{"num_not_elig":79885,"result":[{"id":175886,"parent_message_id":null,"user_id":10070,"idea_id":148247,"add_date":"2021-03-09 16:20:38","by_member":1,"subject":"Re: Tough break","comment":"Yesterday’s regulatory update was certainly a surprise and disappointing development in the SLNO story. We continue to see upside if the company is able to continue their discussions with the FDA and find a path","is_private":0,"up":0,"down":0,"votes":0,"rank":0,"is_long":1,"idea_keyid":"6267458976","idea_add_date":"2021-02-19 14:14:38","deleted_date":null,"thread":"SOLENO THERAPEUTICS INC","symbol":"SLNO","idea_status":4,"display_name":"conway968","can_edit":0,"display_name_html":"conway968<\/span>","format_date":"Tuesday, Mar 9 2021","time_ago":"3\/09\/21 4:20PM","posted_time":"4:20 PM","subject_link":"Re: Tough break<\/a>","topic":"SOLENO THERAPEUTICS INC","read_more":"

Yesterday’s regulatory update was certainly a surprise and disappointing development in the SLNO story. We continue to see upside if the company is able to continue their discussions with the FDA and find a path forward to a 2021 NDA submission. However, our conservative base case is that the company will need to begin, and likely complete, a second study to enable approval. Because of this, it makes sense to re-visit the company's cash runway as well as our projected timeline to first sales and probability of success for DCCR.<\/span><\/p>\n

Cash Runway & Projected Dilution: <\/span><\/strong>Soleno ended 4Q20 with $49M in cash. While we don't know the exact direct costs of the DESTINY trial, we note that the company spent approximately $35M in R&D expense from 2Q18 through 2Q20, the time period over which the placebo-controlled portion of DESTINY was conducted. We believe it's possible another study could be conducted more efficiently by leveraging the company's lessons and investigator\/caregiver interest arising from DESTINY. Therefore pending further details on study size and scope, we believe the current cash runway could potentially cover another placebo-controlled trial of DCCR in PWS. <\/span><\/p>\n

Our model included an equity raise in mid'22 to fund ongoing operations. At this time, we are keeping this equity raise in place but are assuming a reduction in the price at which the company is able to raise equity from $7\/share to $2\/share and assuming an increase in the number of shares offered to 12.5M. Even at a smaller size, this raise should allow Soleno to complete the Phase III and regulatory filings. We are also assuming a second small equity raise at a higher valuation during 2023 to fund the launch. <\/span><\/p>\n

Time to First Sales: <\/span><\/strong>While Soleno has not provided specific guidance on their next steps for DCCR, as noted above we assume another study is the most likely course of action. We think a reasonable timeline for this would be: design and begin the study by mid'21; report results in 2H22; submit applications for approval by YE22; gain approval in 2H23. Therefore we are updating our time to peak sales from 5 years to 7 years. <\/span><\/p>\n

Probability of Success: <\/span><\/strong>As noted above, we believe another study is the most likely course of action and therefore see the risks for DCCR as shifting from regulatory to clinical in the near-term. We are keeping our overall probability of success for the program at 65% today.<\/span><\/p>\n

A second placebo-controlled clinical study for DCCR would inherently introduce some new clinical risk to the program. However, we believe certain elements of trial design (for example around patient selection, site selection, choice of endpoints, and strategies to reduce placebo response) could minimize the clinical risks inherent to any clinical study of PWS. In terms of regulatory risk, we think a second placebo-controlled study designed in discussion with the FDA, if positive, could actually increase the probability of approval once an NDA and MAA for DCCR are submitted. <\/span><\/p>\n

Price Target: <\/span><\/strong>Taken together, these changes to our assumptions move our PT from $11\/share to $8\/share. <\/strong><\/span><\/p>\n

Model: <\/span><\/strong><\/p>\n

\"\"<\/p>\n

\"\"<\/p>","show_more":1,"other":"