Approval Likely in U.S., EU for New Drug for Prader-Willi
Research Report

Soleno Therapeutics Inc.'s (SLNO:NASDAQ) investigative treatment for Prader-Willi syndrome, called DCCR (diazoxide choline), is expected to be approved, first in the States as early as next year then later in the European Union, reported Oppenheimer analyst Dr. Leland Gershell in an Oct. 10 research note. Prader-Willi is a rare genetic disorder in which hyperphagia, or the excessive desire to eat, "is the major source of morbidity and mortality."

"Our attendance at the Foundation for Prader-Willi Research's annual Research Symposium and Family Conference late last week reinforced our bullish view on DCCR's U.S. Food and Drug Administration (FDA) approval and commercial prospects for Prader-Willi syndrome," Gershell wrote.

Buying opportunity, attractive return

As such, Oppenheimer reiterated its target price of $39 per share on California-headquartered Soleno. Its current share price, in comparison, is about $25.75 per share.

"We believe shares remain undervalued following the recent positive data," wrote Gershell, referring to results of a Phase 3 study and a subsequent withdrawal trial. "We would continue to be buyers."

The difference between the current and target prices implies a compelling return for investors of 51%.

Soleno remains rated Outperform.

Expected approval dates

Oppenheimer expects the FDA to approve DCCR for Prader-Willi syndrome in the U.S. in 2024, with a commercial launch to follow by early 2025, Gershell wrote. Approval in the European Union (EU) is estimated to happen in 2026.

Further, Oppenheimer projects peak sales of DCCR to be $1 billion or more in each region.

Takeaways from meeting

Gershell pointed out that the clinicians Oppenheimer talked with at the conference indicated they were excited about the performance of DCCR in the recent randomized withdrawal trial. In it, the drug showed "a strongly significant benefit to hyperphagia," thereby meeting the primary endpoint. Clinicians also indicated they did not have concerns about DCCR or it getting approved.

Some investors have expressed the concern, noted Gershell, that study patients with a lower starting weight/BMI who stayed on DCCR may have "favored a drug effect." However, while physicians at the conference acknowledged this was possible, they said it would not impact the hyperphagia endpoint.