Soleno Stock Plummets 30% as VYKAT XR Launch Concerns Eclipse Record Quarter
Shares hit 52-week lows after management revealed a slowdown in patient starts and rising discontinuations for its key Prader-Willi syndrome drug, sparking legal scrutiny.
Soleno Therapeutics (NASDAQ: SLNO) shares collapsed by more than 30% over two days, erasing nearly $1 billion in market value as investor panic over the commercial launch of its flagship drug, VYKAT XR, overshadowed the company's first-ever profitable quarter.
The sell-off began in earnest on Wednesday, with the stock plunging 26% on heavy trading volume and continuing its slide another 8% in Thursday morning trading. The decline pushed the stock to a 52-week low, wiping out months of gains that had been built on optimism for its newly approved treatment for Prader-Willi syndrome, a rare genetic disorder.
The sharp reversal in sentiment came just days after Soleno reported what appeared to be stellar third-quarter results. The company posted net revenue of $66.0 million, primarily from VYKAT XR sales, which was more than double the previous quarter. The performance drove Soleno to its first profitable quarter with a net income of $26.0 million.
However, the devil was in the details of the company's earnings call. Despite the strong top-line numbers, management acknowledged a "disruption in our launch trajectory." According to the Q3 earnings call transcript, executives pointed to a slowdown in new patient start forms in late Q3 and an increase in patient discontinuations.
Management directly linked the higher discontinuation rate to a damaging short-seller report published by Scorpion Capital in mid-August. The report raised questions about the drug's safety profile, creating fear among patients and physicians that impacted adherence. While Soleno stated the overall discontinuation rate of approximately 10% remains below levels anticipated from clinical trials, the admission spooked investors who were banking on a seamless commercial rollout.
"The market has savagely repriced Soleno stock from a story of unbridled growth to one clouded by significant launch risk," said a healthcare analyst at a boutique investment firm. "Last week, the narrative was about a successful biotech achieving profitability. This week, it's about whether the company can defend its only commercial product against a crisis of confidence."
The fallout was immediate and severe. Trading volume for Soleno shares surged to more than triple its daily average as institutional investors recalibrated their growth expectations. The stock's market capitalization fell from over $3.5 billion to approximately $2.5 billion.
Adding to the pressure, the law firm Hagens Berman announced it was [launching an investigation](https://www.globenewswire.com/news-release/2025/11/06/3182997/32716/en/Soleno-Therapeutics-SLNO-Faces-Investor-Scrutiny-Amid-Disappointing-VYKAT-XR-Starts-Discontinuations-Shares-Down-26-Hagens- Berman.html) into the company on behalf of investors, citing the disappointing launch metrics. Such investigations often precede class-action lawsuits and add another layer of uncertainty for shareholders.
VYKAT XR is critical to Soleno's future, as it is the company's only approved and revenue-generating product. Prader-Willi syndrome is a rare disease with no other approved treatments for its most severe symptom—hyperphagia, an unrelenting feeling of hunger. Analysts had been optimistic, with firms like TD Cowen recently reiterating a "Buy" rating and a $120 price target, noting the launch had initially "pleasantly defied expectations."
In response to the challenges, Soleno's management said it was deploying educational initiatives and field teams to address concerns about adverse events and support patients and physicians. Investors will now be closely watching for signs that the company can stabilize the launch trajectory and restore confidence in VYKAT XR's long-term commercial potential.