Soleno Therapeutics won a hard-fought approval for a drug that treats excessive hunger associated with a rare disease. The biotech stock rocketed into a breakout.
The company's drug, extended-release tablets called Vykat XR, will treat abnormally strong hunger tied to Prader-Willi syndrome. Soleno expects to launch the daily pills for patients ages 4 and older in April, according to a news release.
RBC Capital Markets analyst Brian Abrahams noted the development process for Vykat XR was "somewhat of a journey." To prove the drug's effectiveness, Soleno Therapeutics had to pull patients off of it — showing that their strong hunger returned in the absence of treatment.
On Thursday, Soleno stock surged 37.6%, closing at 67.39. That put the biotech stock above a buy point at 60.92 out of a consolidation, according to MarketSurge.
Biotech Stocks Surge On Approval
There are roughly 12,000 patients with Prader-Willi syndrome in the U.S. The condition causes a number of physical, mental and behavioral problems, including constant hunger. Soleno Therapeutics plans to charge $486,000 a year for patients who weigh between 40 and 65 kilograms.
The approval isn't necessarily a surprise, but following "a history of somewhat mixed data," RBC's Abrahams said. This suggests the Food and Drug Administration "remains open and flexible in working with sponsors developing orphan disease drugs."
But Abrahams expects Aardvark Therapeutics to come up with the better solution. The company is testing a drug called ARD-101 that could have a better benefit/risk profile, he said. In one of Soleno's tests, more Vykat XR patients experienced hyperglycemia than placebo recipients. The potential for excessive hair growth from Vykat XR could deter some females from starting treatment, he said.
"Overall, we see the drugs coexisting, and potentially even being used in combination," he said.
Fellow biotech stock Aardvark initially jumped on Soleno Therapeutics' approval, but shares closed 5.5% in the red at 8.90.
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