Soleno Therapeutics stock recently jumped more than 500% in a single day, and the biopharmaceutical company says it has now come out from "under the radar" with a potential treatment for a rare genetic disease.
The company is working on a treatment for Prader Willi syndrome, a genetic disease that causes obesity, intellectual disability and short stature. An estimated 10,000 to 20,000 people in the U.S. have the disease, Chief Executive Anish Bhatnagar told Investor's Business Daily.
Bhatnagar says results of recent tests confirm what Soleno researchers already knew: the drug works. Over the course of four months, patients who previously took Soleno's treatment for two to four years were switched to a placebo. That caused the patient group to experience a return to the abnormally strong hunger signals that mark Prader Willi.
Investors clearly were impressed with the results as SLNO stock rocketed 505% on Sept. 26, hitting a two-year high.
"We were so focused on the data itself that I'm not sure we were really processing what kind of move the stock would have," Bhatnagar said. "So, whatever it was, it was a pleasant surprise."
SLNO Stock: A Covid Slowdown
Soleno was borne from the marriage of two companies called Capnia and Essentialis in 2017.
The Covid pandemic weighed on Soleno's earlier results in Prader Willi syndrome patients, Bhatnagar said. The once-daily pill, known as diazoxide choline or DCCR, failed to pass muster in a Phase 3 study in August 2020. But it showed promise in patients with severe hyperphagia, or abnormally strong hunger. SLNO stock surged more than 24% that month, according to MarketSmith.com.
Then shares subsequently slouched from a high at 32.68 that month to a low of 85 cents last December. Soleno stock mostly has traded under the radar since then — until Sept. 26.
More than three years after the Phase 3 study, Soleno bore out the promise in hyperphagia by withholding DCCR from patients who had been taking it for two to four years. Those who went without DCCR started experiencing hunger issues again.
There are other potential uses for DCCR down the line. Bhatnagar says the parent molecule of DCCR was first developed for patients with hyperinsulinemic hypoglycemia, a condition that leads to persistently low blood glucose. He said there's also a chance Soleno could test it in patients with a condition that changes the way the body uses and stores glycogen, a form of sugar.
Right now, though, the SLNO stock story is completely around Prader Willi syndrome, Bhatnagar said. The company isn't planning to test DCCR in the broader obesity treatment market, an area currently led by Novo Nordisk with its drugs Wegovy and Saxenda. Eli Lilly hopes to join the weight-loss market with its diabetes drug, Mounjaro, later this year.
Top 1% Stock
Bhatnagar says Soleno is preparing to ask the Food and Drug Administration to approve DCCR for Prader Willi patients. The FDA could approve the drug in mid-2025.
If approved, Soleno will be entering uncharted territory with DCCR in Prader Willi patients. There is "absolutely nothing" on the market for the disease, Bhatnagar said. Patients often take multiple psych medications and growth hormones can help them reach a normal height.
"This is uncharted territory," he said. "This is, as I was saying earlier, one of the most significant unmet needs in the rare diseases space, in my opinion. This would be, if approved, the first product to address these problems."
Today, SLNO stock has a best-possible Relative Strength Rating of 99, according to IBD Digital. This puts shares in the top 1% of all stocks when it comes to 12-month performance.
The other ratings are lower, however. SLNO stock has a Composite Rating of 70, which means it ranks narrowly in upper one-third of all stocks in terms of fundamental and technical measures.
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