GlobeNewswire Inc | Nov 10, 2020 04:01PM EST

November 10, 2020

REDWOOD CITY, Calif., Nov. 10, 2020 (GLOBE NEWSWIRE) -- Soleno Therapeutics, Inc. (Soleno) (NASDAQ: SLNO), a clinical-stage biopharmaceutical company developing novel therapeutics for the treatment of rare diseases, today provided a corporate update, and reported financial results for the third quarter and nine months ended September 30, 2020.

Third Quarter 2020 and Recent Corporate Highlights

-- Announced updated top-line results from Phase III DESTINY PWS (C601) study evaluating once-daily Diazoxide Choline Controlled-Release (DCCR) tablets for patients with Prader Willi Syndrome (PWS) Significant DCCR exposure response relationship between DCCR plasma concentrations and change from baseline in hyperphagia supporting the therapeutic benefit of DCCR treatment on hyperphagia Significant improvements in leptin and adiponectin, adipokines that are differentially expressed in obesity and cardiovascular diseases, deepening the companys insight into the mechanism of action in PWS Significant reductions in fat mass and a trend towards increased lean body mass were observed Interim analysis of the change in HQ-CT from C601 baseline at week 13 of C602, the open-label extension study, indicated that nearly all subjects treated with DCCR showed improvement in hyperphagia, supporting the long-term clinical benefit of treatment with DCCR in PWS More than 100 subjects continue to be treated with DCCR in C602, with 20 having been treated for more than a year The safety profile of DCCR remains generally consistent with the known profile of diazoxide and prior experience with DCCR, with no serious unexpected adverse events related to DCCR reported Soleno reaffirms plan to meet with the FDA before the end of this calendar quarter to determine next steps -- Body composition data from C601 were highlighted in a late-breaking oral presentation at The Obesity Societys ObesityWeek 2020 meeting

We continue to be encouraged by the improvements in hyperphagia and other PWS associated behaviors, as well as positive body composition and metabolic data seen in the updated results from our Phase III program evaluating DCCR for PWS, a disease with life-threatening comorbidities, said Anish Bhatnagar, M.D., Chief Executive Officer of Soleno Therapeutics. We remain confident in the potential of DCCR to address the unmet need for a safe and effective treatment option for PWS patients.

Financial ResultsSolenos current research and development efforts are primarily focused on advancing its lead product candidate, DCCR, for the treatment of PWS, through late-stage clinical development.

Third Quarter EndedSeptember 30, 2020Financial ResultsResearch and development expenses were$4.8 millionfor the quarter endedSeptember 30, 2020, compared to$4.5 millionin the same period of 2019. The increase was primarily due to increased activities related to the DCCR development program.

General and administrative expense was$2.3 millionfor the quarter endedSeptember 30, 2020, compared to$1.6 millionin the same period of 2019. The increase was primarily related to increased personnel-related costs, costs for intellectual property, and corporate business development expenses.

The change in the fair value of contingent consideration results from Solenos obligation to make cash payments toEssentialisstockholders upon the achievement of certain future commercial milestones associated with commercial sales of DCCR in accordance with the terms of theEssentialismerger agreement. The fair value was estimated to be approximately$10.1 millionas ofSeptember 30, 2020, a$0.8 millionincrease from the estimate atJune 30, 2020.

Total other expense was$0.7million in the three months endedSeptember 30, 2020, compared to other income of$7.0 millionduring the three months endedSeptember 30, 2019. The change was primarily due to a change in the value of outstanding warrants.

Net loss for the quarter endedSeptember 30, 2020, was approximately$8.5 million, ora net loss of$0.11per basic and diluted share, compared to net income of approximately$0.9 million, or$0.03per basic share, and a net loss of $0.19 per diluted share, for the quarter endedSeptember 30, 2019.

Nine Months EndedSeptember 30, 2020Financial Results for Continuing OperationsResearch and development expenses were$17.6 millionfor the nine months endedSeptember 30, 2020, compared to$11.0 millionin the same period of 2019. The increase was primarily due to increased activities related to the DCCR development program.

General and administrative expense was$6.5 millionfor the nine months endedSeptember 30, 2020, compared to$5.3 millionin the same period of 2019. The increase was primarily related to increased personnel-related costs and costs for intellectual property.

Total other income was$6.5 million in the nine months endedSeptember 30, 2020, compared to other income of$0.6 millionduring the nine months endedSeptember 30, 2019. The increase was primarily due to a $6.5million decrease in the fair value of Solenos outstanding warrants during the nine months ended September 30, 2020, compared to a decrease of $0.9 million during the nine months ended September 30, 2019.

Net loss for the nine months endedSeptember 30, 2020, was approximately$21.8 million, or$0.38per basic and diluted share, compared to a net loss of approximately$16.1 million, or$0.51per basic share, and $0.53 per diluted share, for the nine months endedSeptember 30, 2019.

As ofSeptember 30, 2020, Soleno had cash and cash equivalents of approximately$56.1 million, as compared to$20.7 millionatDecember 31, 2019.

About PWSThe Prader-Willi Syndrome Association USA estimates that one 15,000 live births in the U.S. have PWS. The hallmark symptom of this disorder is hyperphagia, a chronic feeling of insatiable hunger that severely diminishes the quality of life for PWS patients and their families. Additional characteristics of PWS include behavioral problems, cognitive disabilities, low muscle tone, short stature (when not treated with growth hormone), the accumulation of excess body fat, developmental delays, and incomplete sexual development. Hyperphagia can lead to significant morbidities (e.g., stomach rupture, obesity, diabetes, cardiovascular disease) and mortality (e.g., choking, accidental death due to food seeking behavior). In a global survey conducted by the Foundation for Prader-Willi Research, 96.5% of respondents (parent and caregivers) rated hyperphagia as the most important or a very important symptom to be relieved by a new medicine. There are currently no approved therapies to treat the hyperphagia/appetite, metabolic, cognitive function, or behavioral aspects of the disorder. Diazoxide choline has received Orphan Drug Designation for the treatment of PWS in the U.S. and EU, and Fast Track Designation in the U.S.

About Diazoxide Choline Controlled-Release (DCCR) TabletDiazoxide Choline Controlled-Release tablet is a novel, proprietary extended-release, crystalline salt formulation of diazoxide, which is administered once-daily. The parent molecule, diazoxide, has been used for decades in thousands of patients in a few rare diseases in neonates, infants, children and adults, but has not been approved for use in PWS. Soleno conceived of and established extensive patent protection on the therapeutic use of diazoxide and DCCR in patients with PWS. The DCCR development program is supported by data from five completed Phase I clinical studies in healthy volunteers and three completed Phase II clinical studies, one of which was in PWS patients. In the PWS Phase III study, DCCR showed promise in addressing hyperphagia, the hallmark symptom of PWS, as well as several other symptoms such as aggressive/destructive behaviors, fat mass and other metabolic parameters.

AboutSoleno Therapeutics, Inc.Soleno is focused on the development and commercialization of novel therapeutics for the treatment of rare diseases. The companys lead candidate, Diazoxide Choline Controlled-Release (DCCR) tablets, a once-daily oral tablet for the treatment of Prader-Willi Syndrome (PWS), is currently being evaluated in a Phase III clinical development program. For more information, please visit www.soleno.life.

Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release are forward-looking statements, including statements regarding timing of any regulatory process or ultimate approvals and determining a path forward for DCCR for the treatment of PWS. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions, including the risks and uncertainties associated with market conditions, as well as risks and uncertainties inherent in Solenos business, including those described in the company's prior press releases and in the periodic reports it files with theSEC. The events and circumstances reflected in the company's forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, the company does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Corporate Contact:Brian RitchieLifeSci Advisors, LLC212-915-2578

Soleno Therapeutics, Inc.Condensed Consolidated Balance Sheets(In thousands except share and per share data)

September December 30, 31, 2020 2019Assets (Unaudited) Current assets Cash and cash equivalents $ 56,137 $ 20,733 Prepaid expenses and other current assets 348 411 Total current assets 56,485 21,144 Long-term assets Property and equipment, net 20 22 Operating lease right-of-use assets 195 398 Finance lease right-of-use assets 17 24 Intangible assets, net 15,067 16,525 Other long-term assets ? 59 Total assets $ 71,784 $ 38,172 Liabilities and stockholders? equity Current liabilities Accounts payable $ 3,213 $ 1,995 Accrued compensation 756 283 Accrued clinical trial site costs 3,399 1,999 Operating lease liabilities 220 305 Other current liabilities 408 382 Total current liabilities 7,996 4,964 Long-term liabilities 2017 PIPE Warrant liability 4,777 10,822 2018 PIPE Warrant liability 867 1,354 Contingent liability for Essentialis purchase 10,138 5,938 priceOther long-term liabilities ? 147 Total liabilities 23,778 23,225 Commitments and contingencies (Note 6) Stockholders? equity Common stock, $0.001 par value, 100,000,000 sharesauthorized,79,593,621 and 44,658,054 shares issued and 80 45 outstanding atSeptember 30, 2020 and December 31, 2019,respectively.Additional paid-in-capital 227,519 172,708 Accumulated deficit (179,593 ) (157,806 )Total stockholders? equity 48,006 14,947 Total liabilities and stockholders? equity $ 71,784 $ 38,172





Soleno Therapeutics, Inc.Condensed Consolidated Statements of Operations(unaudited)(In thousands except share and per share data)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating expensesResearch and $ 4,827 $ 4,490 $ 17,625 $ 10,995 developmentGeneral and 2,256 1,615 6,507 5,322 administrativeChange in fairvalue of 774 28 4,200 417 contingentconsiderationTotal operating 7,857 6,133 28,332 16,734 expensesOperating loss (7,857 ) (6,133 ) (28,332 ) (16,734 )Other income (expense)Change in fairvalue of (689 ) 7,116 6,532 930 warrantsliabilitiesLoss fromminority ? (123 ) ? (478 )interestinvestmentInterest income 1 29 13 133 Total other (688 ) 7,022 6,545 585 income (expense)Net income $ (8,545 ) $ 889 $ (21,787 ) $ (16,149 )(loss)Net income(loss) per common share:Basic $ (0.11 ) $ 0.03 $ (0.38 ) $ (0.51 )Diluted $ (0.11 ) $ (0.19 ) $ (0.38 ) $ (0.53 )Weighted-averagecommon sharesoutstanding used inper-sharecalculation:Basic 79,583,254 31,793,292 56,916,137 31,775,590 Diluted 79,583,254 32,443,647 56,916,137 32,235,528