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

Greetings, and welcome to the Soleno Therapeutics Update 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 of LifeSci Advisors. Please go ahead, Brian.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss the FDA approval of DCCR or diazoxide choline extended release tablets, now known by the brand name VYKAT XR. It's the first medicine ever approved for the treatment of hyperphagia in adult and pediatric patients 4 years of age and older with Prader-Willi syndrome, or PWS. Please note that we'll be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements. On the call with me today from Soleno are Anish Bhatnagar, Soleno's Chief Executive Officer; and Meredith Manning, Soleno's Chief Commercial Officer. James MacKaness, Soleno's Chief Financial Officer, will join us for the Q&A session. Anish will begin with a brief overview of the current PWS treatment landscape and unmet need and a review of the VYKAT XR label. Meredith will then review the company's commercial strategy and launch plans, and then we will open up the call for questions. Please note, we're also reviewing a slide presentation as part of our webcast today, which will be posted to the Soleno website after the call. With that, I will now turn the call over to Anish.

Thank you, Brian, and thank you, everyone, for joining us on this historic day. I am thrilled to announce the FDA approval of VYKAT XR as the first medicine for the treatment of hyperphagia in patients with Prader-Willi syndrome or PWS. Most importantly, this approval provides hope for individuals and families who have been waiting for a treatment option for this devastating disease since it was first recognized in 1956. We could not have achieved this milestone without the tireless efforts of the entire PWS community, including the study participants and their families, the study investigators, the study site team members. We're incredibly grateful for the support of the PWS community, particularly the 2 major advocacy organizations, FPWR and PWSA USA. I would also like to thank the team here at Soleno for their significant efforts and perseverance over the years to bring us to this point. Next slide. Before we walk you through the label and commercialization strategy, I would like to briefly remind you of the key characteristics of the disease and discuss the impact hyperphagia can have on the lives of people with PWS, their caregivers, their families and the health care professionals who treat them. PWS is a rare genetic disease. It occurs spontaneously in about 1 in 15,000 live births due to the loss or lack of expression of a certain set of genes on chromosome 15. This translates to approximately 300,000 to 400,000 individuals living with PWS globally. By the age of around 7 or 8, though sometimes as early as 4, individuals with PWS typically will begin to exhibit the hallmark characteristic of this disease, which is hyperphagia and insatiable desire to eat. This is essentially your brain telling you that you're starving despite having eaten. Hyperphagia is a truly terrible condition for which no approved treatments have existed until today's approval of VYKAT XR. The only thing families and caregivers have been able to do to try to control hyperphagia is to restrict access to food, such as locking refrigerators, trash cans and pantries. The constant food preoccupation and food seeking often leads to significant behavioral problems that can substantially disrupt daily life for those living with PWS and their families. Caregiver burden is highest after the onset of hyperphagia and in fact, has been measured to be higher than the burden experienced by caregivers for patients with Alzheimer's. Studies have shown an immense impact to a PWS patient siblings with many suffering from PTSD. The approval of VYKAT XR, therefore, is historic and incredibly important to both patients and their families. As a reminder, our approval is based on a comprehensive data package that includes statistically significant data from a Phase III study showing that patients in placebo had significantly more hyperphagia than those on VYKAT XR in a randomized withdrawal study. We're pleased with the label we have received. The indication is for the treatment of hyperphagia in adults and pediatric patients 4 years of age and older with PWS, which is consistent with our expectations. Our label reflects VYKAT's favorable safety and tolerability profile, contains no box warnings, no contraindications for diabetes, no exclusions for severity of hyperphagia and no requirement for a risk evaluation and mitigation strategy or REMS program. Importantly, the approved label clearly states that VYKAT XR should not be substituted with diazoxide oral suspension because the pharmacokinetic profiles are different. VYKAT XR is to be taken orally once daily. As you can see on the slide, there are 3 tablet strengths, which allow for weight-based dosing. There is a short titration period of up to 6 weeks, after which all patients taking VYKAT XR should be on their maintenance dose. The label has clear directions on how to modify the dose, if needed, to address any side effects and minimize dose interruptions. We believe our indication for hyperphagia in PWS represents a significant commercial opportunity. As we have prepared for launch, we have continued to refine our claims data analysis and now believe that we have confidently identified approximately 12,000 individuals diagnosed with PWS in the United States, of which approximately 10,000 should represent our total on-label addressable market. This excludes those individuals with PWS who are younger than 4 years old, others who may not be experiencing hyperphagia or who may have comorbidities that make them ineligible for VYKAT XR. With FDA approval now received, we're prepared to accept VYKAT XR start forms immediately and expect that VYKAT XR will ship as soon as it's in channel, which we expect -- which we anticipate will be in April. I will now turn the presentation over to Meredith, who will share how we plan to commercialize VYKAT XR. Meredith?

Thank you, Anish. Good afternoon, everyone. As Anish said, I'm Meredith Manning, Soleno's Chief Commercial Officer. Joining Soleno and working alongside such dedicated colleagues has truly been rewarding for me. I've also been deeply moved by the resilience and strength of the PWS community, and I'm eager to outline our approach to making VYKAT XR the first ever FDA-approved medicine for the treatment of PWS-related hyperphagia accessible to those who need it. As we celebrate this milestone, our focus immediately shifts to launching VYKAT XR and raising awareness of the FDA approval among treating health care professionals, individuals living with PWS, their families, their caregivers and the PWS advocacy groups. We aim to drive robust adoption of VYKAT XR. Our focus will be on 3 key areas. First, we aim to establish VYKAT XR as the standard of care for hyperphagia and PWS. Second, we will deliver operational excellence to ensure that people with PWS-related hyperphagia through their health care professionals can easily start and stay on therapy. And finally, we intend to communicate our compelling value proposition to payers to ensure we obtain comprehensive coverage. Earlier, Anish described the market opportunity. And importantly, we know already that there is a high level of awareness and interest around the launch of VYKAT XR. To establish VYKAT XR as the standard of care, the field force will initially prioritize engagement with approximately 300 top specialists nationwide who we believe influence or directly treat approximately 40% of the addressable market. These specialists are primarily pediatric endocrinologists, psychiatrists and adult endocrinologists who have multiple PWS patients under their care. And we expect these prescribers will be early adopters of VYKAT XR. Market research tells us many caregivers and families with children or young adults experiencing hyperphagia are highly engaged. These individuals average approximately 4 to 6 health care visits per year and are very motivated to seek treatment. We are encouraged by the receptivity we have seen in market research to our product profile. Recently, our analytics team conducted quantitative research showing that approximately 80% of pediatric endocrinologists surveyed expressed a willingness to prescribe VYKAT XR. We have purposely curated a commercial team that embodies Soleno's values and has deep experience in bringing paradigm-changing medicines to rare disease communities. Prior to launch, our marketing team rolled out disease state education programs for HCPs and caregivers. These efforts have enabled Soleno to engage with a broader community and deliver fundamental PWS education to create a solid foundation, which we will build on with the launch of VYKAT XR. We have assembled a highly experienced field team that will be deployed across the U.S. More than half of the team has been actively engaged in disease state education with customers since January of this year. We have planned by the end of April, the complete team will have been trained and ready to educate on the efficacy, safety and value proposition of VYKAT XR. I mentioned our initial focus is on a highly targeted universe of endocrinologists and psychiatrists. We will simultaneously engage with other prescribers who are either a smaller -- who either have a smaller number of patients or are part of the PWS care team. And we will complement our field efforts with nonpersonal promotion, digital assets, advanced analytics and an inside sales team to educate those community prescribers who are less specialized in PWS. In preparation for launch of VYKAT XR, our market access team has been engaged with top national and regional payers. In our pre-approval information exchange discussion, payers understood the complexity of PWS, acknowledge the severity of consequences of not controlling hyperphagia and recognize the need for a therapeutic option. We predict our payer mix will be approximately 1/3 commercial payers, 1/3 Medicaid and 1/3 Medicare. Our market access team will continue to communicate our compelling value proposition post approval to facilitate patient access to VYKAT XR. Now moving on to pricing. First, let me state that it is our goal to ensure all eligible people with PWS-related hyperphagia in the U.S. who are prescribed VYKAT XR per our approved indication have access to the treatment. We considered many factors when determining the price for VYKAT XR, including the urgent need for treatment for those impacted by hyperphagia, the severe burden of the disease, the fact that hyperphagia is the leading cause of mortality in PWS and that VYKAT XR is the first and only FDA-approved medication for the treatment of hyperphagia in people with PWS. Given the robust and durable clinical data supporting VYKAT XR as a treatment that significantly impacts hyperphagia, we believe we have a strong value proposition. The list of VYKAT XR is $5.92 per milligram, and physicians will determine the prescription dosage based upon each individual's weight. As you can see on this slide, individuals with PWS are assigned a weight band to closely approximate the optimal therapeutic dosage using 3 tablet strengths available. To provide context, the average baseline weight of participants in our C601 study was 61 kilograms, which falls within the weight band of 40 to 64 kilograms and would equal an average annual cost to insurers of $466,200. It is important to note, however, that we expect the initial uptake in 2025 to be driven by children and younger adults, likely resulting in a lower average weight than those patients in our C601 study. Of course, the net price will be driven by payer mix. Soleno is fully committed to ensuring VYKAT XR is available to all eligible patients. To realize this vision, we have established Soleno One. Soleno One will be complemented by our Regional Access Director team who are dedicated to supporting health care providers in minimizing and navigating payer access obstacles. The Soleno One program will assist eligible people with PWS who have hyperphagia, who have commercial insurance, where they may pay as little as $0 per month after being enrolled in our VYKAT XR co-pay program. We anticipate that most individuals with Medicaid and Medicare coverage will have nominal out-of-pocket costs. Additionally, Soleno One may provide appropriate financial assistance options for those families who may have insufficient insurance coverage or overly restrictive coverage policies. VYKAT XR will be shipped directly to families' homes through a single specialty pharmacy. The approval of VYKAT XR is an exciting and energizing milestone for Soleno and a monumental advancement for the PWS community. I will now turn the call back over to Anish for closing remarks.

Thank you, Meredith. We are extremely pleased with the FDA approval of VYKAT XR in the U.S. and are looking forward to a robust launch. I remind everyone that it will take time to execute a full commercial launch, which involves patients scheduling visits with their health care providers, payers determining coverage policies and the sales team to be fully oriented in their territories. We are the first company to successfully introduce a treatment to market for this significant unmet need. Based on these important factors, we are not expecting meaningful revenue in the second quarter when we intend to launch VYKAT XR, but anticipate steady growth in the second half of 2025 that accelerates beginning in 2026. I look forward to sharing more details on the launch trajectory, including the number of start forms and number of prescribers, which we expect to provide over at least the next 2 to 3 quarters. We also acknowledge that access to coverage is an important driver of launch progress, so we will share those numbers of the number of lives covered as well. We're also committed to making this therapy available to patients globally. To that end, our efforts are well underway in the European Union, and we plan to submit an MAA in the second quarter of this year. Before we open the call for questions, I would like to thank the FDA for a truly collaborative effort during the review period. I would also like to thank the PWS community for its unwavering support along the way. We look forward to working together as we bring VYKAT XR to many families who have been waiting patiently for a treatment for hyperphagia. I've been waiting patiently to say this for a very long time, and many of you on the phone have been waiting to hear this for a very long time. VYKAT XR is now available for prescribing. With that, we'll now open the call for questions.

[Operator Instructions] Our first question is coming from Yasmeen Rahimi from Piper Sandler.

Team, congrats, really words can describe how happy and excited I am for you, really a remarkable achievement and really a phenomenal label as well. I guess 2 questions. One, as you spoke about the payer mix, what do you anticipate if there is any prior authorization? Is it just the genetic diagnosis of PWS? Do they need to show that they have hyperphagia? If you could comment around the work that you've done in terms of eligibility. And then my follow-up question is if you could just comment on how do you envision sort of the glucose monitoring to occur during the first week for monitoring for hypoglycemia, and I'll jump back in the queue.

Meredith, why don't you take the first part of it? I'll take the second part.

Okay. Yes. Thank you, Yasmeen. So our engagement in the prelaunch PI exchange or discussions of pre-approval information exchange have been very productive, and we've had over 50 engagements with payers. What we're seeing in the claims data is what we expect the payer mix to be. As you know, it will take some time, 3, 6 months before coverage policies start coming into effect. So it will take some time for the payer mix to rest out and settle down and see what it will be in a natural state or a steady state. We're expecting because VYKAT XR is a rare disease product, we expect payers to have a prior auth to label. And it would probably be very viable to have it be genetically confirmed PWS. We don't really have any feedback as of right now about the requirement for a hyperphagia score, but that's something that we'll see as it comes along, and we'll be able to share later on.

Thanks, Meredith. And Yas, thank you for the question. I do want to clarify one thing. We realized that there was some glitch in the link in the press release for the label. We have for now posted the label to the scientific posters and Presentations section of our website under the Investor tab, if you want to take a look there. In response to your question about monitoring for hypoglycemia, so this is actually not onerous at all. If you look at the label, it's once every week for the first 2 weeks and then at least once every week for every 4 weeks and it's clinically indicated. So that is really not that difficult. We believe a lot of this is going to be done by glucometers and at home. And we know that we've been doing this for some time in the clinical trial now several years, in fact, and it's not really much of a burden.

Next question is coming from Ry Forseth from Guggenheim.

This is Ry from Debjit's team and congratulations on the approval. We were curious about your statistic about the 80% of prescribers being willing to prescribe the drug. Could you speak to the 20% that were not willing and sort of what the dynamic is there and what you anticipate will be the particular issues to address for that 20%?

I will let Meredith take that question. Thank you, Ray.

Yes. Thank you for the question. In my multiple decades of commercial experience, 80% willingness to prescribe is an incredibly strong number. So we're really pleased with that. This demonstrates when we show them the product profile or the target product profile, -- it just demonstrates that there's a really strong unmet need and that there is a huge dissatisfaction with the lack of treatment options. Since we did the market research in approximately 400 treaters across both academic and community, we're expecting that the 20% is mostly those clinicians who are out in the community who see few people with PWS who might be treating 1 to 2 patients. So really, as I mentioned, what is going to be a successful launch. This is our job to educate on hyperphagia, the full definition, communicate our compelling value proposition and then to establish VYKAT XR as a standard of care. So we're really pleased with the 80% and know that we're working hard to bring that to fruition.

I think as a point of clarification, if you look at the 300 health care providers that we think are the larger prescribers, that number is probably far north of 80%.

Next question is coming from Kristen Kluska from Cantor Fitzgerald.

You should feel extremely proud about everything that you've done for this patient community over the years, and it's just -- so great to see this announcement this morning. So congrats to the PWS community and the whole Seleno team for this. So I wanted to ask, in terms of the patients out there, clearly, a lot of them are already following the story. We got an e-mail from the PWS advocacy group already congratulating and letting patients know about this. So when we think about the patients that are going to be incoming with the request, do you think that physicians are going to be open to kind of treating them all simultaneously upfront given how safe the drug is? Or do you think that they're going to essentially stagger patient starts so that they can first follow up the initial patients before adding more to their practice?

So thanks for the question, Kristen. I think it's fair to say that there is a significant desire to treat patients. And there's a significant pull from families and patients as well. The question really, in my mind, is more about the logistics of scheduling patients, treating them, coverage and policies, et cetera. I don't think -- in general, we don't hear any concerns about treating patients simultaneously versus not. We have seen that in our clinical trials, there are sites who have had multiple patients at the same time. I think people who have very little experience with the drug may want to try it first. But from what we hear from the more experienced centers, the centers that have more patients, that has not come up as a concern.

Okay. Then my follow-up is, I know prior to the approval, the team had identified a number of potential sales reps and the hires were contingent on an approval. So now that you have that in place, are those essentially going to be going out in the next few weeks? Congratulations.

So what we've been saying publicly is, and we have executed on that, approximately half of the sales force has been on already, and they have been in the field doing disease state education, things like that. What we had said is that the rest of the team will be coming on contingent upon approval. So those offers are in place and signed, and we expect to have everyone on board shortly.

Next question today is coming from Leland Gershell from Oppenheimer.

And team congratulations from me as well. Really gratifying to see this come through all the effort put in. Two questions. One, at the same time that you may have negligible commercial revenue in the second quarter. We also would presume that you'll see conversion of patients who are -- who remained on PCCR in the open label. Are you able to tell us how many patients approximately you have you receive the drug and what you see as kind of that cadence of conversion? And then also want to ask Anish, with respect to Europe, I think you had contemplated maybe a partnering scenario or maybe going to Europe on your own with your own sales force. Just wondering with this approval now in the U.S., just wondering where your perspective stands here.

Sure. Thanks, Leland. So on 614, we have about 70 patients on drug active at this time. As a reminder, about 20% are in the U.K. So the rest of them are obviously in the U.S. And yes, we do plan to roll them over to commercial drug. Hopefully, within the next 1 to 2 quarters, we have already started the process around that. Regarding Europe, as we have said more recently, we are looking at both paths. We have not made the final decision yet. Initially, we were fairly certain of not having an ex U.S. commercial infrastructure. But more recently, as we have done the work, as we have understood the market better, we see a pretty significant opportunity there. So we plan to do our full diligence before we make the decision. Right now, the team is focused on a filing in Europe in the next quarter. So once we have that out of the way, we expect to make a decision.

Next question is coming from Brian Skorney from Baird.

Congratulations on a great approval for PWS patients. I guess I'm just starting to look over the label, but Anish, I was hoping you could just kind of go over the IP underpinning your approval here. And if there's anything specific in the label to kind of point to in regards to how that could support IP or IP extension.

Yes. On the IP side, as you know, obviously, we have orphan approval that takes us to 2032 with an approval at this time. Our Salt polymorph patent has a primary expiration in the end of 2026. With PTA and if we apply PTE to that, that goes through 2034. As you know, we have 2 families of method patents with primary expirations in the 2035 time frame. And if you apply PTE to one of those, that goes into the late 2030s. We believe some of the method patents will be Orange Book listed, and you'll be seeing that information publicly in the coming weeks. But in general, we feel very confident about our patent estate. We are continuing to prosecute the families that are currently existing right now in the various markets. And we are continuing to look at new opportunities for filing IP. I'm not able to share any details on that at this time, but certainly, we'll keep you posted in the future.

Next question is coming from James [indiscernible]

And let me add my congratulations as well. And just real quick, you mentioned kind of in the first year, there might be younger patients that are not as heavy and then therefore, the kind of average price might be lower than what you laid out. Just curious if you can give any sort of color on how much lower that may be? And obviously, not -- I don't assume you can give a specific number, but just curious any color. And then two, as you think about -- just curious to hear what you think might be the right analogs here in terms of -- I think often people look at SKYCLARYS or trofinetide as recent kind of rare disease launches, which had really big boluses and strong initial starts and maybe are starting to plateau. So just curious to hear your thoughts on why or why not those are good analogs.

Yes. I'll address the issue of the bolus or lack thereof. And as I was just saying, there's clearly a pull. There's a lot of interest in the drug from health care providers as well as for patients. We are unable to predict what the bolus, if any, would look like just because we think there's a lot of other factors that will determine the initial number of start forms, et cetera. So we'll have to stay tuned on that. We'll keep you posted. But Meredith, could you address the pricing question?

Yes, absolutely. So if you look at -- we had mentioned that in our clinical trial, the average weight from the C601 was 61 kilograms. So that we had mentioned that, that would be approximately 466,000. Probably averaging the lower patient population, looking at the 3 weight bands will be somewhere between the 350 to 450 range around there. So it's kind of difficult for us to fully estimate at this point. As time goes on, we'll definitely look at the mix of patients coming in and be able to share that with you.

Next question today is coming from Miriam Belgidi from LifeSci.

Congratulations again on the approval and on the label. Just a quick question for me. Could you provide any color on the size of the commercial team and number of sales reps needed? So you said about half are already on the land, but what's the total number here?

Yes. Thanks, Miriam. I'll let Meredith answer that.

Yes. So we have approximately 30 people who will be out in the field. And as Anish said, we have about half that have been on since the end of January doing disease state education. And we expect everybody to be ready and in the field towards the end of April.

[Operator Instructions] Our next question is coming from I-Eh Jen from Laidlaw & Company.

It is a very tough time -- those are tougher times, and congrats to went through that perfectly. So 2 quick questions here. The first one is in terms of you have different doses, so -- and the drug was shipped to the patient's house. So would that be a physician holding hands to advise patients how to take the medicine? Or what's the interaction over there might be?

Yes, Meredith, do you want to go ahead?

Yes, so it's a tablet. It's oral once daily. So it's essentially a prescription that the physician fills out and sends to our hub, Soleno One, and they can go ahead and fulfill that prescription and send it to the patient's home. It will most likely be at a month's time, and it's pretty simple and easy from there.

Okay. Great. Maybe the last question here, which would be you mentioned that substitution is not allowed. And so you guys were not too worry about anybody intend to compounding these things? Or would that be the situation you felt?

So Yale, thank you for the question. There is no real compounding possible here. This is a sustained release tablet. So you can't really compound the tablet, you can't really crush anything. The question was more around we get asked all the time that can someone use dzoxide oral suspension. And the answer, the FDA agrees with that is that, no, you cannot because the pharmacokinetic profiles are very different.

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

Thank you, everyone, for calling in. This is truly a historic day. I appreciate all your support, and we look forward to continuing the conversation.

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