On Monday, Soleno Therapeutics Inc. (NASDAQ:SLNO) saw its price target increased by Oppenheimer from $65.00 to $73.00, while the firm maintained an Outperform rating on the stock. The revision comes as Soleno anticipates the FDA approval of DCCR for the treatment of Prader-Willi syndrome (PWS) by late December.
Oppenheimer updated its revenue model for Soleno, projecting significant growth in U.S. sales from 2025 to 2029. The new estimates are $50 million for 2025, escalating annually to $902 million by 2029. These figures represent an increase from the previous estimates, which started at $35 million in 2025 and were expected to reach $795 million by 2029.
The upward revision of sales forecasts is based on several key factors. Analysts at Oppenheimer cite an expected rise in diagnosis rates among children and young adults, a demographic that could yield high commercial returns for Soleno. Additionally, the availability of DCCR is believed to encourage older patients to seek active treatment, thereby increasing the number of diagnoses.
Another contributing factor to the revised price target is the anticipated pricing strategy for DCCR. Oppenheimer suggests that the drug's price will align more closely with other rare disease therapies, which typically command premium pricing.
The possibility of Soleno self-commercializing DCCR in Europe is seen as a potential additional benefit, although it is not currently factored into Oppenheimer's assumptions. The decision to proceed with self-commercialization could provide further upside to the company's prospects.
In summary, the increased price target reflects a positive outlook for Soleno Therapeutics, driven by higher expected sales and a strategic approach to pricing and market expansion. The firm's confidence in the stock remains strong as it reiterates its Outperform rating.
In other recent news, Soleno Therapeutics has been making significant strides in the development of its drug DCCR, aimed at treating Prader-Willi Syndrome (PWS). The U.S. Food and Drug Administration (FDA) has indicated no need for an advisory committee meeting, a positive sign for the New Drug Application (NDA) process. This development has been well received by several analyst firms. Laidlaw, Baird, and Stifel have all maintained their positive outlooks on Soleno, with Laidlaw and Stifel setting a price target of $75 and $74 respectively, while Baird maintains a $72 target.
Oppenheimer also echoed this sentiment, maintaining an Outperform rating and a $65 price target, highlighting the potential for significant revenues if DCCR is approved. The FDA's decision on DCCR is expected by the end of 2024, marking a critical milestone for Soleno Therapeutics.
In other company news, Soleno has seen changes in its Board of Directors with the appointment of Matthew Pauls as the new Lead Independent Director and the addition of Dawn Carter Bir to the board. The company has also entered into an agreement with Jefferies LLC to potentially sell up to $150 million of its common stock and has awarded performance-based restricted stock units to its employees.
InvestingPro Insights
Soleno Therapeutics Inc. (NASDAQ:SLNO) has been showing strong market performance, aligning with Oppenheimer's optimistic outlook. According to InvestingPro data, the company has seen a remarkable 143.87% price total return over the past year, and is currently trading near its 52-week high at 96.67% of that peak. This impressive performance is reflected in one of the InvestingPro Tips, which notes the company's "High return over the last year."
The market seems to be pricing in the potential FDA approval of DCCR, as evidenced by the stock's high Price to Book ratio of 7.6. This valuation suggests investors are betting on future growth, which is consistent with Oppenheimer's increased revenue projections. An InvestingPro Tip also highlights that "Net income is expected to grow this year," further supporting the positive outlook.
However, it's important to note that Soleno is not currently profitable, with a negative EBITDA of -$66.53 million over the last twelve months. This aligns with another InvestingPro Tip stating that the company is "Not profitable over the last twelve months." Despite this, analysts predict profitability this year, which could be a game-changer if the FDA approves DCCR as anticipated.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Soleno Therapeutics, providing a deeper understanding of the company's financial health and market position.
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