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CURRENT REPORT
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| ITEM 2.02 | Results of Operations and Financial Conditions |
On March 3, 2021, Soleno Therapeutics, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2020. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
This information is intended to be furnished under Item 2.02 and Item 9.01 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| ITEM 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit |
Description | |
| 99.1 | Press release issued by Soleno Therapeutics, Inc. dated March 3, 2021 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOLENO THERAPEUTICS, INC. | ||||||
| Date: March 3, 2021 | ||||||
| By: | /s/ Anish Bhatnagar | |||||
| Anish Bhatnagar | ||||||
| Chief Executive Officer | ||||||
Exhibit 99.1
Soleno Therapeutics Provides Corporate Update and Reports Fourth Quarter and Full-Year
2020 Financial Results
REDWOOD CITY, Calif., March 3, 2021 – 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=0.037 |
| • | Statistically significant improvements were noted in all key secondary endpoints |
| • | Clinical Global Impression of Improvement (CGI-I) at Visit 7: p=0.015 |
| • | Change from Baseline in Body Fat Mass (DXA) at Visit 7: p=0.004 |
| • | Caregiver Global Impression of Change (Caregiver GI-C) at Visit 7: p=0.031 |
| • | 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 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 Results
Soleno’s 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 million in 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 Soleno’s 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 company’s 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 million for 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 million and 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 PWS
The Prader-Willi Syndrome Association USA estimates that PWS occurs in one in every 15,000 live births in the U.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 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 Soleno Therapeutics, Inc.
Soleno is focused on the development and commercialization of novel therapeutics for the treatment of rare diseases. The company’s 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 Statements
This 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 Soleno’s business, including those described in the company’s prior press releases and in the periodic reports it files with the SEC. 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 Ritchie
LifeSci Advisors, LLC
212-915-2578
Soleno Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(In thousands except share and per share data)
| December 31, 2020 |
December 31, 2019 |
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| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 49,224 | $ | 20,733 | ||||
| Prepaid expenses and other current assets |
1,019 | 411 | ||||||
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| Total current assets |
50,243 | 21,144 | ||||||
| Long-term assets |
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| 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 | ||||||
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| Total assets |
$ | 64,982 | $ | 38,172 | ||||
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| Liabilities and stockholders’ equity |
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| Current liabilities |
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| 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 | ||||||
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| Total current liabilities |
8,618 | 4,964 | ||||||
| Long-term liabilities |
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| 2017 PIPE Warrant liability |
— | 10,822 | ||||||
| 2018 PIPE Warrant liability |
539 | 1,354 | ||||||
| Contingent liability for Essentialis purchase price |
10,278 | 5,938 | ||||||
| Other long-term liabilities |
— | 147 | ||||||
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| Total liabilities |
19,435 | 23,225 | ||||||
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| Commitments and contingencies (Note 8) |
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| Stockholders’ equity |
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| Common stock, $0.001 par value, 250,000,000 and 100,000,000 shares authorized at December 31, 2020 and December 31, 2019, respectively, 79,615,692 and 44,658,054 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively. |
80 | 45 | ||||||
| Additional paid-in-capital |
227,912 | 172,708 | ||||||
| Accumulated deficit |
(182,445 | ) | (157,806 | ) | ||||
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| Total stockholders’ equity |
45,547 | 14,947 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 64,982 | $ | 38,172 | ||||
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Soleno Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(In thousands except share and per share data)
| For the Three Months Ended December 31, |
For the Years Ended December 31, |
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| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Operating expenses |
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| Research and development |
$ | 5,566 | $ | 5,272 | $ | 23,191 | $ | 16,267 | ||||||||
| General and administrative |
2,251 | 1,608 | 8,758 | 6,930 | ||||||||||||
| Change in fair value of contingent consideration |
140 | (128 | ) | 4,340 | 289 | |||||||||||
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| Total operating expenses |
7,957 | 6,752 | 36,289 | 23,486 | ||||||||||||
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| Operating loss |
(7,957 | ) | (6,752 | ) | (36,289 | ) | (23,486 | ) | ||||||||
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| Other (expense) income |
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| Change in fair value of warrants liabilities |
5,105 | (7,894 | ) | 11,637 | (6,964 | ) | ||||||||||
| Loss from minority interest investment |
— | — | — | (478 | ) | |||||||||||
| Interest and other income |
— | 21 | 13 | 154 | ||||||||||||
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| Total other income (expense) |
5,105 | (7,873 | ) | 11,650 | (7,288 | ) | ||||||||||
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| Net loss |
$ | (2,852 | ) | $ | (14,625 | ) | $ | (24,639 | ) | $ | (30,774 | ) | ||||
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| Loss per common share, basic and diluted |
$ | (0.04 | ) | $ | (0.36 | ) | $ | (0.39 | ) | $ | (0.90 | ) | ||||
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| Weighted-average common shares outstanding used to calculate basic and diluted net loss per common share |
79,608,495 | 41,165,960 | 62,620,227 | 34,142,478 | ||||||||||||
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