FDA Approval for its Drug Lifted Soleno Therapeutics (SLNO) Shares by 60%

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund returned -9.41% (gross) and -9.64% (net), compared to a -11.12% return for the Russell 2000 Growth Index. There was a broad positive sentiment in the market at the beginning of 2025. Expectations for a pro-business and soft regulatory environment lifted global markets in January. However, delays and uncertainties surrounding U.S. policies led to a significant downturn in March. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, TimesSquare Capital U.S. Small Cap Growth Strategy highlighted stocks such as Soleno Therapeutics, Inc. (NASDAQ:SLNO). Soleno Therapeutics, Inc. (NASDAQ:SLNO) is a clinical-stage biopharmaceutical company. The one-month return of Soleno Therapeutics, Inc. (NASDAQ:SLNO) was 4.02%, and its shares gained 99.55% of their value over the last 52 weeks.  On June 20, 2025, Soleno Therapeutics, Inc. (NASDAQ:SLNO) stock closed at $79.98 per share, with a market capitalization of $4.031 billion.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Soleno Therapeutics, Inc. (NASDAQ:SLNO) in its Q1 2025 investor letter:

“Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. Soleno Therapeutics, Inc. (NASDAQ:SLNO) is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for rare diseases. The FDA granted approval of Vyvkat for treating Prader Willi syndrome, a rare genetic disorder that causes life-threatening obesity in children. That development served to boost the stock price by 60% and we decided to book some of the profits by cutting back on the investment.”

Why Soleno Therapeutics Inc. (SLNO) Went Up Last Week?

A clinical-stage biopharmaceutical company’s boardroom, emphasizing the importance of decision-making for the lead candidate development of a once-daily oral tablet.

Soleno Therapeutics, Inc. (NASDAQ:SLNO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held Soleno Therapeutics, Inc. (NASDAQ:SLNO) at the end of the first quarter, which was 39 in the previous quarter. Soleno Therapeutics, Inc. (NASDAQ:SLNO) reported a net loss of about $43.8 million ($0.95 per share) for Q1 2025, compared to a loss of $21.4 million ($0.59 per share) in Q1 2024. While we acknowledge the potential of Soleno Therapeutics, Inc. (NASDAQ:SLNO) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Soleno Therapeutics, Inc. (NASDAQ:SLNO) and shared the list of biotech stocks screaming a buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of SLNO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.