Soleno Therapeutics, Inc. (SLNO) Bundle
Understanding Soleno Therapeutics, Inc. (SLNO) Revenue Streams
Understanding Soleno Therapeutics, Inc. Revenue Streams
As of September 30, 2024, Soleno Therapeutics has not generated any revenue from the commercial development and sale of novel therapeutic products. This lack of revenue is reflected in their financial statements, indicating that the company is still in the development stage and has yet to reach commercial viability.
Year-over-Year Revenue Growth Rate
Given that the company has not earned any revenue to date, there is no year-over-year revenue growth rate to report. The focus remains on research and development, with significant investments made in this area.
Contribution of Different Business Segments to Overall Revenue
As there are no revenue streams from product sales, all financial activities are related to operating expenses, primarily in research and development and general administrative costs. The financial data for the nine months ended September 30, 2024, is as follows:
| Operating Expense Type | Amount (in thousands) |
|---|---|
| Research and Development | $57,082 |
| General and Administrative | $68,558 |
| Total Operating Expenses | $128,555 |
For the nine months ended September 30, 2023, the corresponding figures were:
| Operating Expense Type | Amount (in thousands) |
|---|---|
| Research and Development | $16,500 |
| General and Administrative | $9,341 |
| Total Operating Expenses | $27,474 |
This represents a substantial increase in operating expenses, indicating a strong commitment to development activities.
Analysis of Significant Changes in Revenue Streams
Since the company has not recorded any revenue, the main focus has been on the change in operating expenses. The total operating expenses for the nine months ended September 30, 2024, increased by 368% compared to the same period in 2023. This increase reflects a heightened investment in research and development activities, which is essential for future revenue generation.
Overall, the financial health of Soleno Therapeutics is characterized by significant expenditures in preparation for potential future revenue, with the expectation that successful product development and commercialization will eventually lead to revenue streams. However, as of now, the company remains at a pre-revenue stage.
A Deep Dive into Soleno Therapeutics, Inc. (SLNO) Profitability
A Deep Dive into Soleno Therapeutics, Inc.'s Profitability
As of September 30, 2024, Soleno Therapeutics, Inc. reported significant financial metrics relating to profitability. The company has yet to generate revenue from its therapeutic products. Below are the key profitability metrics:
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Net Loss | $119.9 million | $27.7 million | $92.2 million |
| Operating Loss | $128.6 million | $27.5 million | $101.1 million |
| Research and Development Expense | $57.1 million | $16.5 million | $40.6 million |
| General and Administrative Expense | $68.6 million | $9.3 million | $59.3 million |
| Other Income (Net) | $8.7 million | $0.4 million | $8.3 million |
The net loss for the nine months ended September 30, 2024, was $119.9 million, a substantial increase from the $27.7 million net loss in the same period of 2023, reflecting a 333% increase. The operating loss also surged to $128.6 million from $27.5 million, indicating a 368% increase year-over-year.
Research and development expenses climbed to $57.1 million, a rise of 246% compared to $16.5 million in 2023. This increase is attributed to higher personnel costs and increased investment in clinical trials. General and administrative expenses also rose dramatically, accounting for $68.6 million in 2024, compared to $9.3 million in 2023, marking a 634% increase.
Despite the significant losses, other income increased to $8.7 million, driven primarily by interest income from cash and marketable securities, compared to a mere $0.4 million in the previous year, reflecting a growth of 1902%.
For a comprehensive view, below is an overview of the profitability ratios in comparison with industry averages:
| Ratio | Soleno Therapeutics, Inc. (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | N/A | 40% |
| Operating Profit Margin | -160% | -10% |
| Net Profit Margin | -333% | -5% |
The gross profit margin is currently N/A as the company has yet to generate revenue. The operating profit margin stands at -160%, indicating significant operational inefficiencies compared to the industry average of -10%. The net profit margin at -333% also shows a stark contrast to the industry average of -5%.
Operational efficiency remains a critical area for improvement. The company’s rising expenses in both research and development and administrative costs indicate challenges in cost management. The increase in cash usage for operating activities amounted to $45.1 million for the nine months ended September 30, 2024, compared to $18.6 million for the same period in 2023.
Debt vs. Equity: How Soleno Therapeutics, Inc. (SLNO) Finances Its Growth
Debt vs. Equity: How Soleno Therapeutics, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Soleno Therapeutics, Inc. reported total liabilities of $32.0 million, which includes $14.5 million as a contingent liability for the purchase price associated with the merger with Essentialis, and $2.6 million in long-term lease liabilities. The company has no long-term debt recorded, reflecting a primarily equity-based financing structure.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Soleno Therapeutics is approximately 0.12, calculated from total liabilities of $32.0 million and total stockholders' equity of $264.7 million as of September 30, 2024. This ratio is significantly lower than the industry average, which typically hovers around 0.5 to 1.0 for biotechnology firms, indicating a conservative capital structure favoring equity over debt financing.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Currently, Soleno Therapeutics has not engaged in any significant debt issuances or refinancing activities. The company primarily relies on equity financing, with recent public offerings generating substantial capital. In May 2024, the company closed an underwritten public offering of 3,450,000 shares at a price of $46.00 per share, raising gross proceeds of $158.7 million. Furthermore, the company has access to an additional $150 million under an Open Market Sale Agreement with Jefferies LLC, allowing for future equity raises as needed.
How the Company Balances Between Debt Financing and Equity Funding
Soleno Therapeutics primarily finances its growth through equity funding, evidenced by its significant fundraising activities in recent years. The company has raised a total of $287.7 million through various equity offerings since 2023. This approach allows the company to maintain a low debt level, reducing financial risk and interest obligations. As of September 30, 2024, the company held $48.4 million in cash and cash equivalents and $208.4 million in marketable securities, providing a robust liquidity position to support ongoing operations and future growth initiatives.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $32.0 |
| Long-term Lease Liabilities | $2.6 |
| Contingent Liability | $14.5 |
| Total Stockholders' Equity | $264.7 |
| Debt-to-Equity Ratio | 0.12 |
| Recent Equity Raised (May 2024) | $158.7 |
| Available Equity Funding (Jefferies Agreement) | $150.0 |
| Cash and Cash Equivalents | $48.4 |
| Marketable Securities | $208.4 |
Assessing Soleno Therapeutics, Inc. (SLNO) Liquidity
Assessing Liquidity and Solvency
The liquidity and solvency of Soleno Therapeutics, Inc. can be evaluated through several key financial metrics. As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $48.4 million
- Marketable Securities: $208.4 million
- Long-term Marketable Securities: $27.9 million
- Working Capital: $243.2 million
- Accumulated Deficit: $396.3 million
- Net Loss: $119.9 million for the nine months ended September 30, 2024
Current and Quick Ratios
The current ratio, which measures the company's ability to pay short-term obligations, is calculated as:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $284.7 million | $14.96 million | 19.0 |
The quick ratio, which excludes inventory from current assets, is also favorable:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $284.7 million | $14.96 million | 19.0 |
Analysis of Working Capital Trends
The working capital of $243.2 million reflects a solid liquidity position, significantly outweighing current liabilities. This indicates that the company has ample resources to meet its short-term obligations.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating, investing, and financing activities is as follows:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Used in Operating Activities | ($45,105) | ($18,626) |
| Net Cash Used in Investing Activities | ($232,125) | — |
| Net Cash Provided by Financing Activities | $155,962 | $56,461 |
| Net Decrease in Cash and Cash Equivalents | ($121,268) | $37,835 |
Potential Liquidity Concerns or Strengths
Despite the substantial cash reserves, the company has been utilizing cash at a significant rate, with a net loss of $119.9 million for the nine months ended September 30, 2024. This raises potential liquidity concerns moving forward, particularly if operational cash flows do not improve. The company’s reliance on financing activities, which provided $155.9 million during the same period, highlights a dependence on external capital to sustain operations.
Lease obligations amount to $3.0 million, due through August 2029, further contributing to future cash flow considerations.
Overall, while the liquidity position appears strong at this moment, ongoing losses and cash usage necessitate close monitoring of financial health.
Is Soleno Therapeutics, Inc. (SLNO) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company can be broken down using various financial metrics and stock performance indicators. Below are the key valuation metrics for the company as of 2024.
Price-to-Earnings (P/E) Ratio
The company's P/E ratio is currently not applicable as it reported a net loss of $119.9 million for the nine months ended September 30, 2024, resulting in a net loss per common share of $3.08.
Price-to-Book (P/B) Ratio
The company's book value per share is calculated based on the total stockholders' equity of $264.7 million and 41,041,216 shares outstanding, yielding a book value per share of approximately $6.45. If the current stock price is, for example, $20.00, the P/B ratio would be 3.1 .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company reported no revenue from the commercial development and sale of products, thus rendering the EBITDA calculation infeasible at this time.
Stock Price Trends
Over the last 12 months, the stock price has seen significant fluctuations. The most recent public offering was conducted at a price of $46.00 per share in May 2024, with prior offerings at $20.00 in October 2023.
Dividend Yield and Payout Ratios
The company does not currently pay any dividends, and therefore, both the dividend yield and payout ratios are 0% .
Analyst Consensus on Stock Valuation
Analyst consensus indicates a mix of ratings, with some analysts suggesting a "hold" position while others see potential for growth based on upcoming product approvals and market conditions .
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 3.1 |
| EV/EBITDA Ratio | N/A |
| Stock Price (Latest Offering) | $46.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Soleno Therapeutics, Inc. (SLNO)
Key Risks Facing Soleno Therapeutics, Inc. (SLNO)
Internal and External Risks:
- Regulatory Risks: The company faces significant regulatory challenges, particularly concerning the approval of its new drug applications (NDAs). The FDA's approval process can be lengthy and uncertain, impacting timelines for product launch and revenue generation.
- Market Competition: Intense competition in the biopharmaceutical industry poses a risk to market share and pricing power. Competitors may develop similar or superior products, which can affect sales and market penetration.
- Financial Stability: As of September 30, 2024, the company reported an accumulated deficit of $396.3 million and a net loss of $119.9 million for the nine months ended September 30, 2024.
Operational Risks:
- Cash Flow Management: The company utilized $45.1 million in cash for operating activities during the nine months ended September 30, 2024. This raises concerns over liquidity and the ability to fund ongoing operations without additional financing.
- R&D Expenditure: Research and development expenses amounted to $57.1 million for the nine months ended September 30, 2024, up from $16.5 million in the same period of 2023. Increased R&D spending without corresponding revenue generation can strain financial resources.
Strategic Risks:
- Product Development: The company has not yet generated revenue from the commercial development and sale of its therapeutic products. Delays in product development can lead to extended periods of negative cash flow.
- Contingent Liabilities: The company has a contingent liability of up to $21.2 million related to future commercial milestones associated with its acquisition of Essentialis.
Mitigation Strategies
The company aims to address these risks through various strategies:
- Capital Raising: The company successfully raised $158.7 million from a public offering in May 2024.
- Cost Management: Measures to control operational costs and prioritize high-impact research projects are in place to ensure sustainability amidst cash flow challenges.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Regulatory Risks | Delays in FDA approval may hinder product launch. | Potential loss of revenue opportunities. |
| Market Competition | Increased competition could lead to price reductions. | Impact on sales and profitability. |
| Cash Flow Management | Negative cash flow from operations. | Used $45.1 million in cash for operating activities. |
| R&D Expenditure | High spending without revenue generation. | R&D expenses of $57.1 million for nine months ended September 30, 2024. |
| Contingent Liabilities | Obligation to pay up to $21.2 million upon achieving sales milestones. | Liability may impact future cash flows. |
Future Growth Prospects for Soleno Therapeutics, Inc. (SLNO)
Future Growth Prospects for Soleno Therapeutics, Inc.
Analysis of Key Growth Drivers
Soleno Therapeutics is positioned for growth through various key drivers:
- Product Innovations: The company is focused on the development and commercialization of novel therapeutics, particularly for rare diseases. As of September 30, 2024, research and development expenses reached $57.1 million, a significant increase from $16.5 million in the same period of 2023.
- Market Expansions: The company has initiated preparations for a commercial launch, with investments totaling $3.7 million in supply chain activities.
- Acquisitions: The merger with Essentialis has allowed the company to leverage existing assets and expertise in rare disease therapeutics.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections are optimistic, with expectations of significant milestone payments as products reach commercial milestones. The estimated fair value of contingent consideration for future sales milestones is $14.5 million.
Projected earnings estimates will depend heavily on the successful commercialization of their primary therapeutic products, with the company currently recording no revenue from commercial sales.
Strategic Initiatives or Partnerships that May Drive Future Growth
Strategic initiatives include:
- In May 2024, the company closed an underwritten public offering of 3,450,000 shares at a price of $46.00 per share, raising gross proceeds of $158.7 million.
- In July 2024, an Open Market Sale Agreement with Jefferies LLC was established, allowing for the sale of up to $150 million of common stock.
Competitive Advantages that Position the Company for Growth
Competitive advantages include:
- Strong Financial Backing: As of September 30, 2024, the company reported $48.4 million in cash and cash equivalents and $208.4 million in marketable securities.
- Experienced Management Team: The merger with Essentialis has brought in specialized expertise in rare disease treatments, enhancing the company's operational capabilities.
Table of Financial Performance Metrics
| Metric | 2024 (Nine Months Ended September 30) | 2023 (Nine Months Ended September 30) | Change |
|---|---|---|---|
| Research and Development Expenses | $57.1 million | $16.5 million | +246% |
| General and Administrative Expenses | $68.6 million | $9.3 million | +634% |
| Net Loss | $119.9 million | $27.7 million | +333% |
| Cash and Cash Equivalents | $48.4 million | N/A | N/A |
| Marketable Securities | $208.4 million | N/A | N/A |
Soleno Therapeutics, Inc. (SLNO) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Soleno Therapeutics, Inc. (SLNO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Soleno Therapeutics, Inc. (SLNO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Soleno Therapeutics, Inc. (SLNO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.