On Monday, Piper Sandler initiated coverage on Soleno Therapeutics Inc. (NASDAQ:SLNO), assigning an Overweight rating to the company’s stock with a price target of $93.00. The biopharmaceutical company has seen its shares surge over 1500% in the past year, a rise attributed to positive Phase 3 data for its drug candidate, DCCR, in treating Prader-Willi Syndrome (PWS).
The firm expressed confidence in the potential of DCCR, which is anticipated to be submitted for a New Drug Application (NDA) by mid-2024. The optimism is based on the significant unmet medical needs of PWS, a rare genetic disorder affecting approximately 9,000 individuals in the United States. Analysts at Piper Sandler believe that DCCR has a high probability of success for approval due to the strong data presented.
The report by Piper Sandler compared the market opportunity for DCCR to that of Reata Pharmaceuticals (NASDAQ:RETA)' omaveloxolone, a treatment for Friedreich's ataxia (FA), which is another orphan disease. Omaveloxolone's approval led to a $7.3B acquisition, illustrating the potential financial rewards for successful treatments in niche markets with critical needs.
Piper Sandler's bullish stance on Soleno Therapeutics is rooted in the belief that DCCR will significantly penetrate the PWS market. The firm's analysis suggests that the current valuation of Soleno Therapeutics does not fully reflect the growth prospects, especially if the drug gains approval, making the company's stock a compelling investment opportunity.
InvestingPro Insights
As Soleno Therapeutics Inc. (NASDAQ:SLNO) garners attention with a stellar performance in the stock market, it’s important to delve into the financial metrics and forecasts that could influence investor decisions. With a market capitalization of $1.43 billion, the company stands out in the biopharmaceutical space, especially when considering its significant share price appreciation over the past year.
An InvestingPro Tip highlights that Soleno Therapeutics is expected to see net income growth this year, which could signal a turning point for the company that has not been profitable over the last twelve months. This aligns with the optimism surrounding the potential approval of DCCR for treating Prader-Willi Syndrome. Analysts have also noted that the company is trading near its 52-week high, with the price at 95.62% of this peak, suggesting robust investor confidence in its growth trajectory.
While the P/E ratio currently stands at -14.46, indicating that the company has yet to post positive earnings, the remarkable 1,704.63% one-year price total return underscores the market's response to the company’s prospects. Additionally, the InvestingPro Fair Value estimate is at $20.76, offering a grounded perspective amidst the stock's rapid ascent.
Investors interested in a deeper analysis will find additional InvestingPro Tips, such as insights on the company's gross profit margins and debt levels, available through a subscription. Currently, InvestingPro is offering a special New Year sale with discounts of up to 50%. To further sweeten the deal, use coupon code SFY24 for an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year InvestingPro+ subscription.
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