Scorpion Capital has disclosed a short position in Soleno Therapeutics, triggering a steep decline in the company’s share price. The hedge fund cited issues with Vykat XR, Soleno’s recently approved treatment for Prader-Willi syndrome, citing risks of fluid accumulation in the lungs and potential heart failure. Scorpion also suggested that the drug could eventually be withdrawn from the market.

Following the disclosure, Soleno’s stock fell sharply, tumbling around 15 per cent in early trading. Vykat XR, approved earlier this year to treat hyperphagia—a persistent, insatiable hunger characteristic of the disorder—had previously helped boost the company’s valuation.

Soleno has not yet responded to the allegations. The company launched Vykat XR in April, and reported that nearly 300 unique prescribers had adopted it.