Soleno Therapeutics, Inc. (SLNO) Earnings Call Transcript & Summary

Greetings, and welcome to the Soleno Therapeutics Phase III DESTINY PWS Trial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Brian Ritchie with LifeSci Advisors. Brian, please go ahead.

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Soleno's Chief Executive Officer, Dr. Anish Bhatnagar; the company's Chief Financial Officer, Jim MacKaness; and Dr. Jennifer Miller, Professor of Pediatrics in the Division of Endocrinology at the University of Florida. This afternoon, Soleno issued a news release announcing top line results from the company's DESTINY PWS Phase III clinical trial of DCCR tablets for patients with Prader-Willi Syndrome. As Slide 2 states, please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Soleno management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Soleno's press release issued today and the company's SEC filings, including in its annual report on Form 10-K and subsequent SEC filings that was made. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, June 8, 2020. Soleno undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. For those of you dialed into the conference call and not logged on to the webcast, the slides to accompany this conference call are available under the Events & Presentations section of the company's Investors page on the Soleno website. Now I'd like to turn the call over to Anish. Go ahead, Anish.

Thank you, Brian, and good afternoon to everyone who's joining us on today's call. This afternoon, we announced top line results from our Phase III trial, DESTINY PWS, or C601, evaluating once-daily Diazoxide Choline Controlled Release, or DCCR, tablets for patients with Prader-Willi Syndrome, or PWS. While the study did not achieve statistical significance for its primary end point, patients in prespecified subgroups with severe hyperphagia, the hallmark symptom of PWS, demonstrated significant improvements. We're also very encouraged by the significant changes in 2 out of 3 key secondary end points and the improvements in various key PWS-related behaviors. Before reviewing the detailed results of the study on behalf of the Soleno team, I would like to thank the patients, families, investigators involved in this trial as well as the foundation for Prader-Willi Research and the Prader-Willi Syndrome Association of the U.S.A. and the U.K. for their support of DESTINY PWS. If you turn to Slide 3. DESTINY PWS is a multicenter, randomized, double-blind, placebo-controlled study of once-daily oral administration of DCCR at 29 sites in the U.S. and the U.K. The goal of this study was to assess the safety and efficacy of DCCR in subjects ages 4 and older with genetically confirmed PWS. Patients who completed the double-blind study were eligible to enroll in Study 602, our ongoing open-label 36-month extension study. Overall, 181 patients were screened to enroll 158 subjects into a 2-week single-blind placebo run-in phase. 127 of those subjects qualified to be randomized 2:1 into the double-blind treatment phase. Several of the subjects who did not qualify to be randomized were due to improvements in HQ-CT score during the run-in phase. 120 patients completed the study while 7 subjects terminated early. 115 patients enrolled into C602, and 106 of them are currently continuing on treatment. I would like to point out that the data we're discussing today are based on a top line analysis, and further analysis of the data is continuing. Slide 4 is a description of the demographics of the subjects in Study C601. And the median age is about 13 years, which is balanced between arms as is the gender distribution. Approximately 20% of the patients came from the U.K. and the rest from the U.S. The genetic subtype of deletion versus nondeletion was about 62% to 38%. The primary end point of DESTINY PWS was change from baseline in hyperphagia. The change was measured by the total score of a Hyperphagia Questionnaire for Clinical Trials or HQ-CT. The HQ-CT is a validated 9-item caregiver-reported measure of food-seeking behaviors observed among individuals with PWS. And it's generally accepted method of evaluating hyperphagia by the FDA and other regulators. An improvement in HQ-CT is represented by a decrease in the score. As you can see on Slide 5, the change from baseline for DCCR was minus 5.94 compared to a placebo score of minus 4.27. The least squares mean difference in the HQ-CT score of DCCR compared with placebo was minus 1.67 with a p-value of 0.1983. This placebo response is substantially higher than what we had anticipated based on prior clinical studies in PWS. Slide 6 shows hyperphagia data in a prespecified subgroup with more severe hyperphagia as identified by a dichotomized median baseline HQ-CT score of greater than 22. The subgroup includes 61 patients or approximately half of the study population, 42 of whom were on DCCR and 19 on placebo. There was an improvement of minus 9.67 compared to minus 4.26 in the placebo group. The p-value for this comparison is 0.0124. The data from the primary analysis is shown for comparison. Moving to Slide 7. Significant changes were observed in 2 of 3 key secondary end points from baseline to week 13. There was a statistically significant improvement in the Clinical Global Impression, or CGI score, as assessed by the investigator with a p-value of 0.029. The CGI score is a 7-point scale that requires the clinician to rate the severity of a patient's illness at the time of assessment relative to the clinician's past experiences with patients who have had the same diagnosis. There was also a statistically significant reduction of body fat mass as measured by DXA, which is an X-ray technique used to measure body composition. And the p-value for this comparison was 0.025. The changes in CGI-C, or caregiver global impression of change, were not significant. Turning to Slide 8. In addition to the decrease in total fat mass, other body composition changes included a significant decrease in trunk fat mass with a p-value of 0.047, and an improvement in the lean body mass to fat mass ratio in DCCR subjects compared to placebo with a p-value of 0.001. Turning to Slide 9. An interim analysis of 63 subjects who completed 3 months of treatment in study C602, the ongoing open-label extension study of DCCR in PWS, shows continuing improvements in hyperphagia. 38 DCCR patients from DESTINY PWS at 6 months of total treatment demonstrated a reduction in hyperphagia of about 11.7 or a reduction of 48%. 25 601 placebo patients showed a similar change following 3 months of DCCR treatment in 602. A total of 115 patients enrolled into 602 upon completing 601, and more than 90% of them continue to be treated on the study at this time. Moving to Slide 10. The interim analysis of data from the PWS Outcomes Assessment study. As a reminder, the study consists of interviews evaluating individual patient experiences with DCCR and placebo using 3 domains: food-related improvements, nonfood-related improvements, daily life improvements. Interviews and in some cases, videos are obtained at multiple time points in C601 and C602. An interim analysis of a subset of subjects in the PWS Outcomes Study was conducted consisting of data from interviews at the end of C601 for caregivers of 27 patients, 17 on DCCR and 10 on placebo. In each of the 3 domains, approximately 48% of participants on DCCR reported at least some positive improvement with 18% to 24% reporting a major improvement in the PWS patients. In the placebo group, a single participant reported a minor improvement in their PWS patient and none reported a major difference. Slide 11 shows the safety profile of DCCR in DESTINY PWS. Treatment-emergent adverse events, or TEAEs, were reported in 83.3% of DCCR subjects and 73.8% of placebo subjects. TEAEs that were reported more frequently in the DCCR group versus placebo and occurred in at least 5% of patients were hypertrichosis, peripheral edema, blood glucose increase, hyperglycemia and pyrexia. There were 5 subjects who discontinued from study early due to adverse events, 4 of those were in the DCCR group and 1 in the placebo group. Six subjects reported SAEs in the DCCR group and none in the placebo group. One of those subjects had an SAE related to DCCR. Finally, Slide 12. The safety profile of DCCR was generally consistent with what we would expect given the prior experience with DCCR and the known profile of diazoxide. Most of the events were grade 1 in severity which are mild and included all events of hypertrichosis except one grade 2 in the placebo group. No grade 4 or higher events were reported in the study and there were no serious unexpected adverse events, or SUSARs, related to CCR. I would like to point out that the study visits in C601 and C602 conducted after approximately mid-March were impacted by COVID-19. Certain evaluations could have been conducted in a different manner and evaluations such as DXA were not conducted in most cases during that period. Additional analyses will evaluate the impact of these changes. I would now like to introduce Dr. Jennifer Miller. Dr. Miller is the Professor of Pediatrics in the Division of Endocrinology at the University of Florida. She is well known to all in the field of PWS and has been an active investigator for drug development programs in the disease. She was the highest enroller in the DESTINY PWS study and has had the opportunity to review these top line data. Dr. Miller, please go ahead.

Thank you, Anish. I want to say that I was very excited to see the top line data from the 601 and 602 studies. These families with Prader-Willi Syndrome have an extraordinarily unmet medical need. I've been involved in research studies in Prader-Willi Syndrome for almost 20 years now. And unfortunately, all of the studies that I've done prior to this one have failed to provide a safe and effective treatment for the severe hyperphagia that affects these individuals with Prader-Willi Syndrome. I was, as Anish mentioned, one of the sites for the Phase III study of DCCR, back in fact, DCCR. I was fortunate enough not only witness the remarkable effects of this drug in the patients at my site. But because I see patients from all over the country and all over the world, I was fortunate enough to also see the positive results in my clinical patients who were enrolled at other sites around the U.S. and U.K. And I have to say the results of this study are truly unprecedented. I've seen a dramatic improvement in the severe hyperphagia and food-related behaviors associated with the syndrome. And rather unexpectedly, I've seen that this medication also treated some of the core behavioral problems of this disease, such as anxiety, obsessive-compulsive behaviors, temper tantrums, meltdowns and aggressive behaviors. Additionally, the families are really pleased with the improvements in body composition that they saw in the patients on DCCR with a decrease in body fat, increasing lean muscle mass as the participants looked and felt healthier. They were able to do more physically and able to exercise and seem to have better stamina as well. And this really pleased everybody involved. It's really important to remember that the natural history of this disease is such that once these individuals develop hyperphagia, there is virtually no change in it over time, except for maybe worsening, but it generally does not get better, ever. The effects of DCCR has tended to increase with time as we follow these patients through the 602 study and become very, very obvious either in the latter part of 601 or early in 602. The data showing an approximately 50% or 11-point decrease in hyperphagia score within 6 months of treatment is truly unprecedented. Again, I've done many of these studies, and I've never seen anything like this. And nothing that has been sustained as the response we've seen to this drug. I would like to address the high placebo response issue that we did see in the study, which initially actually shocked me because I really just didn't see it in my patient population. However, because measuring the change in baseline -- from baseline to end of treatment with the hyperphagia questionnaire is the best end point we have available to us right now, we used it. But all the experts in the field of Prader-Willi recognize that the HQ-CT has many problems associated with it. One challenge is that the questionnaire has been around for forever for many years now, at least 10, and has been used in virtually every trial involved with Prader-Willi Syndrome, if not every trial. I think it's been used in every trial. Caregivers are totally familiar with the hyperphagia questionnaire with all the questions and the domains and know what is expected of them to be enrolled in a study. The entry score necessary to denote hyperphagia for most, if not all trials, is well known amongst the Prader-Willi community. Indeed, it was actually put out on the Internet by some of the parent organizations during the Zafgen trial in an attempt to increase enrollment by giving the baseline hyperphagia score that was necessary in order to qualify for a trial. With these large Phase III studies that are being done, sites will often enroll patients they don't know well, and thus inadvertently enroll people who are not actually in nutritional Phase III. Parents have actually gotten pretty upset with me during the course of this trial when I've told them that their children actually shouldn't be enrolled into the DCCR trial because their children were not in hyperphagia yet and were more likely to have a placebo response. This is a direct quote from a parent by e-mail when I informed him that his daughter did not qualify for the DCCR study because she was not hyperphagic. He said, "From talking with other parents, I was under the impression that parents should be enrolling their kids into drug trials, such as DCCR, as soon as possible, even if that meant slightly enhancing the details of their kid's situation." While we all know that parents and patients enhance the details of the hyperphagia, they're much more likely to have a significant placebo response. Given that information, what was so exciting to me from this data set is that the patients with the more severe hyperphagia, truly hyperphagic patients had lower placebo responses and significantly more robust positive responses to the drug, indicating that it truly works and is effective for those individuals with severe hyperphagia. There's so many anecdotes I could share with you from the DCCR study, but I'd like to mention just a couple. One is that several of my patients who have been in the study for the course of this year have won awards for being the most improved students in their grade or even in their school in some cases. They have gotten most improved student for -- in terms of attention and concentration, in terms of behavior and in terms of overall academic achievement. One of them, while crying so hard because he was so excited to win the award because he won it -- he was a fifth grader and won the award for all the students overall in the entire school for highest improved student and academic achievement. First, thanked his parents for supporting him in his effort and then thanked DCCR for making his life easier. One of my patients from a different site was put in charge of managing food pack, so he was on a wilderness experience, and he was put in charge of managing the food packs for everyone that was on this cross-country wilderness experience. His mom would send me pictures of him in a kitchen surrounded by bags of food, just smiling and not feeling or eating the food. She kept saying this would not be possible without DCCR. My patients on this trial have been able to unlock their kitchens and leave food out in the kitchen without fear that the patients will take it. And again, this is simply unheard of. Once the hyperphagia has begun, it doesn't go away typically. Food is never able to be unlocked or left out because the kid will eat it, no matter what it is, if it's available. Several of my older patients who have been in the trial have now begun to learn to drive one in New York and one in Chicago because now they are able to concentrate on the task at hand because they're not always thinking about food. The difference in my clinical patients who are not on the study and those who are -- have been stunning, especially during the COVID-19 pandemic and quarantine. The families who are not on the study, and I experienced this multiple times today during clinic, have been telling me that they're looking into group homes for their children with Prader-Willi Syndrome because it's just too hard to live with Prader-Willi. They tell me Prader-Willi is evil. Prader-Willi is terrible. Prader-Willi is the worst thing in the world. My patients who are on a DCCR testing called angels, repeatedly and consistently by their parents during this COVID-19 quarantine. I have been stunned. It just doesn't happen with Prader-Willi Syndrome. And they all say, a year ago, this wouldn't have been possible. If it wasn't for DCCR, this wouldn't have been possible. I couldn't live with this kid if it wasn't for DCCR. So overall, as you can probably tell, I'm very excited by the results of the result -- of the study. I and the rest of the Prader-Willi community have waited forever for this. And I just really am looking forward to doing whatever I can to help bring this drug to all patients with Prader-Willi Syndrome. Now I'll pass it back to Anish, and I'll be happy to take questions.

Thank you, Dr. Miller. I'll turn it over to the operator to begin the Q&A session. If you could provide the instructions, please.

[Operator Instructions] Our first question today is coming from Leland Gershell from Oppenheimer.

Thank you, Dr. Miller, for providing your perspective and insight on this trial and the results. My question -- my first question is given that you do have what seems to be a strong support in the more severe population and deem that was prespecified and stratified, what would be your approach then with the FDA with regard to trying to get DCCR approved? Could there be a path to approval in that more severe population? How should we think about the steps that you look forward to taking to get DCCR toward becoming available?

Sure. Thanks for the question, Leland, and thanks for calling in. I would say that at this point, we are very encouraged by the data in the severe population. We are very encouraged by the secondaries, by the behavioral changes, by the body composition changes. So we're looking forward to completing our analyses and having this discussion with the agency. So I'm not able to comment right now on what the path might be but we certainly look forward to having these discussions with the agency soon.

Okay. And then just one follow-up, if I may. The one SAE that was related to study drug, would you be able to tell us what the adverse event was?

There was one patient who had edema, I believe, is a combination of peripheral and pulmonary. That was the one. It was an expected event, so it was not reportable.

[Operator Instructions] Our next question is coming from Yale Jen from Laidlaw.

First is that -- it's obviously that the drug is -- has activities and that's only in the sort of multiple front at this moment. I understand that you need to speak with the agency and have completed 602 before. Do you need to speak with the FDA after completing the 602? Or you can speak with them in the near future when you complete the analysis?

Yes, sure. Thanks for the question, Yale. We will plan to meet with them definitely before completing 602 because as you may remember, the duration of 602 is up to 36 months, and we have a lot of patients who are currently on the study. So we will plan to meet with them as soon as possible once we have completed 601 analyses as well as the related analyses in 602 in the Outcomes Assessment study.

Okay. Great. And also another follow-up here is that given you have the -- a rather robust outcome in the severe patients, you actually have statistically significant outcome. First of all, is that a possibility that, that cohort alone you could speak with the agency for potential approval? Or maybe expand it on that cohort to get approval? Or how do you see the -- some of the possibilities might be?

So I don't know the true answer to that. I do believe that this is a very large cohort of patients. It's not a small subset. It's half the study, and it's prespecified and it's a well-defined population. So I do think this is worth a discussion with the agency. I don't know what they will say in terms of next steps. But we are quite encouraged that it's a possibility that the agency would buy in.

And maybe one another follow-up question here is that you have around 20% of the patients from U.K. And I know it's still in early stage of data analysis. First of all, do you see any differences so far from the different cohorts between the United States and U.K.? Any sort of data differences based on the geographic location? And I have one more follow-up on that.

So nothing obvious at this time. So as you said, these are top line analyses. So at this time, we have nothing that suggests to us that that's the case. But we certainly will dig into that further and see if that was something that was a determining factor of response.

And maybe the last one is that the analysis also suggests that in 3 different groups -- different categories, I should say, you've seen that the treated patient certainly performed better than placebo-treated groups. Can -- is that same sort of outcome or the trend of the outcome also reflected in the severe patients as well? And presumably that was sort of support the notion that it has a stronger impact certainly in the cohort -- in the severe patient and that's worth maybe additional discussion.

Yes. That is a really good question, and those are exactly the type of analyses that we will be completing sometime over the next few weeks. But it's a very valid question and don't have the data today.

Okay Great. Well, sorry about the data. But so far, given this is presumably active drug, better luck for the path forward.

Thank you.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

No more comments. Thank you for calling in today, and good afternoon, everyone. We will keep you posted on our progress. And the Soleno team is encouraged by the promising results of the study. We look forward to providing you with further updates. And with that, I thank you for joining us today. Enjoy the rest of your day.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.