An emerging biopharmaceutical company has received the first Food and Drug Administration approved treatment to address a chronic, excess hunger condition called hyperphagia in sufferers with Prader-Willi Syndrome (PWS).
Shares of Soleno Therapeutics (NASDAQ: SLNO) spiked 44 per cent on Thursday following the milestone for the clinical-stage company.
The FDA’s decided to approve VYKAT XR (diazoxide choline extended-release tablets) came on Wednesday after an extended review period that pushed the Prescription Drug User Fee Act target action date from late December of 2024 to Thursday.
This approval is a hard-won victory for Soleno, which has been developing the drug through a Phase III clinical program. Hyperphagia is one of the most challenging symptoms of PWS, often leading to severe obesity and related health complications. Until now, no approved therapies have directly targeted this condition. This has made VYKAT XR a groundbreaking addition to the treatment landscape for this underserved patient population.
Investment firm, Cantor Fitzgerald, raised its price target for Soleno Therapeutics from USD$67 to USD$123 while maintaining an “Overweight” rating.
This significant upward revision—nearly doubling the previous target—signals strong confidence in the commercial potential of VYKAT XR.
Analysts see the drug as a game-changer because of its ability to meet an unmet medical need. Additionally, it’s because of its potential to generate substantial revenue in a niche market. The combination of FDA approval and bullish analyst sentiment has created a perfect storm of positive momentum for the stock.
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Soleno’s approval a positive signal for broader market
Prader-Willi syndrome is a rare genetic disorder resulting from the loss of function of specific genes on chromosome 15.
In newborns, it manifests as weak muscle tone (hypotonia), poor feeding, and slow development. As children grow, they often develop an insatiable appetite (hyperphagia), leading to overeating and potential obesity.
Additional characteristics include mild to moderate intellectual impairment, behavioural issues, short stature, and distinctive physical features such as a narrow forehead and small hands and feet. PWS affects males and females equally across all races. Furthermore, doctor’s consider it to be the most common genetic cause of life-threatening obesity in children.
Additionally, the ripple effects of Soleno’s success extend beyond its own ticker.
Shares of Aardvark Therapeutics (NASDAQ: AARD), another biotech company working on treatments related to obesity and metabolic disorders, also rose with Soleno’s news.
This suggests investors view Soleno’s approval as a positive signal for the broader sector targeting rare diseases and obesity-related conditions.
Soleno Therapeutics has been preparing for this moment for awhile.
It’s bolstered its financial position with a USD$200 million debt financing deal with Oxford Finance LLC in December 2024. It’s also maintained a cash reserve of USD$284.7 million as of its last quarterly report. This strong balance sheet provides the company with the resources needed to launch VYKAT XR commercially.
This new drug offers a unique market position with VYKAT XR. Further, this is first approved therapy for PWS-related hyperphagia, giving it a significant first-mover advantage.
Investors responded positively to Soleno’s success in bringing a treatment for a rare disease to market.
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