10-Q
--12-31false0001484565Q3SOLENO THERAPEUTICS 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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, 2023

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 3, 2023, there were 30,499,352 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 (unaudited)

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

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

21

Item 4. Controls and Procedures

21

PART II—OTHER INFORMATION

22

Item 1. Legal Proceedings

22

Item 1A. Risk Factors

22

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

22

Item 3. Defaults Upon Senior Securities

22

Item 4. Mine Safety Disclosures

22

Item 5. Other Information

22

Item 6. Exhibits

22

EXHIBIT INDEX

23

SIGNATURES

23

 

 

 

 


 

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,
2023

 

 

December 31,
2022

 

Assets

 

(Unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,437

 

 

$

14,602

 

Prepaid expenses and other current assets

 

 

1,222

 

 

 

1,045

 

Total current assets

 

 

53,659

 

 

 

15,647

 

Long-term assets

 

 

 

 

 

 

Property and equipment, net

 

 

15

 

 

 

26

 

Operating lease right-of-use assets

 

 

474

 

 

 

131

 

Intangible assets, net

 

 

9,235

 

 

 

10,693

 

Other long-term assets

 

 

165

 

 

 

-

 

Total assets

 

$

63,548

 

 

$

26,497

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

3,216

 

 

$

1,777

 

Accrued compensation

 

 

1,498

 

 

 

1,675

 

Accrued clinical trial site costs

 

 

3,237

 

 

 

3,222

 

Common stock purchase liability

 

 

19,938

 

 

 

-

 

Operating lease liabilities - current

 

 

256

 

 

 

155

 

Other current liabilities

 

 

848

 

 

 

484

 

Total current liabilities

 

 

28,993

 

 

 

7,313

 

Long-term liabilities

 

 

 

 

 

 

2018 PIPE Warrant liability

 

 

653

 

 

 

1

 

Operating lease liabilities - noncurrent

 

 

214

 

 

 

-

 

Contingent liability for Essentialis purchase price

 

 

10,468

 

 

 

8,835

 

Total liabilities

 

 

40,328

 

 

 

16,149

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.001 par value, 100,000,000 shares authorized,
 
15,467,229 and 8,159,382 shares issued and outstanding at
   September 30, 2023 and December 31, 2022, respectively

 

 

15

 

 

 

8

 

Additional paid-in-capital

 

 

288,320

 

 

 

247,762

 

Accumulated deficit

 

 

(265,114

)

 

 

(237,422

)

Accumulated other comprehensive loss

 

 

(1

)

 

 

-

 

Total stockholders’ equity

 

 

23,220

 

 

 

10,348

 

Total liabilities and stockholders’ equity

 

$

63,548

 

 

$

26,497

 

 

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,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

6,043

 

 

$

3,771

 

 

$

16,500

 

 

$

11,455

 

General and administrative

 

3,318

 

 

 

2,332

 

 

 

9,341

 

 

 

7,442

 

Change in fair value of contingent consideration

 

1,021

 

 

 

132

 

 

 

1,633

 

 

 

(110

)

Total operating expenses

 

10,382

 

 

 

6,235

 

 

 

27,474

 

 

 

18,787

 

Operating loss

 

(10,382

)

 

 

(6,235

)

 

 

(27,474

)

 

 

(18,787

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrants liabilities

 

(653

)

 

 

2

 

 

 

(652

)

 

 

31

 

Interest income

 

174

 

 

 

101

 

 

 

434

 

 

 

175

 

Total other income (expense), net

 

(479

)

 

 

103

 

 

 

(218

)

 

 

206

 

Net loss

$

(10,861

)

 

$

(6,132

)

 

$

(27,692

)

 

$

(18,581

)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

(1

)

 

 

(1

)

 

 

(1

)

 

 

(2

)

Total comprehensive loss

$

(10,862

)

 

$

(6,133

)

 

$

(27,693

)

 

$

(18,583

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.95

)

 

$

(0.65

)

 

$

(2.65

)

 

$

(2.31

)

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

 

11,436,748

 

 

 

9,417,705

 

 

 

10,443,186

 

 

 

8,045,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2023 and 2022

(unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

Equity

 

Balances at January 1, 2023

 

 

8,159,382

 

 

$

8

 

 

$

247,762

 

 

$

(237,422

)

 

$

-

 

 

$

10,348

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

495

 

 

 

-

 

 

 

-

 

 

 

495

 

Issuance of restricted stock units under equity incentive plan

 

 

9,534

 

 

 

-

 

 

 

136

 

 

 

-

 

 

 

-

 

 

 

136

 

Tax withholding payments for net share-settled equity awards

 

 

(128

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16

 

 

 

16

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,356

)

 

 

-

 

 

 

(8,356

)

Balances at March 31, 2023

 

 

8,168,788

 

 

 

8

 

 

 

248,393

 

 

 

(245,778

)

 

 

16

 

 

 

2,639

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,204

 

 

 

-

 

 

 

-

 

 

 

1,204

 

Issuance of common stock warrants, net of issuance costs

 

 

-

 

 

 

-

 

 

 

9,973

 

 

 

-

 

 

 

-

 

 

 

9,973

 

Sale of common stock, net of costs

 

 

1,772,397

 

 

 

2

 

 

 

7,099

 

 

 

-

 

 

 

-

 

 

 

7,101

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16

)

 

 

(16

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,475

)

 

 

-

 

 

 

(8,475

)

Balances at June 30, 2023

 

 

9,941,185

 

 

 

10

 

 

 

266,669

 

 

 

(254,253

)

 

 

-

 

 

 

12,426

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

2,201

 

 

 

-

 

 

 

-

 

 

 

2,201

 

Exercise of common stock warrants, net of issuance costs

 

 

5,522,113

 

 

 

5

 

 

 

19,440

 

 

 

-

 

 

 

-

 

 

 

19,445

 

Exercise of stock options

 

 

3,931

 

 

 

-

 

 

 

10

 

 

 

-

 

 

 

-

 

 

 

10

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

(1

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,861

)

 

 

-

 

 

 

(10,861

)

Balances at September 30, 2023

 

 

15,467,229

 

 

$

15

 

 

$

288,320

 

 

$

(265,114

)

 

$

(1

)

 

$

23,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2

)

 

 

(2

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,724

)

 

 

-

 

 

 

(5,724

)

Balances at March 31, 2022

 

 

8,005,921

 

 

 

8

 

 

 

245,534

 

 

 

(219,079

)

 

 

(2

)

 

 

26,461

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

571

 

 

 

-

 

 

 

-

 

 

 

571

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

1

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,725

)

 

 

-

 

 

 

(6,725

)

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

 

 

 

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,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(27,692

)

 

$

(18,581

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

1,469

 

 

 

1,476

 

Non-cash lease expense

 

 

254

 

 

 

215

 

Stock-based compensation expense

 

 

4,036

 

 

 

1,898

 

Change in fair value of stock warrants

 

 

652

 

 

 

(31

)

Change in fair value of contingent consideration

 

 

1,633

 

 

 

(110

)

Other non-cash reconciling items

 

 

(1

)

 

 

(2

)

Change in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses, other current assets and other assets

 

 

(177

)

 

 

337

 

Accounts payable

 

 

1,338

 

 

 

(930

)

Accrued compensation

 

 

(177

)

 

 

554

 

Accrued clinical trial site costs

 

 

15

 

 

 

(594

)

Operating lease liabilities

 

 

(242

)

 

 

(218

)

Other liabilities

 

 

266

 

 

 

348

 

Net cash used in operating activities

 

 

(18,626

)

 

 

(15,638

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

-

 

 

 

(7

)

Net cash used in investing activities

 

 

-

 

 

 

(7

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from sale of common stock and common stock warrants, net of issuance costs

 

 

17,074

 

 

 

-

 

Proceeds from sale of common stock and pre-funded warrants, net of costs

 

 

-

 

 

 

14,108

 

Proceeds from exercise of common stock warrants, net of costs

 

 

19,445

 

 

 

-

 

Proceeds received prior to and for the issuance of common stock and pre-funded warrants

 

 

19,932

 

 

 

-

 

Proceeds from stock option exercises

 

 

10

 

 

 

-

 

Tax withholding payments for net share-settled equity awards

 

 

-

 

 

 

(16

)

Net cash provided by financing activities

 

 

56,461

 

 

 

14,092

 

Net increase (decrease) in cash and cash equivalents

 

 

37,835

 

 

 

(1,553

)

Cash and cash equivalents, beginning of period

 

 

14,602

 

 

 

21,304

 

Cash and cash equivalents, end of period

 

$

52,437

 

 

$

19,751

 

 

 

 

 

 

 

Supplemental disclosure of non-cash financing information

 

 

 

 

 

 

Operating lease right-of-use assets obtained in exchange for operating lease obligations

 

$

597

 

 

$

-

 

Unpaid financing costs included in accounts payable and accrued liabilities

 

$

199

 

 

$

-

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

Soleno Therapeutics, Inc.

September 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.).