Soleno Therapeutics, Inc. (NASDAQ:SLNO) is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for the treatment of rare diseases. The company's lead product candidate, DCCR (diazoxide choline) extended-release tablets, is being evaluated for the treatment of Prader-Willi syndrome (PWS), a rare and complex genetic disorder characterized by insatiable appetite, uncontrolled food intake, and various metabolic and behavioral issues.
Business Overview and History Soleno Therapeutics was incorporated in the State of Delaware on August 25, 1999, initially operating as Capnia, a diversified healthcare company that developed and commercialized innovative diagnostics, devices, and therapeutics addressing unmet medical needs. In 2017, the company merged with Essentialis, Inc., a privately held clinical-stage company focused on the development of breakthrough medicines for the treatment of rare diseases where there is increased mortality and risk of cardiovascular and endocrine complications. Following the merger, Soleno's primary focus shifted to the development and commercialization of novel therapeutics for the treatment of rare diseases, with a particular emphasis on DCCR for the treatment of PWS. In April 2024, the FDA granted Breakthrough Therapy Designation for DCCR, marking the first ever breakthrough designation for a drug being developed for PWS.
Prader-Willi Syndrome and DCCR PWS is a rare and complex genetic disorder that affects approximately one in 15,000 to 30,000 individuals worldwide. The condition is characterized by a relentless and insatiable appetite, leading to obesity and various metabolic and behavioral issues. There are currently no approved treatments for the underlying hyperphagia (excessive hunger) and food-related behaviors associated with PWS.
DCCR, Soleno's lead product candidate, is a once-daily, oral tablet formulation of diazoxide choline, a benzothiadiazine derivative with various pharmacological properties. The company has been evaluating DCCR in clinical trials for the treatment of PWS, and the drug has received Fast-Track and Breakthrough Therapy designations from the U.S. Food and Drug Administration (FDA) for the treatment of PWS, as well as orphan designations in the U.S. and European Union.
Clinical Development and Regulatory Updates Soleno has conducted several clinical trials to evaluate the efficacy and safety of DCCR in patients with PWS. The company's pivotal Phase 3 study, known as DESTINY PWS (C601), was a 3-month, randomized, double-blind, placebo-controlled study that enrolled 127 patients at 29 sites in the U.S. and U.K. Although the trial did not meet its primary endpoint of change from baseline in hyperphagia, significant improvements were observed in two of three key secondary endpoints.
In January 2022, the FDA recommended that additional controlled data be included in a New Drug Application (NDA) submission for DCCR. In response, Soleno initiated the randomized withdrawal (RW) period of Study C602, a multi-center, randomized, double-blind, placebo-controlled study of DCCR in 77 patients with PWS at 17 sites in the U.S. and 5 sites in the U.K. In September 2023, the company announced positive, statistically significant top-line results from the RW period of Study C602.
On June 28, 2024, Soleno submitted an NDA to the FDA for DCCR for the treatment of PWS in individuals four years and older who have hyperphagia. On August 27, 2024, the company announced that the FDA had granted Priority Review for the NDA and assigned a Prescription Drug User Fee Act (PDUFA) target action date of December 27, 2024.
Financial Performance As a clinical-stage biopharmaceutical company, Soleno has not yet generated any revenue from the commercial development and sale of its product candidates. The company's financial performance has been primarily driven by its research and development (R&D) and general and administrative (G&A) expenses.
For the nine months ended September 30, 2024, Soleno reported a net loss of $119.87 million, compared to a net loss of $27.69 million for the same period in 2023. The increase in net loss was largely due to higher R&D and G&A expenses as the company advanced its DCCR program and prepared for potential commercialization.
For the three months ended September 30, 2024, Soleno reported the following financial results: - Research and development expenses were $30.14 million, which includes $18.52 million of non-cash stock-based compensation. - General and administrative expenses were $49.20 million, which includes $38.08 million of non-cash stock-based compensation. - Net loss was $76.62 million. - Operating cash outflow was $14.93 million. - Free cash outflow was $15.12 million.
The company has not reported any revenue to date, reflecting its status as a clinical-stage biopharmaceutical company focused on developing novel therapeutics for the treatment of rare diseases. The significant net loss, operating cash outflow, and free cash outflow for the most recent quarter reflect the company's ongoing research and development activities, as well as preparations for the potential commercialization of DCCR.
Liquidity As of September 30, 2024, Soleno had $48.41 million in cash and cash equivalents, $208.36 million in marketable securities, and $27.95 million in long-term marketable securities, providing the company with a strong financial position to continue the development of DCCR and pursue other strategic initiatives. The total cash, cash equivalents, and marketable securities amounted to $284.72 million.
The company has a current ratio of 17.26 and a quick ratio of 17.26, indicating a strong short-term liquidity position. Soleno's debt-to-equity ratio is 0, suggesting that the company has no significant debt obligations.
Soleno expects that its current cash, cash equivalents, and marketable securities balances will be sufficient to enable it to meet its obligations for at least the next twelve months from the date of the filing.
Risks and Challenges Soleno's success is heavily dependent on the successful development, regulatory approval, and commercialization of DCCR for the treatment of PWS. The company faces several risks and challenges, including:
1. Clinical Development Risk: There is no guarantee that DCCR will demonstrate the desired efficacy and safety profile in ongoing and future clinical trials, which could delay or prevent regulatory approval. 2. Regulatory Approval Risk: The FDA's approval of DCCR is not assured, and the regulatory review process can be lengthy and unpredictable. 3. Commercialization Risk: Even if DCCR is approved, the company may face challenges in effectively commercializing the product and achieving widespread adoption by healthcare providers and patients. 4. Competition Risk: The company may face competition from other therapies or products developed for the treatment of PWS, which could impact DCCR's commercial potential. 5. Funding and Liquidity Risk: As a clinical-stage company, Soleno will require significant additional funding to continue its operations and advance its pipeline, and there is no guarantee that the company will be able to secure such funding on favorable terms or at all.
Geographic Markets Soleno's operations and product candidate are currently focused on the United States market. The company has conducted clinical trials in both the U.S. and the U.K., but its primary target for initial commercialization, pending regulatory approval, is the U.S. market.
Outlook and Conclusion Soleno Therapeutics is at a pivotal stage in its development, with the recent submission of an NDA for DCCR and the FDA's granting of Priority Review. If approved, DCCR would become the first and only approved treatment for the underlying hyperphagia and food-related behaviors associated with PWS, a rare and complex genetic disorder with significant unmet medical needs.
The company's strong financial position, with over $285 million in cash, cash equivalents, and marketable securities as of September 30, 2024, provides it with the resources needed to continue the development of DCCR and potentially expand its pipeline. However, Soleno faces several risks and challenges, including the inherent uncertainty of the clinical development and regulatory approval processes, as well as the competitive landscape and the need for ongoing funding.
Overall, Soleno Therapeutics' focus on developing novel therapeutics for rare diseases, particularly its lead candidate DCCR for the treatment of PWS, positions the company as a potential leader in this underserved market. The company's upcoming regulatory decision and the successful commercialization of DCCR, if approved, will be critical for its long-term success and the potential to improve the lives of patients with Prader-Willi syndrome.