10-Q
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2

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36593

 

SOLENO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

77-0523891

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

203 Redwood Shores Parkway, Suite 500

Redwood City, California

(Address of principal executive offices)

94065

(Zip Code)

(650) 213-8444

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

SLNO

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 4, 2022, there were 8,159,382 shares of the registrant’s Common Stock, par value $0.001 per share, outstanding.

 

 


 

 

SOLENO THERAPEUTICS, INC.

TABLE OF CONTENTS

 

 

Page

PART I—FINANCIAL INFORMATION

3

Item 1. Financial Statements

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

4

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

5

Condensed Consolidated Statements of Cash Flows (unaudited)

6

Notes to Condensed Consolidated Financial Statements (unaudited)

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3. Quantitative and Qualitative Disclosures About Market Risk

20

Item 4. Controls and Procedures

20

PART II—OTHER INFORMATION

21

Item 1. Legal Proceedings

21

Item 1A. Risk Factors

21

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3. Defaults Upon Senior Securities

21

Item 4. Mine Safety Disclosures

21

Item 5. Other Information

21

Item 6. Exhibits

21

EXHIBIT INDEX

22

SIGNATURES

22

 

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Soleno Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

(Unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,751

 

 

$

21,304

 

Prepaid expenses and other current assets

 

 

821

 

 

 

1,118

 

Total current assets

 

 

20,572

 

 

 

22,422

 

Long-term assets

 

 

 

 

 

 

Property and equipment, net

 

 

23

 

 

 

33

 

Operating lease right-of-use assets

 

 

206

 

 

 

421

 

Intangible assets, net

 

 

11,178

 

 

 

12,637

 

Other long-term assets

 

 

-

 

 

 

40

 

Total assets

 

$

31,979

 

 

$

35,553

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

2,324

 

 

$

3,254

 

Accrued compensation

 

 

1,282

 

 

 

728

 

Accrued clinical trial site costs

 

 

2,826

 

 

 

3,420

 

Operating lease liabilities

 

 

239

 

 

 

282

 

Other current liabilities

 

 

671

 

 

 

323

 

Total current liabilities

 

 

7,342

 

 

 

8,007

 

Long-term liabilities

 

 

 

 

 

 

2018 PIPE Warrant liability

 

 

-

 

 

 

31

 

Contingent liability for Essentialis purchase price

 

 

9,437

 

 

 

9,547

 

Long-term lease liabilities

 

 

-

 

 

 

175

 

Total liabilities

 

 

16,779

 

 

 

17,760

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized,
 
8,159,382 and 5,324,287 shares issued and outstanding at
   September 30, 2022 and December 31, 2021, respectively.

 

 

8

 

 

 

80

 

Additional paid-in-capital

 

 

247,130

 

 

 

231,068

 

Accumulated deficit

 

 

(231,936

)

 

 

(213,355

)

Accumulated other comprehensive loss

 

 

(2

)

 

 

-

 

Total stockholders’ equity

 

 

15,200

 

 

 

17,793

 

Total liabilities and stockholders’ equity

 

$

31,979

 

 

$

35,553

 

 

See accompanying notes to condensed consolidated financial statements

3


 

Soleno Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(In thousands except share and per share data)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

3,771

 

 

$

4,968

 

 

$

11,455

 

 

$

17,719

 

General and administrative

 

2,332

 

 

 

2,767

 

 

 

7,442

 

 

 

8,210

 

Change in fair value of contingent consideration

 

132

 

 

 

551

 

 

 

(110

)

 

 

2,598

 

Total operating expenses

 

6,235

 

 

 

8,286

 

 

 

18,787

 

 

 

28,527

 

Operating loss

 

(6,235

)

 

 

(8,286

)

 

 

(18,787

)

 

 

(28,527

)

Other income

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrants liabilities

 

2

 

 

 

112

 

 

 

31

 

 

 

369

 

Interest income

 

101

 

 

 

34

 

 

 

175

 

 

 

76

 

Total other income

 

103

 

 

 

146

 

 

 

206

 

 

 

445

 

Net loss

$

(6,132

)

 

$

(8,140

)

 

$

(18,581

)

 

$

(28,082

)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

(1

)

 

 

 

 

 

(2

)

 

 

 

Total comprehensive loss

$

(6,133

)

 

$

(8,140

)

 

$

(18,583

)

 

$

(28,082

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.76

)

 

$

(1.53

)

 

$

(2.60

)

 

$

(5.28

)

Weighted-average common shares outstanding used to calculate basic and diluted net loss per common share

 

8,093,033

 

 

 

5,319,405

 

 

 

7,156,344

 

 

 

5,316,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements

4


 

Soleno Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022 and 2021

(unaudited)

(In thousands except share data)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balances at January 1, 2022

 

 

5,324,287

 

 

$

5

 

 

$

231,143

 

 

$

(213,355

)

 

$

-

 

 

$

17,793

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

464

 

 

 

-

 

 

 

-

 

 

 

464

 

Issuance of restricted stock units under equity incentive plan

 

 

18,650

 

 

 

-

 

 

 

180

 

 

 

-

 

 

 

-

 

 

 

180

 

Tax withholding payments for net share-settled equity awards

 

 

(3,683

)

 

 

-

 

 

 

(16

)

 

 

-

 

 

 

-

 

 

 

(16

)

Sale of common stock and pre-funded warrants in public offering, net of costs of $1,034

 

 

2,666,667

 

 

 

3

 

 

 

13,763

 

 

 

-

 

 

 

-

 

 

 

13,766

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,724

)

 

 

-

 

 

 

(5,724

)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2

)

 

 

(2

)

Balances at March 31, 2022

 

 

8,005,921

 

 

 

8

 

 

 

245,534

 

 

 

(219,079

)

 

 

(2

)

 

 

26,461

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

571

 

 

 

-

 

 

 

-

 

 

 

571

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,725

)

 

 

-

 

 

 

(6,725

)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

1

 

Balances at June 30, 2022

 

 

8,005,921

 

 

 

8

 

 

 

246,105

 

 

 

(225,804

)

 

 

(1

)

 

 

20,308

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

683

 

 

 

-

 

 

 

-

 

 

 

683

 

Sale of common stock, net of costs

 

 

104,773

 

 

 

-

 

 

342

 

 

 

-

 

 

 

-

 

 

 

342

 

Exercise of common stock warrants

 

 

48,688

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Foreign currency translation adjustment

 

 

 

 

 

-

 

 

 

 

 

 

-

 

 

 

(1

)

 

 

(1

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,132

)

 

 

-

 

 

 

(6,132

)

Balances at September 30, 2022

 

 

8,159,382

 

 

$

8

 

 

$

247,130

 

 

$

(231,936

)

 

$

(2

)

 

$

15,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balances at January 1, 2021

 

 

5,307,713

 

 

$

5

 

 

$

227,987

 

 

$

(182,445

)

 

$

-

 

 

$

45,547

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,095

 

 

 

-

 

 

 

-

 

 

 

1,095

 

Issuance of restricted stock units under equity incentive plan

 

 

11,137

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

Tax withholding payments for net share-settled equity awards

 

 

(3,938

)

 

 

-

 

 

 

(120

)

 

 

-

 

 

 

-

 

 

 

(120

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,954

)

 

 

-

 

 

 

(8,954

)

Balances at March 31, 2021

 

 

5,314,912

 

 

 

5

 

 

 

228,962

 

 

 

(191,399

)

 

 

-

 

 

 

37,568

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

857

 

 

 

-

 

 

 

-

 

 

 

857

 

Issuance of restricted stock units under equity incentive plan

 

 

2,370

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,988

)

 

 

-

 

 

 

(10,988

)

Balances at June 30, 2021

 

 

5,317,282

 

 

 

5

 

 

 

229,819

 

 

 

(202,387

)

 

 

-

 

 

 

27,437

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

906

 

 

 

-

 

 

 

-

 

 

 

906

 

Issuance of restricted stock units under equity incentive plan

 

 

3,150

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,140

)

 

 

-

 

 

 

(8,140

)

Balances at September 30, 2021

 

 

5,320,432

 

 

$

5

 

 

$

230,725

 

 

$

(210,527

)

 

$

-

 

 

$

20,203

 

 

See accompanying notes to condensed consolidated financial statements

5


 

Soleno Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(18,581

)

 

$

(28,082

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,476

 

 

 

1,471

 

Non-cash lease expense

 

 

215

 

 

 

220

 

Stock-based compensation expense

 

 

1,898

 

 

 

2,858

 

Change in fair value of stock warrants

 

 

(31

)

 

 

(369

)

Change in fair value of contingent consideration

 

 

(110

)

 

 

2,598

 

Other non-cash reconciling items

 

 

(2

)

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses, other current assets and other assets

 

 

337

 

 

 

317

 

Other assets

 

 

-

 

 

 

(40

)

Accounts payable

 

 

(930

)

 

 

369

 

Accrued compensation

 

 

554

 

 

 

(196

)

Accrued clinical trial site costs

 

 

(594

)

 

 

(196

)

Operating lease liabilities

 

 

(218

)

 

 

(156

)

Other liabilities