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

Hello, and welcome. My name is Jim MacKaness, and I'm the Chief Financial Officer for Soleno Therapeutic, and I'll be presenting the company today. So Soleno Therapeutic, we're a company based in Redwood Shaw, the San Francisco Bay Area, about 140 employees, growing rapidly. We have a single asset. It's formerly known as DCCR or diazoxide choline extended-release tablets. It has recently gained FDA approval. So it is now known as Vykat XR and it's approved for the treatment of hyperphagia in patients with Prader-Willi syndrome, PWS 4 years and older. We have significant IP protection around the asset, 3 families of patents being prosecuted in all major pharma markets. DCCR did receive breakthrough and Fast Track, and we do designation here in the U.S. and the EU. We think it's a very compelling commercial opportunity, greater than $2 billion in the U.S. and attractive markets ex U.S. And we find ourselves in a very fortunate situation with a strong balance sheet of $290 million of cash at the end of Q1. So a couple of words on Prader-Willi syndrome, PWS. This is a complex rare genetic neurobehavioral metabolic disorder. It's genetic, but it's not hereditary. It happens by chance in about 1 in 15,000 births. It's very well diagnosed here in the U.S. and in other Western countries. And that's because when the infant is born, the infant will be born with very low muscle tone. So it will effectively be a floppy baby. The attending physician knows something wrong. They'll run a number of tests, one of which will be a genetic test for PWS. And until now, the parents have been told that they have a child with PWS, but not much else can be done for them. They will be given growth hormone because one of the characteristics is low stature, but the hallmark symptom is hyperphagia. Now hyperphagia is insatiable desire to eat. It's your brain telling you you're starving 24/7. So whereas you and I might feel hungry, we'll eat 1 pizza, these individuals will eat 2, 3, 4 pizzas. They'll eat as many hamburgers as they can. They'll eat a frozen chicken if it's left out, they'll eat nonfood items. And in certain situations, they can eat so much that will end up with rupturing their stomach and die. So they need constant monitoring. The burden of this disease is very, very heavy, both on the individual and the caregivers. They need constant monitoring and creation of food secure zones, locking refrigerators, locking cabinets, keeping trash away, avoiding social situations with food. And the burden on the caregiver is measured as higher than those looking after people with Alzheimer's. 92% of siblings indicated moderate to severe PTSD. So a very dreadful situation. Recently, though, the FDA approved on March 26, Vykat XR, diazoxide Choline release extended-release tablets. This is indicated for the treatment of hyperphagia in adults and pediatric patients 4 years of age or older with PWS. And we think this gives us an opportunity to change what it means to live with PWS. Vykat XR is the first-to-market treatment. Our clinical program, we believe, demonstrates a significant reduction in hyperphagia, and we think Vykat XR become a foundational therapy for patients with PWS. All this is based on our clinical program that's been going on for a number of years, started back in 2018 with C601, DESTINY PWS, where we enrolled 127 patients and read out the results in June of 2020. Now for clinical trials measuring hyperphagia, you use the HQ-CT score, hyperphagia questionnaire for clinical trials. 9 questions, 0 to 4, so your maximum score is 36. It's filled out by the caregiver. And so when we had our primary endpoint readout in June 2020, we did not have statistical significance. But looking at the data, we felt there's a strong impact of COVID, which has been effectively came on in March of 2020. And so the patients enrolled on C602, and we continue to dialogue with the FDA. And over a number of months, we reached agreement that we could run a 16-week randomized withdrawal period with the existing patients on C602 to obtain additional control data. So we did that in September of 2023, we read out strongly statistical significant results on the hyperphagia measurement. That's what we used to form the basis for our NDA. Meanwhile, the patients rolled on to C614 open label. This slide here gives you a pictorial of what's happening over the whole duration of the clinical programs, the HQ-CT total scores over time. You see we start with scores of 23 for those on DCCR, 21.9 on those placebo. And during that original phase, C601, you can see the reduction of the scores, hyperphagia scores, separation between DCCR and placebo, but not statistically significant. Again, we believe due to COVID. Patients go on to open label for a number of months, if not years. You can see the continued improvement in the HQ-CT score all the way down to 9.3. And you'll notice that there's dotted line across this graph at 13. 13 is the measure that an individual has to be able to qualify to be on a clinical trial for hyperphagia. So the effect of the drug is to take people so they're no longer able -- eligible for a trial on hyperphagia, showing significant improvement in the quality of their life and reduction of hyperphagia. We're going to C602, the randomized withdrawal phase. And you see what you'd like to see is those on placebo worsening, going up to 15.7, those on drug staying constant. And then ultimately, on C614, again, you see improvement in the hyperphagic scores, again, down to 9.4. So overall, a really good illustration of what we believe is the effectiveness of Vykat XR. High scores to start with continued reduction over time, those patients that went on to placebo worsening and ultimately, everyone returning back to a very good score of 9.4. Regarding the safety profile for DCCR, extensive clinical trial safety database with greater than 100 PWS patients treated for over a year. Safety profile is consistent with the parent molecule diazoxide. The most common adverse events reported were hyperthecosis, edema and hyperglycemia, but typically self-limiting, could do some dose adjustment or a drug holiday and in certain situations, maybe oral antidiabetics for hypoglycemia. And during the entire length of the clinical program, only 2 severe AEs have been reported to date. Throughout that time, we've continued engagement with the PWS community, HCPs and patient advocacy groups. We have very good relationships, growing body of evidence presented at medical and scientific conferences by KOLs. We have ongoing support for the PWS community, attending local state and national advocacy meetings. We've created a council that is 20 members of the PWS community, of which 3 are adults with PWS to help provide feedback on initiatives, programs and materials. And we're working and partnering with the PWS USA to support the PWS community, things related to Medicaid and recognition of PWS as a disability. Turning our attention to the commercial opportunity. As I mentioned at the beginning, we think it's a very compelling commercial opportunity, over $2 billion possibility in the U.S. This is based on the 1 in 15,000 live births. And now we've had time through our own analytics work to get into all the claims data and we've come to the realization there's 12,000 individuals living in the U.S. with PWS. And of that, we estimate 10,000 being the total on-label addressable market. So this excludes people younger than 4, excludes those who have not yet got hyperphagia symptoms and exclusive comorbidities. Also of interest to us is the concentration of prescribers. So 300 HCPs are the primary treaters of 2,100 PWS patients and influence prescription for additional 2,000. So a very nice concentrated call point to start off our commercial strategy. Pathway to successful launch of Vykat XR is based on a couple of pillars, robust clinical program. As I said, now, we have 5 years of clinical trial data. We've invested heavily in a great commercial team with analytics, running all of the claims data account profiling. We have a field force team now embedded in the U.S. And one of the key elements of those is deep experience in rare disease launch to help us make sure we have a successful launch. We've also invested heavily in our payer team, great payer team that's working with payers, mapping payers to support rapid uptake, educating on the value proposition and working hand-in-hand with our distribution partner, PANTHERx. And we continue engagement with key stakeholders, deep community and advocacy engagement. We've been doing disease state education, and we continue to have a strong presence in medical congresses. When we look at the data, we look at it in a number of different ways. One of the ways we look at it is we look at the patient population segment by age. So 25 and younger and those older than 25. One of the key reasons for that is because 25 and younger, you're typically on your parents insurance. After 26, you tend to have insurance elsewhere. Also in those younger age groups, the onset of hyperphagia and increasing disruptive PWS-related behaviors are occurring. There's typically more touch points with the health care system, 4 visits a year. So the majority will be living at home. And we're focusing on the pediatric endocrinologists as the primary point of care for this group. Once you get a little bit older, transition to adult care, a little bit less engagement with the health care system. Often, people living PWS of this age are seeking a little bit more independence. They can't live independently, but they may end up living in community homes. You do need to have 24/7 monitoring. And now the call point may move more to adult endocrinologists or psychiatrists. With regards to payers, we're looking to make sure they understand the compelling value proposition to gain payer coverage, focusing on 4 key elements. Often when we talk to payers, they're not aware of Prader-Willi syndrome, obviously, a rare disease, but very quickly, they understand and they can see the urgent need for hyperphagia treatment, the severe burden it places and the high mortality rates. We're able to use our robust durable clinical data to show the efficacy of Vykat XR in treating hyperphagia. And they're aware that rare disease has a small patient number, so low budget impact and the fact that Vykat XR is the first and only FDA-approved medication. So we're getting a very receptive audience with the payers. We also offer Soleno ONE, which provides end-to-end patient support. This is provided through us and also with PANTHERx, providing hub services and allows us to ensure that patients have access to drug, education and additional resources as necessary. And all of these elements are coming together for us to be able to drive forward and position Vykat XR as the standard of care. The first and only approved treatment of hyperphagia. And most importantly as well, we've got a very, very clean label. So no exclusion for severity of hyperphagia, no box warnings, no REMS, no contraindications. And also of interest and importance, Vykat XR should not be substituted with diazoxide oral suspension. We got approval in March of '26. We did have a Q1 earnings call on May 7, 29 business days after approval, and we're able to report out early statistics. So by then, we've received 268 start forms. 131 prescribers and Vykat XR, our value proposition, which resonated well with commercial payers and government payers. A vast key interest was 131 prescribers. Sometimes in rare disease drug launch, you'll get the majority -- the vast majority of the start forms from a small handful of KOLs, and then you can lose momentum beyond that. For us, the 131 did include the KOLs, but it was a broader prescriber base, which gives us confidence for maintaining momentum going forward. Turning to Europe. PWS affects people across the globe. It's not geographic or ethnic specific. So strong opportunity in Europe. We're working with strong thought leader support, estimated 9,500 people living with the PWS in the EU4 and the U.K. Typically, rare diseases are handled through centers of excellence, so a concentrated call point, and in May of 2025, we announced the submission and the EMA's validation of our MAA. I did mention the extensive IP patent protection, 3 families of patents. In the middle column, you'll see the solent polymorph patent. If PTA and PTE is applied, that has the opportunity to extend through 2034. Right-hand side of the method patents, Orange Book listed. And again, if PTE were to be chosen here, potential protection through 2038, 2039. And finally, financial highlights. As I mentioned, strong balance sheet, $290 million of cash, March 31, $50 million of debt, allowing us to fund our execution of our commercial strategy and 55 million shares outstanding. So with that, thank you very much.