Good afternoon, everyone. Thanks for joining us. Pleased to have the Denali team with us. We have Ryan Watts, CEO, Co-Founder, and President, and Alex Schuth, CFO and COO. Ryan, to start here, you've made steady progress with the pipeline, notably with positive data from Hunter syndrome with your blood-brain barrier portfolio, and we saw some data at WORLDSymposium recently. As you look to second half onwards, where do you see the most important areas that investors should focus to understand the value proposition for the story?
Well, thank you for having us here again, Salveen. Yes, it's been a lot of steady progress. In fact, you know, we founded Denali seven years ago, and I think what's most exciting for us right now is that we have six clinical stage programs, and three of them are entering late stage efficacy studies or have entered within the last several months.
I think that's, you know, just shows the early investment in a broad discovery and now development portfolio has led to the progress overall for our approach. Just a reminder that, you know, our targets are they're really genetically implicated targets, what we call the degenogenes pathways. Every one of the drugs we've invented is engineered to cross the blood-brain barrier, and we're discussing that.
We'll discuss that at length with the Hunter program. We focus on these biomarker-driven development approaches that allow us to select the right dose. As you highlighted, we had data earlier this year, and we look forward to the second half of the year, additional data coming out of a number of our programs. I think the most important one is likely our eIF2B program, which we hopefully get a chance to talk about. Again, that's one of six programs that we've advanced in our portfolio.
That's great. Maybe let's start with Hunter syndrome. You recently announced plans to initiate the pivotal phase II/III study in the first half. Is this still on track? Secondly, just help us understand the data that we've seen to date and the variability of impact that we saw with neurofilament light, in light of some of the feedback that's been coming out recently at FDA panels.
Yeah. Great. I'll start with the phase II/III for the Hunter program. That trial is now posted on ClinicalTrials.gov. Very exciting time for us. This is one of the three efficacy studies that we're advancing. I should just highlight, and we'll talk about it in a minute.
The other one is our LRRK2 program, and then we have a RIPK program in ALS, so LRRK2 for Parkinson's. That particular study, that phase II/III study, is a head-to-head study with the standard of care, Elaprase. As I mentioned, we've just outlined it. We're on track, looking forward to enrolling that study as quickly as we can, focusing on important biomarker endpoints, but also clinical efficacy.
In fact, if you look at the study, their two co-primary endpoints are CSF heparan sulfate, which we've shown a 90% reduction already in the phase I/II in normalization, and the neurobehavioral assessment. I think we'll get into more detail in a moment. What's been really interesting about that program and our other programs is early on in Denali, we decided to invest heavily in biomarker-driven development.
The way you think about biomarkers for us is target engagement, pathway engagement, and patient phenotyping. The key is that each one of these biomarkers lead to insight around dosing and potential efficacy. In the case of the Hunter program, the most important biomarker is the actual substrate, which is elevated. Once that substrate is elevated, it leads to neurotoxicity and actual toxicity, physical manifestations as well.
Elaprase effectively treats the physical manifestations but doesn't cross the blood-brain barrier. Our technology is engineered to cross the blood-brain barrier and reduce heparan sulfate in brain, and then all the subsequent downstream effects. What we've observed is we then correct the pathway biomarkers, which are these lysosomal biomarkers.
We're also starting to see in the majority of patients an improvement in cognition and neurobehavioral endpoints. It was an open label study, but very, I think, exciting improvement in those patients. It's obviously a rare disease. Those patients, especially in cohort A or ages five to eight, they should be declining, and they're actually improving in their various endpoints.
The outlier in the data, as you mentioned, is the neurofilament data, which we've now presented over a year ago. It's an interesting biomarker. It's not a biomarker that the FDA hangs their hat on. In other words, it's not a, you know, it's not an approvable biomarker.
There's been mixed data across different disease areas, kind of on the extremes, and I'll just give one or two examples. I think it became an exciting biomarker because of what was seen in SMA and in MS. However, there are now data in ALS where there seems to be a disconnect between changes in neurofilament and clinical benefit.
Probably the most relevant for us is likely Batten disease, where neurofilament was eventually reduced, but clinical benefit was observed in the first year of treatment, and it took as much as three years in order to see an effect on neurofilament. When we started exploring all these biomarkers, our goal is to find a biomarker that we think will translate to clinical benefit.
It seems that, you know, the FDA is most keen on heparan sulfate for obvious reasons, both in the CSF but also in the periphery. Neurofilament does not appear to be in Hunter syndrome an acute biomarker that responds acutely to treatment, but, you know, likely over time, you would see a reduction in neurofilament.
You also have a program going after TREM2 in Alzheimer's disease that is a key asset and is on clinical hold. Are you still, I guess, where do you stand with the FDA in resolving this? Is an update still planned for second half on that front?
Yeah. The last point first. Yes, we definitely plan to give an update in the second half of the year when we understand our exact path forward, and we're on that path, so we wanna share as we've made progress with that program. A reminder about TREM2. TREM2 loss of function is a risk factor in Alzheimer's disease.
TREM2 is very specifically expressed in the immune cells in the nervous system, microglial cells. And because of the genetic data, the implication is that you need to activate TREM2, and that's exactly what we've done. We've engineered an antibody that robustly activates TREM2, and there are a couple other antibodies that are in development as well. Notably, you're activating an immune receptor, right? And that's essentially the path we're taking here.
You know, our experience so far is that immune modulation, you know, that's a pretty aggressive way of going after a particular target and especially a disease like Alzheimer's disease. Our plan is to provide an update. Just as a reminder, for those of you that are not aware, we received a clinical hold at the beginning of the year, and then subsequent, another 30 days, received a letter that was highly, you know, very collaborative, and now we're mapping out that path forward.
Can you remind us the reason behind this? Was it the preclinical tox disclosure, and is there anything related to the target that maybe has played out in the field?
Yeah. It's a great question. Yes, it is preclinical tox assessment. It's really about determining the therapeutic index based on the data. Subsequent to that, how do you monitor, right? It's been an interesting field around TREM2 with other programs either on partial clinical hold or having to discontinue dosing in a subset of patients.
I think there's a lot to be learned about this particular target, and really the immune modulation. I think importantly, and this is probably the most important point, is that what we see with TREM2, we don't see in any of our other TV-related programs, any of our transport-related transport vehicle-related programs.
We're gonna see eIF2B activator data in this quarter, I believe?
Yeah. Exactly. eIF2B, just again, a reminder of that. We have so many targets that we're going after and let me give you a little bit of background on eIF2B. Our eIF2B activator, it's really a master regulator of Integrated Stress Response. When a cell responds to stress, there are a number of kinases that will be activated in the case of viral infection or starvation or protein misfolding.
What happens is the cell basically stops translating proteins. It accumulates all of the mRNA in what are called RNA stress granules. Part of this is basically the inactivation of eIF2B. The molecule that we have can activate eIF2B and basically put cells back into a healthy state and reinitiate translation.
The data that we've shown so far has been in healthy volunteers in which we see we're able to activate eIF2B by reading out a couple important biomarkers, and these I term them as pathway biomarkers, CHAC1 and ATF4. Our goal with the ALS study, and it's a 28-day study, is to show basically very similar data in ALS patients, but then we have a longer-term extension in that particular study.
We'll look at data mid-year, make a decision, and our plan is to basically present data second half of this year at a medical conference, which is really how we've been doing this with all of our programs, especially like our Hunter program, but and our LRRK2 program is identifying a medical conference in which we can basically share the data.
We'll have the data to be able to make that decision, you know, mid-year this year now.
Will you share any efficacy measures, and what do you need to see to move it forward?
It is a 28-day study, so we don't have high expectations for efficacy in the sense of, you know, any delay in the rate of decline. It's really gonna be biomarker-focused. The study continues. It's an ALS study with a safety extension. We'll just continue to follow all of those patients.
Perfect.
For us to move it forward, to answer the question, it's really pathway engagement, the ISR pathway.
A question for you, Alex, on partnerships here.
Yeah.
You've got collaborations with Biogen and Sanofi, among others. Given the breadth of the TV platform as well as the other verticals that you're focused on, do you anticipate collaborating with biopharmas more in the future with different programs? I guess when do you think about doing it and, you know-
Yeah.
How do you decide what to keep in-house versus not?
Yes. Thanks for the question on partnering. Partnering is a core pillar of our overall strategy, and this really goes back to when we set up the company. We think, how can we succeed in an area that has been so challenging and where so many others have not succeeded? One of the reasons is, Ryan mentioned some of the scientific reasons, you know, degenogenes getting drug into the brain, but there is a business component as well.
We wanted to build a portfolio company. Right? A portfolio company based on the platform, the TV platform, and based on our small molecules, partly because of the opportunity, but also partly to manage the risk, right? Many of these trials take a long time and are extensive. Now, the upside is also really large.
This is where partnering comes in and why partnering is so expensive, so important. You mentioned our three partnerships, Biogen, Sanofi, and Takeda, and each of those are essentially 50/50 arrangements where we share the cost. Our part of the cost is covered through the milestones, and then we maintain 50% of the upside.
Now on the other hand, it's also important for us that we maintain a number of wholly owned programs where we have all of the upside, where we drive progress, where we can really go after this. Currently, we have the entire enzyme replacement therapy portfolio, which is wholly owned and eIF2B. Now, in addition to the six programs in the clinic, some of them which we just touched on, we have about 15 in preclinical development.
As more molecules transition into the clinic, we have more opportunity for partnering. Long way to answer, yes, there is more opportunity for partnering in neurodegeneration. There's also some adjacent areas. Oncology is an area which we have generated really interesting preclinical data on getting antibodies into the brain. You can think about brain metastases.
You can think about primary brain tumors where the TV platform is ideal. It's not within our core area of focus. It's not something where we want to build capabilities in the clinic, so that could be a partnering opportunity.
Where do you stand from a cash perspective with funding all of these programs?
Yeah. Which is, you know, a very important question now more than ever. We are well-financed. We had $1.2 billion in cash at the end of Q1. We have guided that our operating expense compared to last year will increase by about 20%-25%.
That is offset by about $100 million in expected milestone income that we would have this year. The great thing about partnerships are as programs progress, you know, they continue to cover part of our cost. If you do the numbers, that's about a net spend of about $200 million this year.
You know, I guess when you think of the vision for Denali, it always was you'd be a neurology-focused company, but you would bring in all the tools you need and have as many verticals and approaches. You've talked about bringing in, for instance, exploring AAV as an approach there. Clearly, we've seen you take oligos into the TV platform or the blood-brain barrier platform. Maybe you could talk to us about technologies you're looking to bring in-house or how you're expanding.
Right. I mean, expansion is not what we need today because in the last two years we've massively expanded. We built an enzyme transport vehicle, the ETV franchise with Hunter syndrome and soon Sanfilippo syndrome and a number of other lysosomal storage diseases. One of the most exciting pieces of data that we've presented this year is on our oligo transport vehicles.
It's basically taking an ASO, combining it with an antibody that binds to transferrin receptor and getting it across the blood-brain barrier. This is a whole other franchise, right? We've accessed the technology through a partnership with Sirnaomics that allowed us to basically get unlimited access to ASOs. Now we're executing on basically the enzymes, the oligos, which is preclinical.
We have our broad small molecule portfolio, which is, you know, each of those are engineered to cross the blood-brain barrier. I think our vision is that, you know, we're at the point where when we need to access technology, we can do it through partnerships as we've done historically. I think even our Fc engineering technology was enabled through a partnership that gave us access to intellectual property, and now it's about executing on those programs.
Going back to the TV platform. You have a program with Takeda in frontotemporal dementia. When should we expect initial phase 1 data from that program, and what are you hoping to see here? Remind us of the mechanism of action, just given the competitive dynamics.
Yeah. This particular program, it's called PTV progranulin, so protein transport vehicle progranulin. It's similar to our Hunter program, where our Hunter program is an Enzyme Transport Vehicle getting iduronate two-sulfatase or I2S into the central nervous system. This allows us to replace progranulin. The simplest way to think about it is that FTD granulin is basically a mutation in the granulin gene.
We're replacing the protein in a similar sort of enzyme replacement therapy. It's very logical in terms of just the linear thinking between loss of function and then restoring progranulin. What's important, and I think this reflects our commitment to science, is we have three different pathways that we've invested in heavily, lysosomal biology, glial biology, and cellular homeostasis.
Our lysosomal biology team has worked on the lysosomal storage diseases LRRK2 and progranulin or FTD granulin. We published a paper in Cell in September of last year that did show two things. One is the role of progranulin in the lysosome. Actually in granulin loss of function, you see basically a lysosomal defect in microglial cells, which is leading to FTD.
We showed that we could rescue that, specifically crossing the blood-brain barrier with our Transport Vehicle technology, right? That particular program is now in healthy volunteers. It's our second Transport Vehicle program. We've now taken two TVs, and we'll be taking more TVs into the clinic. We'll start with healthy volunteers, and then we're moving forward in FTD granulin. Now, the biomarkers are most ideally suited for the granulin mutation carrier.
They're really restoring lysosomal function. We don't have an expectation to be presenting biomarkers in healthy volunteers because you already have normal levels of progranulin. You know, likely safety and PK in healthy volunteers and then moving forward into FTD granulin.
We're not actually guiding on when we'll collect that data, but what I can say is, as you point out, Takeda has opted into that program. We're going all out on the healthy volunteer, and then we'll begin enrolling the FTD granulin. As we've accumulated more data and understand the enrollment better, we can give guidance on when we'd expect to present that data.
Perfect. Moving over to LRRK2. You have a program partnered with Biogen Parkinson's disease that's entering two late stage trials here. What should investors take note of? When we look at this target and just given the updated information around it and the programs out there, I guess how much data is there that's supportive of LRRK2 as a target in this indication?
Yeah. I can tell you that I've been working on LRRK2 since 2006. It was discovered in 2004 as a gene linked to Parkinson's disease. Through a human genetic study, there were two papers published back-to-back identifying mutations in LRRK2 in Parkinson's disease.
These mutations are kinase activating. It's almost like the perfect drug target where you have these kinase activating mutations, and what we need to do is invent a molecule that can inhibit the kinase, bring it back to normal levels, and then move forward in clinical trials. Now, that was 2004 that was published, and obviously a lot of work has gone into de-risking LRRK2, initially at Genentech and now at Denali.
What I'm very excited to say is that at the end of May, we began dosing the first full efficacy study with the potential really to, for you know a pivotal study 640 patients LUMA study. This is an idiopathic Parkinson's.
Actually, all patients except for LRRK2 carriers in part because what's really built up around this particular target is after that discovery and after several decades of discovery work or you know 15 years it's been shown that LRRK2 activation leads to lysosomal dysfunction. Back to this theme with progranulin and with Hunter syndrome, it's really linked to the lysosome. Inhibiting LRRK2 restores that lysosomal function, right?
Just last week, we published the first human data in both healthy volunteers and Parkinson's disease, including LRRK2 carriers with a LRRK2 inhibitor that was published in Science Translational Medicine last week.
That was actually basically the proof of concept that led to us selecting the clinical lead, which is DNL151, which can be given once a day. The LUMA study is now enrolling, dosing, and then soon we'll be kicking off the LIGHTHOUSE study, which are with LRRK2 carriers. Obviously, the highest probability of success, again, inhibiting LRRK2 and restoring lysosomal function.
Just remind us with LRRK2 carriers, how important is patient selection in the sense that you can be a carrier, but if it's not activated, it may not result in Parkinson's disease. How do you account for that in accounting for early versus later stage patients?
Right.
How do you know you'll have a read-through to non-LRRK2 carrier?
Yeah. We're starting with the non-LRRK2 because of the evidence around lysosomal dysfunction. The broad genetic architecture of Parkinson's points to lysosomal dysfunction. I think GBA is probably the best example. It's the other most common genetic variant in Parkinson's and homozygous carriers of GBA mutations have Gaucher disease, which is a lysosomal storage disease.
Notably, we can actually treat patient fibroblasts with Gaucher disease and restore lysosomal function with a LRRK2 inhibitor. Just showing how closely related these pathways are. For us, you know, I think that the LRRK2 carriers, it's actually a little bit of a longer study. It's a two-year study, and it will be almost all LRRK2 carriers that will be eligible for that. For the idiopathic study, it's biased towards early-stage Parkinson's.
Ideally, patients that are not yet on standard of care, although there will be a subset of patients that will be. Therefore, we can see probably a more rapid rate of decline, and we'll just run those two studies in parallel. Back to your original question, it's really, you know, all LRRK2 carriers, and including those that are on standard of care, of course, we'd have a bias towards earlier stage. That's where you're gonna see the most robust effect.
RIPK1, that is also. You've initiated the phase two trials there in ALS. Remind us of the study design and what you're looking for and the measures of efficacy here. This one's a bit more complicated because it's a mutated pathway versus the target itself.
Yeah. I'll hand this one to Alex, and as part of our Sanofi partnerships.
That's right. RIPK kinase is really interesting biology. It's a novel immune modulatory mechanism. The simplest way to think about it is that RIPK kinase is just downstream of TNF. In some form, it's like an oral anti-TNF with a nuanced immune modulatory mechanism.
In collaboration with Sanofi are two compounds, one compound that crosses the blood-brain barrier that gets into the brain, and one that was specifically engineered not to get into the brain. The former is currently just started an ALS study, and I'll get to that in a second. Sanofi also plans to start an MS study with this mechanism. The peripheral compound is currently in a study in cutaneous lupus. Sanofi also expressed the intention to initiate a study in ulcerative colitis.
The peripheral molecule is essentially an outright license, so there is milestone and royalties. Now back to the CNS compound. This is a co-development, co-commercialization agreement. The most advanced study is the ALS study. The ALS study just initiated last month. We received a $40 million milestone based on that. It's called the HIMALAYA study.
It is a study in 260 patients with ALS. The primary endpoint is ALSFRS after six months, and then there is an open label extension after 12 months. There will also be an assessment on overall survival. This is, you know, one of two clinical ALS stage programs that we have. If you look at those two, the other one being the eIF2B compound.
If you look at the mechanisms of actions, they're very distinct. This is immune modulation, and the eIF2B is in the context of the Integrated Stress Response. You can think of triggers and effectors of disease. Going after ALS by two different approaches.
Any questions from the audience?
I think GSK recently had a RIPK1.
Yes.
In phase II, and it didn't show benefit in ulcerative colitis. Could you just talk about how yours is different or why that doesn't read through to you guys?
Yeah. It's really about levels of target engagement and exposure. The GSK molecule was not able to reach the level of exposure that was required for a level of target engagement that would expect some benefit. If you look into the history of that compound, they subsequently escalated the dose but were not able to reach the level of target engagement.
We are, as you may know, this is actually our third RIP kinase inhibitor that we're taking to the clinic. First was DNL104, which we discontinued early on for some molecule-specific liver effects. The second was DNL747, which we discontinued also because we couldn't hit the level of target engagement that we think is relevant here. This is really the third and optimized version that we think has all the right properties.
For eIF2B, will you guys share TDP-43 levels in CSF? Is that one of the biomarkers that we'll get or is.
Yeah. That's an interesting hypothesis. We actually haven't seen necessarily regulation of TDP-43 levels, but what you see is a redistribution of TDP-43 which forms these aggregates, colocalizes with the RNA stress granules. There's not evidence that TDP-43 itself may be modulated in CSF.
The set of CSF biomarkers that we're looking at are ISR dependent, so they're really related to eIF2B. We haven't disclosed what those are, and just worth mentioning that it's a highly competitive target, mainly with, you know, some of our friends across the street, working on the target.
One last one for me. The ATV-HER2 program.
As well as ATV more broadly, where maybe you could describe the HER2 program, but more broadly, where are you going next? Could you apply it to Alzheimer's with next generation approaches?
Yeah. I'll take the HER2 program, which had always been a little bit under the radar at Denali, and I think there is partly so much of the history of us is linked to Genentech, and there's this big oncology perspective. Conceptually, what the TV platform can do is can get antibodies in the brain. We know antibodies are great anti-cancer drugs. They don't cross the blood-brain barrier.
Brain metastases are a huge problem in HER2 positive breast cancer and other cancers as well. Early on, we, as a side project, initiated the HER2 program, which was making blood-brain barrier penetrant versions essentially of Herceptin and Perjeta. Subsequently, because we have great antibody engineers, we made a bispecific molecule, which, with one Fab, binds the Herceptin targeting site and the other one the Perjeta targeting site.
It's an interesting biological molecule in itself. Now it's a trispecific molecule. It has those two Fabs, and then it binds transferrin receptor with the Fc. Now what's really interesting about this, and what we saw preclinically in peripheral tumor models, is that transferrin receptor binding leads to additional antitumor activity. It's a super potent molecule because cancer cells, they're fast dividing, they need lots of iron and therefore have lots of transferrin receptor expressed.
This additional binding site actually leads to superior antitumor activity in the periphery, not even in the brain, where it's expected to be better than the standard of care because standard of care doesn't cross. This is now a very interesting data package. We have a very passionate and very competent team that is leading that program.
We're now considering the options how to take it forward. I think it's unlikely that we would take it into the clinic ourselves, not impossible. We could definitely do it, but I think it would actually be better in the hands of a company that is fully dedicated to oncology. Just one more point on that. HER2 is just the lead program in a potential package of oncology molecules. There are other targets, some data that we have and others that is more conceptual, where one could consider this a whole suite of oncology molecules.
The second half to your question.
Yeah.
which is application of ATV to other targets. You know, Biogen has an option to ATV Aβ, so basically an antibody targeting Aβ using the transport vehicle technology. We have, of course, data with TREM2, which we discussed, an immune modulation, which is antibody transport vehicle. I think the area that we haven't gone into detail yet is the ability to use an antibody-like structure, but to tag an ASO and get that across the blood-brain barrier.
Rather than it being an ATV, it's an oligo transport vehicle. That really, again, the data that we've generated in non-human primates is that we get, you know, fantastic biodistribution of ASOs delivering it systemically. The foundation was the ATV, which we then of course, converted into the OTV.
Got it. Great. Well, with that, thank you very much.
Great. Thank you.
Thank you.