On Monday, Stifel updated its outlook on Soleno Therapeutics Inc. (NASDAQ:SLNO), raising the price target to $74 from the previous $59, while maintaining a Buy rating on the stock. The firm's optimism is centered on the potential approval of Soleno's diazoxide choline controlled-release (DCCR) treatment.
According to the analyst, the current focus for the stock is the approval of DCCR, but the long-term commercial value is tied to the strength of its market exclusivity, which may be supported by intellectual property (IP) or other factors.
The firm has consulted with key opinion leaders (KOLs) in intellectual property to assess the likelihood of DCCR-related patents being listed in the FDA's Orange Book, which is a prerequisite for market exclusivity, in case of approval. The composition of matter (COM) patent for diazoxide choline, along with the KOLs' prediction of an 80-90% chance of Orange Book listing for DCCR-related patents, suggests that market exclusivity could be secure until the mid-2030s.
The analyst from Stifel also considered a hypothetical scenario where a generic extended-release diazoxide choline could enter the market with a "skinny label," a version that avoids patent infringement by not including certain patented indications. However, they believe such a scenario is highly unlikely from both legal and commercial perspectives.
With these factors in mind, Stifel anticipates an increased uptake and market longevity for DCCR in the treatment of Prader-Willi Syndrome (PWS), leading to the raised target price. The firm's outlook reflects confidence in the drug's approval and its subsequent market performance.
In other recent news, Soleno Therapeutics has seen several significant developments. The U.S. Food and Drug Administration (FDA) has accepted Soleno's New Drug Application (NDA) for DCCR, a potential treatment for Prader-Willi syndrome. The application has been granted Priority Review status with a target action date set for December 27, 2024. In addition, Soleno Therapeutics has witnessed changes in its Board of Directors, with Matthew Pauls becoming the new Lead Independent Director and Dawn Carter Bir joining the board. The company has also entered an agreement with Jefferies LLC to potentially sell up to $150 million of its common stock.
Moreover, Soleno Therapeutics has awarded performance-based restricted stock units to its employees, aligning their interests with the company's performance. Piper Sandler reiterated its Overweight rating on the company's shares, maintaining a price target of $93.00, based on the anticipated favorable outcome for DCCR. Other firms such as H.C. Wainwright, Stifel, and Oppenheimer have also expressed optimism about the company's prospects.
InvestingPro Insights
Recent data from InvestingPro adds depth to Stifel's optimistic outlook on Soleno Therapeutics Inc. (NASDAQ:SLNO). The company's market capitalization stands at $1.96 billion, reflecting investor confidence in its potential. This aligns with Stifel's raised price target and the anticipated approval of DCCR.
InvestingPro Tips highlight that Soleno's net income is expected to grow this year, and analysts predict the company will be profitable. This projection supports Stifel's positive stance on the stock's future performance. Additionally, Soleno holds more cash than debt on its balance sheet, indicating financial stability as it moves towards potential drug approval and commercialization.
The stock has shown strong performance, with a 66.49% price total return over the past year and a 20.42% return in the last three months. This robust momentum could be attributed to growing investor optimism surrounding DCCR's approval prospects and market potential.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Soleno's financial health and market position.
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