Soleno Therapeutics: A Blockbuster Play in Rare Diseases with Diabetes Implications

Soleno Therapeutics has emerged as a standout player in the rare disease space with the March 2025 FDA approval of VYKAT XR (diazoxide choline extended-release tablets) for treating hyperphagia in Prader-Willi syndrome (PWS) patients aged four and older. This milestone, coupled with early commercial traction and a robust clinical profile, has positioned the company to capitalize on a $2 billion peak sales opportunity by 2032, according to a Visible Alpha report. While VYKAT XR is currently marketed for PWS, its mechanism of action and observed efficacy in patients with pre-diabetes or diabetes suggest untapped potential in broader metabolic disease markets.

Clinical Efficacy and Diabetes Relevance

VYKAT XR's approval is rooted in its ability to reduce hyperphagia-a relentless hunger that often leads to obesity and diabetes in PWS patients. Clinical trials demonstrated statistically significant (p ≤ 0.0001) improvements in hyperphagia scores, with sustained efficacy over three years of treatment, as reported in a Soleno press release. Notably, 60% of trial participants had pre-diabetes or diabetes at baseline, and the drug showed comparable efficacy in these patients despite a higher incidence of hyperglycemia-related adverse events (42.7% vs. 24.0% in normoglycemic individuals). These events were generally manageable, with low discontinuation rates (4.0% in the pre-diabetes/diabetes group vs. 6.0% in normoglycemic patients), according to a GlobeNewswire release. This dual impact on hyperphagia and glycemic control positions VYKAT XR as a unique therapeutic asset in metabolic disorders.

Market Expansion and Commercial Momentum

The U.S. launch of VYKAT XR in April 2025 was met with strong demand, with 646 patient start forms processed and 295 unique prescribers by June 30, 2025, as detailed in a Soleno launch update. Analysts project $61.4 million in 2025 sales, with revenue climbing to $268 million in 2026 and $1.1 billion by 2029 before generic competition, per analyst projections. Soleno is also pursuing European approval via a Marketing Authorization Application (MAA) submitted to the EMA in Q2 2025, which could expand its addressable market by 30% given the ~1,000 PWS patients in the EU, according to a SWOT analysis.

While label expansion beyond PWS remains unannounced, the drug's mechanism-targeting potassium channels in the brain, pancreas, and fat tissue-suggests potential in other genetic obesity syndromes. An open-label Phase 2 study is already evaluating VYKAT XR in genetic obesity, and long-term safety data from NCT05701774 and NCT05532020 could pave the way for broader indications, per the Patsnap listing.

Competitive Advantages and Risks

Soleno's competitive edge lies in its first-mover status in PWS hyperphagia, a $1.2 billion market with no prior FDA-approved therapies. The company also benefits from Orphan Drug and Fast Track designations, which provide market exclusivity and regulatory incentives, as noted in a GeneOnline article. Additionally, Soleno's management team has a proven track record in rare disease commercialization, and its patient support program, Soleno One, addresses access barriers critical for orphan drug adoption, as described in the FDA approval press release.

However, risks persist. The company remains a single-asset play, with over 90% of its projected revenue tied to VYKAT XR. Label expansion into diabetes or other metabolic diseases is speculative, and payer pushback on pricing (list price of $300,000/year) could emerge as reimbursement hurdles - a concern also raised in the Visible Alpha analysis.

Investment Thesis

Despite these risks, Soleno's blockbuster trajectory is compelling. With a $2 billion peak sales forecast and a strong balance sheet ($250 million in cash as of Q2 2025), the company is well-positioned to execute its commercial strategy while exploring secondary indications. For investors, the key catalysts will be:
1. EMA approval in 2026, which could add $100–150 million in annual revenue.
2. Label expansion into genetic obesity or diabetes, which would unlock a $10+ billion market.
3. Sustained U.S. adoption, with current market penetration at just 15% of the ~2,500 PWS patients in the U.S., as noted in a BioSpace release.

In a sector where rare disease drugs often command 20x+ P/S multiples, Soleno's current valuation (~$1.5 billion) appears undemanding relative to its growth potential.