Soleno's Q3 2025: Contradictions Emerge on Patient Retention, Short Report Impact, and Revenue Conversion

Date of Call: November 04, 2025

Financials Results

• Revenue: $66.0M, more than doubled from $32.7M in Q2 2025; no revenue in Q3 2024
• EPS: $0.47 per diluted share ($0.49 basic), net income $26.0M vs net loss $76.6M or $1.83 per share in Q3 2024

Business Commentary:

* Revenue and Profitability Growth: - Soleno Therapeutics reported net revenue of $66.0 million for Q3, more than doubling from the previous quarter, leading to positive net income of $26.0 million. - This growth was driven by strong performance in the U.S. launch of VYKAT XR, the first FDA-approved treatment for hyperphagia in patients with Prader-Willi syndrome.

• Patient Adoption and Prescriber Growth:
• The company achieved 1,043 cumulative patient start forms, with 397 in Q3 alone, and had 764 individuals actively treated with VYKAT XR.

• The expansion in prescribers, reaching 494 unique prescribers by Q3, was a key driver of this growth, with over 50% of the top 300 healthcare providers submitting start forms.

• Insurance Coverage and Payer Access:

• Soleno secured coverage for VYKAT XR with approximately 132 million lives, including coverage policies with top national PBMs.

• This broad coverage access has facilitated market adoption and timely patient reimbursement across various payer channels, contributing to the launch's momentum.

• Discontinuation Due to Short Seller Report:

• The company experienced a temporary disruption in launch trajectory due to a short seller report, with a significant number of patients returning to therapy as VYKAT XR withdrawal led to a rapid return of PWS symptoms.
• Educational efforts were intensified to address patient and physician concerns regarding VYKAT XR's adverse event profile, which was found to be nonserious in most cases, impacting the restart rate.

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted Q3 revenue of $66.0M (more than double Q2) and positive net income of $26.0M, active patients 764, coverage ~132M lives, and described continued launch investments and expanding prescriber base.

Q&A:

• Question from Kyuwon Choi (Goldman Sachs Group, Inc., Research Division): Can you comment on restart rates after discontinuations and how many of the disclosed active patients are waiting for insurance clearance versus reflected in start forms? Any color on lag time between start forms and coverage?
  Response: Restarts are minimal so far (anecdotal); all 764 active patients have reimbursement claims and typical fill/backlog from start form to fill is ~30 days.

• Question from Tyler Van Buren (TD Cowen, Research Division): How much did the short-seller report affect discontinuations and start forms, is the impact fading in Q4, and what is early launch momentum into October/YE?
  Response: The short report likely contributed to reduced start forms and increased nonserious-AE discontinuations in Aug–Sep; October activity resembled September; company is executing education/outreach but timing for recovery is uncertain.

• Question from Moritz Reiterer (Guggenheim Securities, LLC, Research Division): What is the average dose across current patients and what percent of existing prescribers' PWS patients are on VYKAT XR — is growth mostly from existing prescribers or new ones?
  Response: There is substantial room to grow (≈1,000 start forms ≈10% of TAM); average dosing is still evolving and patients are heavier than in trials, so dosing patterns are being established over time.

• Question from Rick Miller (Cantor Fitzgerald & Co., Research Division): Can you describe the profile of AEs leading to the increased discontinuations — are these on-label events or unexpected issues?
  Response: Discontinuations are driven by on-label, predominantly nonserious AEs (mild peripheral edema, some hyperglycemia); most events are low-grade and manageable.

• Question from Yasmeen Rahimi (Piper Sandler & Co., Research Division): Which types of physicians or patient profiles are showing hesitation after the report and how will you communicate to overcome fear — any visibility on a rebound?
  Response: Hesitancy is concentrated among community prescribers with only 1–2 PWS patients; company is deploying a speakers bureau, HCP peer programs and caregiver webinars to educate, but rebound timing is unclear.

• Question from Leland Gershell (Oppenheimer & Co. Inc., Research Division): Are adverse events more common among less specialized prescribers and has time to reimbursement changed versus prior expectations?
  Response: Reported AEs are mostly low-grade and incidence is below trial rates, but less experienced prescribers may mismanage cases; company provides field/MSL and peer-to-peer support and still targets ~30 days turnaround for reimbursement.

• Question from Brian Skorney (Robert W. Baird & Co Incorporated, Research Division): Was the summer disruption both a slowdown in start forms and an increase in discontinuations — do you have metrics on missed refills or quantification?
  Response: Company observed a decrease in start forms in Aug–Sep likely due to summer + the short report and anecdotally increased discontinuations; no granular refill metrics are available.

• Question from James Condulis (Stifel, Nicolaus & Company, Incorporated, Research Division): After ~6 months of launch, what early efficacy learnings are you seeing and how might that affect discontinuation rates over time?
  Response: Early real-world anecdotes report meaningful behavioral and functional improvements; management expects sustained efficacy stories and peer-sharing to reduce discontinuations over time.

• Question from Derek Archila (Wells Fargo Securities, LLC, Research Division): Is the initial bolus of demand over or will uptake resume as comfort increases, and can you characterize the EMA day-120 questions and whether they improve confidence for EU approval?
  Response: No clear return of a bolus is evident; company expects a slow, steady build; EMA questions mirror prior FDA discussions on efficacy and study design—responses are being prepared.

• Question from Yale Jen (Laidlaw & Company Ltd., Research Division): Will you study long-term treated patients to quantify sustained improvements, and do you need additional efforts to find new patients beyond current start forms?
  Response: Company has long-term open-label and follow-up data showing varied sustained benefits and can analyze longer-term outcomes; claims data identifies ~12,000 PWS claims (~TAM ~10,000) and ML targeting is planned to locate patients.

• Question from Katherine Dellorusso (LifeSci): What proportion of patients reach or are maintained on on-label dose versus dose reductions, and how long are patients typically on therapy before discontinuation?
  Response: Most discontinuations occur early (during titration or within ~3 months); about two-thirds of active patients are beyond 3 months; majority reach on-label dosing (therapeutic window ~3–5 mg/kg) with dose reductions in a small minority.

• Question from Jade Montgomery (H.C. Wainwright, on behalf of Ram Selvaraju): When might you provide annualized revenue guidance, and is Rhythm's setmelanotide a competitor or potentially synergistic?
  Response: Guidance: too early to provide annual revenue guidance as business matures; on setmelanotide, prior randomized PWS data were negative—future data will determine if it is competitive or potentially synergistic.

Contradiction Point 1

Patient Discontinuation and Restart Rates

It involves the nature and extent of patient discontinuations and restart rates, which are crucial for understanding the drug's effectiveness and patient experience.

Can you provide the restart rate for discontinuations and the patient restart numbers and timeframe for restarts? - Kyuwon Choi (Goldman Sachs Group, Inc., Research Division)

2025Q3: It's early, so we're just starting to see it now. A handful of patients who have already started, with others planning to start. - Anish Bhatnagar(CEO)

How did July’s monthly prescription volumes compare to previous months? How do you expect prescription volumes to change in August and September? What is the current fill time, and how do you expect it to evolve over time? - Yasmeen Rahimi (Piper Sandler & Co., Research Division)

2025Q2: Q2 has shown a strong start, and we see the momentum building. But, as you know, this is a new market for us, and it's early. - Anish Bhatnagar(CEO)

Contradiction Point 2

Impact of Short Report on Patient Start Forms and Discontinuations

It highlights the impact of the short report on patient start forms and discontinuations, which are key metrics for assessing drug adoption and market response.

What was the impact of discontinuations and lower patient starts from the short report this quarter? How confident are you in that impact? - Tyler Van Buren (TD Cowen, Research Division)

2025Q3: August, September saw decreased start forms and increased discontinuations. October looks similar to September, reflecting ongoing effects. - Anish Bhatnagar(CEO)

How do July's monthly prescription volumes compare to earlier months, and what changes are expected in August and September? What is the current fill time, and how do you expect it to change over time? - Yasmeen Rahimi (Piper Sandler & Co., Research Division)

2025Q2: Q2 has shown a strong start, and we see the momentum building. But, as you know, this is a new market for us, and it's early. - Anish Bhatnagar(CEO)

Contradiction Point 3

Educational Efforts and Market Behavior

It involves the company's educational efforts and their impact on market behavior and prescriber adaptability, which are critical for understanding market dynamics and drug adoption.

How does the report address when concerns will subside? Is there visibility of a significant rebound in the remainder of the quarter? - Yasmeen Rahimi (Piper Sandler & Co., Research Division)

2025Q3: We don't expect intra-quarter disclosures. We're observing and learning about market behavior and prescriber adaptability. We have significant education efforts ongoing. - Anish Bhatnagar(CEO)

How have July’s monthly prescription volumes compared to earlier months? How do you expect them to change in August and September? What is the current time to fill, and how do you anticipate it will evolve over time? - Yasmeen Rahimi (Piper Sandler & Co., Research Division)

2025Q2: We expect policies to grow, affecting time to fill. We aim for approximately 30 days turnaround by year's end. - Meredith Manning(COO)

Contradiction Point 4

Patient Start Forms and Conversion to Revenue

It involves expectations regarding the conversion of patient start forms into revenue, which is a critical indicator for investor expectations and financial forecasting.

What is the restart rate for discontinuations, and how many patients are restarting along with the time to restart? - Kyuwon Choi(Goldman Sachs Group, Inc., Research Division)

2025Q3: All 764 have claims that are being reimbursed. So there's still an evolving number for paid versus free. - Meredith Manning(CCO)

How soon can you quantify the conversion of starting forms into revenue? - Yasmeen Rahimi(Piper Sandler)

2025Q1: We anticipate modest revenues for Q2 as the specialty pharmacy partners will be cautious in inventory build. We expect a lag between receiving a start form and when we record revenue. - James MacKaness(CFO)

Contradiction Point 5

Impact of Short Report on Start Forms and Discontinuations

It involves the impact of a short report on start forms and discontinuations, which could influence market expectations and patient adoption.

Explain the impact of discontinuations and lower patient start forms from short reports this quarter. How confident are you that this affected results? - Tyler Van Buren(TD Cowen, Research Division)

2025Q3: August, September saw decreased start forms and increased discontinuations. October looks similar to September, reflecting ongoing effects. - Anish Bhatnagar(CEO)

What percentage of the 127 Phase 3 trial patients are reflected in the current enrollment forms? - Debjit Chattopadhyay(Guggenheim Securities)

2025Q1: The actual randomized withdrawal is only around 60 patients, and we're really pleased with how quickly our clinical operations team is converting those patients. - Meredith Manning(CCO)