What happened
Shares of Soleno Therapeutics (SLNO 1.47%) were down more than 23% as of 3 p.m. on Wednesday, a day after the pharmaceutical stock rose as much as 420% on news regarding its prospective treatment for Prader-Willi Syndrome (PWS), a rare genetic disorder.
So what
Investors took the opportunity to take profits following the stock's big run the day before. Thanks to the rise, even with Soleno's shares falling on Wednesday, sellers were bound to make money, assuming they bought the stock as late as Monday when it was as high as only $4.86 a share. On Wednesday, the lowest the stock sold for was still above $20 a share.
On Tuesday, the clinical-stage biotech said that it planned to submit a New Drug Application (NDA) to the Food and Drug Administration (FDA) regarding diazoxide choline controlled-release (DCCR) to treat PWS. That came after the company reported phase-3 data that showed a dramatic improvement for PWS patients compared to a placebo in a long-term study.
Now what
It may take awhile for the stock to find a truer level, so it wouldn't be surprising to see its shares fall a little further. PWS is quite rare, affecting one of every 15,000 to 25,000 children. It leaves patients with strong hunger signals and can cause physical, mental, and behavioral problems.
It's still a big deal for Soleno, as DCCR, a once-daily oral pill, would be its first marketed drug, assuming the FDA approves it. The company has said it plans a NDA in the first half of 2024. The company's finances got better just with the positive trial-data news. In the second quarter, Soleno said it had $19.4 million in cash. The company is in line for an additional payment of $15 million from a Securities Purchase Agreement (SPA) with Nantahala Capital Management, Abingworth, and Vivo Capital, due to the announcement of the positive top-line data. There is an additional $35 million in warrants that could be paid if the SPA is exercised within 30 days of an FDA approval of DCCR to treat PWS.
