GlobeNewswire Inc | Mar 3, 2021 04:01PM EST

March 03, 2021

REDWOOD CITY, Calif., March 03, 2021 (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 announced financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 and Recent Corporate Highlights

-- Announced analysis of Phase 3 DESTINY PWS (C601) study evaluating once-daily Diazoxide Choline Controlled-Release (DCCR) tablets for patients with Prader Willi Syndrome (PWS), limited to data collected through March 1, 2020, before the onset of the COVID-19 pandemic Primary endpoint demonstrated a statistically significant change from baseline in hyperphagia Change was measured by the total score of a Hyperphagia Questionnaire for Clinical Trials (HQ-CT, 0-36): p=0.037Statistically significant improvements were noted in all key secondary endpoints Clinical Global Impression of Improvement (CGI-I) at Visit 7: p=0.015Change from Baseline in Body Fat Mass (DXA) at Visit 7: p=0.004Caregiver Global Impression of Change (Caregiver GI-C) at Visit 7: p=0.031The 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 reportedSoleno continues its interactions with the FDA around this as well as other analyses of completed and ongoing studies of DCCR -- Hosted key opinion leader (KOL) webinar to discuss the treatment landscape and unmet need in PWS, impact of the COVID-19 pandemic on PWS patients and families, and an analysis of Phase 3 DESTINY PWS evaluating data generated prior to disruptions caused by the COVID-19 pandemic -- Announced collaboration agreement with Vanderbilt University to discover and develop novel ATP-dependent potassium (KATP) channel activators with the potential to treat rare diseases

We remain focused on our goal of advancing our late-stage DCCR program in PWS, said Anish Bhatnagar, M.D., Chief Executive Officer of Soleno Therapeutics. Based on the substantial impact of the COVID-19 pandemic on PWS patients and families, we conducted further analysis of our Phase 3 DESTINY PWS study that evaluated data collected prior to the onset of the pandemic, which we highlighted at a recent KOL webinar. We observed statistically significant improvements with DCCR compared with placebo patients for the primary and all key secondary endpoints during the pre-pandemic time period. We are continuing our interactions with the regulatory authorities, including around these most recent results. In addition, we are excited about our collaboration with Vanderbilt University, which has the potential to add additional clinical candidates for PWS and other rare diseases to our product pipeline.

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.

Fourth Quarter Ended December 31, 2020 Financial Results from Operations

Research and development expenses were $5.6 million for the quarter ended December 31, 2020, compared to$5.3 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 million for the quarter ended December 31, 2020, compared to $1.6 million in the same period of 2019. The increase was due to an increase in personnel related costs.

The fair value of contingent consideration results from Solenos obligation to make cash payments to Essentialis stockholders upon the achievement of certain future commercial milestones associated with the sale of DCCR in accordance with the terms of the Essentialis merger agreement and is remeasured at the end of each reporting period. The value increased by $0.1 million for the quarter ended December 31, 2020 compared to a decrease in value of $0.1 million in the same period in 2019.

Total other income of $5.2 million and total other expense of ($7.9 million) for the quarter ended December 31, 2020 and the same period in 2019, respectively, consisted primarily of the change in the fair value of the liability for the companys outstanding warrants. The other income recorded in the fourth quarter of 2020 was primarily due to the 2017 PIPE warrants expiring unexercised during the quarter.

Net loss for the quarter ended December 31, 2020, was approximately $2.8 million, or $0.04 per basic and diluted share, compared to net loss of approximately $14.6 million, or $0.36 per basic and diluted share, for the quarter ended December 31, 2019.

Year Ended December 31, 2020 Financial Results from Operations

Research and development expenses were $23.2 million for the year ended December 31, 2020, compared to$16.3 millionfor the year ended December 31, 2019. The increase was primarily due to increased activities related to the DCCR development program.

General and administrative expense was $8.8 million for the year ended December 31, 2020, compared to $6.9 million for the year ended December 31, 2019. The increase was primarily related to increased compensation costs, costs for intellectual property, and corporate business development expenses.

The fair value of contingent consideration was estimated to be approximately$10.3 million at December 31, 2020 up $4.3 million from $5.9 million at December 31, 2019.

Total other income of$11.7 millionand total other expense of ($7.3 million) in 2020 and 2019, respectively, consisted primarily of the change in the fair value of the liability for warrants of approximately $11.6 million and ($7.0 million) in 2020 and 2019, respectively.

Net loss for the year ended December 31, 2020, was approximately $24.6 million, or $0.39 per basic and diluted share, compared to a net loss of approximately $30.8 million, or $0.90 per basic and diluted share, for the year ended December 31, 2019.

As of December 31, 2020, Soleno had cash and cash equivalents of approximately $49.2 million, as compared to $20.7 million at December 31, 2019.

About PWSThe Prader-Willi Syndrome Association USAestimates that PWS occurs in one in every 15,000 live births in theU.S.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., obesity, diabetes, cardiovascular disease) and mortality (e.g., choking, stomach rupture, accidental death due to food seeking behavior). In a global survey conducted by theFoundation 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 theU.S.and EU, and Fast Track Designation in theU.S.

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)

December December 31, 31, 2020 2019Assets Current assets Cash and cash equivalents $ 49,224 $ 20,733 Prepaid expenses and other current assets 1,019 411 Total current assets 50,243 21,144 Long-term assets Property and equipment, net 19 22 Operating lease right-of-use assets 124 398 Finance lease right-of-use assets 15 24 Intangible assets, net 14,581 16,525 Other long-term assets ? 59 Total assets $ 64,982 $ 38,172 Liabilities and stockholders? equity Current liabilities Accounts payable $ 3,489 $ 1,995 Accrued compensation 1,005 283 Accrued clinical trial site costs 3,789 1,999 Operating lease liabilities 139 305 Other current liabilities 196 382 Total current liabilities 8,618 4,964 Long-term liabilities 2017 PIPE Warrant liability ? 10,822 2018 PIPE Warrant liability 539 1,354 Contingent liability for Essentialis purchase 10,278 5,938 priceOther long-term liabilities ? 147 Total liabilities 19,435 23,225 Commitments and contingencies (Note 8) Stockholders? equity Common stock, $0.001 par value, 250,000,000 and100,000,000 sharesauthorized at December 31,2020 and December 31, 2019, 80 45 respectively,79,615,692 and 44,658,054 sharesissued and outstanding atDecember 31, 2020 andDecember 31, 2019, respectively.Additional paid-in-capital 227,912 172,708 Accumulated deficit (182,445 ) (157,806 )Total stockholders? equity 45,547 14,947 Total liabilities and stockholders? equity $ 64,982 $ 38,172

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

For the Three Months Ended For the Years Ended December 31, December 31, 2020 2019 2020 2019 Operating expensesResearch and $ 5,566 $ 5,272 $ 23,191 $ 16,267 developmentGeneral and 2,251 1,608 8,758 6,930 administrativeChange in fairvalue of 140 (128 ) 4,340 289 contingentconsiderationTotal operating 7,957 6,752 36,289 23,486 expensesOperating loss (7,957 ) (6,752 ) (36,289 ) (23,486 )Other (expense) incomeChange in fairvalue of 5,105 (7,894 ) 11,637 (6,964 )warrantsliabilitiesLoss fromminority ? ? ? (478 )interestinvestmentInterest and ? 21 13 154 other incomeTotal other 5,105 (7,873 ) 11,650 (7,288 )income (expense)Net loss $ (2,852 ) $ (14,625 ) $ (24,639 ) $ (30,774 )Loss per commonshare, basic and $ (0.04 ) $ (0.36 ) $ (0.39 ) $ (0.90 )dilutedWeighted-averagecommon sharesoutstanding usedto calculate 79,608,495 41,165,960 62,620,227 34,142,478 basic anddiluted net lossper common share