All right, everyone, I think we'll get started here with our next fireside discussion. My name is Derek Archila. I'm the Senior Biotech Analyst here at Wells Fargo. Looking forward to our next discussion here with Soleno Therapeutics from the company. We have Anish Bhatnagar, the CEO, as well as Jim Mackaness, the CFO. Gentlemen, thank you so much for joining us and looking forward to the discussion. Thanks for having us, Derek. All right, maybe Anish, if you want to just start us off, you know, a lot has been going on with Soleno, approval of your first drug, VYKAT XR, and Prader-Willi syndrome, ongoing launch. Maybe just kind of talk about, you know, what's kind of going on before we dive into the Q&A here. Sure. Soleno, as you know, is in the Prader-Willi space. We're a rare disease company. We have a single asset which has recently been approved. We got FDA approval at the end of March. We launched shortly thereafter, a couple of weeks after that. We had our Q2 results that were announced a few weeks ago. The launch has been going really well. We've had, in those three months or so, 646 starts form, 295 prescribers. This definitely exceeded our expectations. In general, really excited to see this drug finally come to market in a disease where nothing has worked. Let's talk about the launch. Obviously, there's always fits and starts with launches. One of the things that I would love to learn is, what are you seeing in the real world from an early efficacy perspective, but also from a safety perspective from some of these patients who have been on drug the longest, which is still not that long. It's only probably several months. Maybe you can give us some insight into what you're seeing. Yeah, I think it's important to know that we have had several patients from our clinical trials on drug for, at this point, more than six and a half, seven years. All of the ones who were on our open label extension study have, you know, I believe all of them at this point, or almost all of them, have converted to commercial drug. We have very long experience with those patients with this drug. In general, what you always see when you transition from a controlled clinical trial setting to a commercial setting is you're going to patients who are newer, who are likely more comorbid, who are not as controlled. They're not seeing their doctors as often. The safety profile, while it remains similar to what we saw, we have had some patients who were more comorbid have side effects which were similar, but more severe in nature. It's not surprising. The common side effects that you see are peripheral edema, fluid retention, as well as hyperglycemia. Those are the two most common things. The good thing about both of them is they are trackable. Neither of them develop sort of overnight. You can look at glucose over a period of time, see what it's doing. The same thing with peripheral edema. You can measure it slowly over a period of time. I think the challenge for some physicians would be that they might not be accustomed to the drug. As they get accustomed to it, I think they will realize that what the key opinion leaders, et cetera, are doing is going to allow them to take care of these patients quite well on this drug. Yeah. I mean, it doesn't seem too dissimilar from many rare disease launches where, you know, familiarity with, you know, the drug and the overall side effect profile. Also, what I think, at least what we've heard, and maybe you can give us some color, is like the uniqueness of Prader-Willi. These patients, and more, you know, certain around the patient, like the caregivers and the parents, they're quite desperate. This is a very, you know, tough disease, behavioral issues. Maybe you can put that more in the context in terms of like what you're seeing and obviously, you know, the real enthusiasm to get these patients on therapy. It's a really good point. If you look at the launch, that many start forms, and in particular that many prescribers, is quite amazing. We think this is possibly a function of the fact that KOLs' practices are extremely busy, and it's hard for them to insert patients into their practice to put them on drug. We think part of what is happening is these very motivated families who are very desperate for treatment go to local providers and get those providers to write the scripts. The background of the disease is very complicated. As you pointed out, these are patients with very comorbid conditions. You have patients who have significant behavioral problems. They can be significantly obese. They can have edema at baseline. Many people have cardiopulmonary issues. One has to be careful when you look at a disease like that and you're giving them a drug with a known side effect profile. You have to monitor them. This is also a population which is very anxious. Not only the patients, but many caregivers are also very anxious because they've had no treatment for so long. We have to sort of balance all of this. I would say what we see today is what you would expect in a rare disease launch which has never seen a treatment before. Got you. How's kind of like the physician community like so far, you know, kind of not only, you know, what's kind of their enthusiasm level around the drug, but also kind of embrace some of these nuances around the safety and some of the things that we've heard come emerge? Yeah, I think the embrace of the drug is obvious. If you think about 295 prescribers in the first three months, that is a very high number. A lot of those prescribers were people that we were actually not aware of as Prader-Willi treaters. I think there is no doubt that there is a very significant embrace of a treatment available for this disease. We've talked to several KOLs, and I know that you all have done the calls as well. KOLs are very comfortable with the drug. They're very comfortable with the side effect profile. What they point out is the obvious, which is this is a drug we understand. There is a disease which needs to be put in the context of a side effect profile. You have to monitor patients appropriately. You have to titrate them appropriately. The label allows you to do it in ways that allow better care of these patients. Of the first patients that have been put on therapy in the first couple of months here, what's that phenotype look like? Are these older patients? Are they heavier patients? What's that look like, and ultimately, how does that kind of normalize over time? Going in, our expectation was that patients who would come on earlier would be younger. For us, younger would mean 26 and younger. The reason being that at 26, you can keep your parents' insurance. You're likely to be living at home. Your parents are more likely to be motivated to take you to the doctor. In fact, the claims data bears that out. What you see in the claims data is for that population, four to six visits to health care providers a year. That is indeed what we have seen post-launch in the first few months of launch, that a vast majority of the patients are between 4 years and 26 years of age. They are therefore somewhat heavier than the clinical trial population, where the average was 61 kilograms and the age was 13.5 years. Yes, they're a little heavier, which also means that many of them could have more comorbidities. One of the challenges that comes along with the comorbidities is challenges with monitoring. For example, if you have a patient who's lean, it's very obvious. If you have grade 1 edema, you'll see swelling around the ankles. Sure. If you have a patient who is older and more obese, that's harder to see. That's a patient you need to evaluate more carefully for other symptoms, et cetera. All of this is a process of education. We're working on that with the providers. I would say that overall, the risk-benefit ratio remains very positive. For sure. Is there any specific, you know, guidelines or anything that you guys have started to put out, you know, around, again, monitoring and sort of, you know, you have since the launch? Is there anything officially going to come out? Is it more the physician and the physician groups that really are the experts in this area, kind of, you know, figuring that out on their own? I'd say there's a lot of efforts. From our side, it's more related to things like our materials, our marketing materials, whether they're to health care providers or to families. They have significant detail around adverse events. They point to sections in the label that talk about those modifications, modifying titrations, et cetera. We have our specialty pharmacy. They will do a counseling call before anyone starts drug. They will make a call at every titration step. They will make a call every time there's a refill. The families get a lot of touch points. They have the ability to tell the clinical pharmacist what's going on. The physicians themselves are also learning from the KOLs. We now have a speakers' bureau. There are a lot of these things going on. We also believe there is a set of guidelines that physicians are working on. All good things. Gotcha. Maybe, in terms of what you're seeing in the real world around discontinuations, there's probably going to be two: one, AE-related discontinuations, then ultimately longer-term, efficacy-related. Maybe some patients are not responding. Can you see, or highlight to us, where you think those will land over time? It's a good question. I don't know that we know the answer. What we do know is that when you look at drugs transitioning from a clinical trial setting to a commercial setting, you do have very high discontinuation rates relative to clinical. The reason is simply you're giving it to a much broader population, which is less controlled. What we have seen so far is actually pretty consistent with our clinical trial population. As we had pointed out a couple of weeks ago, the discontinuation rate for adverse events was about 5.2% compared with our 13-week study where the drug arm had a discontinuation rate of about 4.8%. Very similar and actually surprisingly low, I would say. What was the other part of your question? Longer term in terms of efficacy-related discontinuations. I think it's fair to say that this is too early for us to assess efficacy, although we do hear anecdotes about, you know, good things happening. We know from the profile of the drug and the published data about the drug that while a lot of people will start to see the effects early on, maximal effects can take six to nine months. This is a point of education for health care professionals who are not familiar with the drug, as well as to families who have patients going on drug. We make it a point to say you have to wait. You have to be patient. Interestingly, the policies that we are seeing written by providers are also 6 months- 12 months in duration. I think the right things are in place to assess patients over a longer period of time. We're not sure where the discontinuation rate will land. I think it's fair to assume that commercial discontinuation rates end up being higher. Gotcha. In terms of payer coverage, I mean, and going back to reauthorizations, is this going to be more of an objective measure on hunger, or is it more subjective by physicians being like, hey, we're just hearing that the patients are doing well, we keep them on drug? I mean, it's still early. I don't know how many reauths we've seen, but what do you expect on that front from a payer coverage standpoint? No reauth so far. Obviously, it's too early. I do think that the fact that the label did not specify a level of hyperphagia, et cetera, confirms what we believe, which is it's more about being hyperphagic or not. It's not about having some degree of hyperphagia. Most KOLs will tell you that if someone is hyperphagic, that hyperphagia waxes and wanes over time. They could be, you know, okay and just anxious about food and then suddenly have an episode where they go and try to eat something that's, you know, like a frozen chicken. These are things that are unpredictable. In our opinion, it's always been hyperphagia or not. So far, what we've seen, the reauths should really just be, you know, is it working or not? Yeah, okay, got you. This is an indication that's been evaluated before. I think a lot of people get excited about it because, again, the unmet need is so dire. In the context of a launch now, we're only, like, very, very early. How do you think about a launch trajectory in this type of indication? It's probably not one that we've seen quite like before. What sort of analogs would you use? I guess we don't want to get ahead of our skis. There's a lot of different moving parts. Again, how do you think about the launch ramp and where sales could end up, you know, one, two, three years from now? Yeah, let me answer part one of it. I'm going to give Jim the full part two. I think it's fair to say. Yeah, I think it's fair to say that we always hesitate in coming up with analogs for rare disease launches. The simple reason is that they're all bespoke. They're so specific to each disease, to the way it's treated, where they are treated, et cetera. We hesitate in giving out any analogs. I think what you have seen so far is a very motivated population of caregivers and patients and physicians. I would say that what we saw in the first quarter, those numerically, is not something that one could sustain. I think from a trajectory perspective, it's fair to assume a slow and steady increase over time. Jim, numbers? Yeah, I think to emphasize, you know, 646 start forms in Q2 was outstanding. To Anish's point, to expect that to go 2x, 3x, 4x, 5x is just beyond sort of credibility. We think it'll moderate. Healthy cadence continuing. Ultimately, you know, as you know, there's a 10,000-patient TAM. The idea is to really sort of, as you pointed out, over those two, three years, to really continue to build the momentum, continue to take the therapy in there, and get a very high number of ultimate patients on drug. Gotcha. When you think about the 295, the docs that, you know, prescribers, I mean, you know, how much of the 10,000 does that make up? Is it, again, more ones and twos, or is it like these are centers of excellence that are, you know, kind of concentrated Prader-Willi patients and Prader-Willi families? It's a combination. Yeah, I think our selling strategy, if you like, is to go deeper in the KOL accounts and then have breadth across those ACPs at C1, C2, C3. You saw us comment there are 300 KOLs that sort of really focus on 2,000 direct and another 2,000 influence. We said out of Q2, we were running a third into those. We want to go deeper into those accounts. We also, back to the 295, that showed breadth. That shows going into sort of the second, third, fourth tier of ACPs, which is ultimately important to be able to get to the whole patient population. We like the start of being able to be in the deeper accounts and also go breadth for the guys that see one or two patients. Gotcha. I guess when you think about the patients, you know, and how physicians are using it early, I mean, as you said, you're seeing younger under 26. If we kind of go within that group, are physicians starting older patients that, you know, again, most of the Prader-Willi patients only live to like 30, right? That's like the average age. I mean, essentially, are they starting kind of with the older patients that might be some of the most sick? Are they going to start and start moving younger? Are they starting with the younger and moving older? Is it kind of a combination right now because it's just, it's too early to really see any pattern? I'd say the profile of Prader-Willi has changed substantially over the last few years. The data that you're referring to, an average age of about 30, the mean age, I think life expectancy is about 29 or 30 in the publications, we feel like those are dated because we are aware of so many patients who are in their 50s and 60s and even older today that the number seems to be skewed to prior data. This is based on FLAMES analysis. We've said this in the past that if you bifurcate the PWS population at the age of 26, it's about a 50/50 distribution. To answer the second part of your question, we are seeing a mix of patients. We don't get that much information on, you know, comorbid characteristics because it's a commercial drug at this point. We think we're seeing some patients who are sort of end of road, morbidly obese, who have many comorbidities and may actually not be great candidates for the drug. It's unfortunate because a lot of physicians are motivated to try and do something. Sure. They see a drug approved and they want to try it. It may not be the best thing for them. We're seeing a mix. We're trying to push health care providers to make educated decisions on who they're putting on drug and how they monitor them. If you break that down in terms of, like, maybe patients who are severely obese that, again, maybe have a lot of edema, but also patients who have hyperglycemia that may not be candidates, what portion of the population in Prader-Willi have those kind of comorbidities that maybe are not really good candidates for VYKAT XR? At the time of launch, we had said that based on our claims analysis, we are seeing about a total of 12,500 patients in the U.S. Our best guess at TAM was 10,000. That was excluding, among other things, the comorbidities. Okay. I think we'll learn more as we launch the drug. I think we're going to find out more. I also feel like some of those comorbidities are not absolute contraindications. It's more about monitoring the patients better, titrating them better. I think that'll come with more experience with the health care providers. Got you. Obviously, we've been talking mostly about the U.S. Can you maybe, you know, give us some thoughts about your opportunity in Europe, obviously the filing and kind of status there, and your thoughts on approval there? Yeah, so the prevalence or the birth incidence of PWS is the same regardless of geography or ethnicity. When you look at the EU4 + U.K., you see about the same prevalence as the U.S. It's about 9,000 patients overall. From a numerical perspective, the opportunity is significant. The other thing that's interesting about Europe is that in many countries in Europe, particularly France, to some extent Germany, and also Italy, the care is a lot more structured. You have these centers of excellence where pretty much every patient from the country is being seen at one of those centers. In a lot of ways, it's somewhat easier than the U.S. The challenges, of course, relate to pricing and things like that, which we will work through. As you probably know, we did file in early May. Given the process in the EU is different from here with clock stops and what have you, we generally tell people to expect about a year to approval. We are expecting the day 120 questions at the latter part of September. That'll give us some idea on how they're thinking about it. Gotcha. I mean, is there anything that would increase or decrease the probability of success of getting approved in the EU? I mean, obviously, it doesn't seem like the stock really reflects that you would get approval there. What are some of the factors that we need to consider? I think that it's a complicated data set. We know that. However, we also know that, and we were pretty transparent about the FDA's views on the data set and their concerns about the data set and randomized withdrawal of patients who had been on drug for a long time and the potential bias that it brought. At the end, the strength of the data was such that they approved the drug. I expect the EU, the EMA, to have similar questions about the data. I hope the strength of the evidence will allow us to prevail there. Gotcha. In terms of commercialization, is that something that, you know, you can do yourself with a small footprint? We've seen, you know, we cover Rhythm, and they've done that with Bardobetal pretty well, given the concentration around some of those indications. Is that similar for Prader-Willi in that you could do it yourself? Would you want to partner that? We are firmly on the fence on that one right now. Initially, we were pretty clear that we would partner it out. We've been doing work there, and we like the market. We like the opportunity. We also feel like with MFN-related issues, we'd like to have more control. We're continuing the conversations with potential partners, but we do have the ability to do it ourselves. We've been developing more of a footprint in Europe. We've been doing some basic hiring there at headquarter levels, and we are looking at country-specific footprints as well. You can do it. Rhythm is a good example, although Bardobetal is a much more limited population than Prader-Willi. Conceptually, there are other companies that have done the same. Gotcha. Maybe shifting gears to kind of the competitive landscape and competitive intensity in Prader-Willi. Obviously, nothing has worked up until now. It doesn't stop people from trying. We have a couple of readouts that are coming out. Just your thoughts on how you see that evolving over time. Is it more, is it a zero-sum game? Is there combination opportunities? Going back to earlier, are there subsegments of the population that, again, everyone kind of wins because there's different areas? I think what you see is a population that's large enough that there's space for more than one drug. No drug will work for everyone. I think there'll be an opportunity to try other things. As we're all aware, it's a very challenging indication. We haven't really seen other things work. The readouts that are coming up will be interesting to watch. The preliminary data from a number of those is not that encouraging. We're curious to see what large randomized studies look like. Where do you think, if you had one or two, three items that you feel like were VYKAT XR relative to the competitive field, where you guys have the advantage? I mean, obviously, you're approved. Beyond that, just on differentiation, dosing, et cetera, where do you think you can continue to win against some of those, assuming efficacy is even somewhat near where VYKAT XR is? I think if you look at the fact that we are a once-a-day fill, that is a significant advantage over other situations, which might be an injection or might be three times a day nasal. That's one. I think, two, if you look at our data set, and it's been published in peer-reviewed journals at this point, the benefits are substantially beyond hyperphagia as well. Yes, our indication is hyperphagia. If you look at behavioral problems in Prader-Willi, we seem to have a very significant effect. If you look at body composition, if you look at biomarkers related to metabolic stuff, there's a lot that happens with the drug that seems to benefit these patients. It does it in subtle ways. It does it over long periods of time. There's a lot that seems to happen that improves the lives of these patients. I think for a competitor, there is space. I think replacing VYKAT XR may be more difficult. Perhaps the more obvious indications would be places where VYKAT XR is not able to be used. If there are significant comorbidities, for example, or uncontrolled diabetes, and it is a drug that does not impact that patient, perhaps that's a good place to start. Gotcha. I mean, I guess one of the things we've heard is really just like the fact that going back to some of your early commentary is just like the long-term safety data. You've had really good data for a long time in these patients. That's generally hard to replicate if you don't have it, right? If you're a new drug, without that long-term safety data, usually, it seems like by default, physicians feel like that at least keeps you in the pole position potentially. Would you agree with that? I would. I think the other part of this is that the parent molecule is also well known. The primary prescribers, and this is bearing out even in the commercial setting, are predominantly pediatric endocrinologists. Those are exactly the people who have used the parent molecule. They understand the toxicity of that molecule because that's something that ends up being used at high doses and has significant problems associated with it. For them, in some ways, VYKAT XR is a bit of a relief because you see a Cmax, which is much lower, a safety profile that's likely a lot more tolerable. Yes, I would agree with that. Gotcha. The other thing just in terms of the competitive intensity, going back to potential combo use, some of these trials are enrolling patients who are on standard of care, which is now VYKAT XR, right? Do you see that as potential areas of interest among physicians or enthusiasm around that where maybe one has more hyperphagia benefit, others have more metabolic or weight loss benefits? Together, they could be used in combination? Certainly. I think physicians would like that. I think the question would be from a payer perspective, how does that work with two rare disease drugs? I don't see from, I would say, any of these mechanisms anything that would create a problem in using the drugs together. Obviously, you have to assess safety and see how it works. Mechanistically, they do seem to be distinct enough. Gotcha. Maybe just an IP question. As we think about how this business kind of evolves over time and, you know, continues to ramp, talk about kind of what you have from an IP perspective, but also, you know, some of the mechanisms to continue to kind of like retain that tail value, you know, for VYKAT XR long term. Yeah, we have three families of patents that we prosecute in all major markets. Primary cases in all have issued. The SALT polymorph patent has a primary expiration at the end of 2026, but it also has more than 800 days of PTA. If you apply PTE to that, you could extend that to about 2034. We have two families of method patents with primary expirations in 2035, and some of those, if you apply PTE to them, they could go to the late 2030s. From a work perspective on the IP front, we continue to prosecute these families. You might have seen there was a new patent that was added to the Orange Book a couple of weeks ago. We are continuing to do the work there. We have said we are looking at some new options for IP as well, although we haven't described them in detail. We've also said that from a lifecycle management perspective, stay tuned. Give us a quarter or two, and we'll provide more detail on what we are planning. Is there, you know, a strategy to bring in assets or potentially do other things in Prader-Willi, maybe not around the VYKAT XR molecule, but other MOAs? Do you want to be fully functioning with pipeline, or do you want to just continue to be a straight-up commercial story? I'd say all of the above. I think in the short term, we want to be a straight commercial story, hyper-focused on the launch. We want to keep our eyes open to see what else is out there that makes sense to us. I think we would like to stay rare and stay sort of adjacent to where we are today. You can accomplish that in many ways. We'll look at all of them. Got you. Maybe a question for Jim on the financials. Obviously from a cash perspective, but also from a build-out perspective, do you feel like right now salesforce is kind of where it needs to be? Is there more expansion needed in terms of spend? Maybe just kind of how that evolves with the launch as well. Sure, yes. I think we commented, if you like, just before Q2 that we felt that we had line of sight with the cash balance at that stage to profitability. Q2 came in and we'd say it's stronger than anticipated. That's great. That shored up our confidence in getting to profitability. We did, in fact, an incremental raise. We ended up with over $500 million of cash on the balance sheet, a very strong position. We do look at the commercial footprint. We think it's right-sized at the moment, but we will put in little sort of add-in pieces around wherever we think it makes sense. I think that balance sheet strength really allows us to continue the momentum in Europe, to your point about sort of continue to do stuff ourselves while looking at partnerships. We can play that out. To Anish's point, we're well capitalized to do lifecycle management in 2026 and beyond. We think we're in a very good shape. Gotcha. I guess where do you think right now the story is underappreciated? Is it the launch? Is it the IP? Is it the safety thing? Where do you think that people are not constructive enough here on VYKAT XR and in the Soleno Therapeutics story? I think we feel a lot more appreciated now than we did a couple of years ago. Fair. We don't complain too much. I think it's fair to say that at least in the short term, these conversations around safety are a distraction. I think it's important to realize that this is a drug that has a known side effect profile. We're in a setting which is commercial and is already treating hundreds of patients. One has to know that the side effect profile will look somewhat different than what it did in the clinical trials. I'd say that's really been the only glitch. Otherwise, I think the launch is going extremely well. We feel good about where the market has been. We appreciate your support. Got it. We'll leave it there, gentlemen. Thank you so much. Thank you. Thank you.