Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Wednesday, Feb. 25, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Anish Bhatnagar
  • President and Chief Operating Officer — Meredith Manning
  • Chief Financial Officer — James H. MacKaness

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Net revenue -- $91.7 million was reported for the fiscal fourth quarter ended Dec. 31, 2025, totaling $190.4 million for the fiscal year, despite less than nine months of commercial sales.
  • Profitability -- Achieved positive net income of $20.9 million for the fiscal year, transitioning from a prior fiscal year net loss of $175.9 million.
  • Cash generation -- Generated $48.7 million in operating cash during the fiscal fourth quarter and ended the fiscal year with $506.1 million in cash, cash equivalents, and marketable securities, after a $100 million accelerated share repurchase program announced in November.
  • Active patients -- 859 individuals were on active VICAT XR treatment at fiscal quarter end, up from 764 in the prior quarter.
  • Patient start forms -- Cumulative start forms reached 1,250 by fiscal year-end, representing approximately 12.5% of the U.S. VICAT XR addressable market.
  • Prescriber engagement -- 136 new prescribers added in the fiscal fourth quarter, with total unique prescribers at 630 as of Dec. 31, 2025.
  • Discontinuation rates -- Launch-to-date discontinuation rate related to adverse events was approximately 12%, with a total discontinuation rate near 15% at fiscal year-end; management anticipates a long-term rate of 15%-20%.
  • Payer coverage -- Policies covering VICAT XR included over 180 million lives across commercial, Medicaid, and Medicare channels at the end of the fiscal quarter, with reimbursed claims from about 45 state Medicaid programs.
  • EU commercialization progress -- All responses to EMA Day 120 questions were submitted before fiscal year-end; management expects Day 180 questions in February and anticipates a regulatory decision mid-year 2026.
  • R&D expense -- Research and development expense was $9 million for the fiscal fourth quarter ($2.8 million non-cash stock-based compensation included) and $40.6 million for the fiscal year ($78.6 million in fiscal 2024).
  • SG&A expense -- Selling, general, and administrative expense was $40.9 million for the fiscal fourth quarter ($8.7 million non-cash) and $132.1 million for the fiscal year ($115.9 million in fiscal 2024).
  • Gross margin note -- Fiscal fourth quarter cost of goods sold was $0.9 million; management indicated that COGS as a percentage of revenue will rise as zero-cost inventory depletes.
  • International expansion plans -- Plans to file an IND for glycogen storage disease type 1 (GSD1) in 2026, targeting a new rare disease indication with VICAT XR.
  • CFO transition -- James H. MacKaness will retire in March, with Jennifer Volk announced as his successor; MacKaness to remain in a consulting role to ensure continuity.

SUMMARY

Soleno Therapeutics (SLNO 5.58%) confirmed rapid early commercial adoption of VICAT XR, resulting in the transition to profitability within nine months of launch. The company reported strong financial liquidity and strategic flexibility, supporting both ongoing U.S. commercialization and pipeline expansion into new rare disease indications. An accelerated share repurchase program was executed, and broad payer coverage was secured by fiscal year-end.

  • The EU regulatory process advanced as planned, with all required submissions completed and a decision expected mid-2026.
  • VICAT XR real-world adherence is supported by consistent discontinuation rates and manageable adverse event profiles as described by management.
  • Broadening prescriber adoption and increasing caregiver engagement initiatives were actively underway to support sustained growth throughout 2026.
  • Soleno Therapeutics indicated ongoing investment in platform growth, with an IND filing for GSD1 and life-cycle management strategies in development.
  • Leadership transition in the CFO role was formally announced, with measures described to preserve business continuity.

INDUSTRY GLOSSARY

  • PWS (Prader-Willi syndrome): A rare genetic disorder characterized by hyperphagia (insatiable appetite), leading to obesity and metabolic complications.
  • DCCR (Diazoxide Choline Controlled-Release): A once-daily oral therapeutic targeting hyperphagia in rare disease conditions, marketed as VICAT XR.
  • Start form: Document provided by healthcare providers to initiate insurance benefits review and treatment for a new patient on VICAT XR.
  • Gross-to-net: The reconciliation metric capturing the impact of discounts, rebates, and other deductions from gross revenue to net sales.
  • EMA Day 120/Day 180 questions: Standard regulatory review milestones in the European Medicines Agency marketing authorisation process requesting sponsor clarifications or additional data.
  • IND (Investigational New Drug): An application to the FDA required before beginning clinical trials of a new drug in humans.
  • GSD1 (Glycogen Storage Disease Type 1): A rare inherited metabolic disorder addressed as a potential new indication for VICAT XR.

Full Conference Call Transcript

Anish Bhatnagar: Thank you, Brian, and thank you, everyone, for joining us for our fourth quarter and year-end results call this afternoon. As has been our practice, following my brief opening remarks, Meredith will review the company's commercialization progress to date and James will cover the company's financial statements for the fourth quarter and for the year. Then I will spend a few minutes outlining our thoughts and plans on expanding beyond Prader-Willi syndrome, after which we will open the call for questions. We finished 2025 on a very strong note, driven by a continuation of many of the positive trends that we have seen since VICAT XR was commercially launched in the second quarter of last year.

Consistent with our pre-announcement press release from January 12, total net revenue for the fourth quarter was $91,700,000, which brings our total net revenue for the full year, which was less than nine months of sales, to $190,400,000. We achieved profitability with positive net income for the year of $20,900,000, became cash flow positive, including generating $48.7 million of cash from operating activities in the fourth quarter, and ended the year with over $500,000,000 of cash, cash equivalents, and marketable securities. All of these are outstanding results.

This has been an incredibly successful launch made possible by the entire team at Soleno Therapeutics, Inc. who come to work each day to help fulfill our mission of improving the lives of people with serious rare diseases. We are very pleased to see such durable and exciting growth nine months post launch. Looking ahead, our leading indicators are strong. Since launch through 12/31/2025, we received 1,250 patient start forms, which represents approximately 12.5% of the U.S. VICAT XR addressable market, and as of December 31, there were 859 people on active treatment. We believe we can sustain our current momentum and capture an additional approximately 1,000 start forms over the next nine to twelve months.

This bodes well not only for the thousands with PWS and their caregivers, who struggle with the significant daily burden of hyperphagia, but also for our company, which is poised to generate significant long-term value. Importantly, the real-world safety profile of VICAT XR continues to mirror our expectations and the clinical long-term safety profile of the drug. This is significant when you reflect on the complexity of PWS and all the serious comorbidities of this very vulnerable and fragile patient population. The cumulative launch-to-date discontinuation rate of VICAT XR related to adverse events was approximately 12% as of the end of the fourth quarter and the total discontinuation rate was about 15%.

As stated earlier, we expect a long-term discontinuation rate of 15% to 20%. We are now seeing more and more success stories emerge as individuals with PWS-related hyperphagia have been on therapy for multiple months and we are seeing interest spread across all stakeholders, particularly among caregivers who endure a very significant burden in caring for someone with PWS who exhibits hyperphagia. We believe this dynamic will build as we progress through 2026. I would now like to provide a brief update on our activities in support of potential approval of DCCR in the EU. Last May, we announced the submission and EMA validation of our Marketing Authorization Application.

We subsequently received Day 120 questions and all responses were submitted before the end of the year. As we have indicated before, the nature of the key questions centered around the adequacy of the data to prove efficacy based primarily on our randomized controlled study. The next step is for us to receive Day 180 questions from the EMA around February. We continue to anticipate a decision in the mid-year 2026 timeframe, and we are considering a range of commercialization options in the EU and have continued to develop our own team and capabilities on the ground. It is a significant market opportunity.

We have said previously that we believe that there are about 9,500 people living with PWS in the EU under E4. Further, perhaps more so than in the U.S., it is a concentrated market driven by centers of excellence, and there is strong thought leader support for VICAT XR. We look forward to keeping you apprised of our progress over the next few months as we approach a regulatory decision and potential commercial launch. Now I would like to turn the call over to Meredith for a detailed commercial update. Meredith?

Meredith Manning: Thank you, Anish, and good afternoon, everyone. As Anish mentioned, 2025 was an important year for the PWS community and Soleno Therapeutics, Inc., as we brought to market the first FDA-approved medicine for the treatment of hyperphagia in adults and children four years of age and older living with Prader-Willi syndrome. We are encouraged that 1,250 new patient start forms were submitted for VICAT XR from launch on March 26 through year-end, which included 207 in the fourth quarter. This represents approximately 12.5% of the total U.S. VICAT XR addressable market.

At the end of the fourth quarter, 859 individuals were being actively treated with VICAT XR, up from 764 at the end of Q3, indicating that VICAT XR is being adopted into clinical practice and reflecting our ability to convert start forms into treated patients. On the prescriber side, our efforts to raise awareness of VICAT XR’s availability and clinical profile have driven strong engagement. In Q4, we added 136 new prescribers, bringing the total unique prescribers to 630 as of December 31. We continue to hear that VICAT XR delivers meaningful clinical benefits, and physicians plan to proactively discuss the first-to-market therapy with caregivers and patients as they consider treatment options.

Our field teams are not only educating but also activating the prescriber base by providing comprehensive support on therapeutic expectations, monitoring, and dose modification where necessary. These are critical elements that give physicians the confidence to initiate and maintain patients on VICAT XR and to integrate our medicine into routine clinical practice. A few things stand out when we look at who is being treated and who is prescribing. While most patients are between four and 26 years of age, we are also seeing meaningful utilization in adults, particularly those 27 to 45 years old. This speaks to VICAT XR’s relevance across the PWS population.

Side effects reported in the real-world setting have been consistent with those observed in our clinical trials and with the FDA-approved label, and as patients settle into their optimal target dose, adherence has remained high with a launch-to-date discontinuation rate related to adverse events of approximately 12% at the end of the quarter. We are also leaning into real-world experience to support demand. We are systematically capturing success stories with VICAT XR to highlight its impact on hyperphagia and to support more proactive treatment discussions. Through community outreach, including patient webinars and live events where families hear directly from others treated with VICAT XR, we are sustaining strong interest and supporting ongoing launch momentum.

Our January patient webinar attracted over 200 registrants, nearly 60 more than our November event, underscoring growing interest in VICAT XR. We are also collecting feedback from families who have attended these programs, and while still early, we have already heard of families who, after attending these events, have proactively asked their physicians about VICAT XR, encouraging signals that our education efforts are helping to drive appropriate demand and convert interest into active treatment. Looking ahead to 2026, our priority is to deepen experience and adoption across leading academic and endocrine centers, specifically among PWS experts who shape practice patterns, while further broadening the prescriber base in the community where many people with PWS are treated.

We are seeing growing confidence among these key experts in utilizing VICAT XR, and we have made important strides in creating champions among both HCPs and PWS families, which we believe will continue to support wider uptake over time and advance our goal of making VICAT XR the standard of care for appropriate patients with PWS-related hyperphagia. We continue to secure broad coverage for VICAT XR across all channels—commercial, Medicaid, and Medicare—resulting in policies that covered over 180,000,000 lives at the end of the fourth quarter. Additionally, we have strong coverage of reimbursed claims from approximately 45 state Medicaid programs through Q4.

Payers continue to recognize the seriousness of PWS, understand the true unmet need in treating hyperphagia, and appreciate the meaningful value VICAT XR can deliver, and we are seeing this clearly play out in the reauthorization process. As a reminder, payers typically require reauthorization every six to twelve months for rare disease medicines, and we are pleased to see the overwhelming majority of claims for patients have been quickly processed and continued on paid product. In summary, we believe 2025 has established a solid foundation with patients, prescribers, and payers for VICAT XR.

Looking ahead, we are committed to deepening adoption and expanding our prescriber base in both the KOL and community settings while keeping families and individuals with PWS experiencing hyperphagia at the forefront as we realize the full potential of the first approved treatment for this condition. I will now turn the call over to James for a review of the company's financial statements for the fourth quarter. Thanks, Meredith.

James H. MacKaness: Total net revenue for the fourth quarter ended 12/31/2025 was $91,700,000, representing sequential growth of nearly 40% from $66,000,000 in Q3. For the full year 2025, which, as a reminder, represents less than nine months of commercial availability, total net revenue was $190,400,000. VICAT XR was approved in March, and therefore, the company generated no revenue for the three or twelve months ended 12/31/2024. We generated $48,700,000 of cash from operating activities for the fourth quarter and achieved profitability with positive net income of $20,900,000 for the full year 2025. At the end of the year, we had $506,100,000 of cash, cash equivalents, and marketable securities.

Please note this is after our investment of $100,000,000 in the accelerated share repurchase program that we announced in November. Our strong balance sheet ensures that we are sufficiently capitalized to continue an effective U.S. launch of VICAT XR while, in parallel, progressing towards regulatory approvals and commercialization, either on a stand-alone basis or with partners, in the EU and other geographies, and to begin investments in possible new indications. Cost of goods sold was $900,000 for the fourth quarter and $2,700,000 for the full year. As a reminder, prior to FDA approval, costs associated with manufacturing VICAT XR were expensed as research and development expenses.

As such, a portion of the cost of goods sold during these periods included inventory at zero cost. Going forward, as we continue to sell VICAT XR, we will deplete our zero-cost inventory and replenish it with at-cost inventory and, consequently, cost of goods sold as a percentage of revenue will increase. Research and development expense for the fourth quarter was $9,000,000, which included $2,800,000 of non-cash stock-based compensation, compared to $21,500,000, which includes $10,100,000 of non-cash stock-based compensation for the same period of 2024. The cadence of our research and development expenditures fluctuates depending upon the state of our research activities, clinical programs, and the timing of manufacturing and other projects necessary to support regulatory filings.

For the full year 2025, research and development expenses were $40,600,000, as compared to $78,600,000 for the full year 2024. Selling, general and administrative expense for the fourth quarter ended 12/31/2025 was $40,900,000, which includes $8,700,000 of non-cash stock-based compensation, compared to $37,300,000, which includes $19,700,000 of non-cash stock-based compensation for the same period 2024. The increase in expense after removing stock-based compensation reflects our ongoing investment in additional personnel and new programs to support the VICAT XR commercial launch and in support of our increased business activities. For the full year 2025, SG&A expenses were $132,100,000, as compared to $115,900,000 for the full year 2024.

Total other income, net, was $3,800,000 for the three months ended 12/31/2025, compared to total other income, net, of $3,100,000 in the same period of 2024. For the full year 2025, total other income, net, was $11,500,000 as compared to $11,800,000 for the full year 2024. Net income for the fourth quarter was approximately $43,400,000, or $0.82 per basic and $0.80 per diluted share, compared to a net loss of $56,000,000, or $1.27 per basic and diluted share, for the same period in 2024. For the full year 2025, net income was $20,900,000, or $0.40 per basic and $0.39 per diluted share, as compared to a net loss of $175,900,000, or $4.38 per basic and diluted share for 2024.

Please note, with regards to KPIs, we intend to share patient start forms, number of unique prescribers, and lives covered in our Q1 2026 earnings call, which will mark twelve months of results, and our intention is to retire these metrics at that time. This concludes the financial overview. But on a personal note, I would like to let everyone know that I am retiring in March. It has been my great pleasure to work with Anish and team over the last six years. It has been a fantastic journey. We have accomplished so much, and I feel the company is in an excellent position to ensure future success.

We have an outstanding replacement, Jennifer Volk, who will take over as CFO in the coming weeks, and I will move into a consulting role to ensure a smooth transition. And now I will turn the call back over to Anish for additional thoughts.

Anish Bhatnagar: Thank you, James, for the incredible work over the last six years to get us to where we are today. With the launch of VICAT XR well underway, we turn our attention to what is next for the company, and to begin with, what is next for DCCR. We continue to pursue additional metabolic rare disease indications with high unmet need where the probability of success is high and the mechanism of action directly applies. The first of these indications is glycogen storage disease type 1, or GSD1, which is a rare metabolic condition characterized by the accumulation of fat in the liver and kidney, resulting in extremely low levels of blood glucose.

It impacts approximately one in every 100,000 live births, resulting in a prevalence of greater than 7,000 patients globally, and approximately 3,000 to 4,000 of the patients residing in the U.S. There are currently no FDA-approved therapies. GSD1 represents a natural and logical extension of our VICAT XR franchise beyond PWS. The predominant physician treating GSD1, namely pediatric endocrinologists, is the same for PWS. The mechanism of action of VICAT XR uniquely addresses the severe clinical manifestations of GSD1. People affected by GSD1 lack the ability to convert stored glycogen into glucose and live at the constant risk of life-threatening hypoglycemia.

They are dependent upon external sources of glucose, in this case, consumption of cornstarch multiple times a day, in order to survive. However, the precise timing of cornstarch consumption is critical, especially during periods of fasting between meals and during the night, as missed doses can lead to potentially fatal hypoglycemia. In addition, long-term use of cornstarch can lead to severe GI issues, metabolic dysfunction, and very poor quality of life. VICAT XR's ability to inhibit insulin secretion with its fast onset and repeatable and tailored dosing for maintaining proper levels of glucose throughout the day and night can reduce the person's dependency on cornstarch. DCCR has orphan designation for GSD1 in the U.S. as well as in the EU.

Our plan is to file an IND in 2026. More details will be provided during the year as we approach the start of the trial. We look forward to sharing future updates on these programs as they emerge. In closing, we are very pleased with the success and trajectory of VICAT XR, and we will continue to work tirelessly to make this safe and effective therapy available to as many patients living with PWS-related hyperphagia as possible. We are excited about expanding into new indications leveraging our existing knowledge and skills. We will now open for questions. Operator?

Operator: You will hear a prompt that your hand has been raised. If you would like to withdraw from the polling process, please press star then the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Paul Choi from Goldman Sachs. Please go ahead.

Paul Choi: Hi, this is calling in for Paul. Thank you so much for taking the question, and congrats on the quarter. Suppose I just wanted to start quick on the 1,000 patient start forms that you got for the next nine to twelve months. Can you remind us what the cadence of that is expected to look like? Is there going to be a bolus in the start of the year? Is it going to be late in the year due to the seasonal adjustment in Q1? Just help us understand the cadence there.

Anish Bhatnagar: Thanks for the question, Khalil. I think it is fair to say that we want you to think of this as over the nine to twelve months, not necessarily on a quarter-to-quarter basis. So it is hard to think of a bolus at this time. I think it is fair to say that the start forms will come in over the year. I will let Meredith address it further in terms of how she thinks the cadence is likely to be.

Meredith Manning: Yeah. Thank you, Anish. I agree with Anish that, obviously, we are looking at 1,000 over the next nine to twelve months. That is our goal in order to continue the sustained momentum of the very strong launch. And as I mentioned in the script, we are really doubling down on broadening our experience with KOLs, getting out into the community setting, and also activating the caregiver population.

Paul Choi: Got it. Thank you so much. And James, congrats on your retirement. We are sorry to see you go.

James H. MacKaness: Thank you very much. Appreciate it.

Operator: Your next question comes from the line of Moritz Reiterer from Guggenheim Securities. Please go ahead.

Moritz Reiterer: Hi. This is Moritz on for Debjit. I got, first, a question on PWS. At peak, what percent of the market do you think could be accessible in the U.S. at this point? And then a second one about GSD1. What do you think about dosing in GSD1? Do you think the dose would be similar or lower? And how do you think tolerability of the drug would impact adoption in that disease? Thank you.

Anish Bhatnagar: Sure. So your first question was about what is the likely peak penetration. It is a good question, and I think you have to put it in the context of the fact that no other treatments exist today. So, you know, many of these treatments, you look at 40% to 50% penetration in these larger rare diseases. But I think if we are, you know, three, four years out and the competitive landscape looks like the way it does today, I do not think it is unreasonable to expect a higher penetration than that. In terms of GSD, your question around dosing, we have to—so part of our first trial is going to be looking at dosing in these patients.

We do know that insulin is pretty sensitive to diazoxide. So we expect the dosing to be likely in the range of where we are today. It is important to know, though, that even though the unmet need is really great here, it is really about the precise dosing to increase blood glucose levels enough. And these patients do not have the sort of comorbidities that you see in PWS patients, so they are unlikely to be significantly obese. They are unlikely to be significantly diabetic, etc. So I think there will be more room to dose in that patient population, but that remains to be seen and will be the subject of the first trial.

Operator: Your next question comes from the line of Yasmeen Rahimi from Piper Sandler. Please go ahead.

Yasmeen Rahimi: Hi. This is Shannon on for Yaz. Congrats on the progress, and thank you so much for taking our question. Just two from us. Could you help us understand a little bit more about the refill rates that you are seeing now that you have a larger portion of patients who have been on the drug for several months? And then the second question is, how do you expect the average weight of new patients coming in to change over time? If you are seeing more older patients, do you expect the average weight to increase? Thank you.

Anish Bhatnagar: Sure. Shannon, I will take the second question. Meredith will take the first one. In terms of the weight over time, as you know, our clinical trial weight was 61 kilograms. The age was about 13 years. What we have said more recently is that the predominant number of patients coming in are in the four- to twenty-six-year age group, and, in general, likely heavier than what we are seeing in the trial population. So the average weight for a clinical trial patient would be about 488. We have said publicly that we are looking at averages in the higher than 500 range.

We are also seeing more older patients coming on at this time, and we expect that over time, therefore, the total weight will be going up as well. So, again, these are not likely to be large stepwise inflections, but think of it more as gentle rises over time. Meredith, do you want to talk refill rates, realizing that it is early and we do not really have that much data?

Meredith Manning: Yeah. Thank you. And similar to what I said in my prepared remarks, if you look at, as the patients are settling into their optimal dose, we are very pleased with the high adherence rate and seeing that we are, you know, nine months in at the end of Q4. We are seeing patients who are able to stay on therapy and reach a longer time frame. So we are very pleased with the refill rates.

Operator: Your next question comes from the line of Kristen Kluska from Cantor. Please go ahead.

Kristen Kluska: Hi. Thanks for taking the questions, and congrats, James. It has been an absolute pleasure working with you and always wishing you the best. So you talked about longer term, maybe factoring in a 15% to 20% discontinuation rate. I am wondering how you are thinking how efficacy will ultimately play into this. At what point in the launch do you think you will have a good sense of percent of patients that are dropping out due to lack of efficacy? And then I am curious, as you are collecting some of these real-world anecdotes, if the efficacy looks similar or different amongst patients, meaning are there some that are responding to hyperphagia?

Are there some that are responding on behavior? And what is really the factor that will keep somebody on the therapy longer term from an efficacy standpoint?

Anish Bhatnagar: Thanks, Kristen. I think it is fair to say that when you look at our experience in the clinical trials, which, as you know, lasted for many years, if you stay on therapy, you are likely to see benefits. And as you can imagine, you are unlikely to stay on if you have significant adverse events. What we have seen to date is that patients who have stayed on drug for some time are seeing efficacy. I think it is fair to say that discontinuations for lack of efficacy are few at this time, and I would not expect that to change too much. Because if you stay on drug, we expect you to have some levels of efficacy.

Kristen Kluska: Okay. And then just on what that efficacy actually is in the real world, is it looking different in patients, meaning are some responding to hyperphagia or some responding to behavior? Is it like a mix?

Anish Bhatnagar: Yeah. It is a good question. And as you know, we do not have the same precise gauge on efficacy in the real world as we do in the clinical trials. We are not doing efficacy analyses per se. But the anecdotes that we are hearing certainly primarily relate to changes in hyperphagia and the downstream effects of it. So, as you know, hyperphagia itself gets mixed up with anxiety related to food, behaviors, aggressive behaviors around food. So as long as we are targeting something around hyperphagia, we think that is the primary effect. I think the other effects—time will tell. It is hard for us to measure those, even in the trials.

But we do hear anecdotes that talk about being more calm, having better social interactions, having less anxiety, and things like that. So, yes, there is an element of that as well.

Operator: Next question comes from the line of Tyler Van Buren from TD Cowen. Please go ahead.

Tyler Van Buren: Great. Thanks, guys. I will add my congratulations to you, James, on your retirement and the success you have experienced at Soleno Therapeutics, Inc. You will be missed. Wanted to just follow up on the 1,000 start forms over the next nine to twelve months that you guys reiterated, which is, of course, encouraging, and earlier, you spoke about the cadence in response to a question. But wanted to maybe hear you elaborate specifically on what has been observed so far during January and February in the new year with the launch. And then as a follow-up, are you expecting any meaningful level of Q1 seasonality?

Anish Bhatnagar: So, Tyler, as you know, we were not able to comment on Q1, but we can tell you that it is interesting to launch a drug in a completely new indication, and we are learning as we go. You know, Thanksgiving, Christmas was interesting. It was interesting to see some of the summer, you know, camp-related things that happened—people going away to camp. So we will have to see what the cadence is like. I am going to let Meredith answer the rest of the question.

Meredith Manning: Thanks, Anish. And I concur 100% with you that it is interesting to launch. This is the first ever FDA-approved medicine for the treatment of hyperphagia, and so we are learning a lot around some of the aspects in the home or the family or what will bring them into the office to get seen by the practitioner. Also, I think I have mentioned several times in our last earnings calls that we also are looking at some of the physicians who are increasingly more interested to treat PWS because there actually is a treatment for hyperphagia now. And so they are opening up clinical practice or PWS-specific clinics.

So we are hoping to see some of the availability of clinicians improving as we go forward and really strengthening the care that is being delivered out there. So it is exciting. We will hopefully be able to provide you more details as we go along, but know there is strong interest out there. I will say that on the seasonality front—

James H. MacKaness: Sure. Tyler, thanks for the good wishes. I never like to miss an opportunity on the revenue side of Q1 to point out seasonality that impacts all commercial drugs, and it shows up in the gross-to-net. So, Tyler, as you are aware, but just to communicate again, what tends to happen with folks, in particular on commercial plans, is they will reset their co-pays. So that means that is more out of pocket that they would incur, except that we offer Soleno One, and we will effectively reimburse them for those co-pays. So that increases the discount, if you like, on the gross-to-net.

And then the other phenomenon that can happen is in the disruption of changing plans—your employer might change plans, you may choose a different plan—there is an opportunity where you may move from what we would call our paid bucket of active patients into the free bucket of active patients. So maybe you will receive four to six weeks of free drug before you move back to paid. It is a seasonality. It does not change the underlying growth in active patients, but it is just something that does impact the revenue because it will impact the gross-to-net discount for Q1.

And we will obviously be able to give you better color once we get through Q1, and we will be able to size it at that stage.

Operator: Your next question comes from the line of Leland Gershell from Oppenheimer. Please go ahead.

Leland Gershell: Thanks. Good afternoon. For this update, and James, just wanted to add my sentiments as well—wish you all the best as you move on. Wanted to ask, you know, at the time of approval as you were entering the initial launch, I guess this is a question directed at Meredith. You had said, I think, that you had identified that there are about 300 physicians who were direct treaters of about 20% of PWS patients and who also influenced the care of another 20%. And I think there were about 80% of pediatric endocrinologists who had expressed willingness to prescribe VICAT XR.

Just wondering if you could provide us a picture of where that landscape is today with respect to physicians’ uptake of VICAT XR in their practices? Thank you.

Meredith Manning: Yeah. Thank you very much for the question. I appreciate that. The phenomenon is still there as we look at the top 300. We think that is the best way to focus on the market and target where we can have deeper penetration. We are seeing strong uptake among the top 300, and the majority of them have more than one patient, so they are repeat writers, which is very exciting to see, and we are continuing to see that those individuals are influencing the treatment patterns across the country. I have mentioned before that we have peer-to-peer programs, so we are doubling down on that.

We also have an expert-on-demand where many community physicians can reach out to those top practitioners and get guidance on patient selection and what to look for with regard to setting expectations on efficacy and dosing and monitoring, etc. So that has been very exciting. And then as we look at moving forward on focusing in on the caregiver aspect, as I mentioned, we are doubling down on webinars and live events and hoping to see that will drive caregivers to come in and ask for VICAT XR.

Leland Gershell: That is very helpful. And then just, you know, kind of a higher-level question on the company's philosophy going forward in terms of the expansion, maybe through business development and the like. You obviously have a continuing and growing stream of cash coming in. It may, you know, cost you some to commercialize elsewhere and also advance your next program, but seems like you will have firepower to do beyond that. Just wondering if you could give us any sort of thoughts as Soleno Therapeutics, Inc. continues to evolve and develop its footprint. Thank you.

Anish Bhatnagar: Yep. Thanks, Leland. I think the most important thing remains successful commercialization of VICAT XR. And I think it starts with the U.S., but the next step is outside the U.S.—EU, other geographies, etc. And then the next thing is, I would say the lower-hanging fruit of using VICAT XR itself for other things which are high likelihood of success—situations like GSD1. So those are our primary targets. And we obviously continue to look at things on the outside. I do not expect imminent activity on that front, but we certainly will, in the longer term, look at doing that too.

Leland Gershell: That is helpful. Thanks so much.

Operator: Your next question comes from the line of Brian Skorney from Baird. Please go ahead.

Brian Skorney: Good afternoon, guys. Thanks for taking the question, and, James, congrats on the retirement as well. Sorry to see you go. You have six patents listed in the Orange Book for VICAT XR with four longest-duration ones going out to 2035. I think when you got approval last year, we talked a little bit, you know, in vagaries about the label creating some opportunity for even longer-dated IP. So just wondering if you could give us your current thoughts on exclusivity of VICAT XR based on where you are across patent.

And just real quick on COGS, just wanted to get guidance—what we are seeing is product that was already expensed through R&D, and there will be sort of a true-up this year in terms of gross margin?

Anish Bhatnagar: Sure. Let me take the first part, and James can take the second part. So on the exclusivity front, you are right. When we got approved, we had talked about the possibility of extension of IP beyond where we are today, and I think what you saw with the listing of the 2035 patent is a step in that direction. So it is a patent that is specific to methods of treating hyperphagia and food-related behaviors. That particular family, the related patents, have the ability to be extended into the late 2030s. We have also stated that we have filed additional IP, although we have not discussed the details of that. So stay tuned on that.

So, yes, that is the plan on exclusivity. James?

James H. MacKaness: Yeah. So, Brian, to your point, and thanks for your wishes. To your specific point, we still do have a little bit of the zero-cost inventory flowing through—so inventory that was in the supply chain prior to approval. So anticipate that COGS will just gently nudge up. They should stay in mid-single digits, though, so they will just nudge up as we get full cost through the supply chain.

Brian Skorney: Great. Thank you.

Operator: Your next question comes from the line of James Condulis from Stifel. Please go ahead.

James Condulis: Hey. Thanks for taking our question. It is Mark on for James. Yeah. I guess as it relates to the EU side of things, I think it is interesting we have now seen Skyclarys get approval and trofinetide trending in the negative direction with the vote. I guess in the context of that, how are you thinking about these as potential analogs and EMA’s overall comfort with perhaps maybe imperfect clinical data in the rare disease space? And just kind of your overall broader comfort with the EU approval? And then the second question also on EU is, when do you think you will kind of have the 180-day questions in hand and the following? Thank you.

Anish Bhatnagar: Yeah. On the EU approval, you are right. I think it is fair to say that decisions on the rare disease side go in one direction or the other, and, you know, we have seen other examples—Translarna is another example, which was approved in Europe for a long time, did not see approval here. So these things are always custom—rare disease datasets are never perfect. We have to just play out the process and see. So we have Day 120 questions. We responded to Day 120 questions in a timely manner. We are expecting the Day 180 questions by the end of this month, so imminently, and we will see what they say.

I think, as we have said in the past, the nature of the key questions were around the proof of efficacy using randomized withdrawal as the key trial, the fact that the same patients were in the early as well as the late part of the study, and does that create potential for bias, etc. So, clearly, you know, these are questions that the FDA asked us as well, and we were able to prevail. So we will attempt to do the same here. Hard to predict the outcome, though. In terms of timing of the 180-day, I would say imminently. I think they are supposed to be February 26.

Operator: Your next question comes from the line of Katherine Dellorusso from LifeSci Capital. Please go ahead.

Katherine Dellorusso: Hi. Congrats on the strong quarter, and congrats, James, on the retirement, and thank you for taking our questions. Yeah. I guess just a few more follow-ups on Europe, just given the decision is possibly around the corner. Just thinking about the potential trajectory in Europe versus U.S., are there any key learnings that can be had from the U.S. experience that could accelerate the uptake? And I guess if you were to commercialize on your own, any comments on the sales force that you think you would need there?

Anish Bhatnagar: Meredith, would you like to take that?

Meredith Manning: Sure. Happy to take that. So we are still looking at what the size of the field force would look like. Most specifically, we are focusing in on potentially Germany and Austria, the first to launch. So we are looking at what the marketplace looks like there. Additionally, I think the one other thing that Anish had mentioned in his comments, though, about Europe is one of the phenomena is that there are more centers of excellence and tighter treatment over in Europe, and so that is a little bit different than here in the U.S.

But with regard to launch success, obviously, it is making sure that there is strong education of the treaters and making sure that they understand exactly the patient population that they will be treating, and the selection of that patient has been really key in the United States.

Katherine Dellorusso: Okay. Thanks again.

Operator: The next question comes from the line of I-Eh Jen from Laidlaw & Company. Please go ahead.

I-Eh Jen: Good afternoon, and thanks for taking the question, and first, James, congratulations on your retirement, and hopefully, you enjoy the good life going forward. So my first question is that given that the drug has a great start for the first year, do you guys feel that for the next two—getting the next wave of patients—is that more difficult or just a different approach to accomplish that? Then I have a—

Anish Bhatnagar: Sure, Meredith.

Meredith Manning: Sure thing. I am happy to take that. Yeah. So I think what we are pleased to see is that we are getting a spectrum of the patient population. And I mentioned that the majority of patients are coming in ages four to 26. But we are also really pleased that we have reached greater penetration in the younger adults—I will say, even up to 45. That population definitely has more comorbidities, if you will, as they get older, but we are seeing a broad spectrum, and so we continue to see a broad—we believe we will see a broad spectrum as we move into 2026.

I-Eh Jen: Okay. Great. That is very helpful. Maybe just one in the product development or life cycle management questions, which is that are you guys also thinking about maybe the next-gen product following DCCR, and if so, what sort of attribute you think that you may want to have?

Anish Bhatnagar: That is a good question, Yale. As you know, what we are doing is a once-a-day pill, so there are limits to what you can do with regards to improving upon that. That said, we do have some internal programs on life cycle management, which I am not able to discuss today, but we do hope to discuss later this year.

I-Eh Jen: Oh, okay. Maybe last question here. In terms of DCCR, the mechanism of action for GSD, could you elaborate a little bit more? And thanks.

Anish Bhatnagar: Yeah. As you know, the critical problem in GSD is life-threatening hypoglycemia, and we know that when you target certain channels in the beta cells of the pancreas, you can suppress the secretion of insulin, which means that you can elevate levels of glucose. So the problem that occurs in GSD is that in order to keep glucose levels higher, these patients are required to take very regular feedings of cornstarch all day, including through the night. And what is very desirable is to be able to elevate those blood glucose levels enough that they do not get hypoglycemic.

So there is actually interesting information and published data using the parent molecule, and we have spoken with KOLs who have tried it. It works. But, as we know in situations like CHI as well, the side-effect profile is such that it is difficult to tolerate. But when we are looking at VICAT XR, or DCCR, and the low, stable levels that we will have in the blood, we expect a very different side-effect profile and should have the ability to elevate levels of glucose very precisely.

I-Eh Jen: Okay. Great. Thanks a lot, and again, congrats on the progress.

Anish Bhatnagar: Thanks, Yale.

Operator: Next question comes from the line of Derek Archila from Wells Fargo. Please go ahead.

Derek Archila: James, congrats—wishing you well and great working with you. So yeah, just two brief ones. I just wanted to clarify—so on the seasonality component, you talked about kind of impact to price and kind of free drug rate, but how much of an impact do you expect in terms of the patient visits and scripts in the first quarter?

Meredith Manning: Yeah. I think what we were saying is that we are not really commenting on the first quarter numbers as of right now. But with regard to seasonality and the gross-to-net, I think James talked about it. As you know, a lot of patients are coming in, so what we did not see—we launched in March—now we are going into January where the co-pay will re-up for a lot of the commercial patients. And so, as James mentioned, with Soleno One, we offer co-pay support for commercial patients, and we pay down to zero on the co-pay. So that is a potential thing we will see in the gross-to-net.

Derek Archila: So, yeah, let me ask this a different way. So I guess for typical Prader-Willi patients, do they tend to have, you know, seasonality in terms of their patient visits with their physician?

Anish Bhatnagar: So, Derek, I think, again, I will point you back to the fact that we are launching the first hyperphagia drug in this space, and we are learning as we go. What we know about visits that patients have based on claims data is that the younger patient population, which is the four- to twenty-six-year-old age group, has about four to six touchpoints with healthcare providers over the year. And what we know from conversations with KOLs—people who run these top 300 practices or, you know, top 10 practices—is that their practices are pretty crowded, and you schedule your appointments a year out or more. So the visits do happen, and there is this particular cadence of visits.

Whether it is different in the first quarter or not, we will find out.

Derek Archila: Got it. And then just a follow-up. Just want to know in terms of inventory and stocking in Q4 if there are any comments there or things.

James H. MacKaness: Yeah. We work with a specialty pharmacy. They just went through the holiday period. We will have to be able to do a deep dive to really understand anything, but nothing untoward that we are aware of.

Derek Archila: Got it. Excellent. Thanks, guys.

Brian Ritchie: Thanks, Derek.

Operator: Your next question comes from the line of Kapi Patal from Wolfe Research. Please go ahead.

Kapi Patal: Hey. Thank you for taking our question. Just on the active patient number that you gave, the growth in quarter over quarter is not keeping pace with the growth in new patient start forms. Is that mainly driven by insurance-related delays, or is it more of a function of the discontinuation rate, or is it a mix of both factors? And how should we think about this gap moving forward?

Anish Bhatnagar: I think a very important consideration is the time it takes for benefits assessment. So when we get a start form, you do not instantly start someone on drug. So they go into a benefits assessment time, which will take 30-ish days, give or take. And we do not think there are any issues with reimbursement that are significant. And there will always be a lag between the number of new patient start forms and the number of patients who will be active for that quarter. So, Meredith, anything to add to that?

Meredith Manning: No. I think that was a perfect answer. I think that we are looking at a little bit of a mix of all of the above, but we are pleased with, as I mentioned, the ability to convert start forms into patients and reimbursed claims. So we are going to continue to do that and double down on that in 2026, and believe that we will be very successful.

Kapi Patal: Got it. And one more on our end. I know you mentioned the long-term discontinuation rate, but do you forecast the discontinuation rate meaningfully fluctuating now and the end of the year? And how might that affect the active patient growth in 2026?

Anish Bhatnagar: Good question. I mean, we have to see. I mean, what we have seen so far, I think, is very acceptable for a drug that is treating such a significantly comorbid condition. So if we remain in this zone of 15% to 20% thereabouts, I think that is a really good outcome. It is difficult for us to predict if it changes between now and end of the year. I am sure it will go up and down. It will fluctuate. But I do not see a reason why there would be major changes during the year. Not sure if that answers your question.

Kapi Patal: Yeah. That answers it. Thank you. And congrats, James, on the retirement.

James H. MacKaness: Thank you.

Operator: Ladies and gentlemen, if you are using a speakerphone, please make sure to lift your handsets before pressing any keys. Your next question comes from the line of Ram Selvaraj from H.C. Wainwright. Please go ahead.

Ram Selvaraj: Thanks so much for taking our questions. I just wanted to ask about whether you are evaluating other disease indications in which to explore VICAT XR beyond glycogen storage disease, and if so, what some of these indications might be. If, for example, there is any plan to potentially revisit the utility of the drug in Smith-Magenis syndrome or other conditions of that ilk. Secondly, I just wanted to clarify whether you anticipate any potential pricing flexibility impact if you were to launch the drug yourself in Europe or through a partner—if there might potentially be any spillover to the U.S. pricing paradigm or if, ultimately, that is a nonfactor given the rarity of Prader-Willi syndrome.

And lastly, I do not know if you can comment on any underlying dynamics with respect to the discontinuation rate that you are seeing—if it is plateauing, if you are seeing any evidence it is, in fact, declining as there is more experience with the drug over time in the PWS population, or if you are seeing the actual percentage rate increase, and if it is increasing, by how much? Thank you.

James H. MacKaness: Lots of questions, Ram. Okay. I think I got those. So the first one is other indications.

Anish Bhatnagar: What we have said in the past, just to remind you, is that there are two categories of rare diseases that we think DCCR could be useful. One is conditions like PWS where things like hyperphagia and food-related behaviors are a problem. You are right—Smith-Magenis syndrome is one of them. You know, fragile X—about 10% of fragile X is a PWS phenotype. Some patients with Angelman have it. There is SIM1 obesity. So there are various other indications where we definitely continue to think that it could be useful, and we are continuing to evaluate it. In terms of the pricing impact of self-launch versus not, I think the challenge right now is that it is a moving target.

I think if we had to make a decision today, I would probably say that pricing flexibility is optimal if we control it both here as well as in Europe or outside the country. I am not sure that it is a nonfactor due to the rarity because even though there has been some conversation about an orphan exclusion in MFN, we have not seen that actually become reality yet.

In terms of the discontinuation rates and are they plateauing, the one phenomenon that we are following very closely is to see if the cadence of discontinuations is going to be like what we saw in the clinical trials, which is to say that if you stay on drug through titration and some period of time after, you are very likely to stay on drug. And I would say that the early indicators are that is indeed the case. We think that is very encouraging, but it is something that we are following very carefully, and we will continue to update you all.

Ram Selvaraj: Thank you very much.

Operator: Thank you. We have no further questions at this time. I am going to turn the call over back to Anish Bhatnagar for closing comments. Sir, please go ahead.

Anish Bhatnagar: Well, thank you all for dialing in today, and we look forward to continuing the conversation with you all. Have a good evening.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.