with topline data from this trial expected in the fourth quarter of 2020 or early in the first quarter of 2021. Rhythm is leveraging the Rhythm Engine — comprised of its Phase 2 basket study, TEMPO Registry, GO-ID genotyping study and Uncovering Rare Obesity program — to improve the understanding, diagnosis and potentially the treatment of rare genetic disorders of obesity.”
That PDUFA date in three months does give some urgency to the story — though it’s important to think about the difference between treating several hundred or thousand people with identified “rare genetic disorders of obesity” and treating 100+ million obese Americans. This drug, if it is approved, will no doubt be overprescribed as market forces and huge demand push doctors to prescribe it for people who do not have the specific genetic disorders for which the drug is approved, but it’s not necessarily going to immediately have a huge market.
They are actively trying to increase that market, doing a lot of genetic testing in obese patients to identify commonalities or other genetic disorders and variants for which the drug might be indicated, but the size of the market is not “everyone who’s overweight”. At least, not yet. Dave Lashmet might be right that “2 Billion People Need This Drug” … but they’re not all going to get it, at least not anytime soon.
And who knows, it might end up being more dangerous than expected once it’s tested in larger cohorts of people — it is certainly not yet convenient, requiring frequent injections (though they are working on a once-weekly formulation as well).
So far, Setmelanotide has only been given to 440 people — they say that discontinuations are rare, the adverse effects are mostly mild and there have been no associations between setmelanotide and changes to heart rate or blood pressure, so that’s all encouraging (many past diet drugs have failed because they cause cardiovascular side effects, sometimes deadly ones), but we’re still talking about small numbers of people.
In looking through the company’s investor presentation, I get the impression that the impact of the drug is pretty phenomenal — I have no idea whether it will have the same impact on people who do not have genetic disorders that predispose them to obesity, but it’s pretty clear that the drug works and has been well-tolerated on the relatively small number of people who tried it. And it looks like it might be a maintenance drug, not something you take just to lose weight but something that is taken to keep hunger under control in perpetuity — the data they share from last year’s trials in their investor presentation indicate that after a period of weight loss, shifting to a placebo several months in caused the weight gain to bump right back up immediately, bolstering both effectiveness claims and, perhaps, the market opportunity if the drug has to be taken long-term.
And here’s some more from the ad on the size of the opportunity — what Lashmet seems to believe is the secret that leads to this being a mass-market drug eventually:
“There’s no doubt in my mind that this tiny company has the next great blockbuster drug.
“But they also have an ace in the hole… a secret that makes this opportunity even bigger….
“… when this new weight loss drug popped up on my radar, I dug up the 200-page report company executives filed with the U.S. Securities and Exchange Commission back in September of 2017.
“And a sentence I found buried a hundred pages in… revealed something valuable.
“It’s worth its weight in gold, saffron, and diamonds.
“Read it for yourself, right here:
‘Initial [drug name] clinical trials were in patients with general obesity, which provided preliminary evidence of the safety and efficacy of the drug…'”
That language is from Rhythm’s IPO filings in late 2017, here’s some more detail from the S-1:
“Initial studies in general obesity provided preliminary evidence of efficacy and of good tolerability, and served as a foundation for the clinical development of setmelanotide. The general obese population is defined as having a BMI of equal to or greater than 30 kg/m2. In our initial clinical trials, we delivered setmelanotide with continuous SC infusion using an insulin pump. More recently, our administration has been converted to a once daily SC injectable formulation. In addition, we have an ongoing trial to assess the pharmacokinetics of a new, long-acting formulation of setmelanotide.”
My quick take is that there were challenges in those Phase 1 and Phase 2 studies among the “general obesity” population, partly in finding the right way to deliver the drug (insulin pump vs. daily injections) and partly in the much better results for inpatients than outpatients, so it may be that there are other things going on, and perhaps that cooled investors interest in the stock as a big-market diet drug company to some degree (the shares have generally drifted down from their $30 IPO price)… but it is pretty clear from their recent trials that it at least works really well in those targeted patients with genetic disorders, and the early trials in “general obesity” patients, as far as I see in their filings, did not create any scary side effects — it was effectiveness and difficulty in compliance that seemed to moderate the results a bit, not adverse effects, and the drug was still effective in many of those trials, even if not to the dramatic “25% weight loss” degree of some of their more recent trials among the genetic disorder patients.
More from Lashmet:
“And the best part is, this small drug company can choose to hit the general obesity market any time after their drug is approved.
“It could literally be used ‘off-label’ on day one.”
Will it be? I have no idea. It certainly has been very effective at weight loss in their clinical trials, and the stock doesn’t seem wildly priced given even a chance at a larger market emerging — the market cap is right around $1 billion, and they have more than $200 million in cash in addition to the “golden ticket” priority review certificate that Lashmet mentioned, and there will be that FDA catalyst that probably brings more attention to the stock later this year (it could be bad attention, of course, even a high likelihood of approval doesn’t mean 100% certainty).
The market will take time to grow, I imagine, but it is somewhat interesting… even for a guy like me, who rarely invests in biotech stocks. Their target market is officially very small, and the market cap reflects that… but it’s certainly possible that the market could grow rapidly, particularly if doctors embrace the drug for off-label prescribing to patients with persistent or dangerous obesity that hasn’t been connected to a genetic disorder.
And incidentally, if you like the idea but aren’t crazy about Rhythm specifically, there’s also at least one partner working on one of their formulations — the European pharma company Camurus (CAMX in Stockholm). Camurus is best-known for an extended-release opioid addiction treatment, which is the focus of the company, but among their other earlier-stage projects they’re also partnering with Rhythm in the development of an extended-release version of Setmelanotide, using their FLuidCrystal formulation, and if that extended release version is effective and ends up being commercialized Camurus will earn a tiered royalty — they describe it as “mid to mid-high, single digit”, so I guess that’s 4-7% or so of sales. I don’t know much about Camurus, and that extended-release version is not what’s hitting a PDUFA date in November, so that’s a further-in-the-future story, but sometimes a royalty-earning partner can be a nice way to play a blockbuster if it works out.
So that’s all this non-biotech guy can tell you about Lashmet’s new biotech pitch — he’s teasing Rhythm, which does indeed have an impressive anti-obesity drug… and I’d (inexpertly) guess that it probably is likely to be approved in November for that first cohort of patients, and given the general impression I have that it has been well-tolerated and effective, I would further guess that it’s not outside the realm of possibility that a big off-label market could emerge quickly, though it’s an inconvenient once-daily injection, it seems to work better for inpatients, and we have no idea what the cost might be.
That’s a lot of guessing about the future and a lack of real biotech expertise talking, and I expect Dave Lashmet’s report is probably far more detailed for his subscribers… but, well, I’m at least sure that the Thinkolator is correct in identifying Rhythm as the company being teased… and I didn’t charge you $2,500 to find that out. Maybe the notion of this stock makes you crave Lashmet’s advice and makes the idea of subscribing to his letter make sense — maybe it just takes away that “learn the secret” urge and gives you some time to think it over for yourself, that’s your call.
Whether the stock takes off from here and goes on to cure our plague of roundness, I don’t know, but I’d be delighted to hear what the biotech mavens and science folks out there think of the prospects… just use our happy little comment box below.
P.S. if you’re looking for Lashmet’s other teased “special report” ideas, he talks up a “universal cancer cure” that is probably a repeat of what we covered last Fall… and his “first and best Alzheimer’s treatment” pitch was covered here in April.
P.P.S. If you’ve ever subscribed to Lashmet’s newsletter, whether at that “sale price” of $2,500 or some other cost, please click here to let your fellow investors know if Stansberry Venture Technology was a hit for you.
I like your analysis Travis, but I am a Stansberry Alliance member and I can tell you it is not RYTM. It is a VERY TINY company that cannot even be purchased on US exchanges. It is available only on the Hong Kong exchange. The majority of Stansberry Venture picks are only available on foreign exchanges and I have never purchased any of them because it is too much trouble. Sorry, but after spending the equivalent of a new car purchase on my membership, I can not jeopardize it by giving you a;; the details.
Ascentage Pharma – HK06855
It’s not Ascentage. Most if not all of their drugs are still in Phase II testing
Ascentage Pharma stock does not seem to have moved much in last 5 days which one might have expected?
Ascentage is developing anticancer drugs, and their first US trial (Phase Ib/II) was just approved. It can’t be Ascentage, and RYTM is the only company with an anti-obesity drug coming up for FDA approval in the reasonable future.
That’s interesting I wonder what caused the caused the RYTM price to go from $19 to pretty much $27. Is it the gumshoe effect?
1230
Travis just reviewed it today…9/9
Travis posted about this couple weeks ago
Yes, Travis reviewed it on the 9th, but for some reason, some of the comments here say are from 11, 12 days ago… Not sure why that is @travis
Yes, Travis reviewed it on the 9th, but for some reason, some of the comments here say are from 11, 12 days ago… Like your comment indicates from 11 days ago, was this article published 11 days ago and some of us just see it on the 9th?
You say it’s not RYTM; Travis says it is RYTM. I have never heard of you before; I have a good history with Travis. Until I hear otherwise from Travis, I will place your comments in my “fake news” file. Nice try.
ronc
I’m afraid Deb109 could be correct in his statement, and you should look in one of these tickers; VIR OSUR TSE: 4528 TSE: 4523 BIIB NVDA ADI SHL.DE
Well it went up again today. Almost 14% at one point. I have decided to take profits and look for another entry point. All the material points to Travis being correct in my opinion
Just being a Stansberry Alliance Member does not allow you access to Stansberry Venture Tech subscription of Dave Lashmet. So I stick with Travis guess.
When I looked into Alliance last year, I was told I would have access to ALL Stansberry subscriptions. Perhaps this is not so.
I have to correct my last message, and I can confirm that RYTM is correct. They have also just raised the buy-up price on RYTM, so that’s positive
thanks. I thought so but great to have confirmation. Thanks
I can attest to Rythm (RYTM) being correct and available on Nasdaq. I’ve owned it for several months now since Ventures first commented on it. I’m a lifetime Alliancemember.
Thank you for the extra surety
See chrizcringle retraction below where he joins Travis in his RHYM guess. Thank you Chrizcringle
Aside from being a Stansbery Alliance member, did you subscribe to Stansberry Venture Tech too? You’re talking about two different services here.
I believe a Stansberry Alliance member gets everything they publish. deb109 is not exaggerating when he says he forked out the equivalent of buying a new car.
RCD, that is incorrect, at least with older Alliance members.
Even as a Stansberry Alliance member, one still has to pay extra for Lashmet’s 2 Venture
newsletters. This could have changed recently but I tend to think not.
Linda – u are correct – I am an Alliance member, and for Venture u have to pay extra
Hi deb109.
I’m curious when you became an Alliance member? Was there an extra fee charged for Lashmet or was it included?
This concerns me as an Alliance member for over 2+ decades now. When Lashmet came online, I was told I would have to pay extra to receive his 2 newsletters which frankly annoyed me. Further, for the last two years I have seen ads for Alliance memberships at about 1/10th of their former rates. The costs seemed to drop around the time that Porter left his CEO role. At any rate, to this day, I can’t access Lashmet’s newsletters though I see them on the Menu. They are blurred a bit, however. If you would be so kind as to tell me when you joined & whether Lashmet’s info was included without an extra charge, I’d appreciate it. It doesn’t seem fair that newer members receive more potentially for less than us long-timers. Anyway, I hope you’ll reply. Thank you! Linda
I get Lashmet as a lifetime member. I don’t know if it’s available otherwise?
Hmm, that’s interesting. Thanks for letting me know.
And are you happy with your choice, or do you regret the car you didn’t buy? I find them arrogant and Doc Eifrig dividend letter is a dud (I’m going to cancel), Sjugg’s letter is a dud but I’m in for life. They sold everything during the Covid crash and now they buy back once a month. The flab bearer Stans Research is good, I’m going to keep it. I also subscribe to Jeff Brown’s Near Future. After one week of Covid he sent a vid; this is nuts reduce all your stops, with new stops. After two weeks of Covid he sent another vid; this is more than nuts. Drop all your stops. No more stops, the market will finish the year higher. My type of guy. Glad I followed.
Travis, I was not asking about this weight loss medicine. I was referring to Cboe Volatility Index {VIX} as it was separating from the S&P index. VIX rose 5% S&P 1% … Generally, an indicator of correction is insight. Bloomberg with Joanna Ossinger Aug 27, 2020, On E-Trade market news. Is this the indicator we have been waiting for?
Thanks for the confirmation, Travis. I started researching the tease, narrowed it down to RYTM, then looked to your feed. Seeing you reach the same conclusion is a welcome confirmation. I’m thinkiing about 1/15 25 calls.
What a “story stock”! This could be huge.
Stansberry sent out an email Sunday morning, 8.30.20, promoting this Obesity drug. Watch the price action on RYTM….
Their partner in Sweden: https://www.camurus.com/
In years past, I’ve had a lot of experience with Stansberry’s various reports. And that goes for many other Newsletter’s as well. I can honestly say, I’ve never made any significant profit from any of their advise. But, I suspect they’ve all done well on their stock pumping promotions. Still , at times it all makes for interesting reading.
Your pessimism is refreshing. They have so many ways to make money, no?
Except here with our Stock Gumshoe. I’ve just started investing and I can’t believe how much work Travis puts into his reports and charges us not a penny. I’d believe what he says over any other.
Thanks Travis
I 2nd that .
If a stansbury alliance member thinks that once he pays his many thousands of dollars “one time” fee that he will never be solicited/required to pay more to stansbury’s ever changing research reports they didn’t read the fine print. All you’ve done is proven to them you’re a cash cow that can be sold pie in the sky returns. Mind you, I like Porter Stansbury and as newsletters go I think he provides some of the best education around but he is a better salesman than he is a stock picker. His market timing is retched, never bet on his short or precious metals picks and his various writers hedge their bets so someone on his staff has to be right. His insurance company work is excellent and he offers great analysis of “capital efficient “company’s and other long term investment types of companies you should very well on in the run. Still, he is biz to make money and he does that very well. This requires constantly shuffling his deck and coming up with new angles and ways to get you onboard and keep you spending $.
Mark, this is the true and correct description. His net worth is north of $500 million. He should retire and enjoy life rather than use marketing skills excessively.
John Doody recently brought his gold and silver subscriptions into the Stansberry fold. I am up 59% to 137% in stocks and 112% to 439% in calls. While I can’t give specifics, I do not believe the other, older metals service is near as good.
Thanks Travis – I had come to the same conclusion based on the evidence in the pitch. I have purchased a moderate stake – and all indicators are the stock will continue to rise…at least at the moment. IF Lashmet is correct and this becomes available to the general public – WOW. If the clinical trials tank – the way my Corbus stock did yesterday – OUCH – then not so good. We will see. But either way – thank you for your insight!
It is Rhythm but it’s not injectable like it’s main competitor. It’s in PILL form. Which makes it more accessible to the general public once it’s approved over the counter.
I don’t think that this will end up in the OTC column….but time will tell. Richard, MSc, RPh
As a Alliance member the comment below by anther member is wrong. You can buy it in the US , I did. And it is Rhythym!
Dave lashmet
Does anyone here find it disheartening that a drug is necessary to “cure” obesity? Wouldn’t it be easier to just stop eating junk food and do some exercise? Of course, that would create havoc in the pharmaceutical and junk food industry.
I am generally with you and think that “eat less, drink only water, do more sports” is the best cure for overweight people – as difficult as such a change of habits may be for many. However, there are cases where obesity is an illness that requires treatment beyond a behavioral change and a genetic disposition is one of those. OTOH, people tend to be lazy and for many overweight people it is easier to pop a pill than to join the local triathlon club, so I do see a market for anti-obesity drugs.
Personally, WFH in the time of Covid has meant no fast food for me. Down 15 pounds.
Congrats!
Remember, this is being developed for specific genetic abnormalities….not general obesity.
RSH, MSc, RPh
Cartero, As Travis, elesido, ell and other Gumshoe folks have reported, RYTM addresses ultra-rare pediatric obesity diseases. These are life-threatening genetic disorders that can not be mitigated by dietary and exercise regimes. RYTM targets impaired brain pathways causing extreme forms of obesity, POMC & LEPR. Imagine being a parent trying to lift and carry your 3 yr old who already weighs 70-80 pounds without any options for stopping such weight gain or the developing co-morbidities, or having any hope for improving your child’s quality of life now or going forward. What a relief to have a drug cure for those who suffer from such problems.
If interested, you can read more about the company @ https://www.rhythmtx.com/
The following is a section of a PR available at
https://markets.businessinsider.com/news/rytm & elsewhere.
Rhythm Pharmaceuticals Receives Rare Pediatric Disease Designation from U.S. Food and Drug Administration for Setmelanotide for Treatment of POMC and LEPR Deficiency Obesities
Jul. 1, 2020, 02:00 PM
BOSTON, July 01, 2020 (GLOBE NEWSWIRE) — Rhythm Pharmaceuticals, Inc. (Nasdaq:RYTM), a late-stage biopharmaceutical company aimed at developing and commercializing therapies for the treatment of rare genetic disorders of obesity, today announced that the U.S. Food and Drug Administration (FDA) has granted rare pediatric disease designations for setmelanotide, an investigational melanocortin-4 receptor (MC4R) agonist, for the treatment of pro-opiomelanocortin (POMC) deficiency obesity and leptin receptor (LEPR) deficiency obesity. As previously announced, the Company’s New Drug Application (NDA) for setmelanotide was accepted for filing with priority review by the FDA and assigned a Prescription Drug User Fee Act (PDUFA) goal date of November 27, 2020.
Under the FDA’s rare pediatric disease designation and voucher programs, the FDA may grant a priority review voucher to a sponsor who receives a product approval for a “rare pediatric disease,” which is defined as a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years and affects fewer than 200,000 people in the U.S. Subject to FDA approval of setmelanotide for the treatment of POMC and LEPR deficiency obesities, Rhythm would be eligible to receive one priority review voucher, which could then be redeemed to receive priority review for any subsequent marketing application, or sold or transferred to other companies for their programs.
“We believe that receipt of the rare pediatric disease designation for setmelanotide, for which we have previously received Breakthrough Therapy and orphan drug status, underscores the FDA’s recognition of setmelanotide’s potential to treat POMC and LEPR deficiency obesities; two serious, ultra-rare conditions for which existing treatment options are woefully inadequate,” said Murray Stewart, M.D., Chief Medical Officer of Rhythm.
If you go on their website and read through the details about this drug, it says it specifically targets a small group, those who have a very specific condition that causes obesity. this drug targets that condition. So if thats the case, would it be suitable for most of the people that suffer from general obesity? does’nt sound like it. thus, it won’t be going into mass production and sales ( if its approved) and hit the high notes your hearing about in the media. Am I wrong?
That is the very big question. Drugs are often focused on a small and targeted group first, because that’s a far easier and less expensive path to approval. If there is huge economic potential, it has to be from mass use — which means not for the few thousand people with genetic obesity “abnormalities”. They are trying to expand that group by expanding genetic testing and finding more genetic markers, but to have daydreams about megamillions profits you need to imagine that this becomes a drug for “general obesity” and gets taken by millions of people. That’s certainly possible — whether it’s probable or not, you have to make your own call. It will definitely take time.
Travis,
I agree, it will take some time, but look at Victoza. It first was approved for Diabetes 2 and now is approved for obesity as well. It is one of the most powerful obesity drugs to date, but it is an injectable and VERY expensive and somewhat difficult to get a prescription for. If what rhythm has is as powerful, in tablet form and cheaper, a significant demand pressure may develop fairly quickly when word gets out. We shall see!!!
Indeed, just remember to temper that optimism. Right now, setmelanotide is also a daily injection, with phase 2 testing for a weekly injection formulation underway.
Setmelanotide is a small peptide. It has only about 8 amino acids. Small peptides are quickly digested after oral ingestion. With present technology there will be no pill form of setmelanotide.
Good to know, thanks!
A problem that you did not mention (although I might have missed it in your discussion) is that
insurance companies do not pay for “off-label” prescription use. That would definitely retard that imaginary “fast growth” once the drug gets market approval.
Travis mentioned at the beginning of his commentary that Rhythym’s IPO filings in late 2017 referred to “initial studies in general obesity provided preliminary evidence of efficacy and good tolerability….”. I assume that ‘genersl’ means that tests have been done on individuals with no genetic disorder.
That sounds rather promising.
I didn’t really understand what ‘marshgator’ was referring to; availability, etc. Can anyone clarify?
Any thoughts out there on why the stock has plunged in the past week?
Only thing that I have heard is that the CEO suddenly announced he is leaving the company. I would be interested in what others are thinking.
All, the CEO was presenting at the Morgan Stanley healthcare conference a couple of weeks ago. I was streaming online and I presented the question “how large is the off-label opportunity for this obesity drug after FDA approval?” To which the CEO replied that the drug is specific for the pathway of the gene disorder that causes children to overeat. It fundamentally cures this the disorder and eliminates this hunger enabling these children to not overeat. He said it does NOT work in the general population! He said it will not be prescribed off label. This directly contradicts the Stansberry research which is predicated on the huge off label oppty. I sold the stock, the next day and it has been in a free fall ever since. The research is wrong, and they didn’t do their homework, and talk to the company.
Rhoady, thanks for you insight. I exited my position at a loss because I could not see a resting point for the stock while the trials move forward. Nevertheless if the phase 3 trials are a success the ligitimacy of Rhythms science will be big win and validate the stock at a lower risk level. The down draft in the stock price has a panic element and that’s understandable based on the text in which it was teased. Lashmet’s is mum and this stock does not have a robust news pipeline so it’s hard to get the pulse of the companies development. The big question is what is this stock worth if the trials are approved ? At what price would you get back in?
That’s what the company has been saying in presentations and filings all along, their focus is clearly on genetic disorders and predispositions and they have not done “general obesity” testing for at least several years with setmelanotide (and it was not nearly as successful as the more recent testing, as noted above)… but it’s also true that off-label use of drugs, though common in some areas, is a generally something most drug companies don’t want to talk about or promote at all. It’s an easy way to get in trouble with the FDA.
Certainly most companies that are undergoing FDA review would not talk up the potential for off-label use, even if they secretly hope for a broader patient base. That doesn’t mean Rythm is going to have a general-purpose anti-obesity drug next year, even if they do get their initial approval next month, just that the denial of any such possibility is essentially a standard response from company management.
Thank you Rhoady!! Do you think, though, that the CEO is required to say that there will not be any off-label use or do you think his comments went above and beyond any legal requirements?
I would not own this stock at any level now that the CEO has confirmed that the drug cannot be used for the general public for obesity, but rather only for the tiny market approval that they have applied for. The CEO said, and their presentation material, speaks to the market size in the hundreds to few thousands of kids. This is so small that they won’t make any money. I suppose if this discovery leads to other obesity opportunities, that is where the opportunity may be. But not knowing the science and what additional opportunities exist, I won’t get back into the stock.
The FDA gives the company staff and execs no room to say other than you heard Rhoady. The CEO is certainly not going to take on any risk when speaking with an individual investor, i.e., nothing “off the record”, confidential or speculative. Doing otherwise will lead to lawsuits and trouble with the FDA. In comparison, Lashmet is free to speculate and fantasize.
In retrospect the price peak was caused by Lashmet’s recommendations. Perhaps a little of it was in response to Travis’ expose’ here. When Lashmet reiterates his recommendation the price should rise again. If you paid $5000/year or similar for Lashmet’s recommendations, when he says “buy” would you buy? That is a big problem when subscribing to a newsletter, you have to be ready to disregard the recommendations you paid (sometimes a lot) for–and this makes subscribing absurd.
A couple of days ago I received from Stansberry in the mail a Very Fancy promotional package stating “You’re one of only a few Stansberry subscribers to receive this.” It contained a futuristic looking USB drive and a written exhortation, “Watch this short 3 minute video regarding a once-in-a-lifetime breakthrough.” The video on the USB drive shows Lashmet sometimes working at a computer and sometimes looking contemplative into the distance, as the audio lauds him as a savant of biotech stock picking. The written note also says “WARNING: Expires November 13, 2020.” It and the video urge a visit to http://www.20xDrugAlert.com . Going to that website produces only a message, “This offer is no longer available.” The note also includes an 800-number. So the phony message aims to cause anxiety that the offer may be withdrawn.
Over the past couple of days RYTM price has risen with no news. It apparently rose because of the fresh promotional activity.
There is still a “yes but…” thought about the objections written by others here. That it is an injection rather than a pill is a “so what…” because an injection is much easier to take than bariatric surgery, and also much easier than contemplating the heart, kidney, eye and limb destruction caused by diabetes. If it does work on a large percentage of people with medical problems from obesity it will be a super-blockbuster drug, but that is a big big “if.”
I bought RYTM in early Sept and now its way down 28%, so I am past my trailing stop. Normally I would sell all or part of my position, but I’m waiting for the Nov 27 FDA approval date , and also anticipating this stock will be “pumped up again” in the days leading up to that FDA date by Stansberry and Lashmet. Very irritating, I am still thinking of seliing 1/2 my position to cut my losses, but will likely “wait it out.”
Yes Stansberry’s newsletters often drive markets. This morning they advised selling SII after it hit a trailing stop and the price fell off a cliff, down 4.6% when it should have risen 1%. I don’t rigidly follow trailing stops on tiny companies such as RYTM or when the entire market gets manipulated by short-term news-like headlines.
Thanks for your feedback. Yes, I feel the same way which is why I am not selling any of my position. At least will stick it out until I know what happens on Nov 27 with the FDA, and I am almost certain the stock will go up in the days leading to it. Even worst case scenario, perhaps not all the way back, but at least half of the way back.
Are we sure that RYTM is the stock they were referring to? There is another company EFX Pharmaceutical that seems to fit some of the descriptions better from the teaser (in my layman opinion)
I just cannot figure out the ticket symbol for this company…
If you mean the drug EFX, I believe that’s being developed by Akero Therapeutics.
I’m still sure this tease was about RYTM. You may conclude differently, of course.
Actually…I looked and I spelled that wrong. ERX Pharmaceutical is what I should have written. Could be worth looking into.
Thanks.
That is an interesting one, though very early stage — their lead drug is in Phase 1 with very early but encouraging results, and the company is privately held. Not sure who their venture backers are, or whether they intend to go public in the near future.
Very Good news.