Soleno Therapeutics finds itself at a dramatic crossroads, caught between a landmark commercial launch and a storm of allegations that threaten to derail its progress. The biopharmaceutical company’s story has rapidly evolved from a celebrated debut to a contentious legal and financial battle, leaving investors to weigh groundbreaking revenue against claims of potential fraud.
Unprecedented Market Reception for New Therapy
The launch of VYKAT XR has been nothing short of phenomenal for Soleno. The drug, which secured FDA approval in March 2025 and became commercially available in April, delivered a stunning second-quarter performance. The company reported revenue of $32.66 million, a figure that surpassed analyst expectations by a remarkable eightfold. Even the loss per share showed significant improvement, coming in at -$0.09 compared to the anticipated -$0.53.
This commercial success was driven by immediate physician and patient adoption of the treatment for hyperphagia in Prader-Willi syndrome. Treatment initiation data revealed 646 patients beginning therapy under the care of 295 distinct physicians. Furthermore, the drug’s insurance coverage extends to a patient pool exceeding 100 million lives.
Scorpion Capital’s Damning Report Triggers Selloff
The celebratory atmosphere was abruptly shattered on August 15th when activist short-selling firm Scorpion Capital released a scathing report. The analysis labeled Soleno a “one-trick pony” with an insignificant development pipeline beyond its flagship drug.
The allegations were severe: Scorpion Capital contended that VYKAT XR is not only excessively priced but may also present safety concerns for pediatric patients, citing potential hospitalizations linked to cardiac issues. Adding to these concerns, the report highlighted that the drug’s core patent protection is scheduled to expire as early as 2026.
Should investors sell immediately? Or is it worth buying Soleno Therapeut.?
Financial markets reacted instantly to the allegations. Soleno’s stock price plummeted 7.4% on the day the report was published. The fallout extended beyond the immediate selloff, with multiple law firms announcing investigations into whether Soleno Therapeutics misled investors regarding the drug’s associated risks.
Maintaining Analyst Confidence Amid Controversy
Despite the serious nature of the allegations, several prominent analysis firms have maintained their positive outlook on Soleno’s stock.
Guggenheim reaffirmed its Buy rating, attaching a $106 price target that implies a potential upside of over 50% from current levels. Similarly, HC Wainwright and Wells Fargo maintained their optimistic positions, with price targets reaching as high as $123. The consensus average price target among analysts stands at $115.
This institutional confidence appears reflected in ownership patterns, with institutional investors holding a substantial 97.4% of all shares. Several funds have significantly increased their positions in the company, though filings did show insider selling by Patricia C. Hirano, who disposed of a portion of her holdings.
The coming quarters will prove decisive for Soleno Therapeutics. The company must demonstrate whether it can convert its impressive initial sales figures into sustainable growth or whether the serious allegations will fundamentally undermine its business prospects. All eyes will be on the next earnings report for clarity.
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