The last time I spoke about Soleno Therapeutics, Inc. (NASDAQ:SLNO) it was in a Seeking Alpha article entitled “Soleno: Mid-2024 NDA Filing For PWS Treatment Is A Major Catalyst To watch.” In that article, I noted that it was gearing up to submit its New Drug Application [NDA] of Diazoxide Choline Extended-Release [DCCR] for the treatment of patients with Prader-Willi Syndrome [PWS] ages 4 and older who have hyperphagia. The latest update is that the company was indeed in a position to submit this NDA to the FDA.
Not only that, but the FDA just today accepted this NDA submission of DCCR. Why should investors care now more than ever? That’s this filing acceptance sets up two catalysts for investors to keep an eye on. The first catalyst of which would be an FDA Advisory Committee panel to give its opinion on whether DCCR should be approved to treat these patients. The most important catalyst that stemmed out of today’s update would be that the FDA set a PDUFA date of December 27th of 2024 to review this drug for potential U.S. marketing.
Even better than that, considering that this fills a huge unmet medical need, this date for review was granted with Priority Review. Besides the potential approval being a good outcome for the company itself, it does even more than that. It actually gives a treatment option for these patients. Especially, considering that there are no FDA approved drugs to treat major symptoms of PWS. With an FDA advisory panel to look forward to now for review of DCCR for PWS patients, plus a PDUFA date with Priority Review now set in stone, I believe that investors could benefit with any potential gains made here.
Despite Failure In the Past Company Was Able To Shoulder Path Forward
The company had not only been able to submit its NDA of DCCR for PWS, but has had it accepted it for Priority Review by the FDA with a PDUFA date of December 27th of 2024. This was not an easy road at all because it actually stemmed from a prior failure. This was regarding the phase 3 Destiny PWS /C601 study [C601 study], whereby the primary endpoint of change from baseline in hyperphagia was not statistically significant. That is, the measure of Hyperphagia Questionnaire for Clinical Trials [HQ-CT] failed to be separated with such numbers as follows:
- DCCR mean change from baseline of HQ-CT was -5.94
- Placebo mean change from baseline of HQ-CT was -4.27.
This was a massive blow and one of the many challenges for these studies would actually be this hyperphagia component as part of those with PWS. However, this devastating disease has many other symptomatic problems that must be addressed. Despite this setback, there was an opening created based on dialogue with the FDA. To be in a position to file an NDA of DCCR, it would have to run an additional placebo-controlled study showing further evidence that the drug works in treating these patients. Thus, the phase 3 C601 study was branched out to the C602, which had an ongoing open-label extension period where patients were then added to a randomized-withdrawal period. In June 2022, the FDA stated that such a randomized study of this caliber would be enough for it to be in a position to file an NDA of DCCR for approval in PWS patients. Having said all of this, it ultimately was able to file its NDA based on a successful outcome of this C602 randomized-withdrawal study. It did so based on the meeting of the primary endpoint of a change from baseline of HQ-CT to week 16. The data this time around was much better as well and was as follows:
- 38 patients given DCCR had a point change from baseline to week 16 of 2.6 points
- 39 patients given placebo had a point change from baseline to week 16 of 7.6 points.
Thus, the final difference of -5.0 points regarding this primary endpoint ended up being statistically significant, with a p-value of p=0.0022.
Prader-Willi Syndrome is a rare disorder characterized by a gene that causes a major issue with a patient’s metabolism. It leads to problems such as hyperphagia, which is the constant feeling of being hungry. If such excessive eating is not managed, then it leads to obesity and other issues.
The thing to note about this disorder is that it is not only a person’s metabolism that is affected. Nope, it is also known to cause issues with cognitive and behavior functions as well. As I have stated in the beginning above, this is a huge unmet medical need. There are no FDA approved drugs to treat hyperphagia or several other symptoms associated with this disorder. However, there is one FDA approved drug that I could find, which is Genotropin [generic name of Somatropin]. The issue with this is that the only issue it handles for PWS patients is the growth deficiency or short-stature component of the disease. It does not address hyperphagia, cognition, or behavior problems. Going back to the C601 and C602 studies, after 12 months of treatment with DCCR patients saw statistically significant p-values of p<0.0001 in various issues associated with this disorder like the following: Aggressive behaviors, anxiety, depression, compulsivity, rigidity irritability, and disordered thinking.
There might be an expansion opportunity to make note of, which is that the company is also assessing a possible pathway to be able to file for European approval of DCCR. However, this is an ongoing progress, and it remains to be seen if it will be able to file for regulatory approval to the European Medicines Agency [EMA] of this drug based on the studies produced to date.
Financials
According to the 10-Q SEC Filing, Soleno Therapeutics had cash, cash equivalents and marketable securities of $294.6 million as of June 30th of 2024. The reason for the cash on hand is because of an underwritten public offering of 3.45 million shares of its common stock at a public offering price of $46 per share, which also included the underwriters’ option to purchase additional shares. The total gross proceeds from this offering, before deducting expenses, were $158.7 million. Despite this cash raise, this will not be enough cash to carry it forward. This is the case because in the 10-Q SEC Filing, it states that it believes it has a cash runway, or enough cash on hand to fund its operations, for at least the next 12 months.
One way it might be able to raise cash would be through the use of an ATM it can tap into. That is, back on July 19th of 2024, it entered into an Open Market AgreementSM with Jefferies LLC, where it could occasionally offer and sell common stock with an aggregate offering price of up to $150 million. It doesn’t have to tap into this financing, but it can if it chooses to do so. Its cash burn per quarter is about $23.2 million, broken down into $12.3 million for Research & Development expense and then $10.9 in General and Administrative expense.
Risks To Business
There are several risks that investors should be aware of before investing in Soleno Therapeutics. The first risk to consider would be regarding the expected FDA advisory panel of DCCR for the treatment of patients with PWS. The risk here is that there is no assurance that the company will get a positive vote outcome from such an advisory panel. If this is the case, then not only would it cause the stock price to trade lower, but could also then lead to an FDA rejection.
A second risk to then consider would be the FDA Priority Review of DCCR for PWS, expected on or before December 27th of 2024. There is no guarantee that the FDA will eventually approve this drug for marketing in the United States. Especially, if it doesn’t somehow obtain a positive outcome from the FDA advisory panel expected to convene before the final FDA decision.
The third and final risk to consider would be regarding potential sales of the drug. Even if the company receives U.S. approval of this drug, there is no guarantee that it will be successful once it reaches the market. How well this company does long-term is ultimately going to largely depend upon its commercial success of DCCR, should it be approved by the FDA.
Conclusion
Soleno Therapeutics has been able to bounce back from its failed trial several years ago and has made itself a pathway forward to potentially receive U.S. marketing approval of DCCR for the treatment of patients with PWS. It is not at the finish line yet because it still has to get through two more hurdles before it can do so. The first of which is the advisory panel meeting I noted above, which is going to recommend whether this drug should be approved for the treatment of this patient population. The second hurdle of which will be the final FDA decision.
Hopefully, things go well for this company and for the PWS patients who desperately need a new treatment option. Especially, for such patients who suffer from hyperphagia, which when not controlled, leads to obesity and other problems.
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