Soleno Therapeutics, Inc. (NASDAQ:SLNO) Q4 2025 Earnings Call Transcript

Soleno Therapeutics, Inc. (NASDAQ:SLNO) Q4 2025 Earnings Call Transcript February 26, 2026

Operator: Good afternoon, and thank you for standing by. Welcome to Soleno Therapeutics Fourth Quarter and Full Year 2025 Financial and Operating Results Conference Call and Webcast. [Operator Instructions] As a reminder, today’s webcast is being recorded. I would now like to introduce Brian Ritchie of LifeSci Advisors. Please go ahead.

Brian Ritchie: Thank you. Good afternoon, everyone, and thank you for joining us to discuss Soleno Therapeutics’ Fourth Quarter and Full Year 2025 financial and operating results. Please note we’ll be making certain forward-looking statements today. We refer you to Soleno’s SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements. On the call with me today for Soleno are Anish Bhatnagar, Soleno’s Chairman and Chief Executive Officer; Meredith Manning, Soleno’s Chief Commercial Officer; and Jim MacKaness, Soleno’s Chief Financial Officer. With that, I will now turn the call over to Anish.

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 Jim 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 VYKAT XR was commercially launched in the second quarter of last year. Consistent with our preannouncement press release from January 12, total net revenue for the fourth quarter was $91.7 million, which brings our total net revenue for the full year, which was less than 9 months of sales to $190.4 million.

We achieved profitability with positive net income for the year of $20.9 million, 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 million 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 who come to work each 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 9 months post launch. Looking ahead, our leading indicators are strong. Since launch through December 31, 2025, we received 1,250 patient start forms, which represents approximately 12.5% of the U.S. VYKAT 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 9 to 12 months. This bodes well not only for the thousands of people 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 VYKAT 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 also serious comorbidities of the very vulnerable and fragile patient population. The cumulative launch to date discontinuation rate of VYKAT 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 to hyperphagia have been on therapy for multiple months, and we are seeing interest spread across all stakeholders, particularly among caregivers we 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 and 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’ve indicated before, the nature of the key questions centered around the adequacy of the data to improve efficacy based primarily on our randomized withdrawal study. The next step is for us to receive Day 180 questions from the EMA around the end of February. We continue to anticipate a decision in the midyear 2026 time frame, 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 U.K. and EU. Further, perhaps more [indiscernible] in the U.S., it is a concentrated market driven by centers of excellence, and there is strong thought leader support for VYKAT XR.

We look forward to keeping you apprised of our progress over the next few months as we approach the regulatory decision and potential commercial launch. Now I’d 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 as we brought to market the first FDA-approved medicine for the treatment of hyperphagia in adults and children 4 years of age and older living with Prader-Willi Syndrome. We are encouraged that 1,250 new patient start forms were submitted for VYKAT 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. VYKAT XR addressable market. At the end of the fourth quarter, 859 individuals were being actively treated with VYKAT XR, up from 764 at the end of Q3, indicating that VYKAT 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 VYKAT 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 VYKAT 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 VYKAT 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 4 and 26 years of age, we are also seeing meaningful utilization in adults particularly those 27 to 45 years old. This speaks to VYKAT’s relevance across the PWS population. Side effects reported in the real-world study 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 a real-world experience to support demand. We are systematically capturing success stories with VYKAT 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 VYKAT 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 VYKAT 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 VYKAT 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 VYKAT 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 VYKAT XR the standard of care for appropriate patients with PWS-related hyperphagia. We continue to secure broad coverage for VYKAT XR across all channels: commercial, Medicaid and Medicare, resulting in policies that covered over 180 million 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 VYKAT XR can deliver.

And we are seeing this clearly play out in the reauthorization process. As a reminder, payers typically require reauthorization every 6 to 12 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 products. In summary, we believe 2025 has established a solid foundation with patients, prescribers and payers for VYKAT XR. Looking ahead, we are committed to deepening adoption and expanding our prescriber base in both the KOLs 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 Jim for a review of the company’s financial statement for the fourth quarter.

James MacKaness: Thanks, Meredith. Total net revenue for the fourth quarter ended December 31, 2025 was $91.7 million, representing sequential growth of nearly 40% from $66 million in Q3. For the full year 2025, which, as a reminder, represents less than 9 months of commercial availability, total net revenue was $190.4 million. VYKAT XR was approved in March of this year, and therefore, the company generated no revenue for the 3 or 12 months ended December 31, 2024. We generated $48.7 million of cash from operating activities for the fourth quarter and achieved profitability with positive net income of $20.9 million for the full year 2025. At the end of the year, we had $506.1 million of cash, cash equivalents and marketable securities.

Please note, this is after our investment of $100 million in the accelerated share repurchase program that we announced in November. Our strong balance sheet ensures that we are sufficiently capitalized to continue to execute an effective U.S. launch of VYKAT 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 $0.9 million for the fourth quarter and $2.7 million for the full year. As a reminder, prior to FDA approval, costs associated with manufacturing VYKAT XR were expensed as research and development expenses. As such, a portion of the cost of goods sold during these periods included inventory at 0 cost.

Going forward, as we continue to sell VYKAT XR, we will deplete our 0 cost inventory and replenish it with at-cost inventory consequently, cost of goods sold as a percentage of revenue will increase. Research and development expense for the fourth quarter was $9.6 million, which included $2.8 million of noncash stock-based compensation compared to $21.5 million, which includes $10.1 million of noncash 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 submission of regulatory filings. For the full year 2025, research and development expenses were $40.6 million as compared to $78.6 million for the full year 2024.

Selling, general and administrative expense for the fourth quarter ended December 31, 2025 was $40.9 million, which includes $8.7 million of noncash stock-based compensation compared to $37.3 million, which includes $19.7 million of noncash stock-based compensation for the same period of 2024. The increase in expense after removing stock-based compensation reflects our ongoing investment in additional personnel and new programs to support the VYKAT XR commercial launch and in support of our increased business activities. For the full year 2025, SG&A expense were $132.1 million as compared to $105.9 million for the full year 2024. Total other income net was $3.8 million for the 3 months ended December 31, 2025 compared to total other income net of $3.1 million in the same period of 2024.

For the full year 2025, total other income net was $11.5 million as compared to $11.8 million for the full year 2024. Net income for the fourth quarter was approximately $43.4 million or $0.82 per basic and $0.80 per diluted share compared to a net loss of $56.0 million or $1.27 per basic and diluted share for the same period in 2024. For the full year 2025, net income was $20.9 million or $0.40 per basic and $0.39 per diluted share as compared to a net loss of $175.9 million or $4.38 per basic and diluted share for 2024. Please note, with regards to KPIs, we intend to share patient start forms, a number of unique prescribers and lives covered in our Q1 2026 earnings call, which will mark 12 months of results. And our intention is to retire these metrics at that time.

And this concludes the financial overview. But on a personal note, I would like to let everyone know that I am retiring at the end of March. It has been my great pleasure to work with Anish and the team over the last 6 years. It’s been a fantastic journey. We’ve 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’ll turn the call back over to Anish for additional thoughts, Anish.

Anish Bhatnagar: Thank you, Jim, for the incredible work over the last 6 years to get us to where we are today. With the launch of VYKAT XR well underway, we turn our attention to what’s next for the company and to begin with what’s 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 GSD 1, 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 1 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.

GSD 1 represents a natural and logical extension of our VYKAT XR franchise beyond PWS. The predominant physician call point for GSD 1, namely pediatric endocrinologists is the same for PWS. The mechanism of action of VYKAT XR uniquely addresses the severe clinical manifestations of GSD 1. People affected by GSD 1 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, daily consumption of cornstarch multiple times a day in order to survive. However, the precise timing of cornstarch consumption is critical, especially during periods of fastening 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. VYKAT XR’s ability to innovate insulin secretion with its fast onset and repeatable and tailored dosing could maintain proper levels of glucose throughout the day and night and reduce the person’s dependency on cornstarch. DCCR has orphan designation for GSD 1 in the U.S. as well as in the EU. Our plan is to file an IND in the first half of this year and to initiate a clinical program later 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 merge. In closing, we are very pleased with the success and trajectory of VYKAT XR and we will continue to work tirelessly to make the safe and effective therapy available to as many patients living with PWS-related hyperphagia as possible.

We’re excited about expanding into new indications, leveraging our existing knowledge and skills. And with that, we’ll now open the call for your questions. Operator?

Operator: [Operator Instructions] Your first question comes from the line of Paul Choi from Goldman Sachs.

Q&A Session

Khalil Fenina: This is Khalil calling in for Paul. Congrats on the quarter. I suppose I just wanted to start a quick one with us on the 1,000 patient start forms that you guided for the next 9 to 12 months. Can you remind us what the cadence of that is expected to look like? Is there going to be a bolus at the start of the year? Is it going to be — is that going to be late in the year due to the adjustment — seasonal adjustment in 1Q. Just help us understand the cadence there.

Anish Bhatnagar: Thanks for the question, Kai. I think it’s fair to say that we want you to think of this as over the 9 to 12 months, not necessarily on a quarter-to-quarter basis. So it’s hard to think of a bolus at this time. I think it’s fair to say that the start forms will come in over the year. I’ll let Meredith address it further in terms of how she thinks the cadence is likely to be.

Meredith Manning: Yes. Thank you, Anish. I agree with Anish, that obviously, we’re looking at 1,000 over the next 9 to 12 months. That’s our goal in order to continue the sustained momentum of the very strong launch. And as I mentioned in the script, we’re really doubling down on broadening our experience with KOLs, getting out into the community setting and also activating the caregiver population.

Khalil Fenina: Got it. And Jim, congrats on your retirement. We’re sorry to see you go.

James MacKaness: Thank you very much. Appreciate it.

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

Moritz Reiterer: This is Moritz 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 the second one about GSD 1. What do you think about dosing in GSD 1? Do you think the dose will be similar or lower? And how do you think tolerability of the drug would impact adoption in that disease?

Anish Bhatnagar: Sure. So your first question was about what is the likely peak penetration in PWS. It’s a good question. And I think you have to put it in the context of the fact that no other treatments exist today. So many of these treatments, you look at 40%, 50% penetration in these larger rare diseases. But I think if we are 3, 4 years out and the competitive landscape looks like the way it does today, I don’t think it’s 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 it’s a pretty sensitive — 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’s really about the precise dosing to increase blood glucose levels enough. And these patients don’t have the sort of comorbidities that you see in PWS patients. So they’re unlikely to be significantly obese, they’re unlikely to be significantly diabetic, et cetera. So I think there will be more room to dose in that patient population, but that remains to be seen [indiscernible] the subject of the first trial.

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

Unknown Analyst: This is Shannon on for Yas. Congrats on the progress, guys, 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’re seeing now that you have a larger proportion of patients who’ve 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’re seeing more older patients, do you expect the average rate to increase?

Anish Bhatnagar: Sure. Shannon, I’ll take the second question, Meredith will take the first one. In terms of the weight over time, as you know, our clinical trial average 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 4- to 26-year age group and in general, likely heavier than what we are seeing in the clinical trial population. So the average WACC for a clinical trial patient would be about 488. We have said publicly that we’re 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 step-wise inflections, but think of it more as sort of gentle increases over time. Meredith do you want to talk about refill rates realizing that it’s early, and we don’t really have that much data.

Meredith Manning: Yes. 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’re very pleased with the high adherence rates and seeing that we are 9 months in at the end of Q4, we’re seeing patients who are able to stay on therapy and reach a longer time frame. So we’re very pleased with the refill rates.

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

Kristen Kluska: Congrats, Jim. It’s 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’m wondering how you’re thinking how efficacy will ultimately play into this? At what point in the launch do you think you’ll have a good sense of percent of patients that are dropping out due to lack of efficacy. And then I’m 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’s really the factor that will keep somebody on the therapy longer term from an efficacy standpoint?

Anish Bhatnagar: Thanks, Kristen. I think it’s fair to say that when you look at our experience in the clinical trial, 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’re unlikely to stay on therapy if you have significant adverse events. So what we have seen to date is that patients who have stayed on drug for some time are seeing efficacy. I think it’s 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? Or is it like a mix?

Anish Bhatnagar: Yes, it’s a good question. And as you know, we don’t have the same precise gauge on efficacy in the real world as we do in the clinical trial. So we’re not doing efficacy analyses per se. But the anecdotes that we’re 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 will — time will tell. It’s 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: Your next question comes from the line of Tyler Van Buren from TD Cowen.

Tyler Van Buren: I’ll add my congratulations to you, Jim, on your retirement and the success you’ve experienced at Soleno. You’ll be missed. Wanted to just follow up on the 1,000 start forms over the next 9 to 12 months that you guys reiterated, which is, of course, encouraging. And earlier, you spoke about the cadence in response to the 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 into a completely new indication, and we are learning as we go. Thanksgiving, Christmas was interesting. It was interesting to see some of the summer camp related things that happen, people going away to camp. So we’ll have to see what the cadence is like. I’m going to let Meredith answer the rest of the question.

Meredith Manning: Yes. 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’re 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’ve mentioned several times on our last earnings calls that we also are looking at some of the physicians who are increasingly more interested and excited to treat PWS, because there actually is a treatment for hyperphagia now. And so they’re opening up clinical practices or PWS-specific clinics. So we’re hoping to see some of the availability of clinicians, improving as we go forward and really strengthening the care that’s being delivered out there. So it’s exciting. We’ll hopefully be able to provide you more details as we go along, but strong interest out there.

Anish Bhatnagar: I will say that on the seasonality front, Jim, would you like to add something?

James MacKaness: Sure. Tyler, thank you for the good wishes. Yes, I’d 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’re aware, but just to communicate again, what tends to happen with folks on, particularly on commercial plans is they’ll reset their co-pays. So that means that’s 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’s 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’ll receive 4 to 6 weeks of free drug before you move back to paid. It’s a seasonality. It doesn’t change the underlying growth in active patients, but it’s just something that does impact the revenue because it will impact the gross to net discount for Q1. And we’ll obviously be able to give you better color once we get through Q1, and we’ll be able to cite it at that stage.

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

Leland Gershell: Thanks for this update. And Jim, just wanted to add my sentiments as well. Wish you all the best as you move on. I wanted to ask 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’d identified that there are about 300 physicians who were direct treaters of about 20% of PWS patients and who also influence the care of another 20%. And I think there were about 80% of pediatric endocrinologists who had expressed willingness to prescribe VYKAT XR. Just wondering if you could provide us a picture of where that landscape is today with respect to physicians uptake of VYKAT in their practices?

Meredith Manning: Yes. Thank you very much for the question. I appreciate that. The phenomena is still there. As we look at the top 300, we think that’s 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’re repeat writers, which is very exciting to see. And we’re continuing to see that those individuals are influencing the treatment patterns across the country. I’ve mentioned before that we have peer-to-peer programs, so we’re 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, et cetera.

So that’s been very exciting. And then as we look at moving forward on focusing in on the caregiver aspect, as I mentioned, we’re doubling down on webinars and live events and hoping to see that, that will drive caregivers to come in and ask for VYKAT XR.

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

Anish Bhatnagar: Yes. Thanks, Leland. I think the most important thing remains successful commercialization of VYKAT. And I think it starts with the U.S., but the next step is outside the U.S., EU, other geographies, et cetera. And then the next thing is, I’d say, the lower-hanging fruit of using VYKAT itself or 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 don’t expect imminent activity on that front, but we certainly will in the longer term, look at doing that, too.

Operator: Your next question comes from the line of Brian Skorney from Barnett.

Brian Skorney: Jim, congrats on the retirement as well. Sorry to see you go. You have six patents listed in the Orange Book for VYKAT with the four longest duration ones going out to 2035. I think when you got approval last year, we talked a little bit 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 VYKAT based on where you are across patent prosecution. And just real quick on COGS. I just wanted to get guidance of what we’re seeing is product that was already expensed through R&D and if there will be sort of a true-up this year in terms of the gross margin?

Anish Bhatnagar: Sure. Let me take the first part, and Jim can take the second part of it. So on the exclusivity front, you’re 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’s a patent that’s 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’s the plan on exclusivity. Jim?

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

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

Unknown Analyst: It’s Mark on for James. Yes, I guess, as it relates to the EU side of things, I think it’s interesting, we’ve 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 analogues 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’ll kind of have the 180-day questions in hand for the filing?

Anish Bhatnagar: Yes. On the EU approval, you’re right. I think it’s fair to say that decisions on the rare disease side go in one direction or the other. And we’ve seen other examples. Translarna is another example, which was approved in Europe for a long time, did not see an approval here. So these things are always custom rare disease data sets are never perfect. So 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. Expecting the day 120 questions by the end of this month, so imminently. And we’ll see what they say. So 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, et cetera.

So clearly, 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’re supposed to be February ’26.

Operator: Next question comes from the line of Katherine Dellorusso from LifeSci Capital.

Katherine Kaiser-Dellorusso: Congrats on the strong quarter. And congrats, Jim, on the retirement. Yes, I guess just a few more follow-ups on Europe, just given that it’s possibly around the corner. Yes, just thinking about just the potential launch trajectory in Europe versus U.S., are there anything 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’re still looking at what the size of the field force would look like. Most specifically, we’re focusing in on potentially Germany and Austria, the first to launch. So we’re looking at what the marketplace looks like there. Additionally, I think…

Anish Bhatnagar: U.S. launch experience.

Meredith Manning: Yes, U.S. launch experience. Yes, I think the one other thing that Anish had mentioned in his comments about Europe is one of the phenomena is that there are more centers of excellence and tighter treatment over in Europe. And so that’s a little bit different than here in the U.S. But with regard to launch success, obviously, it’s making sure that there’s strong education of the treaters and making sure that they understand exactly the patient population that they’ll be treating and the selection of that patient population has been really key in the United States.

Operator: Next question comes from the line of Yale Jen from Laidlaw & Company.

Yale Jen: First, Jim, congratulations on your retirement, and hopefully, you can enjoy the good life going forward. So my first question is that given that the drug has a great start for the first year. And do you guys feel that for the next to — getting the next wave of patients, is that more difficult or just a different approach to accomplish that? Then I have a follow-up.

Anish Bhatnagar: Sure. Meredith, do you want to take that?

Meredith Manning: Yes. I’m happy to take that. Yes. So I think what we’re pleased to see is that we’re getting a spectrum across the patient population. I mentioned that the majority of patients are coming in ages 4 to 26, but we’re also really pleased that we’ve reached greater penetration in the younger adults, I’ll say, even up to 45. That population definitely has more comorbidities, if you will, as they get older. But we’re seeing a broad spectrum. And so we continue to see a broad — we believe we’ll see a broad spectrum as we move into 2026..

Yale Jen: Okay. Great. That’s 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 follow the DCCR? And if so, what sort of attribute you think that may you want to have?

Anish Bhatnagar: That’s 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’m not able to discuss today, but we do hope to discuss later this year.

Yale Jen: Okay. Maybe last question here. In terms of DCCR, the mechanism of actions for GSD, could you elaborate a little more?

Anish Bhatnagar: Yes. As you know, the critical problem in GSD is life-threatening hypoglycemia. And we know that when you target certain channels on 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 don’t get hypoglycemic. So there is actually interesting information in published data using the parent molecule, and we’ve 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’s difficult to tolerate. But when we are looking at VYKAT XR, DCCR and the low stable level 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.

Operator: Your next question comes from the line of Derek Archila from Wells Fargo.

Derek Archila: Jim, congrats, wishing you well and great working with you. So yes, 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?

Anish Bhatnagar: Meredith?

Meredith Manning: Yes. I think what we were saying is that we’re not really commenting on the first quarter numbers as of right now. But with regard to seasonality in the gross-to-net, I think Jim talked about it. As you know, a lot of patients are coming in. So what we didn’t see we launched in March of last year. Now we’re going into January where the co-pay will re-up for a lot of the commercial patients. And so as Jim mentioned, with Soleno ONE, we offer co-pay support for commercial patients, and we pay down to 0 on the co-pay. So that’s a potential what we’ll see in the gross-to-net.

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

Anish Bhatnagar: So Derek, I think, again, I’ll point you back to the fact that we’re launching the first hyperphagia drug in the space. And we’re learning as we go. What we know about visits that patients have based on claims data is that the younger patient population, which is a 4- to 26-year-old age group, has about 4 to 6 touch points with healthcare providers over the year. And what we know from conversations with KOLs, people who run these top 300 practices or 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’s different in the first quarter or not, we’ll find out.

Derek Archila: Got it. And then just a follow-up, just wanted to know in terms of inventory and stocking in 4Q, if there’s any comments there?

Anish Bhatnagar: Yes, we work with Panther, as you know, one specialty pharmacy. They just went through the holiday period. We’ll have to sort of do a deep dive to really understand anything, but nothing untoward that we’re aware of.

Operator: Your next question comes from the line of Kalpit Patel from Wolfe Research.

Kalpit Patel: Just on the active patients 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 that 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 don’t instantly start somewhere on drug. So they go into a benefits assessment time, which will take 30-ish days give or take. And we don’t think there is any issues with reimbursement that have been encountered 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 perfect answer. I think that we’re looking at a little bit of a mix of all of the above, but we’re pleased with, as I mentioned, the ability to convert start forms into patients and reimburse claims. So we’re going to continue to do that and double down on that in 2026 and believe that we’ll be very successful.

Kalpit Patel: 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 between now and the end of the year? And how might that affect the active patient growth in 2026?

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

Kalpit Patel: Yes, that answers it. And congrats, Jim, on the retirement.

James MacKaness: Thank you.

Operator: [Operator Instructions] Your next question comes from the line of Ram Selvaraju from H.C. Wainright.

Raghuram Selvaraju: I just wanted to ask about whether you are evaluating other disease indications in which to explore VYKAT XR beyond glycogen storage disease? And if so, what some of these indications might be if, for example, there’s 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 this is a non-factor given the rarity of Prader-Willi Syndrome? And lastly, I don’t know if you can comment on any underlying dynamics with respect to the discontinuation rate that you are seeing, if it’s plateauing, if you are seeing any evidence that it is, in fact, declining as there is more experience with the drug over time in the PWS population or if you’re seeing the actual percentage rate increase.

And if it is increasing, by how much?

Anish Bhatnagar: Lots of questions, Ram. Okay. I think I got those. So the first one is other indications. And what we’ve said in the past, just to remind you, is that there’s 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’re right, Smith-Magenis syndrome is one of them, Fragile X. About 10% of Fragile has the PWS phenotype. Some patients with Angelman have it. They’re SM-1 obesity. So there’s 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 is right now is that it’s a moving target.

I think if we had to make a decision today, it would probably say that pricing flexibility is optimal if we control it both here as well as in Europe or outside the country. I’m not sure that it’s a non-factor due to the rarity, because even though there has been some conversation about an orphan exclusion, in MFN. We haven’t seen that actually become reality yet. In terms of the discontinuation rates and are they plateauing? The one phenomenon that we’re following very closely is to see if the cadence of discontinuation 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, that is indeed the case.

So we think that’s very encouraging, but it’s something that we are following very carefully and we’ll continue to update you on.

Operator: We have no further questions at this time. So I’m 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.