Soleno Therapeutics Inc Aktie

Good afternoon, and thank you for standing by. Welcome to Soleno Therapeutics Fourth Quarter and Full Year 2025 Financial and Operating Results Conference Call and Webcast. [Operator Instructions] As a reminder, today's webcast is being recorded.

I would now like to introduce Brian Ritchie of LifeSci Advisors. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss Soleno Therapeutics' Fourth Quarter and Full Year 2025 financial and operating results. Please note we'll be making certain forward-looking statements today. We refer you to Soleno's 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 for Soleno are Anish Bhatnagar, Soleno's Chairman and Chief Executive Officer; Meredith Manning, Soleno's Chief Commercial Officer; and Jim MacKaness, Soleno's Chief Financial Officer. With that, I will now turn the call over to Anish.

Thank you, Brian, and thank you, everyone, for joining us for our fourth quarter and year-end results call this afternoon. As has been our practice, following my brief opening remarks, Meredith will review the company's commercialization progress to date, and Jim will cover the company's financial statements for the fourth quarter and for the year. Then I will spend a few minutes outlining our thoughts and plans on expanding beyond Prader-Willi Syndrome, after which we will open the call for questions.

We finished 2025 on a very strong note, driven by a continuation of many of the positive trends that we have seen since VYKAT XR was commercially launched in the second quarter of last year. Consistent with our preannouncement press release from January 12, total net revenue for the fourth quarter was $91.7 million, which brings our total net revenue for the full year, which was less than 9 months of sales to $190.4 million.

We achieved profitability with positive net income for the year of $20.9 million became cash flow positive including generating $48.7 million of cash from operating activities in the fourth quarter and ended the year with over $500 million of cash, cash equivalents and marketable securities. All of these are outstanding results. This has been an incredibly successful launch made possible by the entire team at Soleno who come to work each to help fulfill our mission of improving the lives of people with serious rare diseases.

We are very pleased to see such durable and exciting growth 9 months post launch. Looking ahead, our leading indicators are strong. Since launch through December 31, 2025, we received 1,250 patient start forms, which represents approximately 12.5% of the U.S. [indiscernible] addressable market. And as of December 31, there were 859 people on active treatment. We believe we can sustain our current momentum and capture an additional approximately 1,000 start forms over the next 9 to 12 months. This bodes well, not only for the thousands of people with PWS and their caregivers who struggled with the significant daily burden of hyperphagia, but also for our company, which is poised to generate significant long-term value.

Importantly, the real-world safety profile of VYKAT XR continues to mirror our expectations and the clinical long-term safety profile of the trough. This is significant when you reflect on the complexity of PWS and also see food release of the very vulnerable and fragile patient population. The cumulative launch today discontinuation rate of VYKAT XR related to adverse events was approximately 12% as of the end of the fourth quarter and the total discontinuation rate was about 15%.

As stated earlier, we expect a long-term discontinuation rate of 15% to 20%. We are now seeing more and more success forgemerge as individuals with PWS related to hyperphagia happen on therapy for multiple months, and we are seeing interests spread across all stakeholders, particularly among caregivers we enjoy a very significant burden in caring for someone with PWS exhibits hyperphagia. We believe this dynamic will build as we progress through 2026.

I would now like to provide a brief update on our activities and support of potential approval of DCCR in the EU. Last May, we announced the submission and EMA validation of our marketing authorization application. We subsequently received day 120 questions, and all responses were submitted before the end of the year. As we've indicated before, the nature of the key questions centered around the adequacy of the data to improve efficacy based primarily on our randomizing for study. The next step is for us to receive Day 180 questions from the EMA around the end of February.

We continue to anticipate a decision in the midyear 2026 time frame, and we are considering a range of commercialization options in the EU and have continued to develop our own team and capabilities on the ground. It is a significant market opportunity. We have said previously that we believe that there are about 9,500 people living with PWS in the U.K. and [indiscernible] . Further, perhaps more ice than in the U.S., it is a concentrated market driven by centers of excellence, and there is strong thought leader support for VYKAT XR. We look forward to keeping you apprised of our progress over the next few months as we approach the regulatory decision and potential commercial launch.

Now I'd like to turn the call over to Meredith for a detailed commercial update. Meredith?

Thank you, Anish, and good afternoon, everyone. As Anish mentioned, 2025 was an important year for the PWS community and Soleno as we brought to market the first FDA-approved medicine for the treatment of hyperphagia in adults and children 4 years of age and older living with Prader-Willi Syndrome. We are encouraged that 1,250 new patients a form for submitted for [indiscernible] from launch on March 26 through year-end, which included 207 in the fourth quarter.

This represents approximately 12.5% of the total U.S. bicatics, our addressable market. At the end of the fourth quarter, 859 individuals were being actively treated with Vitamix, up from 764 at the end of Q3, indicating that VYKAT XR is being adopted into clinical practice and reflecting our ability to convert start forms into treated patients. On the prescriber side, our efforts to raise awareness of VYKAT XR's availability and clinical profile have driven strong engagement. In Q4, we added 136 new prescribers, bringing the total unique prescribers to 630 as of December 31.

We continue to hear that VYKAT XR delivers meaningful clinical benefits and physicians to plan to proactively discuss the first-to-market therapy with caregivers and patients as they consider treatment options. Our field teams are not only educating but also activating the prescriber base by providing comprehensive support on therapeutic expectations, monitoring and dose modification were necessary.

These are critical elements that give physicians the confidence to initiate and maintain patients on VYKAT XR and to integrate our medicine into routine clinical practice. A few things stand out when we look at who is being treated and who is prescribing. While most patients are between 4 and 26 years of age, we are also seeing meaningful utilization in adults particularly those 27 to 45 years old. This speaks to VYKAT's relevance across the PWS population. Side effects reported in the real-world study have been consistent with those observed in our clinical trials and with the FDA-approved label. And as patients settle into their optimal target dose, adherence has remained high, with a launch-to-date discontinuation rate related to adverse events of approximately 12% at the end of the quarter.

We are also leaning into a real-world experience to support demand. We are systematically capturing success stories with VYKAT XR to highlight its impact on hyperphagia and to support more proactive treatment discussions. Through community outreach, including patient webinars and live events, where families are directly from others treated with VYKAT XR. We are sustaining strong interest and supporting ongoing launch momentum.

Our January patient webinar attracted over 200 registrants, nearly 60 more than our November event, underscoring growing interest in VYKAT XR. We are also collecting feedback from families who have attended these programs. And while still early, we have already heard of families who after attending these events have proactively active physicians about VYKAT XR encouraging signals that our education efforts are helping to drive appropriate demand and convert interest in active treatment.

Looking ahead to 2026, our priority is to deepen experience and adoption across leading academic and endocrine centers, specifically among PWS experts who shape practice patterns, while further broadening the prescriber base in the community where many people with PWS are treated. We are seeing growing confidence among these key efforts in utilizing VYKAT XR, and we have made important strides in creating champions among both HCPs and TWF family, which we believe will continue to support wider uptake over time and advance our goal of making VYKAT XR the standard of care for appropriate patients with PWS-related hyperplasia. We continue to secure broad coverage for VYKAT XR across all channels: commercial, Medicaid and Medicare, resulting in policies that covered over 180 million lives at the end of the fourth quarter.

Additionally, we have strong coverage of reimbursed claims from approximately 45 state Medicaid programs through Q4. Payers continue to recognize the seriousness of PWS, understand the true unmet need in treating hyperphagia and appreciate the meaningful value VYKAT XR tend to deliver. And we are a team that's clearly play out in the reauthorization process. As a reminder, payers typically require reauthorization every 6 to 12 months for rare disease medicines. And we are pleased to see the overwhelming majority of claims for patients that have been quickly processed and continued on page product.

In summary, we believe 2025 has established a solid foundation with patients, prescribers and cared for VYKAT XR. Looking ahead, we are committed to deepening adoption and expanding our prescriber base in both the KOLs and community settings, while keeping families and individuals with PWS experiencing hyperphagia at the forefront as we realize the full potential of the first approved treatment for this condition.

I will now turn the call over to Jim for a review of the company's financial statement for the fourth quarter.

Thanks, Meredith. Total net revenue for the fourth quarter ended December 31, 2025, was $91.7 million, representing sequential growth of nearly 40% from $66 million in Q3. For the full year 2025, which, as a reminder, represents less than 9 months of commercial availability, total net revenue was $190.4 million. VYKAT XR was approved in March of this year, and therefore, the company generated no revenue for the 3 or 12 months ended December 31, 2024.

We generated $48.7 million of cash from operating activities for the fourth quarter and achieved profitability with positive net income of $20.9 million for the full year 2025. At the end of the year, we had $506.1 million of cash, cash equivalents and marketable securities. Please note, this is after our investment of $100 million in the accelerated share repurchase program that we announced in November.

Our strong balance sheet ensures that we are sufficiently capitalized to continue to execute an effective U.S. launch of VYKAT XR while in parallel progressing towards regulatory approvals and commercialization either on a stand-alone basis or with partners in the EU and other geographies and speaking investments in possible indications.

Cost of goods sold was $0.9 million for the fourth quarter and $2.7 million for the full year. As a reminder, prior to FDA approval, costs associated with manufacturing VYKAT XR were expensed as research and development expenses. As such, a portion of the cost of goods sold during these periods included inventory at 0 cost. Going forward, as we continue to sell VYKAT XR, we will deplete our 0 cost inventory and replenish it with at cost inventory. And consequently, cost of goods sold as a percentage of revenue will increase.

Research and development expense for the fourth quarter was $9.6 million, which included $2.8 million of noncash stock-based compensation compared to $21.5 million, which includes $10.1 million of noncash stock-based compensation for the same period of 2024. The cadence of our research and development expenditures, fluctuates depending upon the state of our research activities, clinical programs and the timing of manufacturing and other projects necessary to support submission of regularly requirements. For the full year 2025, research and development expenses were $14.6 million as compared to $78.6 million for the full year 2024.

Selling, general and administrative expense for the fourth quarter ended December 31, 2025 was $40.9 million, which includes $8.7 million of noncash compensation compared to $37.3 million to include $19.7 million of noncash stock-based compensation for the same period of 2024. The increase in expense after removing stock-based compensation reflects our ongoing investment in additional personnel and new programs to support the VYKAT XR commercial launch and in support of our increased business activities.

For the full year 2025, SG&A expense were $132.1 million as compared to $105.9 million for the full year 2024. Total other income net was $3.8 million for the 3 months ended December 31, 2025 compared to total other income net of $3.1 million in the same period of 2024. For the full year 2025, total other income net was $11.5 million as compared to $11.8 million for the full year 2024. Net income for the fourth quarter was approximately $43.4 million or $0.82 per basic and $0.80 per diluted share compared to a net loss of $56.0 million or $1.27 per basic and diluted share for the same period in 2024.

For the full year 2025, net income was $20.9 million or $0.40 per basic and $0.39 per diluted share as compared to a net loss of $175.9 million or $4.38 per basic and diluted share for 2024. Please note, with regards to KPIs, we intend to share patient start forms, a number of unique prescribers and lives covered in our Q1 2026 earnings call, which will mark 12 months of results. And our intention is to retire these metrics at that time.

And this concludes the financial overview. But on a personal note, I would like to let everyone know that I am retiring at the end of March. It has been my great pleasure to work with Anish and the team over the last 6 years. It's been a fantastic journey. We've accomplished so much, and I feel the company is in an excellent position to ensure future success. We have an outstanding replacement. Jennifer Polk, who will take over as CFO in the coming weeks and I will move into a consulting role to ensure a smooth transition. And now I'll turn the call back over to Anish for additional thoughts, Anish.

Thank you, Jim, for the incredible work over the last 6 years to get us to where we are today. With the launch of VYKAT XR well underway, we turn our attention to what's next for the company and to begin with what's next for CSR. We continue to pursue additional metabolic rare disease indications with high unmet need where the probability of success is high and the mechanism of action directly applied. The first of these indications is glycogen storage disease Type 1 or GST1 which is a rare metabolic condition characterized by the accumulation of fat in the liver and kidney, resulting in extremely low levels of blood glucose. It impacts approximately 1 in every 100,000 live births, resulting in a prevalence of greater than 7,000 patients globally and approximately 3,000 to 4,000 of the patients residing in the U.S.

There are currently no FDA-approved therapies. GSD1 represents a natural and logical extension of our Vigdis franchise beyond PWS. The predominant physician fall for GSD1, namely pediatric endocrinologists is the same for PWS. The mechanism of action of VYKAT XR uniquely addresses the severe clinical manifestations of GSD 1. People affected by GSD1 lack the ability to convert sort litages into glucose and live at the constant risk of life-threatening hypoglycemia. They are dependent upon external sources of glucose. In this case, daily consumption of corn starch multiple times a day in order to survive. However, the precise timing of corn scratch consumption is critical, especially during periods of fastening between meals and during the night, as missed doses can lead to potentially fatal hypoglycemia.

In addition, long-term use of corn starch can lead to severe GI issues, metabolic dysfunction and very poor quality of life. VYKAT XR's ability to innovate insulin secretion with its fast onset and repeatable and tailored dosing for maintain proper levels of glucose throughout the day and night and reduce the person's dependency on corn starch. DCCR has orphan designation for GSD1 in the U.S. as well as in the head. Our plan is to file an IND in the first half of this year and to initiate a clinical program later in 2026. More details will be provided during the year as we approach the start of the trial.

We look forward to sharing future updates on these programs as they merge. In closing, we are very pleased with the success and trajectory of VYKAT XR and we will continue to work tirelessly to make the safe and effective therapy available to as many patients living with PWS-related hyperplasia as possible. We're excited about expanding into new indications, leveraging our existing knowledge and skills. And with that, we'll now open the call for your questions. Operator?

[Operator Instructions] Your first question comes from the line of Paul Choi from Goldman Sachs.

This is [indiscernible] calling in for Paul. Congrats on the quarter. I suppose I just wanted to start a quick one with us on the 1,000 patient start forms that you got for the next 9 to 12 months. Can you remind us what the cadence of that is expected to look like? Is there going to be a bolus at the start of the year? Is it going to be -- is that going to be late in the year due to the adjustment -- seasonal adjustment in 1Q. Just help us understand the cadence there.

Thanks for the question, Kai. I think it's fair to say that we want you to think of this as over the 9 to 12 months, not necessarily on a quarter-to-quarter basis. So it's hard to think of a bolus at this time. I think it's fair to say that the start forms will come in over the year. I'll let Meredith address it further in terms of how she thinks the cadence is likely to be.

Yes. Thank you, Anish. I agree with Anish, that obviously, we're looking at 1,000 over the next 9 to 12 months. That's our goal in order to continue the sustained momentum of the very strong launch. And as I mentioned in the script, we're really doubling down on broadening our experience with KOLs, getting out into the community setting and also activating the caregiver population.

Got it. And Jim, congrats on your retirement. We're sorry to see you go.

Thank you very much. Appreciate it.

Your next question comes from the line of Moritz Reiterer from Guggenheim Securities.

This is Moritz for Guggenheim. I got first a question on PWS. I peak, what percent of the market do you think could be accessible in the U.S. at this point? And then the second one about GSD1. What do you think about dosing in GSD1, do you think the dose will be similar or lower? And how do you think tolerability of the drug would impact adoption in that disease?

Sure. So your first question was about what is the likely peak penetration in PWS. It's a good question. And I think you have to put it in the context of the fact that no other treatments exist today. So many of these treatments, you look at 40%, 50% penetration in these larger rare diseases. But I think if we are 3, 4 years out and the competitive landscape looks like the way it does today, I don't think it's unreasonable to expect a higher penetration than that.

In terms of GSD, your question around dosing, we have to -- so part of our first trial is going to be looking at dosing in these patients. We do know that it's a pretty sensitive -- insulin is pretty sensitive to is oxide. So we expect the dosing to be likely in the range of where we are today. It is important to know though that even though the unmet need is really great here, it's really about the precise dosing to increase blood glucose levels enough. And these patients don't have the sort of comorbidities that you see in PWS patients. So they're unlikely to be significantly obese, they're unlikely to be significantly diabetic, et cetera. So I think there will be more room to dose in that patient population. But that remains to be seen with subject of the first trial.

Your next question comes from the line of Yasmeen Rahimi from Piper Sandler.

This is Shannon on for Yes. Congrats on the progress, guys. Just two from us. Could you help us understand a little bit more about the refill rates that you're seeing now that you have a larger proportion of patients who've been on the drug for several months? And then the second question is, how do you expect the average weight of new patients coming in to change over time? If you're seeing more older patients, do you expect the average rate to increase?

Sure. Shannon, I'll take the second question, Meredith will take the first one. In terms of the weight over time, as you know, our clinical trial average weight was 61 kilograms. The age was about 13 years. What we have said more recently is that the predominant number of patients coming in are in the 4- to 26-year age group and in general, likely heavier than what we are seeing in the clinical trial population. So the average WACC for a clinical trial patient would be about 488.

We have said publicly that we're looking at averages in the higher than 500 range. We are also seeing more older patients coming on at this time, and we expect that over time, therefore, the total weight will be going up as well. So again, these are not likely to be large step-wise inflections, but think of it more as sort of gentle increases over time. Meredith want to talk about refill rates realizing that it's early, and we don't really have that much data.

Yes. Thank you. And similar to what I said in my prepared remarks, if you look at as the patients are settling into their optimal dose, we're very pleased with the high adherence rates and seeing that we are 9 months in at the end of Q4, we're seeing patients who are able to stay on therapy and reach a longer time frame. So we're very pleased with the refill rates.

Your next question comes from the line of Kristen Kluska from Cantor.

Congrats, Jim. It's been an absolute pleasure working with you and always wishing you the best. So you talked about longer term maybe factoring in a 15% to 20% discontinuation rate, I'm wondering how you're thinking how efficacy will ultimately play into this? At what point in the launch do you think you'll have a good sense of percent of patients that are dropping out due to lack of efficacy. And then I'm curious, as you are collecting these real-world anecdotes, if the efficacy looks similar, different amongst patients, are there some that are responding to hyperphagia, are there some that are responding on behavior? And what's really the factor that will keep somebody on the therapy longer term from an efficacy standpoint?

Thanks, Kristin. I think it's fair to say that when you look at our experience in the clinical trial, which as you know, lasted for many years, if you stay on therapy, you are likely to see benefits. And as you can imagine, you're unlikely to stay on therapy if you have significant adverse events. So what we have seen to date is that patients who have stayed on drug for some time are seeing efficacy. I think it's fair to say that discontinuations for lack of efficacy are few at this time. And I would not expect that to change too much because if you stay on drug, we expect you to have some levels of efficacy.

Okay. And then just on what that efficacy actually is in the real world? Is it looking different in patients, meaning are some responding to hyperphagia or some responding to behavior? Or is it like a mix?

Yes, it's a good question. And as you know, we don't have the same precise gauge on efficacy in the real world as we do in the clinical trial. So we're not doing efficacy analyses per se. But the anecdotes that we're hearing certainly primarily relate to changes in hyperphagia and the downstream effects of it. So as you know, hyperphagia itself gets mixed up with anxiety related to food behaviors, aggressive behaviors around food. So as long as we are targeting something around hyperphagia, we think that is the primary effect.

I think the other effects will -- time will tell. It's hard for us to measure those even in the trials. But we do hear anecdotes that talk about being more calm, having better social interactions, having less anxiety and things like that. So yes, there is an element of that as well.

Your next question comes from the line of Tyler Van Buren from TD Cowen.

I'll add my congratulations to you, Jim, on your retirement and the success you've experienced at Soleno. You'll be missed. Wanted to just follow up on the 1,000 start forms over the next 9 to 12 months that you guys reiterated, which is, of course, encouraging. And earlier, you spoke about the cadence in response to the question. But wanted to maybe hear you elaborate specifically on what has been observed so far during January and February and the New Year with the launch?

And then as a follow-up, are you expecting any meaningful level of Q1 seasonality?

So Tyler, as you know, we were not able to comment on Q1, but we can tell you that it is interesting to launch a drug into a completely new indication, and we are learning as we go. Thanksgiving, Christmas was interesting. It was interesting to see some of the summer camp related things that happen, people going away to camp. So we'll have to see what the cadence is like. I'm going to let Meredith answer the rest of the question.

Thanks, Anish. And I concur 100% with you that it is interesting to launch. This is the first ever FDA-approved medicine for the treatment of hyperphagia and so we're learning a lot around some of the aspects in the home or the family or what will bring them into the office to get seen by the practitioner. Also, I think I've mentioned several times on our last earnings calls that we also are looking at some of the physicians who are increasingly more interested and excited to treat PWS because there actually is a treatment for hyperphagia now. And so they're opening up clinical practices or PWS specific clinics.

So we're hoping to see some of the availability of clinicians, improving as we go forward and really strengthening the care that's being delivered out there. So it's exciting. We'll hopefully be able to provide you more details as we go along, but strong interest out there.

I will say that on the seasonality front, Jim, would you like to add something?

Sure. Tyler, thank you for the good wishes. Yes, I never like to miss an opportunity on the revenue side of Q1 to point out seasonality that impacts all commercial drugs and it shows up in the gross to net. So Tyler, as you're aware, but just to communicate again, what tends to happen with folks on -- particularly on commercial plans is they'll reset their co-pays. So that means that's more out-of-pocket that they would incur except that we offer cylinder one, and we will effectively reimburse them for those co-pays. So that increases the discount, if you like, on the gross to net.

And then the other phenomenon that can happen is in the disruption of changing plans, your employer might change plans, you may choose a different plan. There's an opportunity where you may move from what we would call our paid bucket of active patients. into the free bucket of active patients. So maybe you'll receive 4 to 6 weeks of free drug before you move back to paid. It's a seasonality. It doesn't change the underlying growth in active patients but it's just something that does impact the revenue because it will impact the gross to net discount for Q1. And we'll obviously be able to give you better color once we get through Q1, and we'll be at a size it at that stage.

Your next question comes from the line of Leland Gershell from Oppenheimer.

Thanks for this update. And Jim, just wanted to add my sentiments as well. I wish you all the best as you move on. Wanted to ask at the time of approval, as you were entering the initial launch, I guess, this is a question directed at Meredith. You had said I think that you'd identified that there are about 300 physicians who were direct treaters of about 20% of PWS patients and will also influence the care of another 20%. And I think there were about 80% of pediatric endocrinologists who had expressed willingness to prescribe VYKAT XR. Just wondering if you could provide us a picture of where that landscape is today. with respect to physicians uptake of VYKAT in their practices.

Yes. Thank you very much for the question. I appreciate that. The phenomena is still there. As we look at the top 300, we think that's the best way to focus on the market and target where we can have deeper penetration. We are seeing strong uptake among the top 300, and the majority of them have more than one patient, so they're repeat writers, which is very exciting to see. And we're continuing to see that those individuals are influencing the treatment patterns across the country. I've mentioned before that we have peer-to-peer programs, so we're doubling down on that. We also have an expert on demand, where many community physicians can reach out to those top practitioners and get guidance on patient selection and what to look for with regard to setting expectations on efficacy and dosing and monitoring, et cetera. So that's been very exciting.

And then as we look at moving forward on focusing in on the caregiver aspect, as I mentioned, we're doubling down on webinars and live events and hoping to see that, that will drive caregivers to come in and ask for VYKAT XR.

That's very helpful. And then just kind of a higher-level question on company's philosophy going forward in terms of the expansion maybe with through business development and the like, you obviously have a continuing and growing stream of cash coming in. It may cost you some to commercialize elsewhere and also advance your next program, but it seems like you'll have firepower to do beyond that. Just wondering if you could give us any thoughts as Soleno continues to evolve and develop its footprint.

Yes. Thanks, Leland. I think the most important thing remains successful commercialization of VYKAT. And I think it starts with the U.S., but the next step is outside the U.S., EU, other geographies, et cetera. And then the next thing is, I'd say, the lower-hanging fruit of using VYKAT itself or other things, which are high likelihood of success, situations like GSD1. So those are our primary targets. And we obviously continue to look at things on the outside. I don't expect imminent activity on that front, but we certainly will in the longer term, look at doing that, too.

Your next question comes from the line of Brian Skorney from Barnett.

Jim, congrats on the retirement as well. Sorry to see you go. You have 6,000 listed in the Orange Book for VYKAT with the longest duration ones going out to 2035. I think when you got approval last year, we talked a little bit in vagaries about the label creating some opportunity for even longer dated. I just wondering if you could give us your current thoughts on exclusivity of VYKAT based on where you are across patent prosecution. And just real quick on COGS. Just wanted to get guidance of what we're seeing is product that was already expensed through R&D and if there will be sort of a true-up this year in terms of the gross margin?

Sure. Let me take the first part, and Jim can take the second part of it. So on the exclusivity front, you're right, when we got approved, we had talked about the possibility of extension of IP beyond where we are today. And I think what you saw with the listing of the 2035 patent is a step in that direction. So it's a patent that's specific to methods of treating hyperphagia and food-related behaviors. That particular family, the related patents have the ability to be extended into the late 2030s. We have also stated that we have filed additional IP, although we have not discussed the details of that. So stay tuned on that. So yes, that's the plan on exclusivity, Jim.

Yes. So Brian, thanks for your wishes. To your specific point, we still do have a little bit of, if you like, the 0 cost inventory, flowing through. So inventory that was in the supply chain prior to approval. So anticipate that COGS will just generally nudge up. They should stay in mid-single digits. So they'll just nudge up as we get full cost through the supply chain.

Your next question comes from the line of James Candilis from Stifel.

It's Mark on for James. Yes, I guess, as it relates to the EU side of things, I think it's interesting, we've now seen [indiscernible] get approval and trend trending in the negative direction with the vote. I guess in the context of that, how are you thinking about these potential analogues and EMA's overall comfort with perhaps maybe imperfect clinical data in the rare disease space and just kind of your overall broader comfort with the EU approval.

And then the second question also on EU is when do you think you'll kind of have the 180-day questions in hand for the filing?

Yes. On the EU approval, you're right. I think it's fair to say that decisions on the rare disease side go in one direction or the other. And we've seen other examples. Translarna is another example, which was approved in Europe for a long time, did not see an approval here. So these things are always custom rare disease data sets are never perfect. So we have to just play out the process and see. So we have day 120 questions. We responded to day 120 questions in a timely manner. Expecting the day 120 questions by the end of this month, so imminently. And we'll see what they say. So I think as we have said in the past, the nature of the key questions were around the proof of efficacy using randomized withdrawal as the key trial, the fact that the same patients were in the early as well as the late part of the study, and does that create potential for bias, et cetera.

So clearly, these are questions that the FDA asked us as well, and we were able to prevail. So we will attempt to do the same here. Hard to predict the outcome though. In terms of timing of the 180 day, I would say imminently, I think they're supposed to be February '26.

Next question comes from the line of Catherine Deloro from LifeSci Capital.

Congrats on the strong quarter. And congrats, Jim, on the retirement. Yes, I guess just a few more follow-ups on Europe, just given the -- it's possibly around the corner. Yes, just thinking about just the potential launch trajectory in Europe versus U.S.? Are there anything key learnings that can be had from the U.S. experience that could accelerate the uptake? And I guess if you were to commercialize on your own, any comments on the sales force that you think you would need there?

Meredith, would you like to take that?

Sure. Happy to take that. So we're still looking at what the size of the field force would look like. Most specifically, we're focusing in on potentially Germany and Austria, the first to launch. So we're looking at what the marketplace looks like there. Additionally, launch experience. Yes, U.S. launch experience. Yes, I think the 1 other thing that Anish had mentioned in his comments about Europe is 1 of the phenomenon is that there are more centers of excellence and tighter treatment over in Europe. And so that's a little bit different than here in the U.S.

But with regard to launch success, obviously, it's making sure that there's strong education of the treaters and making sure that they understand exactly the patient population that they'll be treating and the selection of that patient population has been really key in the United States.

Next question comes from the line of Yale Jen from Lateline Company.

First, Jim, congratulations on your retirement. And hopefully, you can enjoy the good life going forward. So my first question is that given that the drug has a great start for the first year? Do you guys feel that for the next getting the next wave of patients. Is that more difficult or just a different approach to accomplish that? Then I have a follow-up.

Sure. Meredith, do you want to take that?

I'm happy to take that. Yes. So I think what we're pleased to see is that we're getting a spectrum across the patient population. I mentioned that the majority of patients are coming in ages 4 to 26, but we're also really pleased that we've reached greater penetration in the younger adults, I'll say, even though up to 45, that population definitely has more comorbidities, if you will, as they get older. But we're seeing a broad spectrum. And so we continue to see a broad -- we believe we'll see a broad spectrum as we move into 2026..

Okay. Great. That's very helpful. Maybe just one in the product development or life cycle management questions which is that are you guys also thinking about maybe the next-gen product follow the DCCR. And if so, what sort of attribute you think that may you want to have?

That's a good question, Yale. As you know, what we are doing is a once-a-day pill. So there are limits to what you can do with regards to improving upon that. That said, we do have some internal programs on life cycle management, which I'm not able to discuss today, but we do hope to discuss later this year.

Okay. Maybe last question here. In terms of DCCR, the mechanism of actions for GSD, could you elaborate a little more?

Yes. As you know, the critical problem in GSD is life-threatening hypoglycemia. And we know that when you target certain channels in the beta cells of the pancreas, you can suppress the secretion of insulin, which means that you can elevate levels of glucose. So the problem that occurs in GSD is that in order to keep glucose levels higher, these patients are required to take very regular feedings of cornstarch all day, including through the night. And what is very desirable is to be able to elevate those blood glucose levels enough that they don't get hypoglycemic.

So there is actually interesting information in published data using the parent molecule, and we've spoken with KOLs who have tried it. It works. But as we know in situations like CHI as well, the side effect profile is such that it's difficult to tolerate. But when we are looking at VYKAT XR, DCCR and the low stable level that we will have in the blood, we expect a very different side effect profile and should have the ability to elevate levels of glucose very precisely.

Your next question comes from the line of Derek Archila from Wells Fargo.

Jim, congrats wishing you well and great working with you. So yes, just 2 brief ones. I just wanted to clarify. So on the seasonality component, you talked about kind of impact to price and kind of free drug rate, but how much of an impact do you expect in terms of the patient visits and scripts in the first quarter?

Meredith?

Yes. I think what we were saying is that we're not really commenting on the first quarter numbers as of right now. But with regard to seasonality in the gross to net. I think Jim talked about it. As you know, a lot of patients are coming in. So what we didn't see we launched in March of last year. Now we're going into January where the co-pay will re-up for a lot of the commercial patients. And so as Jim mentioned, with Soleno 1, we offer co-pay support for commercial patients, and we pay down to 0 on the co-pay. So that's a potential what we'll see in the gross to net.

So yes, let me ask this a different way. So I guess for typical Prader-Willi patients, do they tend to have seasonality in terms of their patient visits with their physicians.

So Derek, I think, again, I'll point you back to the fact that we're launching the first hyperphagia drug in the space. And we're learning as we go. What we know about visits that patients have based on claims data is that the younger patient population, which is a 4- to 26-year-old age group, has about 4 to 6 touch points with health care providers over the year. And what we know from conversations with KOLs, people who run these top 300 practices or top 10 practices is that their practices are pretty crowded and you schedule appointments a year out or more.

So the visits do happen, and there is this particular cadence of visits, whether it's different in the first quarter or not, we'll find out.

Got it. And then just a follow-up, just wanted to know in terms of inventory and stocking in 4Q, if there's any comments there?

Yes, we were with Panther, as you know, 1 specialty pharmacy. They just went through the holiday period. We'll have to sort of do a deep dive to really understand anything, but nothing untoward that we're aware of.

Your next question comes from the line of Kalpit Patel from Wolfe Research.

Just on the active patient number that you gave, the growth in quarter-over-quarter is not keeping pace with the growth in new patient start forms. Is that mainly driven by insurance-related delays? Or is that more of a function of the discontinuation rate? Or is it a mix of both factors and how should we think about this gap moving forward?

I think a very important consideration is the time it takes for benefits assessment. So when we get a start form, you don't instantly start somewhere on drug. So they go into a benefits assessment time, which will take 30-ish days give or take. And we don't think there is any issues with reimbursement that have been encountered that are significant. And there will always be a lag between the number of new patient start forms and the number of patients who will be active for that quarter. So Meredith, anything to add to that?

No, I think that was perfect answer. I think that we're looking at a little bit of a mix of all of the above, but we're pleased with, as I mentioned, the ability to convert start forms into patients and reimburse claims. So we're going to continue to do that and double down on that in 2026 and believe that we'll be very successful.

Got it. And one more on our end. I know you mentioned the long-term discontinuation rate. But do you forecast the discontinuation rate meaningfully fluctuating between now and the end of the year? And how might that affect the active patient growth in 2026?

Good question. We have to see -- I mean, what we have seen so far, I think, is very acceptable for a drug that's treating such a significantly comorbid condition. So if we remain in this zone of 15 to 20 thereabouts, I think that's a really good outcome. It's difficult for us to predict if it changes between now and the end of the year. I'm sure it will go up and down, it will fluctuate. But I don't see a reason why there would be major changes during the year. I'm not sure if that answers that question.

Yes, that answers it. And congrats, James on the retirement.

Thank you.

[Operator Instructions] Your next question comes from the line of Ram Selvaraju from H.C. Wainright.

I just wanted to ask about whether you are evaluating other disease indications in which to explore VCAT XR beyond glycogen storage disease? And if so, what some of these indications might be if, for example, there's any plan to potentially revisit the utility of the drug in [indiscernible] syndrome or other conditions of that ilk? Secondly, I just wanted to clarify whether you anticipate any potential pricing flexibility impact if you were to launch the drug yourself in Europe or through a partner if there might potentially be any spillover to the U.S. pricing paradigm? Or if ultimately this is a nonfactor given the rarity of Prader-Willi Syndrome?

And lastly, I don't know if you can comment on any underlying dynamics with respect to the discontinuation rate that you are seeing, if it's plateauing, if you are seeing any evidence that it is, in fact, declining as there is more experience with the drug over time in the PWS population or if you're seeing the actual percentage rate increase. And if it is increasing by how much?

Ram. Okay. I think I got those. So the first 1 is other indications. And what we have said in the past, just to remind you, is that there's 2 categories of rare diseases that we think DCCR could be useful. One is conditions like PWS, where things like hyperphagia and food-related behaviors are a problem. You're right, [indiscernible] syndrome is one of them, Fragile X, about 10% of Fragile as the PWS phenotype. -- some patients with Angelman have it. They're SM-1 obesity. So there's various other indications where we definitely continue to think that it could be useful, and we are continuing to evaluate it.

In terms of the pricing impact of self-launch versus not, I think the challenge right now is that it's a moving target. I think if we had to make a decision today, it would probably say that pricing flexibility is optimal if we control it both here as well as in Europe or outside the country. I'm not sure that it's a nonfactor due to the rarity because even though there has been some conversation about an orphan exclusion, in MFN. We haven't seen that actually become reality yet.

In terms of the discontinuation rates and are they plateauing? The one phenomenon that we're following very closely is to see if the cadence of discontinuation is going to be like what we saw in the clinical trials, which is to say that if you stay on drug through titration and some period of time after you are very likely to stay on drug. And I would say that the early indicators are that, that is indeed the case. So we think that's very encouraging, but it's something that we are following very carefully and we'll continue to update you.

We have no further questions at this time. So I'm going to turn the call over back to Anish Bhatnagar for closing comments. Sir, please go ahead.

Well, thank you all for dialing in today, and we look forward to continuing the conversation with you all. Have a good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

Good afternoon, and thank you for standing by. Welcome to Soleno Therapeutics Third Quarter 2025 Financial and Operating Results Conference Call and webcast. [Operator Instructions]. As a reminder, today's webcast is being recorded.

I would now like to introduce Brian Ritchie of LifeSci Advisors. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss Soleno Therapeutics Third Quarter 2025 financial and operating results.

Please note, we will be making certain forward-looking statements today. We refer you to Soleno's 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 for Soleno are Anish Bhatnagar, Soleno's Chairman and Chief Executive Officer; Meredith Manning, Soleno's Chief Commercial Officer; and Jim MacKaness, Soleno's Chief Financial Officer.

With that, I will now turn the call over to Anish.

Thank you, Brian, and thank you, everyone, for joining us for our third quarter results call this afternoon. Following my brief opening remarks, Meredith will review the company's commercialization progress to date, and Jim will cover the company's financial statements for the third quarter. We will then open the call for questions.

We had an outstanding third quarter, building on the strong launch momentum from our second quarter. Our total net revenue more than doubled from the second quarter to $66 million, and the company achieved profitability with a positive net income of $26 million for the third quarter.

Our leading indicators, including patient start forms, unique prescribers and numbers of lives covered reflect growing awareness of VYKAT XR's potential to improve hyperphagia in those with PWS.

As the first and only FDA-approved treatment for patients 4 years and older for the primary feature of PWS, which is hyperphagia, VYKAT XR is providing a meaningful solution to individuals living with PWS, their caregivers and physicians.

I would like to take a moment to reiterate the complexity of Prader-Willi syndrome. In addition to the hallmark symptom of hyperphagia, people with PWS suffer from a broad range of potentially serious comorbidities as well as significant behavioral problems. And while people with PWS are living longer, some into their 50s and older, the mean age of death, unfortunately still stands at around 30 years old.

Patients with PWS experience a very high burden of disease compared to the general population. In particular, comorbidities associated with fluid overload, diabetes, respiratory failure and congestive heart failure are common.

In a recently published registry of patients with PWS in Sweden, [ Gaiseki ] and colleagues observed a greater than 20-fold increase in heart failure, a tenfold increase in venous thrombosis and a fivefold increase in atrial fibrillation and pulmonary embolism.

In a 40-year survey of mortality in patients with PWS, Butler and colleagues reported that respiratory failure and cardiac disease and cardiac failure together accounted for nearly half of all fatalities.

The most common causes of death are respiratory failure, uncontrolled hyperphagia and hyperphagia-related behaviors, cardiac causes, infection, obesity and pulmonary embolism with each accounting for greater than 5% of deaths.

A recent study in 2020 revealed that the mortality rate in people with PWS is substantially higher than the general U.S. population at 2.7%. This translates to over 300 fatalities per year, assuming a population of approximately 12,000 people living with PWS in the U.S.

The VYKAT XR clinical program established both substantial evidence of efficacy and a safety profile deemed approvable by the FDA based on a comprehensive Phase III clinical program in 127 patients with over 400 patient years of exposure, including patients with nearly 6 years of continuous treatment. At the end of Q3, at approximately 6 months in market, we had 764 active patients.

Our real-world experience, including efficacy, side effects and discontinuation rates related to therapy have been in line with our expectations. As discussed in VYKAT XR's FDA-approved label, the most common adverse events reported in our clinical trials were hypertrichosis, edema, hyperglycemia and rash. Most adverse events were self-limiting with some needing dose adjustments, interruption or other concomitant treatment.

In particular, regarding fluid retention-related adverse events post launch, we see on a percent basis, the incidence being lower than what we saw in clinical trials in spite of the post-launch patients being more complex and having more comorbidities.

Since approval, the discontinuation rate of VYKAT XR related to AEs was approximately 8% at the end of the third quarter, and the total discontinuation was approximately 10%. While the discontinuation rate has increased, it remains below our expected long-term rate based on our clinical trial data.

It is worth noting that we did see a disruption in our launch trajectory in the wake of a short seller report that was released in mid-August, mostly in the form of a lower number of start forms and increased discontinuations for nonserious adverse events.

As we have anticipated, we have started to see patients return to therapy, often as withdrawal of VYKAT XR can bring a rapid return of PWS symptoms. We continue to educate physicians and families on the compelling clinical profile of VYKAT XR, and we dedicated significant resources to these activities during the third quarter.

Our team of patient and community educators, known as the PACE team, is educating families and caregivers on therapy expectations, administration and monitoring at the time of first dose and throughout the patient journey. We're also hosting live community events in collaboration with advocacy organizations, health care providers and caregivers of individuals already on VYKAT XR, so they can share their experience with other caregivers contemplating initiating treatment.

We're continuing our HCP education initiatives, including facilitating physician-to-physician programs, which allows physicians to learn more about VYKAT XR from experts who have experienced treating patients with PWS-related hyperphagia.

Soleno has received positive feedback on our engagement with the stakeholders in the PWS community, and we believe this will continue to fuel our growth and allow us to establish VYKAT XR, as a standard of care for hyperphagia in those living with PWS.

I would now like to provide a brief update on our activities in support of potential approval of DCCR in Europe. As you know, we market DCCR in the U.S. as VYKAT XR. In parallel with our U.S. commercial launch, we have continued to progress along regulatory pathways in other geographies, the most prominent of which is the EU.

In May, we announced the submission and EMA validation of our marketing authorization application. We received day 120 questions during the past quarter and are preparing our responses at this time. The nature of the questions are generally similar to what we discussed with the U.S. FDA during the approval process.

Gaining approval to market DCCR in the EU would represent a meaningful expansion of our addressable market and remains a priority for us, while we continue to progress our U.S. launch. Based on widely cited prevalence data, it is estimated that there are as many as 9,500 people living with PWS in France, Germany, Italy, Spain and the U.K. combined.

Diagnostic rates are high, patient care is often concentrated around centers of excellence. And as with the U.S., the PWS community has strong thought leader support. We will continue to keep you apprised of our progress there and in other territories.

I will now turn the call over to Meredith to provide an update on the launch. Meredith?

Thank you, Anish, and good afternoon, everyone. As Anish mentioned, since approval, we've made remarkable progress in launching VYKAT XR. Our success driving broad awareness and adoption reflects disciplined execution grounded in effectively introducing VYKAT XR to the prescriber community, individuals with PWS, their caregivers and payers.

We also attribute our launch success to Soleno's steadfast commitment to educating stakeholders, sharing individuals' experience on VYKAT XR therapy and robust payer access.

Soleno field teams are dedicated to ensuring comprehensive educational support on therapeutic expectations, appropriate dosing and comprehensive monitoring, all critical factors for successfully integrating VYKAT XR into clinical practice and optimizing patient outcomes.

It is worth noting that many prescribers and academic centers are still in the process of setting up their designated PWS clinics. As a reminder, VYKAT XR is indicated to treat hyperphagia in adults and children 4 years of age and older with Prader-Willi syndrome.

And hyperphagia is defined as extreme hunger, constant thoughts about food and constant urge to eat that cannot be satisfied with food. Throughout the last several months, we have been hearing from families, who are seeing meaningful benefit after completing titration and finding their optimal dose.

While all experiences with VYKAT XR are unique, these experiences continue to reinforce the possibilities and real-world impact of VYKAT XR. And through our responsibility to comprehensive education, we always encourage people to review the full prescribing information and medication guide for important safety information, which can be found on vykatxr.com.

Our commitment to patient services and market access underpins these efforts, ensuring timely access and reimbursement across all payer channels. I will now share the results of our key performance indicators, patient start forms, unique prescribers and number of covered lives.

Cumulative patient start forms from launch through September 30th totaled 1,043, of which 397 were in the third quarter. We previously commented that obtaining 646 patient start forms in our first quarter of launch was outstanding and included a bolus. We recognize the rapid uptake was due to strong operational excellence, a large unmet need and pent-up demand that carried into the early part of Q3.

By the end of Q3, 764 individuals were actively treated with VYKAT XR. We believe that as more and more success stories are shared with the community, they will help create a firm foundation for continued growth.

The second performance indicator is the number of prescribers. We are continuing to make great strides with expanding our prescriber base. In Q3, we added an additional 199 new prescribers, bringing total unique prescribers as of September 30th to 494.

Third quarter performance highlights significant progress within our key accounts. Over 50% of our top 300 providers have submitted start forms, signaling strong adoption. Importantly, a significant share of start forms originated from health care providers, who are associated with our KOL network. This is underscoring the effectiveness of our ability to educate physicians who play a pivotal role in influencing practice patterns.

We are also seeing strong adoption among community treaters, highlighting our expanded reach and continued growth beyond our core targets. We have further strengthened our messaging this quarter by spotlighting real patient experiences, launching a new campaign, Make Space for what matters, that highlights VYKAT XR, as a treatment that has the potential to lessen the relentless burden of hyperphagia, creating mental space for individuals living with PWS to focus on what truly matters to them.

Our third performance indicator is payer policies. We have been working diligently to secure broad coverage for VYKAT XR, resulting in policies that cover approximately 132 million lives at the end of the third quarter, including coverage policies with appropriate criteria from the top 3 national PBMs.

We have achieved broad access coverage across all channels, commercial, Medicaid and Medicare, with a strong uptick in state Medicaid coverage, where we had received reimbursed claims from approximately 40 state Medicaid programs through Q3.

As I stated during our last earnings call, these positive coverage decisions demonstrate payers recognizing the seriousness of PWS -- that payers recognize the seriousness of PWS, understand the true unmet need in treating hyperphagia and appreciate the meaningful value VYKAT XR can deliver. This is great progress this early in launch because one of the perceived barriers to adoption among prescribers is the lack of coverage or the lengthy reimbursement path.

As we move forward, we continue to invest in stakeholder awareness, education and access resources to ensure every individual being treated with VYKAT XR, their family and clinician feel supported throughout the treatment journey.

I will now turn the call over to Jim for a review of the company's financial statements for the third quarter.

Thank you, Meredith. Total net revenue for the third quarter ended September 30, 2025, was $66.0 million, which was more than doubled from $32.7 million in the second quarter of 2025, and we achieved profitability with a positive net income of $26.0 million for the quarter.

In addition, we generated $43.5 million of cash from operating activities during the 3 months ended September 30th. At the end of the third quarter, we had $556.1 million of cash, cash equivalents and marketable securities. This includes the $230 million of gross proceeds that we raised through an underwritten offering of our common stock in July.

Our strong balance sheet ensures that we are sufficiently capitalized to continue to execute on an effective U.S. launch of VYKAT XR , while in parallel progressing towards regulatory approval and commercialization, either on a stand-alone basis or with partners in the EU and other geographies. As a reminder, VYKAT XR was approved in March of this year, and therefore, the company generated no revenue in the third quarter ended September 30, 2024.

Cost of goods sold was $1.1 million for the third quarter. Please note that prior to the FDA approval, costs associated with manufacturing VYKAT XR were expensed as research and development expenses. As such, a portion of the cost of goods sold during the period included inventory at 0 cost.

Going forward, as we continue to sell VYKAT XR, we will deplete our 0 cost inventory and replenish it with [ ad ] cost inventory. And consequently, cost of goods sold as a percentage of revenue will increase.

Research and development expense for the third quarter was $8.4 million, which includes $2.2 million of noncash stock-based compensation compared to $30.1 million, which includes $18.5 million of noncash stock-based compensation for the same period of 2024. The cadence of our research and development expenditures fluctuates depending upon the state of our clinical programs, timing of manufacturing and other projects as we move through submission, approval and now commercialization.

Selling, general and administrative expense for the third quarter ended September 30, 2025, was $33.8 million, which includes $7.8 million of noncash stock-based compensation compared to $49.2 million, which includes $38.1 million of noncash stock-based compensation for the same period of 2024.

The increase in expense after removing stock-based compensation reflects our ongoing investment in additional personnel and new programs to support VYKAT XR commercial launch and in support of our increased business activities.

Total other income net was $3.9 million for the 3 months ended September 30, 2025, compared to total other income net of $3.6 million in the same period of 2024.

Net income was approximately $26.0 million or $0.49 per basic and $0.47 per diluted share for the third quarter ended September 30, 2025, compared to a net loss of $76.6 million or $1.83 per basic and diluted share for the same period in 2024.

This concludes the financial overview, and I'll now turn the call back over to Anish for closing remarks. Anish?

Thank you, Jim. In closing, we're very pleased with the trajectory we're on, and we will continue to work tirelessly to make this safe and effective therapy available to as many people living with PWS-related hyperphagia as possible.

We had an outstanding Q3 marked by noteworthy advancements in each of our key metrics from start forms to new prescribers to lives covered all resulting in the doubling of our revenues from Q2 and leading to the company being cash flow positive. We look forward to continuing to deliver on the successful launch we have seen to date.

And with that, we'll now open the call for questions.

[Operator Instructions] Our first question comes from the line of Paul Choi from Goldman Sachs.

Congrats on the good performance in the quarter with regard to the sales. My first question for the team is, can you maybe comment on the restart rate with regard to the discontinuations you're seeing? Any color from the field in terms of how many patients are restarting and sort of the time to restart there would be helpful.

And then second, in terms of the number of patients on active drug that you disclosed with the press release, can you maybe comment on just how many of those are still waiting for insurance clearance versus the patient start forms? Any color there helping us connect the dots would be great.

Sure. Thanks, Paul. So on the restarts, this is early. So we're just starting to see it now. There's a handful of people who have already started, and we've anecdotally heard of others who are planning to start. So this is not a metric we can give meaningful numbers on, but it's early.

Your second question around number of patients on active drug. Meredith, do you want to answer that?

Yes. So I think, Paul, what you're looking at is active versus -- or paid versus free, and that's still a number that we're not reaching steady state and evolving. So all of the 764 have claims that are being reimbursed. Is that exactly what you're asking for?

Maybe just some clarity, any color you can offer on the lag time between the start forms and the patients actually getting coverage, that would be helpful, too, just so we can sort of triangulate maybe how many patients might be backfilled in the quarter to come.

Understood.

Yes. Jim, go ahead.

Yes. So we've been working closely with the specialty pharmacy on this. So you get your start forms and then obviously, there's a discontinuation cancellation that we've spoken to. And then we're seeing the fill rate somewhere around 30 days. It's plus or minus, obviously, depending on where the patient comes from and the amount of time to get through the benefits. But probably we're carrying about 1 month in backlog, if you like, of start forms.

Our next question is from Tyler Van Buren from TD Cowen.

Congratulations on another strong quarter of sales and achieving profitability. Curious to hear you elaborate on the impact on discontinuations and lower patient start forms due to the short report during the quarter? And I guess how you're confident that it had an impact? And then is this impact going away as we enter Q4? What can you tell us about the early launch momentum observed into Q4 here and into year-end?

Yes. Thanks, Tyler. So what we can tell you is that as we look at the quarter, we saw, I would say, a decrease in the August, September time frame. Now realize there's complexity of summer as well as the short report around the same time. So with the slower August, September, we're also seeing no meaningful changes into October.

So we think that there is an effect, and we unfortunately think that this is on patients who've had the nonserious adverse events, probably the people who would have benefited tremendously had they stayed on therapy. So as Meredith has mentioned, as I also talked to, we're making a lot of efforts in reaching out to these people.

We're having individuals who are on drug, talking to other patients, who are on drug. Yesterday, we had a webinar with about 80-plus families on that, listening to a patient who's been on VYKAT and their experiences. So we think that it's hard to say exactly when the effect would go away, but it's certainly something that we're making serious efforts on.

And when you say no meaningful impact in October, are you saying that October looks similar to August and September or that there's no meaningful impact from the report and you're seeing some whatever a rebound in October?

I'm saying it's looking somewhat similar to what we saw in September.

Our next question is from Moritz Reiterer from Guggenheim.

This is Moritz on for Debjit. Congrats on a strong quarter. I have 2 questions. First of all, could you elaborate a little bit on the average dose across all patients that are currently on drug?

And secondly, for your existing prescribers, could you estimate what percent of their PWS patients are currently on VYKAT? What I'm trying to get at, is there still room to grow within those existing prescribers? Or does future growth need to come from new prescribers?

Yes. I'll take the second part of it, and Meredith can elaborate on it. There's definitely room to grow. We have about 1,000 start forms right now. That's about 10% of the TAM. So I'd say across the board, there is room to grow. And that's particularly the case with our KOL accounts, where Meredith mentioned that more than half of them have written scripts.

But as we had anticipated, their practices are pretty full, and they are -- they appear to be prescribing more when they see patients in their regular cadence of 1x to 2x a year. So we expect that to remain, and we expect that over time, we'll be getting access to those patients.

But Meredith, go ahead.

Yes. Adding on to what Anish said, we're very pleased with the broad prescriber base, and we continue to add new prescribers on a daily basis. So we know that there is a significant amount of room for growth, and as Anish stated on the numbers with regard to the TAM.

You had asked about the average dosing. So again, that's still an evolving number. One thing that we shared last earnings call, which we'll continue to reiterate is that the majority of our patient population is coming in between 4 and 26 age. And we are continuing to make progress in the younger adults, so the 27 to 45, if you will. And we are seeing the average weight coming in a little bit heavier than what we saw in our clinical trial.

Our next question is from Kristen Kluska from Cantor.

This is Rick Miller on for Kristen. So you mentioned the discontinuations being up after some of the nonserious AEs after the short report. Can you give us a sense for kind of the kind of the profile of the AEs that were kind of leading to these discontinuations? Is this strictly sort of the on-label safety profile that we're used to or anything else you could talk about there?

Sure. So yes, these are on-label AEs, typically low levels of peripheral edema or you can have hyperglycemia. And when I was referring to nonserious adverse events, as you can look at fares and you can see that a vast majority of events that are reported are nonserious.

So I think what's happened is a concern that's been created because of the adverse event profile of the drug, which if nonserious, most patients are able to sort of power through and will start to see the benefits. And we're seeing that in real life.

We've had numerous anecdotes of people who have stayed with low levels of edema, some levels of hyperglycemia and have done really well from an efficacy perspective. So yes, the adverse events remain sort of on-label and what we are seeing is predominantly nonserious.

Our next question is from Yasmeen Rahimi from Piper Sandler.

Congrats on a strong quarter. I guess, team, when you look at -- given that August and September was impacted by the short report, like what -- is this -- is the hesitation among patients that are under the care of general endocrinology? Is there a quantification on who are the type of patients or the type of physicians that need additional outreach and communication, like what does that profile look like where you guys are targeting to really have in-depth education for? That's sort of question one.

And then question two is like how do you -- obviously, I think to Tyler's question, you noted that October is looking like more like September. How will you continue to communicate when we're going to -- when are we going to be out of this, I guess, fear or worried by this report? Like any visibility like that the rest of the quarter could be very much rebounding substantially? And what would your disclosures be around it?

So we don't expect to do sort of intra-quarter disclosures. And as you can imagine, Yasmeen, you know that there's a lot of complexity in treating hyperphagia and PWS. We're the first drug, and we're learning what the market is like and the prescribers are learning how to use the drug.

So we realized that last quarter was perhaps a short report, perhaps it was summer, -- perhaps it was people going to a summer camp. And now this quarter, we're going to have Thanksgiving and Christmas, which obviously have meaning for everyone, but for PWS and those with hyperphagia, it has a very different meaning. So we have to navigate this. We have to see what it looks like, and we have to see how prescribers also get accustomed to it.

As we said earlier, there are some hospitals, institutions that are trying to create PWS clinics to sort of figure out how to best administer VYKAT XR and sort of make sure that they can follow these patients.

Meredith, would you like to add something?

Yes. I think -- Yasmeen, we're really pleased about the program that actually we launched in August, more of your traditional speakers bureau program, and we've had really strong adoption with that. So we have recruited some of the national PWS experts to be speakers in the program, which allows for both virtual and in-person as well as an opportunity to do expert on demand, and we've seen really strong interest in that.

And you asked about the profile of the prescribers who are being educated. I think what you're leaning towards and you're correct in thinking that as we're adding these new prescribers on a daily basis, who are out in the community who potentially have only 1 or 2 PWS patients, those are the ones who really need additional education on the disease state in general as well as how to integrate VYKAT XR into their practice. So we've received, as Anish said in his prepared comments, really positive feedback on these programs.

And additionally, we're continuing to educate caregivers and families. So we've had live patient programs, and we'll continue to do that in Q4 as well as webinars, all received very well.

Our next question is from Leland Gershell from Oppenheimer.

We just wanted to maybe understand with respect to the treating physician population of patients who are on VYKAT XR, you're having close to 500 unique prescribers at the end of Q3. But in your investor materials, you said that about 300 providers are primarily treaters of about 2,100 PWS patients. So just going back to something we've talked about in the past, is it the case that we should think about these reports of adverse events as more likely to occur amongst patients, who are being cared for by those who are less specialized in Prader-Willi treatment and therefore, maybe less astute at managing some of the side effects. Wondering if you could share your insights there.

Yes. Thanks, Leland. I think it's fair to say that just a reminder, the adverse event profile, and if you look at edema as an example of fluid retention-related events, in our clinical trials was about 20-some percent. what we are seeing now, at least the reported events are actually lower than that. So it's actually a pretty small minority that has these events. And most of the events that are happening are low-grade events. So these are most often things that may not even need treatment.

So what you're really probably concerned about is significant adverse events or serious adverse events. And those we do worry that physicians who are out there who don't have experience in using VYKAT XR and have one patient on it and choose a patient who had significant comorbidities, et cetera, and how would they manage the side effects.

So we do -- we are concerned about that, and that's something, as Meredith mentioned, we have a significant effort in trying to mitigate. So we have our field teams, our MSLs, who go out, have conversations with these physicians about how to manage these things better. And we have physician-to-physician programs, where there's an expert on-demand thing where you can call a physician who has significant experience and that's actually been used very successfully recently.

Great. And I just want to ask, is the time to securing reimbursement, has that changed from the past? Has that improved, increased? Or is it about the same in terms of going from start form to pull-through?

Meredith?

Yes. So Leland, I think on our last earnings call, we mentioned that we were looking at a turnaround time targeting for 30 days. That's still our target. That's still optimal. But as you know, during the first year of launch, it can vary depending on the channel, but that's exactly what we're targeting is the 30 days.

Our next question is from Brian Skorney from Baird.

I just wanted to try to get a little more clarification on your comments on the disruption that occurred over the summer and how it's specifically manifesting in the numbers. Was there both a slowdown in start forms that you're saying and an increase in discontinuations and implying that you would otherwise have more than 400 start forms and/or lower than 8% discontinuation due to AEs otherwise? Or is there another figure in terms of missed refills that isn't specifically being called out on a quantification measure?

So thanks, Brian. I think where I was trying to go with this is that we saw a decrease in August, September. And a, we realized it's also summer. So we think it was some combination of summer, people in camps as well as the short report that caused the start forms to decrease.

Now we obviously cannot pinpoint that such and so didn't come in because of they read something or whatever. But I do think that, that could -- that was likely a factor. We don't have any specific metrics on refills, et cetera.

But what we are thinking through is if you have patients, who have nonserious adverse events, who discontinue and anecdotally call into the specialty pharmacy and say, I read something that I didn't like and I'm concerned and I'm not going to continue on drug. That's what we are basing the idea on that perhaps it's these anecdotal things that are out there and misleading that are leading to discontinuation that wouldn't have occurred.

Our next question is from James Condulis from Stifel.

I wanted to ask one on efficacy. Obviously, it takes some time to see it, but we're now approaching 6 months kind of plus or so. And just curious what your early kind of learnings are there, what you've heard, how you kind of think that's playing into current discontinuation rates and what that may do to discontinuation rates over time as kind of patients stay on drug for longer? Any color there would be appreciated.

So James, thank you for asking about efficacy. We are starting to hear anecdotes across the board on good things that are happening to these patients. There's tons of examples. We got a call the other day about a child who went without food for 9 hours. We talked to a mom about a child, who sat in temple at the Memorial service for several hours calmly without any tantrums.

We heard from an adult who lives in a group home who will, after years, be able to travel alone to see their family in Florida alone. So it is starting to happen. We are seeing things happen across the board. And we think it will make a difference to these discontinuation rates.

And as I was mentioning, we have started a series of patient webinars, where those who are on drug and their families are able to share their experiences with others. And the first one of those literally had 100-plus people who signed up for it. So there is a lot of interest, and this is exactly the sort of thing that will turn things around.

Our next question is from Derek Archila from Wells Fargo.

Congrats on the progress. I guess, first, I guess, obviously, you're saying what you're seeing in October is kind of resembling September trends. I guess is the bolus over? Or do we think that it resumes as people get more comfortable or the messaging gets better, education gets better? So that's question number one.

And then just quickly on the EU. I know you mentioned about the 120-day questions. I don't know if you can kind of characterize some of those requests, but do they improve your confidence of an eventual approval in Europe?

Sure. So in terms of the bolus, we -- this is one of those situations, where when you have the first drug for an indication, it's hard to tell what it's supposed to look like. So we're finding out as we go.

But if you remember some of the conversations we had prior to launch, we said we don't know if there will be a bolus, but what we are expecting to see is a slow, steady buildup over time with a TAM of 10,000 patients, there is a lot of them out there, and it takes time for physicians to get accustomed to using a drug for an indication that has not really had a treatment before.

So it's hard for us to comment on does a bolus come back or not. I think by definition, a bolus does not come back. And we're looking for a steady state that will continue over time and we'll continue to build a solid base of revenue that we have.

On the EU, I can't really give you any more details on the questions, but I will say that they feel very much similar to the discussions that we had with the FDA, mostly around efficacy, the design of the studies, the sequential nature of the studies, the fact that the same patients have been used through the multiple studies, et cetera. But I would say that as we get these responses and as we get responses to these responses from the EU, we'll have a better sense of where it's going.

Our next question is from Yale Jen from Laidlaw.

Congrats on a very great quarter. And basically I have 2 here. The first one is sort of related to the efficacy that you guys have talked -- in the press release, you even indicated you have 100 patients have more than 1 year treatment and many of those have multiple years of treatment. I just wonder whether you'll be able to do some studies of them to see over such a longer period of treatment, are those patients has been improved and how much those improve? Maybe this will be used for longer-term historical analysis. Then I have a follow-up.

Yes. I mean, we have, as you know, been running a long-term open-label study, then there was a randomized withdrawal, then the patients went back on drug. So we've had the ability to follow these patients very carefully for a very long period of time. And as you know, it's very unusual in a rare disease to have such long-term data. And we have seen improvements of many different kinds in these patients, and this is obviously anecdotal and doesn't apply to everyone.

But only yesterday, we were looking at -- we were talking to a patient who is running a triathlon or preparing for a triathlon. This is a person who's in college. We are aware of a person who's a sous-chef. We're aware of numerous people who have graduated from high school.

So the long-term effects will vary by patient, but we think that taking away the hyperphagia, which is the hallmark symptom of the disease, will, over a period of time, really alter their lives.

Maybe one more question here, which is about the patient size that you already have over 1,000 starting from you suggested maybe 10,000 patients, give and take. And at this stage, do you feel that you need to have additional effort to finding more patients, new patients? Or how would you prescribe -- describe your effort on that regard?

Meredith?

Yes. So I think as we've said previously in our earnings call that we have a claims database, where we're confidently able to identify approximately 12,000 claims in individuals, who have PWS. And that -- when we look at that information, that brings our TAM down to around 10,000. So we know where the patients are and where they're being treated.

I think one thing that we're very excited about that we're working on is more around machine learning to identify specifically when these patients might be coming into the physician's office to really optimize our effective targeting for the sales team. But with regard to traditional rare disease patient finding, we have the claims, so we know where they're being treated.

Our next question is from Katherine Dellorusso from LifeSci.

Congrats on the strong quarter. So I was just curious if you have a sense of the proportion of patients, who are able to reach or be maintained on their on-label dose versus those who undergo dose reduction? And I guess, apologies if I missed this, but for those who discontinue treatment, do you have a sense of how long they're on therapy before they're coming off and kind of expectations for that going forward?

Yes, I can address the second part of it. So we see the discontinuations happening earlier in treatment. So they're either in titration or just after. So think of it as sort of the first 3 months. By the way, of the active patients, we think about 2/3 are beyond the 3-month time frame at this time.

Do you want to address the first question, Meredith?

Yes. I think it's a little more complicated than that with regard to reducing dose because if you look at our label, really the therapeutic window, if you will, is between, I think, like 3 to 5 mg per kg. So any dosing around there is considered on-label dosing.

So I think if you are looking at on-target dose for a given weight band, then I think it's fair to say that there's a very small minority that undergo dose reductions. In general, you would expect people to get to their target doses.

[Operator Instructions] Our next question is from Ram Selvaraju from H.C. Wainwright.

This is Jade on for Ram. Congrats on the profitability this quarter. That actually leads me to my first question. Do you have some sort of idea when you might be in a position to start providing annualized revenue guidance?

And secondly, as I'm sure you know, Rhythm is pursuing an expansion into PWS [ first ] setmelanotide. Do you think of that purely as a competitor drug? Or do you think there's a possibility for synergism between the 2 drugs there?

I'll answer the second part. Jim can take the first part. In terms of Rhythm's drug, we still have to see efficacy. As you know, the one study that's been conducted with the drug in PWS, which was a large, randomized Phase II study was negative for weight loss and hyperphagia. I believe they are conducting an open-label study. So we'll have to see what the data shows.

In terms of whether it's competitive or potentially synergistic, it can be potentially synergistic because the 2 mechanisms are different from each other. So on the competition piece, we'll have to see the data and certainly, at least theoretically potentially synergistic.

Yes. And with regards to guidance, I'd say it's a bit early at this stage. We're obviously looking for a little bit of maturation in the various components of the business, but we'll continue to investigate that.

There are no questions at this time. I would like to hand the call back to Anish. Please go ahead.

Thank you all for listening in today. Have a good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.

All right, everyone. I think we'll get started here with our next fireside discussion. My name is Derek Archila. I'm the senior biotech analyst here at Wells. Looking forward to our next discussion here with Soleno Therapeutics. From the company, we have Anish Bhatnagar, the CEO; as well as James MacKaness, the CFO. Gentlemen, thank you so much for joining us and looking forward to the discussion.

Thanks for having us, Derek.

All right. Well, maybe, Anish, if you want to just start us off, a lot has been going on with Soleno, approval of your first drug, VYKAT and Prader-Willi Syndrome, ongoing launch. So maybe just kind of talk about what's kind of going on before we dive into the Q&A here.

Sure. So Soleno, as you know, is in the Prader-Willi space. We're a rare disease company. We have a single asset, which has recently been approved. We got FDA approval in -- at the end of March, and we launched shortly thereafter, a couple of weeks after that. We had our Q2 results that were announced a few weeks ago. And the launch has been going really well. We've had, in those 3 months or so, 646 start forms, 295 prescribers. So definitely exceeded our expectations. And in general, really excited to see this drug finally come to market in a disease where nothing has worked.

Well let's talk about the launch. And obviously, there's always fits and starts with launches. And just maybe one of the things that I would love to learn is like what are you seeing kind of in the real world from an early efficacy perspective, but also from a safety perspective from some of these patients who have been on drug the longest, which is still not that long. It's only probably several months, but maybe you can give us some insight into what you're seeing.

Yes. I think it's important to know that we have had several patients from our clinical trials on drug for, at this point, more than 6.5, 7 years. And all of the ones who were on our open-label extension study have -- I believe all of them at this point or almost all of them have converted to commercial drug. So we have very long experience with those patients with this drug. And in general, what you always see when you transition from a controlled clinical trial setting to a commercial setting is you're going to patients who are newer, who are likely more comorbid, who are not as controlled. They're not seeing their doctors as often.

So the safety profile, while it remains similar to what we saw, we have had some patients who were more comorbid, have side effects, which were similar, but more severe in nature. It's not surprising. The common side effects that you see are peripheral edema, fluid retention as well as hyperglycemia. Those are the 2 most common things. The good thing about both of them is they are trackable. So neither of them develop sort of overnight. You can look at glucose over a period of time, see what it's doing.

The same thing with peripheral edema, you can measure it slowly over a period of time. I think the challenge for some investors, for some physicians would be that they might not be accustomed to the drug. And as they get accustomed to it, I think they will realize that what the key opinion leaders, et cetera, are doing, is going to allow them to take care of these patients quite well on this drug.

Yes. I mean it doesn't seem too dissimilar for many rare disease launches where familiarity with the drug and the overall side effect profile. But also what I think at least what we've heard and maybe you can give us some color is like the uniqueness of Prader-Willi, these patients and more certain around the [indiscernible] caregivers and the parents, they're quite desperate. This is a very tough disease, behavioral issues. But maybe you could put that more into context in terms of like what you're seeing and obviously, the real enthusiasm to get these patients on therapy.

It's a really good point. And if you look at the launch, that many start forms and in particular, that many prescribers is quite amazing. And we think this is possibly a function of the fact that KOLs practices are extremely busy, and it's hard for them to insert patients into their practice to put them on drug. We think part of what is happening is these very motivated families, who are very desperate for treatment, go to local providers and get those providers to write the scripts.

Now the background of the disease is very complicated, as you pointed out, these are patients with very comorbid conditions. You have patients who have significant behavioral problems. They can be significantly obese. They can have edema at baseline. Many people have cardiopulmonary issues. So one has to be careful when you look at a disease like that and you're giving them a drug with a known side effect profile, you have to monitor them.

This is also a population which is very anxious. And not only the patients, but many caregivers are also very anxious because they've had no treatment for so long. So we have to sort of balance all of this. And I would say what we see today is what you would expect in a rare disease launch, which has never seen a treatment before.

Got you. How is kind of like the physician community like so far kind of not only what's kind of their enthusiasm level around the drug, but also kind of embrace some of these nuances around the safety and some of the things that we've heard emerge?

Yes. I think the embrace of the drug is obvious. If you think about 295 prescribers in the first 3 months, that is a very high number. And a lot of those prescribers were people that we were actually not aware of as Prader-Willi treaters. So I think there is no doubt that there is a very significant embrace of a treatment available for this disease. And we've talked to several KOLs, and I know that you all have done the calls as well, KOLs are very comfortable with the drug.

They're very comfortable with the side effect profile. And what they point out is the obvious, which is this is a drug we understand, and there is a disease which needs to be put in the context of a side effect profile. You have to monitor patients appropriately. You have to titrate them appropriately. And the label allows you to do it in ways that allow better care of these patients.

So out of the first patients that have been put on therapy in the first couple of months here, what's that phenotype look like? Are these older patients? Are they heavier patients? Like what does that look like? And ultimately, how does that kind of normalize over time?

So going in, our expectation was that patients who would come on earlier would be younger. And for us, younger would mean 26 and younger. And the reason being that at 26, you can keep your parents with insurance. So you're likely to be living at home, your parents are more likely to be motivated to take you to the doctor. And in fact, the claims data bears that out. What you see in the claims data is for that population, 4 to 6 visits to healthcare providers a year.

So that is indeed what we have seen post launch in the first few months of launch that a vast majority of the patients are between 4 and 26 years of age. They are, therefore, somewhat heavier than the clinical trial population, where the average was 61 kilograms and the age was 13.5 years. So yes, they're a little heavier, which also means that many of them could have more comorbidities. And one of the challenges that comes along with the comorbidities is challenges with monitoring.

So for example, if you have a patient who's lean, it's very obvious if you have Grade 1 edema, you'll see swelling around the ankles. If you have a patient who is older and more obese, that's harder to see. So that's a patient you need to evaluate more carefully for other symptoms, et cetera. So all of this, it's a process of education. We're working on that with the providers. But I would say that overall, the risk-benefit ratio remains very positive.

Sure. I mean, is there any specific kind of like, I don't know, guidelines or anything that you guys have started to put out around, again, monitoring and sort of -- since the launch? And again, is there anything like officially going to come out? Or is it more kind of the physician and the physician groups, that really are the experts in this area, kind of figuring that out on their own?

So I'd say there's a lot of efforts. From our side, it's more related to things like our materials, our marketing materials, whether they are to health care providers or to families. They have significant detail around adverse events. They point to sections in the label that talk about dose modifications, modifying titrations, et cetera. We have our specialty pharmacy.

They will do a counseling call before anyone starts drug. They will make a call at every titration step. They will make a call every time there's a refill. So the families get a lot of touch points. They have the ability to tell the clinical pharmacists what's going on. And the physicians themselves are also learning from the KOL. So we now have a speakers bureau. So there's a lot of these things going on. We also believe there is a set of guidelines that physicians are working on. So all good things.

Yes. Got you. And then maybe in terms of what you're seeing in the real world around discontinuations, like -- and there's probably going to be 2; one, AE-related discontinuations, then ultimately longer-term efficacy related. So maybe some patients are not responding. So can you maybe see or highlight to us like where you think those will land over time?

It's a good question. I don't know that we know the answer, but what we do know is that when you look at drugs transitioning from a clinical trial setting to a commercial setting, you do have very high discontinuation rates relative to clinical. And the reason is simply you're giving it to a much broader population, which is less controlled.

But what we have seen so far is actually pretty consistent with our clinical trial population. So as we had pointed out a couple of weeks ago, the discontinuation rate for adverse events was about 5.2% compared with our 13-week study where the drug arm had a discontinuation rate of about 4.8%. So very similar and actually surprisingly low, I would say. What was the other part of your question?

Longer term in terms of efficacy and related discontinuations.

So yes, I think it's fair to say that this is too early for us to assess efficacy, although we do hear anecdotes about good things happening. But we know from the profile of the drug and the published data about the drug that while a lot of people will start to see the effects early on, maximal effects can take 6 to 9 months. So we -- this is a point of education for health care professionals who are not familiar with the drug as well as to families who have patients going on drug.

We make it a point to say you have to wait, you have to be patient. And interestingly, the policies that we are seeing written by providers are also 6 to 12 months in duration. So I think the right things are in place to assess patients over a longer period of time. We're not sure where the discontinuation rate will land, but I think it's fair to assume that commercial discontinuation rates end up being higher.

Got you. In terms of like payer coverage, I mean -- and going back to kind of like reauthorizations, is this going to be more of an objective measure on hunger? Or is it more subjective by physicians being like, hey, like we're just hearing that the patients are doing well, we keep them on drug. Like I mean it's still early. I don't know how many [ re-ops ] we've seen, but what do you expect on that front from a payer coverage standpoint?

So no [ re-ops ] so far. Obviously, it's too early. But I do think that the fact that the label did not specify a level of hyperphagia, et cetera. It confirms what we believe, which is, it's more about being hyperphagic or not, and it's not about having some degree of hyperphagia. Most KOLs will tell you that if someone is hyperphagic, that hyperphagia waxes and wanes over time. So they could be okay and just anxious about food and then suddenly have an episode where they go and try to eat something that's like a frozen chicken. So these are things that are unpredictable. And in our opinion, it's always been hyperphagia or not. And so far, what we've seen, the [ re-ops ] should really just be, is it working or not?

Yes. Okay. Got you. And then I guess this is an indication that's been evaluated before, and I think a lot of people get excited about it because, again, the unmet need is so dire. So in the context of a launch now, I mean we're only like very, very early, but how do you think about a launch trajectory in this type of indication? It's probably not one that we've seen quite like before, but what sort of analogs would you use? And I guess we don't want to get ahead of our SKUs, there's a lot of different moving parts. But again, how do you think about the launch ramp and where sales could end up 1, 2, 3 years from now?

Yes. Let me answer part 1 of it, and I'm going to give Jim for part 2 and 3.

I think it's [indiscernible] 1 part.

Yes. I think it's fair to say that we always hesitate in coming up with analogs for rare disease launches. And the simple reason is that they're all bespoke. They're so specific to each disease to the way it's treated, where they are treated, et cetera. So we hesitate in giving out any analogs. But I think what you have seen so far is a very motivated population of caregivers and patients and physicians. I would say that what we saw in the first quarter, those numerically is not something that one could sustain. But I think from a trajectory perspective, it's fair to assume a slow and steady increase over time. But Jim, numbers?

Yes. I think to emphasize, 646 start forms in Q2 was outstanding. But to Anish's point, to expect that to go 2x, 3x, 4x, 5x is just beyond sort of credibility. So we think it will moderate, healthy cadence continuing. And ultimately, as you know, there's a 10,000 patient TAM. So the idea is to really sort of, as you pointed out, over those 2, 3 years to really continue to build the momentum, continue to take the therapy in there and get a very high number of ultimate patients on drug.

Got you. And when you think about the 295 of the docs that to be a prescribers, I mean, how much of the 10,000 does that make up? And is it again more 1s and 2s? Or is it like these are centers of excellence that are kind of concentrated Prader-Willi patients and Prader-Willi families?

It's a combination.

Yes. I think our selling strategy, if you like, is to go deeper in the KOL accounts and then have breadth across those HCPs at C1, C2 Sizes. So you saw us comment there are 300 KOLs that sort of really focus on 2,000 direct and another 2,000 influence. And we said out of Q2, we're already 1/3 into those. So we want to go deeper into those accounts. And then we also -- back to the 295, that showed breadth, that shows going into sort of the second, third, fourth tier of HCPs, which is ultimately important to be able to get to the whole patient population. So we like the start of being able to be in the deeper accounts and also go breadth for the guys that see 1 or 2 patients.

Got you. And I guess when you think about the patients and how physicians are using it early, I mean, as you said, you're seeing younger under 26. But if we kind of go within that group, are physicians starting older patients that -- again, most of the [indiscernible] patients only look to like 30, right? That's like the average age. So like I mean, essentially, are they starting kind of with older patients that might be some of the most sick or are they going to start -- and start moving younger? Or are they starting with the younger and moving older? Or is it kind of a combination right now because it's just -- it's too early to really see any patterns?

I'd say the profile of Prader-Willi has changed substantially over the last few years. So the data that you're referring to an average age of about 30, the mean age, I think life expectancy is about 29 or 30 in the publications. We feel like those are dated because we are aware of so many patients who are in their 50s and 60s and even older today that the number seems to be skewed to prior data. And this is based on claims analysis. So we've said this in the past that if you bifurcate the PWS population, at the age of 26, it's about a 50-50 distribution.

But to answer the second part of your question, we are seeing a mix of patients. We don't get that much information on comorbid characteristics because it's a commercial drug at this point. But we think we're seeing some patients who are sort of end of road, morbidly obese, who have many comorbidities and may actually not be great candidates for the drug. It's unfortunate because a lot of physicians are motivated to try and do something and they see a drug approved and they want to try it. But it may not be the best thing for them. So we're seeing a mix. We're trying to push healthcare providers to make educated decisions on who they're putting on drug and how they monitor them.

I mean if you break that down in terms of like maybe patients who are severely obese that you again, maybe have a lot of edema, but also patients who have hyperglycemia that may not be candidates. Like what portion of the population in Prader-Willi like have those kind of comorbidities that maybe are not really good candidates for VYKAT?

So our best guess, at the time of launch, we had said that based on our claims analysis, we are seeing about a total of 12,500 patients in the U.S. And our best guess at TAM was 10,000. And that was excluding, among other things, the comorbidities. But I think we'll learn more as we launch the drug. I think we're going to find out more. And I also feel like some of those comorbidities are not absolute contraindications. It's more about monitoring the patients better, titrating them better. And I think that will come with more experience with the health care providers.

Got you. And obviously, we've been talking mostly about the U.S., but I guess, can you maybe give us some thoughts about your opportunity in the EU? Obviously, the filing and kind of status there and again, your thoughts on approval there?

Yes. So the prevalence or the birth incidence of PWS is the same regardless of geography or ethnicity. So when you look at the [ EU4 ] plus U.K., you see about the same prevalence as the U.S. It's about 9,000 patients overall. So from a numerical perspective, the opportunity is significant. The other thing that's interesting about Europe is that in many countries in Europe, particularly France, to some extent, Germany and also Italy, the care is a lot more structured. So you have these centers of excellence where pretty much every patient from the country is being seen at one of those centers.

So in a lot of ways, it's somewhat easier than the U.S. The challenges, of course, relate to pricing and things like that, which we will work through. As you probably know, we did file in early May. So given the process in the EU is different from here with clock stops and what have you, we generally tell people to expect about a year to approval. And we are expecting the day 120 questions at the latter part of September. So that will give us some idea on how they're thinking about it.

Got you. I mean, is there anything that like would increase or decrease the probability of success of getting approved in the EU? I mean, obviously, it doesn't seem like the stock fully reflects that you would get approval there. So what are some of the factors that we need to consider?

I think it's a complicated data set. We know that. However, we also know that -- and we were pretty transparent about the FDA's views on the data set and their concerns about the data set and randomized withdrawal of patients who have been on drug for a long time and the potential bias that it bought. But at the end, the strength of the data was such that they approved the drug. So I expect the EU, the EMA to have similar questions about the data, but I hope the strength of the evidence will allow us to prevail there.

Got you. And in terms of commercialization, is that something that you can do yourself with a small footprint? We've seen -- we cover Rhythm and they've done that with Bardet-Biedl pretty well given the concentration around some of those indications. Is that similar for Prader-Willi and that you could do it yourself? Or would you want to partner that?

So we are firmly on the fence on that one right now. Initially, we were pretty clear that we would partner it out, but we've been doing work there, and we like the market. We like the opportunity. We also feel like with MFN-related issues, we'd like to have more control. So we're continuing the conversations with potential partners, but we do have the ability to do ourselves.

We've been developing more of a footprint in Europe. We've been doing some basic hiring there at headquarter levels, and we are looking at country-specific footprints as well. So you can do it, and Rhythm is a good example, although Bardet-Biedl is a much more limited population than Prader-Willi. But conceptually, there's other companies that have done the same.

Got you. Maybe shifting gears to kind of the competitive landscape and competitive intensity in Prader-Willi. Obviously, nothing has worked up until now, but also it doesn't stop people from trying. So we have a couple of readouts that are coming out. So just your thoughts on kind of how you see that evolving over time? And is it more -- is it a zero-sum game? Or is there combination opportunities? Or going back to earlier, are there subsegments of the population that, again, everyone kind of win because there's different areas?

I think what you see is a population that's large enough that more than -- there's space for more than one drug. No drug will work for everyone. And I think there will be an opportunity to try other things. I think as we're all aware, it's a very challenging indication. We haven't really seen other things work. The readouts that are coming up will be interesting to watch. The preliminary data from a number of those is not that encouraging. But we're curious to see what large randomized studies look like.

Like where do you think -- if you have like 1 or 2, 3 items that you feel like were VYKAT relative to kind of the competitive field, where you guys have the advantage. I mean, obviously, you're approved, but beyond that, like just on differentiation, dosing, et cetera, like where do you think you can continue to win against some of those, assuming efficacy is even somewhat near where VYKAT is?

Yes. I think if you look at the fact that we are a once-a-day pill, that is a significant advantage over other situations, which might be an injection or might be 3 times a day nasal. So that's one. I think two, if you look at our data set, and it's been published in peer-reviewed journals at this point, the benefits are substantially beyond hyperphagia as well. So yes, our indication is hyperphagia. But if you look at behavioral problems in Prader-Willi, we seem to have a very significant effect.

If you look at body composition, if you look at biomarkers related to metabolic stuff, there is a lot that happens with the drug that seems to benefit these patients. And it does it in subtle ways and it does it over long periods of time. But there is a lot that seems to happen that improve the lives of these patients. So I think for a competitor, there is space, but I think replacing VYKAT may be more difficult. Perhaps the more obvious indications would be places where VYKAT is not able to be used. So if there's significant comorbidities, for example, or uncontrolled diabetes and a drug that does not impact that patient, perhaps that's a good place to start.

Got you. I mean, I guess one of the things we've heard is really just like the fact that going back to some of your early commentary is just like the long-term safety data, like you've had really good data for a long time in these patients, and that's generally hard to replicate if you don't have it, right? So if you're a new drug without that long-term safety data, usually, it seems like by default, physicians feel like that at least keeps you in the pole position potentially. So would you agree with that?

I would. I think the other part of this is that the parent molecule is also well known. So the primary prescribers, and this is bearing out even in the commercial setting, predominantly pediatric endocrinologists. And those are exactly the people who have used the parent molecule, and they understand the toxicity of that molecule because that's something that ends up being used at high doses and has significant problems associated with it. So for them, in some ways, VYKAT is a lot -- is a bit of a relief because you see a Cmax, which is much lower, a safety profile that's likely a lot more tolerable. So yes, I would agree with that.

Got you. And then the other thing just in terms of the competitive intensity, I mean, going back to potential combo use. So some of these trials are enrolling patients who are on standard of care, which is now VYKAT, right? So do you see that as potential areas of interest among physicians or enthusiasm around that where maybe one has more hyperphagia benefit, others have more metabolic or weight loss benefits and together, they can be used in combination.

Certainly. I think physicians would like that. I think the question would be from a payer perspective, how does that work with 2 rare disease drugs. But I don't see from, I would say, any of these mechanisms, anything that would create a problem in using the drugs together. Obviously, you have to assess safety and see how it works. But mechanistically, they do seem to be distinct enough.

Got you. And then maybe just an IP question. So as we think about how this business kind of evolves over time and continues to ramp, talk about kind of what you have from an IP perspective, but also some of the mechanisms to continue to kind of like retain that tail value for VYKAT long term?

Yes. We have 3 families of patents that we prosecute in all major markets, primary cases and all have issued. The salt polymorph patent has a primary expiration at the end of 2026, but it also has more than 800 days of PTA. And if you apply PTE to that, you could extend that to about 2034. We have 2 families of method patents with primary expirations in 2035.

And some of those, if you apply PTE to them, they could go to the late 2030s. So from a work perspective on the IP front, we continue to prosecute these families, and you might have seen there was a new patent that was added to the Orange Book a couple of weeks ago. So we are continuing to do the work there. We have said we are looking at some new options for IP as well, although we haven't described them in detail. And we've also said that from a life cycle management perspective, stay tuned, give us a quarter or 2, and we'll provide more detail on what we are planning.

I mean, is there, again, like a strategy to bring in assets or potentially do other things in Prader-Willi, maybe not around the VYKAT molecule, but other MOAs. I mean, again, do you want to be fully functioning with pipeline? Or do you want to just continue to be a straight-up commercial story?

I'd say all of the above. I think in the short term, we want to be a straight commercial story, hyper focused on the launch. But we want to keep our eyes open to see what else is out there that makes sense to us. I think we would like to say, stay rare and stay sort of adjacent to where we are today. And you can accomplish that in many ways. So we'll look at all of them.

Got you. And then maybe a question for Jim on the financials. So obviously, from a cash perspective, but also from like a build-out perspective, I mean, do you feel like right now, sales force is kind of where it needs to be? Is there more expansion needed in terms of spend? So maybe just kind of how that evolves with the launch as well?

Sure. Yes. I think we commented, if you like, just before Q2 that we felt that we had line of sight with the cash balance at that stage to profitability. And Q2 came in, which I'd say, stronger than anticipated. So that's great. So that shored up our confidence in getting to profitability. And then we did, in fact, an incremental raise. So we end up with over $500 million of cash on the balance sheet. So a very strong position. We do look at the commercial footprint. We think it's rightsized at the moment, but we will put a little sort of add and pieces around wherever we think it makes sense.

And then I think that balance sheet strength really allows us to continue the momentum in Europe, to your point about sort of continue to do so ourselves while looking at the partnership, so we can play that out. And then to Anish's point, we're well capitalized to do life cycle management in 2026 and beyond. So we think we're in a very good shape.

Got you. I guess where do you think right now like the story is underappreciated? Like is it the launch? Is it the IP? Is it the safety thing? Like where do you think that people are not constructive enough here on VYKAT and the Soleno story?

I think we feel a lot more appreciated now than we did a couple of years ago. So we don't complain too much. But I think it's fair to say that at least in the short term, these conversations around safety, I think, got a distraction. I think it's important to realize that this is a drug that has a known side effect profile. We're in a setting which is commercial and is already treating hundreds of patients. So one has to know that the side effect profile will look somewhat different than what it did in the clinical trials. So I'd say that's really been the only glitch. Otherwise, I think the launch is going extremely well. We feel good about where the market has been, and we appreciate your support.

Got it. Well, we'll leave it there, gentlemen. Thank you so much.

Thank you.

Thank you.

Okay. Hi. Good afternoon, everybody. This is Kristen Kluska at Cantor. Very happy to be hosting Soleno Therapeutics. We have Dr. Anish Bhatnagar, CEO; and Jim MacKaness, CFO. Thank you both so much for being here. Really appreciate it.

Thanks for having us, Kristen.

Absolutely. So I'll start with the most boring question I can think of, which is just giving us a high-level overview of the company, and then we'll get down into some of the specifics.

Sure. So for those of us who don't know us, Soleno Therapeutics -- Kristen is adjusting her mic. We'll give her a minute. Soleno Therapeutics is in the rare disease space. We have a recently approved drug for PWS or Prader-Willi syndrome. We have just launched in the U.S., and that is our current focus. We're in the midst of -- we have filed in Europe as well, and we're in the midst of assessing the other opportunities for the drug.

Okay. So up until the approval of Vykat XR, these patients had no treatment options besides addressing their growth hormone. As a result, how often were these patients checking in with their physicians? And now that this drug is available, how might that dynamic change?

Based on claims data, we see that the younger patients who are more likely to be on growth hormone had about 4 to 6 touch points a year with health care providers. And this would be all health care providers, not just the pediatric endocrinologists. We also saw that older patients had less, maybe 2 touch points with health care providers. In terms of how this would change with the drug, it really depends on, I think, the age and what stage of treatment they're in. I would imagine that early on in treatment, there will be more touch points. But as people are more stable, have been on drug for a while, the number of touch points would be probably the same as they were earlier.

Okay. If there's a doctor who perhaps sees a significant amount of patients then, are you hearing openness to treat as many patients as possible upfront? Or do they want to space this out so they can properly see them in the clinic? I would imagine when you go from seeing somebody 2 times a year to a new drug kind of changes your scheduling book quite a bit.

So I think it varies. Firstly, it's early to make some broad judgment on the trends. But what we have seen is that the practices for the KOLs are pretty busy. We see that it would not be trivial for them to insert someone into a practice at a short notice. So you may have seen from our second quarter numbers, 646 patient start forms and 295 prescribers. So we think that the 295 really is a reflection of providers who were not part of the KOL group doing the prescriptions. And that could be a result of the fact that it's not easy to get into the KOL practices. So they probably call their local endo, say this drug is approved, we'd like to start it. And we are aware of situations where these peripheral endocrinologists have then called the KOLs to talk about the patient and discuss it before starting them on drugs.

Okay. So once a physician and a patient mutually agree that they would like to start this therapy, what steps are they taking? Any background labs or any other work that needs to be done?

Yes. So the idea is that -- when a physician writes a prescription, the idea is that they've already evaluated the patient and decided they are an appropriate candidate. So the only real lab that would be needed would be hemoglobin A1c, perhaps fasting glucose levels to see what their glycemic status is. But once they decide it's the right patient, once the patient and family agree, they would fill out a start form and send it to our specialty pharmacy, which is PANTHERx. It would -- Panther would then look at the form, if there's any corrections or completions to be done, they would do that. But they would then start a benefits investigation for the patient to figure out what's their insurance, are they eligible, et cetera.

Depending on the insurance, if it's commercial, if there's a policy in place, it could be a pretty rapid turnaround. There could be situations like specific state Medicaid programs, which can take a lot longer. But in general, once the benefits investigation is done, the patient would receive drug. And there can be situations where a physician can check a box for a quick start, which means that the physician says, this is a patient that I would like to see on drug as soon as possible. So in those cases, it is possible to provide drug before the benefits investigation is done for them.

Great. You now have some long-term data from the trial experience. Can you talk about what's been observed over the longer term, perhaps the top 3 benefits that you often hear being shared?

Yes. I think the most obvious benefit is the improvement in hyperphagia. And hyperphagia sort of comes in many different forms, but it's the food-seeking behavior whether they manifest as anxiety and constantly talking about food or stealing food or being aggressive about food, something like that, changes to that would be the most obvious ones. There are more subtle changes that have been noted over longer periods of time.

So for example, we still relate this to improvements in hyperphagia, but the fact that these patients then have more sort of brain space to think about other -- we've noticed improvements in school performance, people taking up jobs, being able to take care of things in the house. So those are sort of derived benefits. And then finally, the behaviors that are typical of PWS, which may or may not be food related. We've also shown improvements in those behaviors in the published long-term data.

And in a commercial setting, how are these benefits going to be measured? I would imagine a lot of it is just going to be anecdotes.

Yes. I think from a payer perspective, what we are seeing so far is the physician attestation is probably going to be the same. I think the anecdotes from the perspective of families and clinicians will be important. So for example, recently, we were sent a screenshot of a mother commenting that my child, so and so woke up at 7:45 a.m. today, which apparently is very unusual because these kids wake up really early because they're hungry. And it's 9:45 and they still haven't asked for breakfast. So it's subtle, but it means a lot to these families. We have one patient who's been on drug for a long time, who we understand is a sous-chef. So for these patients to be around food for a living would otherwise be impossible.

That's awesome. And what are you hearing just about how long physicians are going to give the drug a try and see if they're responders. It's obviously not a treatment that works overnight.

Yes. It's a point of education for us. We -- obviously, the people who treated patients on the trial are aware of it. And our published long-term data clearly shows that while a lot of patients might see effects early on, maximum effects can take 6 to 9 months. So it's something that we educate people on all the time. And if you look at the policies that have already been written, those are all 6- to 12-month policies. So we see that as the norm, which is good.

Okay. And then going back to my earlier point about different benefits you're seeing in real world, do you think there's more than one layered definition of patients going to be defined as a responder?

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I think in the real world, you probably won't formally define a responder. But I think to the extent the physician needs to attest to the fact that there is a benefit, it can be a more generic look rather than like a hyperphagia score changing, for example. As you know, the hyperphagia score is not really done in clinical practice. So yes, I think it will be more of a general statement.

Okay. From a high level, what are you seeing from a safety side in commercial use? How does this compare to the trial experience?

So the side effects that we see, hyperglycemia related, peripheral edema or fluid retention related are similar to what we expect from the known side effect profile of the drug. I think the one thing you see that is different in the commercial setting and is no different with our setting is that patients tend to be a lot less controlled, may have more comorbidities than the clinical trials. And also in clinical trials, you're seeing your doctor very often, which is not the case in the commercial setting. So there is potential for these side effects to be more significant in some situations than others.

So yes, just on that note, you're now in a commercial setting. You have patient baseline and demographic factors that are a lot different. Is there any guidance or thoughts that you would kind of handle with these doctors to walk through how their experience on the drug might look different from somebody else's?

I think it depends on the doctors. The KOLs seem very comfortable with the drug. They understand the parent molecule as well because they are pediatric endocrinologists. They've used the parent molecule. They've used Vykat or DCCR in trials, so they understand it. There are definitely physicians who may not have experience with the drug who might need more sort of handholding, as you say. But we have many opportunities to do that. It starts with the marketing materials that have been created for health care providers, for families, et cetera, which underscores some of the side effects and what can be done.

We have marketing campaigns that highlight some of these things. We have speakers bureaus that are in place now. Our specialty pharmacy has multiple touch points with families. Every time there is a titration step, they will get a call from the specialty pharmacy. Similarly, every time there is a refill, they will get a call from the specialty pharmacy. So there's many occasions to touch upon this.

Okay. Something we get asked from investors is just on side effect profiles, things like edema, is this something that tends to show up within the first few months of treatment? Is there any reason to think that if you've been on the drug for 2 years that it might start to show up then? Essentially I'm trying to figure out right away, do you kind of know if you're going to be susceptible to some of these side effects?

So generally, what we've seen in the clinical trials is that if you're going to have these significant side effects, you're likely to see them in the first few months. Now that obviously accounts for stability and other things around. But I'll give you an example of where that might not be the case. So for example, there is a patient who was on a trial -- on our trials for many years, was also at the same time on a glucose lowering medication as well as on growth hormone. There was some set of circumstances that led the insurance company to deny coverage for the glucose lowering medication, so that was discontinued. And at the same time, the patient was also increased on their growth hormone dose, while the DCCR dose remained the same. That's exactly the situation where you might get in control, as you can imagine. But those are unusual situations, which can definitely be taken care of by close monitoring by a physician.

And then to that same point, just the seriousness of it, does this tend to happen overnight? Or are there truly signs that one can kind of look out for at least stop the drug before it maybe gets to a more serious point?

Yes. The good thing about things like hyperglycemia and peripheral edema fluid retention is that they're trackable. And in the trials as well as in clinical practice, you can see this happening. So glucose is tracked using a glucometer, so you can track that quite easily. For peripheral edema, if you're lean, you can see grade 1 peripheral edema around the ankle, which is pretty obvious. The challenge happens if you have an obese patient because their peripheral edema is harder to discern. So you might progress to further stages of fluid retention otherwise -- than you otherwise would. So generally, these things are trackable. If physicians are paying attention, they should look at symptoms instead of just the physical signs as well. They should all be trackable. They should never happen in an overnight type of setting.

Okay. So putting it all together, we understand Vykat XR is not a perfect drug. There are side effects, but how should we be thinking of the risk reward profile in the context of PWS and what these patients go through every day?

You understand the disease now. You've been looking at it for some time. It's a terrible disease with significant effects not only on the patients themselves, but also on the families, on siblings that have PTSD. Any help that you can provide to families with regard to improving hyperphagia is a really big deal. To the extent you have side effects that can be managed, we think the risk reward profile makes sense. You have to pick your patients appropriately. You have to make sure you're monitoring them appropriately. But if all that is the case, we believe the risk reward profile is very significantly in favor of the benefit.

Okay. And then just on reimbursement dynamics. Have some channels been easier to access so far? And are there differences maybe as we think about things on a state-by-state basis?

Jim?

Yes. So payer access is going pretty well. We would anticipate and we've seen commercial coming on at a more rapid clip, if you like, which is to be anticipated. We commented at the end of the second quarter, we had 100 million lives covered. Still work to be done, obviously. Various states take reimbursement straight away on FDA approval for Medicaid. Medicare just takes more time. We have seen reimbursement through all 3 channels. So we think we've got things off to a very good start with the first quarter from launch.

Great. And then it is a weight-based dosing. So can you just give a rough sense about what we're seeing so far and how we should be thinking about if any tricks -- trends, excuse me, are likely to shift over near term, longer term?

So what we have said is that a vast majority of the patients who are on drug since launch are less than 26 years old. And this is what we had expected going in because based on claims data, these are the patients who have more touch points with health care providers. And we think this is a function of the fact that they are likely on the insurance of their parents and the fact that they are living with families who are able to take them to appointments, et cetera.

So this is a bit different from what we had in the clinical trial setting, which was an average age of 13.5 years and an average weight of 61 kilograms. So I think it's fair to assume that if you're below 26 but between 4 and 26, your average weight is probably higher than the 61 kilograms. It's hard to comment on the overall trends over the long period of time because this is -- this 4 to 26 years population is likely the one that will remain the dominant one. But we do expect to start seeing older patients as well, including those from group homes start to come into the picture.

Okay. So on one end, there's going to be some patients that will be getting older, naturally gaining weight as a result of it, but then you're going to have some that are maybe older and kind of peaked or maybe even losing weight depending on where they are in their life.

Possible.

Okay. So clearly, your 2Q print was a very surprise for all of us. I think you absolutely -- I know you absolutely crushed my numbers, but I think you did the same for consensus. So as we all kind of start to rumble and think about 3Q, we're clearly excited, right? But why should we not get over our skis quite yet?

Well, I think a couple of things we've come to. You said, yes, we thought a really, really strong Q2, 646 start forms. We mentioned you can't necessarily expect that to go linear times 2, times 3, times 4. That was a bolus. We would anticipate that would moderate, but we continue to see a very healthy of start forms coming in. So that's great. We're just mindful of people sort of when they build their models to make sure they understand there's some latency between the start form to actually getting through to getting patients active and then you've got to make sure you understand the free drug to the paid drug profile.

But as I said, we did 100 million lives, which is great. But there are still situations where health care providers may be slow to come forward because they just don't want to go through the hassle of dealing with payers at this stage. So there's a couple of things that we'll continue to work out, but we think the dynamics are set up very, very well. But to your point, we just mind people not to get over their ski tips.

Okay. Some of those factors life covered, you think like by '26 or that some of those factors like, for example, the physicians will say, okay, things are at the center now. We don't have to deal with the hassle anymore. So like mid next year, maybe a lot of those things ironed out?

It should be. Yes. I mean we'll -- we think we'll continue to make just some really good solid progress over the next couple of quarters. Yes, work these things through.

We'll be excited, but we won't get too excited yet then. Okay. So Europe, another big opportunity. I know we've spoken at length about patient size, but seems like based on some of the research you're doing there, it might be bigger than you once thought or you're appreciating the opportunity perhaps a little bit better now.

I think it's the latter. I think from a numbers perspective, we are confirming with primary work on the ground that the EU4 plus U.K. has about the same number of patients as the U.S. The EU 27 has more. What we are seeing based on our work is how structured care is in some of those countries. So places like France, for example, have true centers of excellence where virtually every patient with PWS might be seen as one of them. Similarly, Germany is also very organized as is Italy, Spain and U.K. less so. So we are more excited about the opportunity. We've been in touch with a lot of KOLs there. There's a lot of excitement for the drug. So we remain firmly in 2 minds on how to best do that. We are cognizant of the MFN situation as well, which leads us to wanting to have more control over pricing.

Okay. I think sometimes when investors look at your stock and the action over the last few years, they say, great run, but we missed out. Why is that not the case?

I think if you look at the global opportunity, this is one of those rare diseases that's rare, but it's clearly not ultra rare. There are so many patients with this. The unmet need is so significant. Nothing has worked. So if you discount everything else and you just think about that fact, I think this is a very significant opportunity.

So what's the current financial situation of the company? I know obviously, you're revenue generating, so we need to factor that in as well.

Yes. So very strong. We did do a raise in July. Prior to that, we'd actually mentioned that looking at the U.S. launch and anticipating at that stage, what we call a modest launch, we saw a line of sight to cash flow positive even before the financing. And obviously, Q2 came out very strong. So that firms up that confidence. We did do the raise. We thought there was a sensible time to do it. It does allow us to be a bit more aggressive in things like Europe. So it allows us to have confidence to put some at-risk investments in Europe to keep the momentum going and also do some life cycle stuff in the future. So overall, we think we're in a very strong financial situation.

Okay. And I'll close -- I'll turn the floor to you and ask if there's any closing remarks or anything I should have asked you that I didn't.

Well, thank you for your support. I think that this has been a great couple of years. And we -- as you remind us often, 2 years ago is at this conference where we announced the results. And since then, it's been great. So I appreciate the support and all the support from the audience here.

Yes. It has been an awesome journey. I'm just along for the ride, but it's been a great one. So congrats on all your success, and we're still rooting for you as much as we were then. So thank you.

Thank you very much.

Thank you.

Greetings, and welcome to the Soleno Second Quarter 2025 Earnings 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.

Good afternoon, everyone, and thank you for joining us to discuss Soleno Therapeutics Second Quarter 2025 Financial and Operating Results. Please note, we'll be making certain forward-looking statements today. We refer you to Soleno's 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 for Soleno are Anish Bhatnagar, Soleno's Chairman and Chief Executive Officer; Meredith Manning, Soleno's Chief Commercial Officer; and Jim MacKaness, Soleno's Chief Financial Officer. With that, I will now turn the call over to Anish.

Thank you, Brian, and thank you, everyone, for joining us for our second quarter financial results call. For those who follow us closely, you will know that we announced results for the second quarter ending June 30, 2025, on July 10. Therefore, many of you will be familiar with certain key metrics we will be discussing today. With that said, I am very pleased to share our significant progress during the second quarter, highlighted by the commercial launch of Vykat XR and commencement of treating people living with Prader-Willi Syndrome or PWS. Meredith will review the company's commercialization progress to date, and Jim will cover the company's financial statements for the second quarter.

We will then open the call for questions. We achieved a major milestone for the PWS community, and for Soleno in March, when we launched Vykat XR, the first FDA-approved medicine for the treatment of hyperphagia in adults and children 4 years of age and older with PWS. The approval of Vykat XR was based on our comprehensive clinical development program in which participants received double-blind and/or open-label Vykat XR for a mean duration of 3.3 years. Primary evidence of efficacy came from a 16-week randomized withdrawal Phase III multicenter, double-blind, placebo-controlled trial.

Following FDA approval on March 26, Vykat XR was available on April 14, ahead of plan. We've been extremely pleased with the initial reception and demand from the PWS community, which we believe speaks to the urgent need for an FDA-approved therapy to treat the hallmark feature of PWS, which is hyperphagia. As we announced at that time, concurrent with product availability, prescriptions of Vykat XR had been delivered to the first individuals living with PWS. Since that time, we have seen steady growth in both patient starts and unique prescribers. Total net revenue was $32.7 million in the second quarter, which in part reflects underlying demand for the drug, but also the significant efforts of our experienced commercial team whose launch outreach efforts to patients, physicians and payers set the stage for a strong and successful launch.

As Meredith will describe in a moment, we have made steady progress with both commercial and government payers. We continue to engage with payers to ensure that they understand the severe complications and high unmet need associated with PWS and the inherent value proposition that Vykat XR offers. Establishing broad payer reimbursement is among our highest priorities going forward and the compelling efficacy and safety data from our clinical trial program is clearly resonating.

I would like to once again recognize the substantial contributions of the entire PWS community, including study participants and their families, the study investigators and study site team members, as well as the 2 major PWS advocacy organizations, the Foundation for Prader-Willi Research and the Prader-Willi Syndrome Association USA. I would also like to thank the Soleno team members who worked so tirelessly to get us through this point. I would now like to provide a brief update on our activities in support of potential approval of DCCR in Europe.

As you know, we market DCCR in the U.S. as Vykat XR. PWS is a global disease that impacts hundreds of thousands of patients all over the world. In an effort to make DCCR available to as many of these patients as possible, in parallel with our U.S. commercial launch, we have continued to make progress along regulatory pathways in other geographies, the most important of which is the EU. As we have stated previously, Europe also has a high unmet need among patients with PWS. Based on widely cited prevalence data, it is estimated that approximately 9,000 patients living with PWS in the EU4 and the U.K.

We have conducted market research with many PWS experts, patient advocacy leaders, care home executives, et cetera, where we have confirmed the prevalence numbers. Today, in most major markets in the EU, early diagnosis is common. Our research suggests that there is significant structured care for people living with PWS across Europe with variations that will impact our go-to-market strategy by country.

Additionally, as with the U.S., the PWS community has strong thought leader support and patient care is often concentrated around centers of excellence, even more so than in the U.S. In May, we were pleased to announce the submission and EMA validation of our marketing authorization application. Gaining approval to market DCCR in the EU would represent a meaningful expansion of our commercial market and remains a priority for us while we continue to progress our U.S. launch. I will now call -- turn the call over to Meredith to provide an update on the launch. Meredith?

Thank you, Anish, and good afternoon, everyone. As Anish previously mentioned, we are still early in our early phase of launch and the response from both families and providers has been exceptionally encouraging. This tells us that our outreach, whether to caregivers, individuals with PWS, physicians, centers of excellence, payers or advocacy groups is truly resonating. Our disciplined execution and strong clear messaging are helping us to build clinical conviction in the field.

Taken together, these factors reinforce our confidence in the significant potential ahead. At this point, I would like to provide an update on the key performance indicators that we will -- that we believe are helpful in tracking our progress. The first of these is patient start forms. As we announced in our preliminary results press release on July 10, we received 646 patient start forms from launch through June 30. A vast majority of people who have started treatment as expected, are younger, so that's between 4 and 26 years of age. However, a majority of these individuals are older than what we saw in the clinical trial C601, which was approximately 13.5 years. The second key performance indicator is the number of prescribers.

From launch through June 30, that number is 295 unique prescribers. More than 1/3 of the top 300 prescribers who are the primary prescribers for approximately 2,000 patients have written prescriptions. And we are very heartened to see a large number of start forms coming from prescribers who we did not expect to see writing start forms this early in our launch. We believe the launch momentum and positive results directly reflects the success of our strategic launch efforts, initiatives that targeted pediatric and adult endocrinologists, geneticists and psychiatrists who directly treat or influence a substantial portion of our addressable market.

Our field force is prioritizing deep engagement with top-tier providers, each of whom treats multiple individuals with PWS, not only to further strengthen their experience and confidence with Vykat XR, but also because these key clinicians play a pivotal role in influencing practice patterns and the broader adoption of new therapies within the PWS community. At the same time, we are increasingly encouraged by the strong response from physicians beyond this core group. This demonstrates not only growing awareness of Vykat XR, but also expanding recognition of the therapeutic need to treat hyperphagia.

The third performance indicator is payer policies. As Anish mentioned, securing broad coverage for Vykat XR is a core focus for us and is fundamental to the success of our launch. We have seen rapid and broad coverage surpassing recent rare disease launches with approximately 33% of all insured lives now covered, representing just over 100 million lives covered in the United States. We are encouraged with the payer coverage policies established for Vykat XR to date, including several from major insurers. And it's worth highlighting that we are receiving coverage across all channels, commercial, Medicaid and Medicare and to see such broad coverage so early in the launch is outstanding.

These positive outcomes are a direct result of our proactive engagement, efforts that enabled payers to move quickly in recognizing the value of Vykat XR and the urgency of addressing PWS-related hyperphagia. The coverage decisions we have seen so far demonstrate that payers recognize the seriousness of PWS understand the unique challenges of hyperphagia and appreciate the meaningful value Vykat XR delivers. I will now turn the call over to Jim for a review of the company's financial statements for the second quarter.

Thank you, Meredith. We used $12.6 million of cash in operating activities during the 3 months ended June 30, 2025, and had $293.8 million of cash, cash equivalents and marketable securities at the end of the quarter. Subsequent to the quarter end, we raised an additional $230 million of gross proceeds through an underwritten offering of our common stock, bringing our total pro forma cash balance following the financing to more than $500 million. This balance sheet strength ensures that we are sufficiently well capitalized to execute on an effective U.S. launch of Vykat XR and become cash flow positive while in parallel progressing towards regulatory approvals and commercialization either on a stand-alone basis or with partners in the EU and other geographies.

Turning now to a few income statement items. Total net revenue for the second quarter ended June 30, 2025, was $32.7 million. As Vykat XR was approved in March of this year, the company generated no revenue in the second quarter ended June 30, 2024. Cost of goods sold was $0.7 million for the second quarter ended June 30, 2025. Please note that prior to the FDA approval, costs associated with manufacturing Vykat XR were expensed as research and development expenses. As such, a portion of the cost of goods sold during the period included inventory at 0 cost.

Going forward, as we continue to sell Vykat XR, we will deplete our 0 cost inventory and replenish it with at cost inventory and consequently, cost of goods sold as a percentage of revenue will increase. Research and development expense for the second quarter ended June 30, 2025, was $9.1 million, which includes $2.4 million of noncash stock-based compensation compared to $12.3 million, which includes $2.7 million of noncash stock-based compensation for the same period of 2024.

The cadence of our research and development expenditures fluctuate depending upon the state of our clinical programs, timing of manufacturing and other projects as we've moved through submission, approval and now preparation for commercialization. Selling, general and administrative expense for the second quarter ended June 30, 2025, was $28.2 million, which includes $7.3 million of noncash stock-based compensation compared to $10.9 million, which includes $4.5 million of noncash stock-based compensation for the same period of 2024.

The increase reflects our ongoing investment in additional personnel and new programs to support the Vykat XR commercial launch and in support of our increased business activities. Total other income net was $1.8 million for the 3 months ended June 30, 2025, compared to total other net income of $3.0 million in the same period of 2024. Net loss was approximately $4.7 million or $0.09 per basic and diluted share for the second quarter ended June 30, 2025, and $21.9 million or $0.57 per basic and diluted share for the same period in 2024. This concludes the financial overview, and I'll now turn the call back over to Anish for closing remarks. Anish?

Thank you, Jim. In closing, while we are still early in the launch of Vykat XR, we are pleased with the trajectory we're on. In the second quarter, we saw extraordinary momentum in the number of start forms, patients on active drug, number of patients on paid drug and lives covered. While we're not able to share details at this time since we are far from steady state, we continue to be encouraged that Vykat XR is a groundbreaking therapy, and we believe it will soon be the standard of care for people living with PWS-related hyperphagia. And with that, we'll now open the call to questions. Operator?

[Operator Instructions] Your first question comes from Yasmeen Rahimi with Piper Sandler.

I guess many of our clients were wondering if you could comment on, how do you see [indiscernible] The monthly scripts in July compared to the earlier months? And how do you think it will change going into remainder of August and September? I appreciate any color around that. And then also maybe one -- second one to squeeze in is like what is sort of the time to fill currently? And how do you think it would change over time? And I'll jump back in the queue.

Okay. Thanks, Yasmeen. I'll take the July question. And as you know, we're not addressing data after the end of the quarter on this call. But what I can tell you is that we have confidence that Vykat XR is on its way to being the standard of care for people living with PWS. It is going to be a therapy that's going to be meaningful, and it's going to be something that PWS patients are going to be on for a long time to come. But Meredith, I'll let you address the time to fill question.

Yes. Thank you. Thanks, Yasmeen, for the question. I think with regard to time to fill and something that we've mentioned in the past is it takes a while for the payer policies to come in and have a steady state. And while we're very pleased and super encouraged with the 33% coverage live, we still expect policies to come in and for that to grow. So we've seen pretty rapid turnaround time based on the fact that we do have very strong policies, favorable policies coming in, and we have that 33% coverage.

As more policies come in, the turnaround time could potentially slow. And then hopefully, as we move into the later months after a full year, we're looking at reaching a steady state and something that we're shooting for that we've seen in other rare disease or other therapeutic areas around approximately 30 days of turnaround time is pretty standard.

Your next question comes from Ry Forseth with Guggenheim.

This is Ry from Debjit's team. Are there any emerging pain points during the patient start form process that you see as addressable in the next couple of quarters? And our second question is, how are early compliance trends tracking?

So on the pain points front, as you know, this is a very strong start. I mean we -- 646 patient starts in the first quarter is a very large number. We try to track things like seasonality, holidays, vacation, -- summer holidays, things like that. And this is the first drug launch for hyperphagia. So we don't know how it's going to be. It's hard for us to predict the pain points with the start forms. But again, the next couple of quarters will be pretty educational. So we'll keep you posted on that. And your second question was...

Compliance.

Yes. So it's too early to tell, Ry, because we haven't seen that much data. But what I can tell you is that discontinuation rates are substantially lower than what we saw even in clinical trials. So as you may remember, in our trials, we've seen very high compliance rates in part because some of the people living with PWS can also have obsessive compulsive tendencies, and they tend to want to stay on drug as well. So we don't expect that to change significantly and certainly too early to tell from the data.

Your next question comes from Kristen Kluska with Cantor.

Congrats on a very strong quarter. My first question, I just wanted to get a sense of what you're seeing on safety. You've obviously collected a lot of real-world evidence now. And then second, I know you're not commenting on specific revenue trends, but clearly, I think the 2Q numbers were a lot higher than a lot of us modeled and what the investment community was looking for. So can you just give us any broad sense of how we should be thinking about the rest of the year so people perhaps don't go over their skis either?

Sure. Thanks, Kristen. Thanks for the question. So on the safety side, as many of you, I'm sure know, monitoring for safety data in the post-marketing setting is quite different from clinical trial settings. So one typically relies on reports from caregivers or health care providers and the patients that you're treating are also often not as controlled and may have more comorbidities, et cetera. So we are pretty early in the launch. But that said, I can tell you that we have not seen anything in the post-marketing setting that is different from the clinical trial setting. So there are no new safety signals. And once again, just to reiterate, what we have seen with the discontinuation rates at this time are substantially lower than what we have seen in the clinical trials. And Jim, I'll let you take the revenue question.

Sure. Yes. Kristen, Yes, well, as you know, there are quite a number of moving parts between the start form and ultimately the revenue. So I think what we saw was the fact that everything seemed to be clicking very, very well out of the gate. So that's excellent. We're obviously sort of mindful of maybe things normalizing over the next couple of quarters. But at the moment, it just seems to be a very strong start with everything all coming together. So good momentum out of Q2.

Your next question comes from Tyler Van Buren with TD Cowen.

Congratulations on the tremendous progress made during the quarter. So regarding the $33 million of Vykat sales for the quarter, can you help us understand to what extent there was an initial patient bolus or stocking in this number? And maybe just a follow-up. I think you mentioned that you commercially you're seeing older patients than the 13.5 years in the trial. So does that mean on average that these commercial patients are heavier in weight above that 61 kilograms and higher than the average price of $466,000 estimated based on that?

Thanks, Tyler. Jim, do you want to take the bolus stocking question?

Yes. So specifically to the stocking question, Tyler, yes, we -- as you know, we have one distribution partner, PANTHERx. They have been managing their business, I'd say, very astutely. They order weekly from us. They obviously do carry a little bit of inventory, probably 7 to 10 days. But we've not really seen anything that was out of the norm. So they've just been a very repetitive once-a-week stocking proposition from us, and that's continued.

So I don't think there's any anomalies there. I think on the bolus question, yes, we do think there was a fantastic set of start forms coming in, in Q2. I think we've commented before, hard to imagine that, that will continue linearly going forward, if you like. So there will be some moderation there. But everything at the moment seems to indicate a very strong launch going forward.

And Tyler, to your question about patient weight, as you correctly pointed out, the patients that we're seeing, majority of them are above the average age in 601, which is more than 13.5 years. So I think it's a reasonable assumption that they are heavier as well.

Your next question comes from James Condulis with Stifel.

Congrats on the quarter. Just one from us. Just curious, these patients and start forms you're seeing, obviously, a great start. Is this all kind of coming -- are these patients on sort of like their normal cadence of visiting doctors? Or are these kind of patients calling in and trying to get in kind of off cycle? Just curious if you have any color on that dynamic? And kind of on that more broadly, all the kind of cylinders seem to be firing here. So curious what is the rate limiter here kind of going forward, if there's any that's obvious to you?

Meredith, go ahead.

Yes, happy to take that. And it's been really nice to get out in the field and be with our field team and also meet with many of the clinicians. We're seeing both, to answer your question, both patients who are very proactive as they were anticipating the launch of Vykat XR, getting some of their appointments set up within an early time frame. But we're also seeing that some of the PWS experts are very busy with the launch, and therefore, it is taking time to get some of the other patients coming in.

I think something that we're very excited to see is many of these clinics did not have a set PWS clinic day prior to launch. And so as we're seeing the groundwork being laid across these various different clinics, they are setting up their PWS clinic days. And we feel like that, that will allow for a little bit more steady patient visits and patient cycle to come in. So we're still seeing good significant opportunity ahead with the way that the landscape is really measuring out their process and their logistics.

Your next question comes from Leland Gershell with Oppenheimer.

Thanks for the update and tremendous progress. I wanted to ask maybe a little bit in connection with the last question. Patients with PWS come at different levels of severity like in all diseases. Wondering if you're seeing any pattern where perhaps the more severe patients are the ones who are getting Vykat XR earlier as in Q2 and currently. And if we should maybe think about a broader uptake as physicians become more familiar with the drug.

Also want to ask with respect to Europe. I know that's probably going to be a next year, but you're sort of touching profitability here on the U.S. business. Wondering if you could just comment on what could be maybe a more efficient launch in Europe with respect to OpEx and how that may affect your thoughts on profitability and cash flow going forward?

Sure. Thanks, Leland. So in terms of severity, we don't actually collect that information actively. What we see is a diagnosis of PWS and presence of hyperphagia is sort of on label and the age of 4 years, and that patient would be on label. So we don't get that level of detail. But I suspect there's probably a combination of things happening. One is the idea that if there are severe patients, there's probably physicians who are calling them in earlier and getting them on drug.

But there's definitely an element of more motivated families, likely with younger kids who are also pushing their way to getting therapy earlier. And we think this phenomenon of a lot of the non-KOL prescribers may well be the idea that the KOL practices are so full that some of these more motivated families are going to peripheral providers, their local endos, et cetera, and getting prescriptions from there. In terms of the EU business and OpEx, Jim, you want to take that?

Yes, sure. So I think, Leland, you said, I mean, that goes back to the fact that we have the $500 million of balance sheet strength. So it allows us the optionality when we're looking at Europe. We've mentioned partners along the way, but we now also have the ability, if we wish, to continue to do it on our own. We do think it's a concentrated market. Some of the ways that rare diseases are addressed within the European countries do present sort of smaller call points than even in the U.S.

So we've still got to work out the details on exactly the size of the sort of the sales force, the commercial team that would be needed if we do on our own. But we think it's manageable. And as I said, we just point back to the $500 million because it gives us that option to do it if we choose.

Your next question comes from Brian Skorney with Baird.

Congrats on in my entire career being the first company to have a sequentially down operating expenditures into the first quarter of launch, very impressive. So to that point, Jim, I'm just wondering, looking at the OpEx, if this is a fair go-forward number to model for the U.S. business. And you only -- it says that operationally spent $12.5 million in cash. I'm just wondering if I look at just the income statement, you did $32.7 million in sales, it's about $40 million in OpEx. But if I back out stock-based comp, that's $10 million less. So I would have thought that we would actually be operationally cash flow positive. So what's in the cash flow from operations here that's not kind of summing up with the income statement?

Go ahead, Jim.

Yes, I'm not sure I understand the tail end of that question. But Brian, let me provide color that we've -- I think we've provided in the past. So our cash OpEx, I think we've mentioned in the past, we think about $120 million to $130 million for this year. We may find that there's a reason to sort of increase that a little bit, but there wouldn't be much more than $140 million. And that would just be doing things, like I said, putting some early sort of initiatives in Europe, as we've mentioned.

There's also some life cycle management stuff we might fire up as well. So still very well managed for 2025. And then if we go into 2026, that will increment. And I think, again, we mentioned sort of it probably go north of $150 million, but it certainly will be managed, not too much aggressively above that. A lot depends on the size of the Europe commercial footprint and if we decide to go along -- alone. And then I think to your point, then you just got to layer the revenues from the launch. And we've sort of said that's why we've commented in the past, if we think what we referred to as a modestly successful, I would suggest Q2 is exceeding that. But if we have a modestly successful launch, that's how we see ourselves getting to cash flow positive in -- somewhere in the near term. Hopefully, that provides you the guidance you're looking for.

Your next question comes from I-Eh Jen with Laidlaw.

My congrats as well. Just a little bit in terms of the revenue breakdown. In terms of the patients that the titrating phase income sales versus the maintenance sales, the number is quite different. So I'm just curious whether most of the patients in this quarter are already the patient in the trial, so they are actually immediately moved to the maintenance or there are many more new patients -- newer patients that actually in earlier titration stage?

Yes. Thanks, I-Eh. So as you may remember, only about 60 patients were on the long-term study in the U.S. The rest were in the U.K. So if you look at 646 start forms, that's a pretty small fraction of it. And as we've said in the past, virtually all of them will be on -- are on commercial drug at this time. So it's fair to say that in this quarter, a number of patients are still in the titration phase or at least part of the quarter, they were in the titration phase.

Okay. Great. And then maybe just one more question in terms of any breakdown in terms of the payers between government and commercial...

Too early to tell, I-Eh. I think we're not quite at steady state yet, but we'll just remind you of the actual split in the population. It's about 1/3 Commercial, 1/3 Medicare and 1/3 Medicaid. So we don't have numbers to provide for this quarter because of all the moving parts.

[Operator Instructions] Your next question comes from Ram Selvaraju with H.C. Wainwright.

This is Jade on for Ram. Congrats on that first commercial quarter. So first, have you seen any reluctance on the part of your prescribers to deploy in patients who have PWS and are also diagnosed with diabetes?

We don't get sort of real-time information on these things, but I think it would be reasonable for a payer to be -- for a provider to be hesitant if someone has uncontrolled diabetes. If it's diabetes that is controlled, then there is no reason to be reluctant to use DCCR. Of course, you need to be careful and do all the appropriate monitoring per the label, but the drug can certainly be used in patients who have type 2 diabetes.

Okay. Great. And just as a follow-up. So looking to the future, are you thinking about expanding your portfolio beyond Vykat XR? And if so, would this potentially include opportunistic in-licensing and in what areas?

Yes. I think it's fair to say that as of today, we are laser-focused on the launch of Vykat XR, and we don't want to deviate from that. But I think in the long term, it's fair to say that we would, as a company, need to diversify from just Vykat. And we will look for opportunities that are likely adjacent to where we are today. But that is certainly not something we would do in the very short term.

There are no further questions at this time. I will now turn the call over to Anish, for closing remarks.

Well, thank you all again for calling in, and we look forward to talking to you at the end of the next quarter.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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.

Hello, and welcome to the Soleno Therapeutics, Inc. 2025 Annual Meeting of Stockholders. Please note that this meeting is being recorded. [Operator Instructions].

The meeting is about to begin.

Good morning, ladies and gentlemen. I am Jim Mackaness, Chief Financial Officer of Soleno Therapeutics, Inc., and it is a pleasure to welcome you to Soleno Therapeutics Inc's. 2025 Annual Meeting of Stockholders. I will act as Chairman of this meeting and have asked Jesse Schumaker, our General Counsel, to record the minutes of the meeting.

Before proceeding further, let me introduce the directors and director nominees of the company who are with us today and ask them to say hello. Matthew Pauls, our Lead Independent Director.

Greetings, and welcome.

Dr. Birgitte Volck.

Hello, everyone.

Bill Harris.

Hello.

Dawn Carter.

Hello, and good morning.

And Dr. Anish Bhatnagar, our Chairman and Chief Executive Officer. Also with us today are Raymond Loyd, representing CBIZ CPA.

Hello, everybody.

Elton Satusky, representing Wilson Sonsini, our outside Corporate Counsel.

Good morning.

And Steve Hoffman, representing Equiniti Trust Company and Inspector of Election.

Good morning.

The Annual Meeting is being held in accordance with the company's bylaws and Delaware law. During the formal meeting, we will address the matters described in the company's definitive proxy statement dated April 22, 2025. Balloting will be completed, an announcement will be made regarding the preliminary results, and then the formal meeting will be adjourned.

The items on the agenda of the formal meeting are: to elect Class II directors -- 2 Class II directors to serve until the 2028 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified. And two, to ratify the appointment of CBIZ CPAs as our independent registered public accounting firm for the fiscal year ending December 31, 2025.

Should you wish to submit a question during the meeting, please click on the messaging icon at the top left side of your screen, type your question into the text box and then click the send icon at the right of that text box. During the formal for the meeting and the proposals under consideration. Thank you for your understanding.

I have proof by affidavit that the notice of this meeting has been duly given and that the notice of Annual Meeting of Stockholders was mailed on or about April 22, 2025, to all stockholders of record at the close of business on April 15, 2025. The record date for the meeting. We have at this meeting, a record of stockholders as of that date.

The affidavit, together with copies of the notice, proxy statement and proxy card will be filed with the minutes of the meeting. To access and view uploaded documents, please click on the document's icon at the top on the left side of your screen, then click on the document name to view. We have appointed Steve Hoffman to act as Inspector of Election for this annual meeting. The Inspector of Election has signed an oath of office, which will be filed with the minutes of this meeting.

The Inspector of Election has advised me that we have present in-person or by proxy a sufficient number of shares to constitute a quorum. Therefore, the meeting is duly constituted, and we may proceed with business.

Let me briefly describe the voting procedures. We will vote by proxy and by ballot submitted in real time via the Equiniti virtual meeting site. If anyone has not already submitted their proxy, each holder of common stock is entitled to 1 vote for share of common stock held of record at the close of business on the record date. If you have already voted your shares and do not wish to change your vote, no action is required at this time. If you've not yet voted or would like to change your vote. You may do so by clicking the proxy voting site link on the left side of your screen.

Upon receipt of the proxy cards and ballots, the polls will officially be closed. The votes cast today will be counted in the final tally along with the proxies previously received. As the Inspector of Election, Steve Hoffman will announce the preliminary results of the voting at the end of the meeting. Does anyone have any questions regarding voting procedures?

It is now 8:04 on June 5, 2025, and the polls for the matter to be voted on this meeting are now open.

Proposal 1. The company's Board of Directors presently consists of 6 members and is divided into 3 classes, each with a 3-year term. There are 2 Class I directors, 2 Class II directors and 2 Class III directors. The Class 2 directors will be elected at today's meeting. Those 2 nominees receiving the highest number of votes of the shares present in-person or represented by proxy at this meeting and entitled to vote will be elected as directors. Our Nominating and Corporate Governance Committee has recommended, and our Board of Directors has approved Dr. Anish Bhatnagar and William Harris as nominees for election as Class II directors.

If elected, each of Dr. Bhatnagar and Mr. Harris will serve as Class II directors until 2028 Annual Meeting of Stockholders, or until their respective successors are duly elected and qualified. Each of the nominees is currently a Director of our company; and Dr. Bhatnagar serves as Chairman of the Board and Chief Executive Officer of our company.

Pursuant to the notice of this annual meeting and the proxy statement dated April 22, 2025. The proxies solicited by the Board of Directors will be voted in favor of these nominees. This item is discussed on Page 21 of the proxy statement. The company's bylaws require that a stockholder provide advanced notice to the company of a stockholder's intent to nominate a person as directors. No such notice was received.

Accordingly, I declare the nomination for directors closed. Are there any questions concerning director elections?

Proposal 2. At the annual meeting, stockholders are being asked to ratify the appointment of CBIZ CPAs as our independent registered public accounting firm for our fiscal year ending December 31, 2020. The Audit Committee of the Board, which is comprised entirely of nonemployee directors, recommended to the Board of Directors that CBIZ be appointed as independent auditors.

As our independent auditors, CBIZ would audit our financial statements for the fiscal year ending December 31, 2025, and perform audit-related services and consultation in connection with the various accounting and financial reporting matters. CBIZ may also perform certain nonaudit services for the company.

The Board approved the selection of CBIZ as independent auditors for the fiscal year ending December 31, 2025, and is asking the stockholders for ratification of the selection. Stockholder ratification of the appointment of CBIZ is not required by our bylaws or other applicable legal requirements.

However, our Board is submitting the appointment of CBIZ to our stockholders for ratification as a matter of good corporate governance. If the stockholders do not approve the selection of CBIZ as independent auditors, the Board and the Audit Committee will reconsider the appointment. This item is discussed on Pages 22 and 23 of the proxy statement.

Raymond Loyd, present from CBIZ and is available to answer any appropriate questions that you may have at this time.

Are there any questions concerning the proposal? All right. Are there any proxies or ballots that have not been submitted? If so, you must submit them now in order for them to be counted. The Inspector of Elections will not accept ballots, proxies or votes or any changes or revocations submitted after the closing of the polls.

It is now 8:08 on June 5, 2025, and the polls for the matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. The proxies and ballots will be tabulated by the Inspector of Elections.

At this time, the Inspector of Elections will provide us with a preliminary report on the voting results. Thank you.

With regard to proposal 1, to elect 2 Class II directors to serve until the 2028 Annual Meetings of Stockholders or until their respective successors are duly elected and qualified. The 2 nominees who received the highest number of affirmative votes were Dr. Anish Bhatnagar and William Harris, who are approved by a majority of the shares present in-person or by proxy.

With regard to Proposal 2, the appointment of CBIZ CPAs PC to act as the company's independent auditor for the fiscal year ending December 31, 2025, has been ratified by a majority of the shares present in-person or by proxy. These are the preliminary results of voting.

The final count may vary following final examination of the proxies and balance. The final results of voting, including any ballots or proxies recorded during this meeting, will be set forth in the report of the Inspector of Election and will be included in the minutes of the meeting. The final results will also be reported in our reports filed with the SEC.

Thank you, Steve. This Annual Meeting of Stockholders is now adjourned. Thank you for your attendance. We will now proceed with any informal questions and answers.

Okay. No questions. So therefore, I want to thank all of you for attending today's meeting and for your interest that you have shown in the affairs of your company. We are very much appreciative of your attendance and as always, thank you for your support.

This concludes the meeting. You may now disconnect.