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Soleno Therapeutics Provides Corporate Update and Reports Third Quarter 2017 Financial Results

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Tuesday, November 14, 2017

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REDWOOD CITY, Calif.- Soleno Therapeutics, Inc. (NASDAQ:SLNO), a clinical-stage biopharmaceutical company developing novel therapeutics for the treatment of rare diseases, provided a corporate update and announced financial results for the three and nine months ended September 30, 2017.

"We continue to achieve significant progress in advancing our DCCR clinical development program for the treatment of PWS," said Anish Bhatnagar, M.D., Chief Executive Officer of Soleno Therapeutics. "Our most recent key accomplishments include the receipt of constructive guidance from the EMA regarding the regulatory pathway in Europe for DCCR for the treatment of PWS, and the positive opinion received from the EMA recommending DCCR for designation as an orphan medicinal product. Importantly, we recently regained compliance with NASDAQ listing requirements, and our stock continues to be listed on The NASDAQ Capital Market. Looking ahead, we remain focused on finalizing the protocol for our Phase III, randomized, double-blind placebo-controlled study that will treat approximately 100 patients and is now expected to commence in the first quarter of 2018."

Recent Corporate Highlights

Received scientific advice from the Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA) regarding Diazoxide Choline Controlled-Release (DCCR) tablet for the treatment of Prader-Willi syndrome (PWS), a rare and complex genetic neurobehavioral/metabolic disorder affecting appetite, growth, metabolism, cognitive function, and behavior.
o Received positive guidance on key elements of Phase III program
Presented updated safety and efficacy data from the pilot clinical trial of DCCR for the treatment of PWS at the 10th International Meeting of Pediatric Endocrinology demonstrating a significant improvement from baseline in hyperphagia, as well as several other key parameters, such as body fat, lean body mass, aggressive behaviors, and lipid profile.
Regained compliance with NASDAQ listing requirements
Received a positive opinion recommending DCCR for designation as an orphan medicinal product for the treatment of PWS by EMA's Committee for Orphan Medicinal Products
Issued multiple new U.S. patents for the use of DCCR
o Patent number 9,757,384 covers DCCR for the use of reducing aggressive behaviors in a subject with PWS or Smith-Magenis syndrome, a rare disorder with a distinct genetic basis, but a natural history similar to that of PWS
o Patent number 9,782,416 covers the use of diazoxide to treat hyperphagia in a subject with PWS

Third Quarter Ended September 30, 2017 Financial Results for Continuing Operations

As a result of the decision to sell NeoForce, Inc. and either divest or partner the CoSense and Serenz businesses, all revenue and expenses of these businesses have been excluded from continuing operations for all periods herein and reported as discontinued operations. All assets and liabilities of these businesses have been classified as assets held for sale on the balance sheet. All prior period information has been recast to conform to this presentation.

Research and development expenses in the third quarter of 2017 were $1.0 million, compared to $0.7 million for the same period in 2016. The increase was primarily due to an increase in DCCR clinical activities.

General and Administrative expenses in the third quarter of 2017 were $1.7 million, compared to $1.3 million for the same period in 2016. The increase was primarily due to the amortization from the acquisition of intangibles from the completed Essentialis merger in March 2017.

Net loss from continuing operations for the third quarter of 2017 was $2.6 million, or $0.24 per share, compared to a net loss of $1.8 million, or $0.56 per share, for the third quarter in 2016.

Net loss from discontinued operations for the third quarter of 2017 was $1.2 million, or $0.11 per share, compared to a net loss of $1.0 million, or $0.31 per share, for the third quarter in 2016.

Net loss for the third quarter of 2017 was $3.8 million, or $0.35 per share, compared to a net loss of $2.8 million, or $0.87 per share, for the third quarter in 2016.

Nine-Months Ended September 30, 2017 Financial Results for Continuing Operations

As a result of the decision to sell NeoForce, Inc. and either divest or partner the CoSense and Serenz businesses, all revenue and expenses of these businesses have been excluded from continuing operations for all periods herein and reported as discontinued operations. All assets and liabilities of these businesses have been classified as assets held for sale on the balance sheet. All prior period information has been recast to conform to this presentation.

Research and development expenses in the nine months ended September 30, 2017, were $2.0 million, essentially flat when compared to the same period in 2016.

General and Administrative expenses in the nine months ended September 30, 2017, were $4.9 million, compared to $4.5 million for the same period in 2016. The increase was primarily due to the amortization from the acquisition of intangibles from the completed Essentialis merger in March 2017.

The change in fair value of warrants income for the nine months ended September 30, 2017, was $29,000, which represented a decrease in the fair value of the Series A and Series C Warrants compared to the value of the warrants at December 31, 2016. The change in fair value of warrants income for the nine months ended September 30, 2016, was $1.3 million, which represented an increase in the fair value of the Series A, Series B and Series C Warrants compared to the value of the warrants at December 31, 2015.

Net loss from continuing operations for the nine months ended September 30, 2017, was $7.6 million, or $0.85 per share, compared to a net loss of $5.3 million, or $1.73 per share, for the same period in 2016.

Net loss from discontinued operations for the nine months ended September 30, 2017, was $3.0 million, or $0.34 per share, compared to a net loss of $4.1 million, or $1.35 per share, for the same period in 2016.

Net loss for the nine months ended September 30, 2017, was $10.6 million, or $1.19 per share, compared to a net loss of $9.5 million, or $3.08 per share, for the same period in 2016.

Cash and cash equivalents at September 30, 2017, totaled $5.6 million, compared to $2.7 million at December 31, 2016.

About PWS

PWS is a rare and complex genetic neurobehavioral/metabolic disorder affecting appetite, growth, metabolism, cognitive function and behavior. The committee on genetics of the American Academy of Pediatrics states PWS affects both genders equally and occurs in people from all geographic regions: its estimated incidence is one in 15,000 to 25,000 live births. This disorder is typically characterized by hyperphagia, a chronic feeling of insatiable hunger, behavioral problems, cognitive disabilities, low muscle tone, short stature (when not treated with growth hormone), the accumulation of excess body fat, developmental delays, and incomplete sexual development. Hyperphagia, in the absence of effective limitations to access to food, can lead to morbid obesity. In a global survey conducted by the Foundation for Prader-Willi Research, 96.5% of respondents (parent and caregivers) rated hyperphagia, which is the unrelenting hunger that severely diminishes the quality of life for patients and their families, as the most important or a very important symptom to be relieved by a new medicine. There are currently no approved therapies to treat the hyperphagia/appetite, metabolic, cognitive function, or behavioral aspects of the disorder.

About Diazoxide Choline Controlled-Release Tablet

Diazoxide choline controlled-release tablet is a novel, proprietary controlled-release, crystalline salt formulation of diazoxide, which is administered once-daily. The parent molecule, diazoxide, as an oral suspension, has been used for decades in thousands of patients in a few rare diseases in neonates, children and/or adults, but not in PWS. Soleno conceived of and is pursuing an extensive patent portfolio relating to various aspects of the therapeutic use of diazoxide and DCCR in patients with PWS. The DCCR development program is supported by positive data from two completed Phase II clinical studies and five completed Phase I clinical studies in various metabolic indications, as well as a pilot study in PWS patients. In the PWS pilot study, DCCR showed promise in addressing the hallmark symptoms of PWS, most notably hyperphagia. DCCR has received Orphan Drug Designation from the US FDA and a positive opinion for orphan designation from the EMA for the treatment of PWS.

About Soleno Therapeutics, Inc.

Soleno Therapeutics, Inc. (Soleno) is focused on the development and commercialization of novel therapeutics for the treatment of rare diseases. The company is currently advancing its lead candidate, DCCR, a once-daily oral tablet for the treatment of PWS, into a Phase III clinical development program in early 2018. Soleno, through its wholly-owned subsidiary, Capnia, Inc., continues to market Capnia's innovative medical device, the CoSense® End-Tidal Carbon Monoxide (ETCO) monitor, which measures ETCO and is used by hospitals to detect hemolysis in newborns. It is expected that CoSense will be monetized and will not be a focus for the company in the long-term.

Contact

Brian Ritchie
LifeSci Advisors, LLC
212-915-2578

Source: Soleno Therapeutics
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