Rhythm made $195M and lost $202M. Then the tariff clock started.

Rhythm Pharmaceuticals made $194.8 million last year. It also lost $201.9 million.

That math is not unusual for a commercial-stage biotech still building its patient base. What changed in April was the question every investor started asking: what happens when you layer a 100% pharmaceutical tariff on top of a company burning through $50 million a quarter, with no MFN pricing deal and no obvious carve-out from a policy designed to favor companies with leverage?

The answer is uncomfortable for small biotechs, and Rhythm is the case study.

On March 19, the FDA cleared setmelanotide for acquired hypothalamic obesity, a rare condition that leaves patients unable to regulate hunger after brain damage. The approval came one day ahead of the agency's own deadline and added roughly 29,000 potential U.S. patients to Rhythm's eligible population. By the end of that same week, CEO David Meeker was telling Endpoints News that White House pharmaceutical policy was "incredibly worrisome" for small biotechs. The timing was not coincidental.

On April 4, the Trump administration imposed a 100% duty on patented pharmaceutical products under a Cold War-era trade authority. Large companies got 120 days to comply; smaller ones received 180. The ostensible reprieve for small business creates something closer to a two-track system. Major pharmaceutical companies including Pfizer, Johnson & Johnson, and GSK have signed Most Favored Nation pricing agreements with HHS and domestic manufacturing pledges with the Commerce Department, positioning them for 0% tariff exposure through January 20, 2029. BioSpace reported that the same companies also appear on the tariff list alongside non-deal companies, and the ambiguity has not gone unnoticed. BIO CEO John Crowley warned that tariffs will raise costs, impede domestic manufacturing, and delay the development of new treatments.

Smaller biotechs have no equivalent backstop. Only a handful of the largest pharmaceutical companies have MFNs; everyone else is in limbo. For Rhythm, the problem has several layers. The company had $388.9 million in cash as of December 31, 2025. At a quarterly burn rate of roughly $48 million to $50 million, that gives the company about two and a half years of runway, absent new revenues from the March 19 approval. The 180-day tariff clock is already running. And setmelanotide does not obviously qualify for the three main exemption categories: orphan drugs, cell and gene therapies, or antibody-drug conjugates. Rhythm already has multiple approved indications for setmelanotide, which means the drug can no longer claim single-indication orphan drug exclusivity. It is a peptide therapy delivered by subcutaneous injection, not a gene therapy or ADC. Whether that matters in practice is one of the open questions the industry is waiting to see answered.

The ING data puts the stakes in historical context. In 1990, Europe accounted for roughly half of global pharmaceutical R&D and the U.S. for about a third. Today the U.S. represents 55% of global R&D and Europe 26%. The tariff policy is premised on reversing that dynamic through leverage, but for a small biotech with one approved product and no manufacturing offset agreements, there is nothing to lever. The policy was not designed with them in mind.

What makes Rhythm a useful template rather than an outlier is the structure of its vulnerability. The company has real revenue growth and a genuine second indication. It is not a pre-revenue concept. But the combination of net losses, finite cash, a tariff clock, and a drug category that may not qualify for exemptions describes a situation that dozens of similar companies also occupy. Analysts are beginning to revalue the sector not on revenue multiples or pipeline potential, but on cash runway against a new cost overhead that did not exist three months ago.

Whether that revaluation is correct depends on questions the policy has not yet answered: how strictly the exemptions will be enforced, whether smaller companies can negotiate onshoring agreements that qualify them for MFN carve-outs, and whether the 180-day clock will produce real negotiations or become another pressure lever that large players navigate around and small ones absorb. For now, Rhythm's paradox remains unresolved: growth that would look promising in any other policy environment, pressed against a cost structure that a single unpredictable administration can fundamentally alter.