Soleno Turns First Profit on $66 Million in Revenue — Is This Why One Investor Just Made an $87 Million Bet?

Connecticut-based fund Braidwell initiated a new position in Soleno Therapeutics (NASDAQ:SLNO) during the third quarter, adding 1.3 million shares worth about $86.7 million, according to a November 14 SEC filing.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Braidwell disclosed a new equity position in Soleno Therapeutics (NASDAQ:SLNO). The fund acquired nearly 1.3 million shares, bringing its total stake in the biotechnology company to $86.7 million at the end of the third quarter. The new holding accounted for 3.5% of the fund’s reportable U.S. equity assets.

What Else to Know

Top holdings after the filing:

• NASDAQ:CAI: $221.3 million (9% of AUM)
• NASDAQ:XENE: $144.7 million (5.9% of AUM)
• NASDAQ:CGON: $132.3 million (5.4% of AUM)
• NASDAQ:NBIX: $123.6 million (5% of AUM)
• NASDAQ:KRYS: $91.9 million (3.7% of AUM)

As of Wednesday, Soleno Therapeutics shares were priced at $50.72, roughly flat over the past year and well below the S&P 500's roughly 13% gain in the same period.

Company Overview

Company Snapshot

Soleno Therapeutics is a biotechnology company specializing in the development of novel therapeutics for rare diseases. Its lead product candidate is Diazoxide Choline Controlled-Release, an oral therapy for Prader-Willi Syndrome. The company's strategy centers on advancing its lead candidate through late-stage clinical trials to address significant unmet medical needs. With a focused pipeline and expertise in rare disease drug development, Soleno aims to establish a competitive edge in the orphan drug market segment.

Foolish Take

Soleno’s improving fundamentals—and its first quarter of profitability—give long-term investors more to think about as a major healthcare-focused fund steps in. After years of steep losses, the company is finally generating meaningful revenue from VYKAT XR, fueling a narrative shift that may explain why an institutional investor is making Soleno a notable new bet.

Soleno reported $66 million in third-quarter product revenue, more than doubling sequentially from the second quarter, and delivered $26 million in net income, its first profitable quarter. The commercial launch of VYKAT XR continues to scale, with 764 active patients, 1,043 start forms, and over 132 million covered lives reported as of September 30. The company ended the quarter with $556.1 million in cash and securities, bolstered by a $230 million equity offering.

Against that backdrop, Braidwell’s new position—worth $86.7 million and representing 3.5% of its 13F assets—suggests conviction in Soleno’s transition from a clinical-stage story to a commercial one. Still, shares remain down 90% from 2015 levels, underscoring the risk profile.

Glossary

13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC, showing their U.S. equity holdings.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Equity position: Ownership stake in a company, represented by shares of its stock.
Stake: The amount of ownership or investment a fund or individual holds in a company.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Phase III clinical trials: Advanced studies testing a drug's effectiveness and safety in large patient groups before seeking regulatory approval.
Orphan drug: A medication developed specifically to treat rare diseases affecting a small patient population.
Biopharmaceutical: A company or product that uses biological processes to develop drugs and therapies.
Prader-Willi Syndrome: A rare genetic disorder causing physical, mental, and behavioral problems, often targeted by specialized therapies.
Clinical-stage: Refers to companies or products currently being tested in human clinical trials, not yet approved for sale.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Krystal Biotech. The Motley Fool recommends Neurocrine Biosciences. The Motley Fool has a disclosure policy.