Well, good morning, and thank you for joining Guggenheim's 2026 Emerging Outlook Biotech Summit. I am Debjit, one of the therapeutic analysts, and my privilege to welcome our next presenting company, Soleno Therapeutics and joining us from Soleno, our CEO, Anish Bhatnagar, and CFO, Jim Mackaness. Thank you, gentlemen, for flying across the continent and joining us today.
Thanks for having us, Debjit.
Thank you very much.
So, as is customary, not that people don't know about Soleno, but a very quick introduction.
Sure. So Soleno is in the rare disease space. We're based in the San Francisco area. We're a commercial stage company. We have a commercial product for a disease called Prader-Willi syndrome. Just very briefly, it's a genetic disease. It's the main abnormality in the disease is called hyperphagia. It's an insatiable desire to eat. It's a disease which has no treatments available. This is the first treatment to be approved for the disease, and we've been on the market for about 3/4 at this time.
Awesome. So we are roughly halfway through the first quarter. How do you think the start forms are trending? Because that literally is the focus now, for the next sprint.
Yeah, as you know, we can't talk about the current quarter, but we'll point you back to the previous quarter and the sort of guidance that we've given about where the business is headed. We think that the way to think about this is the longer term, nine to 12 months. Think of us as doing about 10% of the TAM, which is 1,000 start forms, and we think there'll be quarter-to-quarter variability, but it's fair to assume that that's the sort of trend that we should see.
Do you think the holiday drop-off that you saw in the fourth quarter last year has sort of reversed now that, you know, sort of normal business environment?
Again, not dealing with the specifics of the quarter, but I will say that the expectation is that the holiday variability that we saw should not be here, because obviously we don't have Thanksgiving and Christmas in this quarter. That said, I think, as we've talked in the past, this is the first launch in the hyperphagia space for PWS, and we are learning as we go as to what the variability might be in the market. So this is our first quarter, so we're curious to see how it goes.
In terms of disclosures and guidance, when you have your full year call, could you outline what we should be expecting during 2026? You know, will first quarter be the last time we talk about start forms and really move to patients on drug, et cetera?
Yeah, our expectation is that the last time you'll hear about start forms will be the first quarter numbers, and we'll then move to sort of more traditional metrics of revenue and active patients.
During the full- year call or during the first- quarter call, are you providing full- year guidance?
At this point, we're not planning to provide full- year guidance. We think that the business needs to mature a little bit more. As we said, we're still kind of understanding the ebbs and flows of it, but I think it's definitely something on the table and something we'd like to do as soon as we feel comfortable.
Got it. So Soleno already has roughly 10% of the market, and you expect another 10%ish over the next nine to 12 months. That would put you roughly 250 kind of start forms per quarter. What kind of visibility do you have to be confident with that kind of a guidance?
Yeah, so the numbers are based on, I'd say, two broad metrics, and both of these dynamics are things we've talked about in the past. One is the idea that the large providers, the KOL, hospitals, have pretty busy practices, and what they've always told us is that they need to provide access to the drug when they see the patient, which in most cases is about once or twice a year. So there will be this sort of baseline cadence of drug being offered to people as they come in.
So that's one. And the second is, we do kind of bottoms-up assessments from time to time with our commercial teams, and that's the zone in which they land. So if we look at sort of the prior experience that we've had so far, if we look at what we see from the KOL practices, and if we talk to our salespeople and the others in the field and look at a bottoms-up analysis, those are the sort of numbers that we land at.
Got it and of the start forms that you're currently capturing, how many of them are actually flowing through to becoming a revenue-generating patient? Or do you see significant drop-off? And if there is a drop-off, how can you fix that?
Sure. Jim, you want to take that?
Yeah, I think, you know, we've tried to explain to people the sort of the life cycle, if you like, of a start form. So start form comes in from the doctor's office and will go to our specialty pharmacy partner, Panther. They'll go through various sort of assessment. They'll basically make sure it's completed, so it'll be backwards and forwards. They go through basically some payment assessment as well. Typically, you know, a lot of them can go through relatively quickly now, but let's say 45-30 days to get through that process. There are some that get canceled out. Sometimes it's filled out for the wrong drug, sometimes what happens in the backwards and forwards, the family says, "Hey, we're going on vacation," or whatever. So maybe single digits get canceled out before they actually get into the active base.
So then what happens is, Panther's gonna basically fill the drug, so they send the drug out to the patient, and that starts us in the active patient count. T hen what I think, to your reference, is, you know, we've seen that, not surprising, there's some discontinuation that happens. You know, when we look at our long-term clinical evidence, we suggest that that discontinuation will probably get into the 15%-20%. It's kind of just nudging up there over the early experience, but we expect that to be about a 15%-20%, which we think is very, very healthy for a rare disease in a situation with the comorbidities that exist. So 15%-20% gets discounted out, so then you end up with your active patient pool.
Your active patient pool consists of paid, the predominant amount, and some in the free. So what'll happen is basically you'll either get free, maybe because of socioeconomic reasons, which, which case you're sort of permanently free, or you may take advantage of some of our programs for free, which is like a quick-s tart program or a bridging program.
And so what can happen is a patient can move between the paid and the free bucket, but ultimately in the paid bucket, you end up with your active patients, and then that's the amount with a little bit of adherence, times your WAC, times your gross-to-net, that's what drives your revenue. So hopefully that gives everyone sort of some guidance, if you like, on how this whole thing grows. Then as you grow your active patient number, that's what drives the cumulative revenue growth over the next couple of years.
Debjit, to the tail end of your question, I would say the trend is the same. We don't see any significant changes to this.
Got it. Now, you don't expect any seasonality with start forms, but there could be seasonality with revenue in the first quarter. So if you could lay out expectations, where you were in the fourth quarter versus where you could land up in the first quarter?
Yeah, that's a, that's a very good point. So, consistent across all commercial drugs, what happens is when you go into the first quarter, you have a little bit of disruption in your gross- to- net. So the reasons for that is, particularly if you're on a commercial program, or like most of us, your copay is reset. So as a result of your copay resetting, now that means for the patient, that's more out of pocket. What we do is we offer a program to do assistance on that, so we help them with that, but that basically means that we're going to be funding the copay, which means there's an increase in the gross-to-net discount.
The other element as well is if you're going through and your employer changes programs or you change programs, there may be some disruption in your coverage, in which case you'll move from that paid bucket I talked about into the free, 'cause we want to keep you on therapy, so we'll give you bridging drug to keep it going. So you move from paid to free, and then you move back from free to pay. and again, that impacts gross-to-net, so that means the discount that we'd anticipate seeing in the first quarter is going to be larger than we saw in the fourth quarter. All of that's very normative, doesn't change the underlying health of the business. It's just a seasonality phenomenon that happens with commercial drugs.
Should we expect sequential decline or it should be steady?
Well, we're not going to make any revenue comments. We're not making revenue comments. The key thing is to make sure we continue to see that active patient build go through, and that's what's going to drive the sort of sustainable growth in the business.
The current discontinuation rate as of the fourth quarter was roughly about 12%. Is that the overall number or just the AE-related discontinuation?
As we said, it was AE-related discontinuation. The overall was approximately 15%.
When you say the long-term discontinuation rates should stabilize in that 15%-20% range, that's the overall, including AEs, et c?
That's our expectation.
You're pretty much at steady state?
I think the 15%-20%, you know, is in that zone. I think we'll, we'll see where it goes, but I feel that, from a AE-related perspective, one of the trends that we've been following is: When do these actually happen? So can you actually predict when these things stabilize? And what we saw in the clinical trials, and what we appear to be seeing now, is that discontinuations for adverse events tend to happen earlier. So if you stay on drug for a certain period of time, you're likely to stay on drug. So that's, that's what we'd like to see. The data is not mature enough to make, you know, sort of clear predictions on that, but, we're following it closely.
Got it and, with respect to the AEs that you're now capturing in the real world setting with VYKAT XR, how does that compare versus your expectations from the clinical trial program?
Yeah, if you look at the nature of the AEs, they appear similar to what we have in the label and occurred in the clinical trial program. So fluid retention, hyperglycemia, rash, hypertrichosis, and you'll see the Pharos Database, it's predominantly that, it's predominantly non-serious. So the difference that could be visible to people is the number. But remember, we've treated, like, almost 10 times as many patients already as we did in the clinical trials. So on a percent basis, I would say things remain similar to what we expect.
The trends that you're capturing with respect to titration, has that changed materially with the, you know, real-time update on the FAERS database? The patients are not titrating to the required dose or are down titrating?
From the best of our ability to look at data today, we think a vast majority of patients are titrating to their prescribed dose. So there will always be, and we want there to be, situations where you don't titrate in the same way or we titrate to a lower dose than expected in situations that have comorbidities, but those are the minority.
Got it and, the label kind of says six weeks from sort of a titration phase. Is that what you're seeing in the clinical, in the real world setting?
Yeah, and again, you know, we are a little bit arm's length on, in the commercial setting. But overall, I would say that unless you are a patient who has significant comorbidities or you're very obese, et cetera, you should be getting to your dose at on time.
Any sense of well, how diuretic use is trending in these patients? Or is it primarily being limited to the older, sort of more patients with more comorbidities or obese?
Again, with the caveat that we don't get that sort of information that we get in clinical trials, diuretic use is in a minority of people.
So if you think about, once the patients get to the right dose, how is the WAC gonna evolve between, say, 2026 and 2028?
Yeah, I think, you know, to benchmark everybody, what we said was coming into the commercial launch, we used a pro forma off the 61 kgs we saw in the clinical trial, average age of 13, and that came to about a WAC of about $480,000, I think. T hen we've commented that, as expected, we do see the earlier patients be the early adopters, but probably a little bit older, and therefore, the weight a little bit north of that. So we're sort of in the $500,000s, we've said for the WAC at the moment.
Our expectation is that we should just see I refer to as a gentle drift up, if you like, through 2026, 2027. Logic there is, as we continue to go into the broader patient population, should continue to see older patients come with an average higher weight, and so we should see it move up through the $500, $600, into $700 over the next sort of 2, 3, 4 years.
Got it. The patients who have discontinued or are discontinuing, have you successfully got them back on treatment?
There's definitely patients who've come back on treatment and are doing well.
What's motivated that, and what's changed in their treatment course?
It's hard to tell what's motivated them, but I think, our conjecture is that it's really the social aspects of being on drug and doing well. We're seeing now there's a groundswell of stories of people who are on drug and doing well and talking about it, and, you know, we've also been sort of showcasing some of them in webinars, et c, and in-person events. I think there's an element of that when people look around and say, "You know, I could be having that," it's very desirable. So we think that's one of the reasons why people are coming back.
I think if you have discontinued for an adverse event, your physician's probably more likely to be, more careful about how they're titrating you, monitoring you more closely, and that allows you to get to a dose that makes sense. The one thing that is important to remember is that you don't need to be on your prescribed target dose to have efficacy. You can start to see efficacy at lower doses, and you can certainly see efficacy if you remain on a, you know, lower dose for a longer period of time as well.
Friday, August 15th, 2025, was a pretty momentous day for you guys.
What happened that day?
You think you're on the other side of that?
What we can do is run the business. You know, there's going to be noise on the outside. We need to execute. This is a huge unmet need. There are so many patients out there. This can take longer than people would like it to, but this is going to be a very, very significant commercial opportunity.
So you know, you honestly think that there is no more overhang from that report that was published, and the physician and the community are now totally on board, that the drug is doing what it's supposed to be doing, and all the glorification of what should have been a normal course of, you know, drug launch has kind of abated?
I think you might be giving too much credit to external noise. I think that the course of a launch in a rare disease where nothing else has ever existed, is always going to be with ups and downs. I think that what we see is, to a large extent, the normal variation of what you should expect to see in a launch. It's a really tough disease. There's a lot of comorbidities, and it's not easy to treat these patients. We have more than 600 prescribers. Many of them have, you know, one or two patients. They don't have a great understanding of the disease. They certainly don't have a great understanding of the drug. So all of this takes time. There's a lot of educational elements to it.
So at launch, I believe there were 300 HCPs who had about 4,000 patients. Of that segment, how deeply penetrated are you, and where is the next leg of growth?
Yeah. One of the things that has happened is we have a much better understanding of the prescribers as well. So going in, our expectation was that these 300 physicians had direct prescriptions to or influence on prescriptions to about 4,000 patients. We know that a majority of those people have written, but what we also understand now is that those 4,000 patients are actually quite skewed towards the top of the 300. So, like, the top 50, 60 actually have a large majority of the 4,000, and virtually all of those top 50 have written. So we've learned a lot, and we're continuing to learn about how these patients are treated and who's treating them and I would say that the large prescribers, by and large, are writing and are rewriting.
So when you think about the next 1,000 patients who are likely to come on therapy over the next nine to 12 months, is that primarily gonna be from these, you know, where bulk of these 4,000 patients are?
So that's not been our experience. That was our expectation going into launch, but we've had a tremendous number of new prescribers. You know, nobody thought we would have 600 and some prescribers at this point. Even those KOLs who see PWS on an ongoing basis have been surprised at the number of people writing scripts. So it's hard for me to predict where they'll come from. If I had to guess, it's going to be a mix.
I believe you had, like, 185 million lives covered end of fourth quarter. Where do you expect to be end of first quarter or end of 2026?
Yeah, I think that number of lives covered is not a great representation. The actual number ends up actually being higher and what we are seeing is we are seeing payments through almost 48 Medicaids at this point. One of our best payers is Medicare. New to market blocks on all large PBMs have been removed, and we're seeing policies being written, by and large, to label. So we think overall, the reimbursement situation for the drug has been better than anyone thought it would be.
Are you having any issues with prior auth with payers?
I'm sure there's one-offs, but I would say that overall, this has been tremendous. The reimbursement team, which is very experienced, has consistently said they have not seen a launch like this before.
Got it and in terms of the physician, you know, B2B kind of training efforts, especially the, you know, for example, when you talk about physicians with one or two patients, how is that progressing, and has that sort of addressed any of the rapid AEs that you saw initially?
Yeah, I think it's a process, and you can imagine that if you're a physician who's never treated a PWS patient before and you're prescribing the drug, many of them will appreciate input from people who understand the disease a lot more and, you know, these sessions can be, I believe, 30-45 minutes, and you can discuss a single patient for that long, and that's really made a difference in some cases. So that continues to happen, and we think that will be useful. We continue to expand the base of people who are having these conversations, too, from our end.
Let's move to the ex-U.S. You responded to the Day 120-day questions. What are your expectations for CHMP approval this year? You know, is there anything out of the ordinary that you're hearing from CHMP that you did not hear from the FDA?
So I think, the one big difference in how the CHMP, the EMA works relative to the FDA is that there's not like this ongoing back and forth. So Day 120, you get a huge number of questions. It's kind of the kitchen sink and then it gets more narrow based on your Day 120 responses. Day 180, you get a smaller number of questions, and that gives you a better idea of what they're thinking and then you can respond to those. There's a possibility of an oral hearing. So it's a much more structured process. So it's not that, you know, we get a call or a information request from them for a single thing. I think, it will be interesting to see what the Day 180 questions show, and those are expected at the end of February.
Got it. As it currently stands, assuming approval sometime earlier this year, how are you thinking about the commercial opportunity in Europe?
Yeah, numerically, it's a great opportunity. The number of patients in the EU 4 plus the UK is about 9,500, so close to what we see here. Some of the countries have very structured ways of seeing their patients, centers of excellence. France is a great example where, you know, virtually every patient with PWS will go to one of these predesignated centers. So we think, commercially, there's a pretty tight way to get to these, providers, and we continue to move it forward.
Do you plan to launch it yourself or do you... Or are there other avenues, partnership, licensing?
Yeah, I mean, there's clearly a lot of interest in partnering for a drug like this. But as we have discussed in the past, we've started to build our own team in Europe, and as we look at the opportunity, we get more and more comfortable that this is something that can be addressed by us, and that's certainly on the table.
As you think about the business, given that you're a profitable company, where are you planning to deploy capital, either expanding portfolio pipeline or doing more share buybacks, et cetera?
I think the key is to continue to feed the business. We will have to make sure that the launch continues to be successful, whether it's the U.S. or it's ex U.S. That's one. Two, we've talked about working on other indications with VYKAT, so we'll be talking more about that soon and, yes, definitely looking at other inorganic ways of growing and looking at assets as they come our way, but probably not in the short term.
Got it. Unless you want to give us guidance. All right. Looking forward to the, you know, fourth quarter call, and thank you very much for making time for us.
Thanks for having us.
Thank you.
Appreciate it.