Soleno Therapeutics Inc. has released its Form 10-Q report, revealing significant financial losses despite advancements in its lead candidate, DCCR (Diazoxide Choline) Extended-Release tablets, for Prader-Willi syndrome (PWS). The report highlights the company's financial performance, operational progress, and strategic initiatives as it approaches the potential commercial launch of DCCR. The FDA target action date is December 27, 2024.
Financial Overview
The company's financial results indicate a substantial increase in net loss, reaching $(76.6) million, a 605% surge compared to $(10.9) million in the same period of 2023. Operating loss also saw a significant rise, amounting to $(80.2) million, a 673% increase from $(10.4) million in 2023. Research and development expenses increased by 399% to $30.1 million, while general and administrative expenses soared by 1383% to $49.2 million. These increases are attributed to costs associated with the NDA submission and preparations for the commercial launch of DCCR.
DCCR Development and Regulatory Status
DCCR, a once-daily oral tablet, has received Fast-Track and Breakthrough Therapy designations in the U.S., as well as orphan designation in both the U.S. and E.U. Soleno submitted an NDA to the FDA in June 2024, which was granted Priority Review. While the Phase 3 study (C601 or DESTINY PWS) did not meet its primary endpoint, subsequent analysis of key secondary endpoints and results from the randomized withdrawal (RW) period of Study C602 showed statistically significant improvements.
Strategic Initiatives and Capital Management
Soleno has been actively managing its capital resources, primarily through equity issuances. In May 2024, the company completed an underwritten public offering, raising $158.7 million. Additionally, an Open Market Sale Agreement with Jefferies LLC was established to offer and sell up to $150 million of common stock. Despite these efforts, the company anticipates continuing losses and may require additional capital to fund its operations.
Challenges and Risks
Soleno faces several challenges, including regulatory risks associated with FDA approval of the DCCR NDA. The company's financial statements are based on estimates and judgments, introducing risks related to the accuracy of these estimates. Securing additional capital is crucial for Soleno to continue its clinical trials, product development, and commercialization efforts. Failure to obtain necessary funding could lead to curtailment of these activities, potentially delaying or preventing the commercial launch of DCCR.
