2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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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 August 3, 2023, there were
SOLENO THERAPEUTICS, INC.
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Soleno Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
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June 30, |
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December 31, |
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Assets |
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(Unaudited) |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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Long-term assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Other long-term assets |
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- |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued clinical trial site costs |
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Operating lease liabilities - current |
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Other current liabilities |
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Total current liabilities |
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Long-term liabilities |
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2018 PIPE Warrant liability |
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- |
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Operating lease liabilities - noncurrent |
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- |
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Contingent liability for Essentialis purchase price |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated deficit |
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Accumulated other comprehensive income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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)
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Operating expenses |
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Research and development |
$ |
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$ |
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$ |
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$ |
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General and administrative |
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Change in fair value of contingent consideration |
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Total operating expenses |
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Operating loss |
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( |
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( |
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( |
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( |
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Other income |
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Change in fair value of warrants liabilities |
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Interest income |
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Total other income |
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Net loss |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Other comprehensive income (loss) |
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Foreign currency translation adjustment |
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( |
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- |
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( |
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Total comprehensive loss |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per common share, basic and diluted |
$ |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding used to calculate basic and diluted net loss per common share |
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See accompanying notes to condensed consolidated financial statements
4
Soleno Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended June 30, 2023 and 2022
(unaudited)
(in thousands, except share data)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Comprehensive |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income |
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Equity |
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Balances at January 1, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
- |
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$ |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Issuance of restricted stock units under equity incentive plan |
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- |
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- |
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- |
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Tax withholding payments for net share-settled equity awards |
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( |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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( |
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- |
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( |
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Balances at March 31, 2023 |
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( |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Issuance of common stock warrants, net of issuance costs |
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- |
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- |
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- |
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- |
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Sale of common stock, net of costs |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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( |
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( |
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Net loss |
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- |
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- |
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- |
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( |
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- |
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( |
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Balances at June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
- |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Comprehensive |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Equity |
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Balances at January 1, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
- |
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$ |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Issuance of restricted stock units under equity incentive plan |
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- |
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- |
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- |
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Tax withholding payments for net share-settled equity awards |
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( |
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- |
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( |
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- |
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- |
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( |
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Sale of common stock and pre-funded warrants in public offering, net of costs of $ |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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( |
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( |
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Net loss |
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- |
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- |
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- |
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( |
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- |
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( |
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Balances at March 31, 2022 |
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( |
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( |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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( |
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- |
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( |
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Balances at June 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements
5
Soleno Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
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Six Months Ended June 30, |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Non-cash lease expense |
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Stock-based compensation expense |
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Change in fair value of stock warrants |
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( |
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( |
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Change in fair value of contingent consideration |
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( |
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Other non-cash reconciling items |
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- |
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( |
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Change in operating assets and liabilities: |
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Prepaid expenses, other current assets and other assets |
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( |
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Accounts payable |
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( |
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Accrued compensation |
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( |
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Accrued clinical trial site costs |
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( |
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Operating lease liabilities |
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( |
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( |
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Other liabilities |
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Net cash used in operating activities |
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( |
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Cash flows from investing activities |
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Purchases of property and equipment |
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- |
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( |
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Net cash used in investing activities |
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- |
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Cash flows from financing activities: |
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Proceeds from sale of common stock and common stock warrants, net of costs |
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- |
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Proceeds from sale of common stock and pre-funded warrants, net of costs |
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- |
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Tax withholding payments for net share-settled equity awards |
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- |
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( |
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Net cash provided by financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash financing information |
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Operating lease right-of-use assets obtained in exchange for operating lease obligations |
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$ |
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$ |
- |
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Unpaid financing costs included in accounts payable |
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$ |
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$ |
- |
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See accompanying notes to condensed consolidated financial statements.
6
Soleno Therapeutics, Inc.
June 30, 2023
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1. Overview
Soleno Therapeutics, Inc. (the Company or Soleno) is focused on the development and commercialization of novel therapeutics for the treatment of rare diseases. Its lead candidate is DCCR (Diazoxide Choline Extended-Release) tablets, a once-daily oral tablet for the treatment of Prader-Willi Syndrome (PWS). DCCR has received orphan designation for the treatment of PWS in the United States (U.S.) as well as in the European Union (E.U.).
The Company incorporated in the State of Delaware on August 25, 1999, and is located in Redwood City, California. It initially established its operations as Capnia, a diversified healthcare company that developed and commercialized innovative diagnostics, devices and therapeutics addressing unmet medical needs. During 2017, the Company merged with Essentialis, Inc (Essentialis) and subsequently received stockholder approval to amend its Amended and Restated Certificate of Incorporation to change its name from “Capnia, Inc.” to “Soleno Therapeutics, Inc.”. Essentialis was a privately held clinical-stage company focused on the development of breakthrough medicines for the treatment of rare diseases where there is increased mortality and risk of cardiovascular and endocrine complications. After the merger, the Company’s primary focus has been the development and commercialization of novel therapeutics for the treatment of rare diseases and the Company divested all prior business efforts.
Note 2. Going Concern and Management’s Plans
The Company had a net loss of $
The accompanying condensed consolidated financial statements have been prepared under the assumption the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
The Company expects to continue incurring losses for the foreseeable future and will be required to raise additional capital to complete its clinical trials, pursue product development initiatives, obtain regulatory approval and penetrate markets for the sale of its products. In December 2022, the Company entered into a Securities Purchase Agreement for up to $
Management believes that the Company does not have sufficient capital resources to sustain operations through at least the next twelve months from the date of this filing. Additionally, in view of the Company’s expectation to incur significant losses for the foreseeable future it will be required to raise additional capital resources in order to fund its operations, although the availability of, and the Company’s access to such resources is not assured. Accordingly, management believes that there is substantial doubt regarding the Company’s ability to continue operating as a going concern through at least the next twelve months from the date of this filing.
7
Note 3. Basis of Presentation and Summary of Significant Accounting Policies
Significant Accounting Policies
There have been no material changes to the significant accounting policies during the three and six months ended June 30, 2023 as compared to the significant accounting policies described in Note 3 of the “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with GAAP for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2023. For further information, refer to the financial statements and footnotes included in the Company’s annual financial statements for the fiscal year ended December 31, 2022, which are included in the Company’s annual report on Form 10-K filed with the SEC on March 22, 2023.
Reverse Stock Split
On August 26, 2022, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation in order to effectuate a reverse stock split of the Company’s issued and outstanding common stock on a basis. All common share and per share data are retrospectively restated to give effect of the split for all periods presented herein. After giving effect to the reverse stock split, the total number of shares of all classes of capital stock that the Corporation is authorized to issue is
Use of Estimates