Good morning. I'm Salveen Richter. Thanks for joining us. I'm a biotechnology analyst at Goldman Sachs. With us, we're really pleased to have Denali and Ryan Watts, the CEO. Ryan, thanks so much for being here. To start, could you just remind us of the clinical data that is expected across your portfolio for the remainder of this year and as we look to next year and what you are most focused on?
Salveen, really grateful to be here. Thank you for the invitation. It's exciting to be with you at such an exciting time in neurodegeneration, drug discovery, and research. I think we're on the cusp of, I think, really important medicines for patients. You asked about what to expect from Denali in the next 6 to 12 months, and let me just start by saying we have five clinical stage programs across different therapeutic areas and modalities. As a result, we have a lot of data coming in. I'd say that, in fact, in just next month, we'll have an update on our DNL310 program, which is an ETV:IDS or Enzyme Transport Vehicle, iduronate-2-sulfatase for Hunter syndrome, in which our plan is to replace Elaprase with an enzyme that is engineered across the blood-brain barrier using our Transport Vehicle technology.
That data we plan to present at the medical conference in the second half of July. It's the six month data on the first five patients. Our focus here is can we have a sustained pharmacodynamic response? We'll get into more detail, but you may recall that four out of five patients, actually, just after four doses, had normalized heparan sulfate, which is pretty much unprecedented. The 5th patient is now nearing normalization after the three month data, which we presented in February. We're very excited about that data. We're also looking for the safety in line with Elaprase and sustained pharmacodynamic response that will be driving our decision around the DNL310 program. I think importantly, that program is our first Transport Vehicle-enabled program. It's a large molecule engineered across the blood-brain barrier.
We have a number of additional large molecules engineered across the blood-brain barrier using this Transport Vehicle technology. The early data was, I think, critically important for validating that transferrin receptor as a viable path to the brain. Now we're asking the question, have a sustained response. I think that's probably the most eminent data that we have in the portfolio. The second program, these are wholly owned assets, ETV:IDS, our plan obviously has been, and we've discussed this before, is to build an enzyme replacement franchise using this Transport Vehicle technology. The second program that we should expect data on is our eIF2B small molecule activator program, that program is in a healthy volunteer study. We continue to dose escalate, however, the data that we have in hand was sufficient to make the decision already to move to a phase I-B in ALS patients.
We plan to share data from the clinical study in the second half of this year and an update on really our small molecule programs, but in particular the eIF2B program. The three other molecules we have in development are one for LRRK2, DNL151, and that's in partnership with Biogen. There we're basically designing the late-stage clinical trial for that molecule, working very closely with regulators, very closely with Biogen, and plan to launch that study and share more details on that study, again, second half of this year. In the last program, the RIPK program, this is in partnership with Sanofi. We have actually two molecules. One is a peripherally restricted compound that's entering Phase II studies in peripheral inflammatory diseases at DNL-758. Again, Sanofi's leading that study.
The second is a CNS penetrant DNL788, and that molecule's in a healthy volunteer study, and we plan to make a decision to move it into patient studies and hopefully share data, but again, Sanofi's leading that program. In summary, five clinical-stage assets, two programs moving to late-stage clinical development, the DNL310 program for Hunter syndrome and the DNL151 program, LRRK2 for Parkinson's, moving to late-stage development. It's a very exciting time with a lot of data expected even within the next month.
Ryan, you started off by saying this is an exciting time for this space. Could you comment on, with the approval of lecanemab in Alzheimer's disease, what this means for the field or the read-throughs for the field of neurodegeneration and specifically your portfolio with the acceptance of a biomarker as an endpoint here, how that might read through your programs?
In the very early days of Denali, we built the company on three principles. First is genetic pathway potential, which we call the DegeneroGenes. Genes are mutated that cause neurodegeneration. APP is, I think, one of these hallmark DegeneroGenes. Mutations in APP lead to early onset Alzheimer's disease. Mutations in APOE lead to early plaque formation and much increased risk of developing Alzheimer's disease. Then there are protective mutations in APP that protect people from developing Alzheimer's disease. Actually, directionally, they're opposite, meaning that mutations that increase A-beta cause disease, those that decrease A-beta are protective. The challenge has been translating that to clinical benefit. It's still a challenge, we all admit that, but very striking genetic data supporting this as a target.
The second principle we built the company on is engineering brain delivery, getting molecules into the brain like standard antibodies get limited exposure to the brain. They definitely get into the brain, but it's limited. I think the third area and principle that we've built the company on is biomarker-driven development. Obviously, the FDA recognizing the importance of these disease-relevant biomarkers is critical for the field, especially in diseases that take a very long time to develop and also are very difficult to assess, ultimately, clinical benefit when you're intervening very late in disease. I do think it's an important step. I think anchoring these biomarkers on genetics that are definitive, knowing that these genetic targets are causative in these diseases is going to be critical. Obviously, we've talked a lot about biomarkers.
We've spent a lot of time presenting data on LRRK2 biomarkers and obviously our Hunter program on disease-relevant biomarkers such as heparan sulfate. I think it's great to see the FDA being forward-thinking about how these biomarkers can translate to clinical benefit.
Great. The partnerships that you mentioned, you have one clearly with Biogen, but also with Sanofi. Could you just talk about your current strategic approach here and how you think about what to advance and what to keep to yourself?
Yeah. Great question. I love this question because partnerships have been such an important part of the growth of Denali, and we think it's really important to solve these problems in partnership. That includes big partnerships, such as the Biogen partnership on LRRK2 and A-beta antibody-enabled biotransport vehicle technology, or the Takeda partnership, which is three targets using the Transport Vehicle technology or the Sanofi partnership. What you'll see thematically in these partnerships, they're often around the large indications, such as Alzheimer's and Parkinson's. The way that we've built Denali is that some of the smaller indications that have, say, high probability of success, such as Hunter syndrome, where it's a monogenic disease and we're getting an enzyme across the blood-brain barrier. Our plan is to keep those assets as wholly owned, to build an enzyme franchise, to basically manufacture and market those molecules ourselves.
That's been very exciting to see that evolve. Those, maybe there are 30,000 patients worldwide that are on enzyme replacement therapies that could benefit from the technology, getting enzymes across the blood-brain barrier, across multiple lysosomal storage diseases. The second area are these rare, we'll call them more rare. Let's take ALS with 200,000 patients. There, we have a wholly owned DI2V program that we plan to continue to advance ourselves, two pivotal studies. You take, again, as I described, the larger indications where we're sharing both risk and upside. Those larger indications often have longer development timelines as well. You see that balance within the Denali portfolio where we're essentially partnering on Alzheimer's and Parkinson's. Many of these, I would say, smaller indications, faster timelines, high probability of success, especially the lysosomal storage disease, we're against ourselves.
That's just the beginning, because the transport vehicle platform can actually be applied to other modalities, such as antisense oligos. We've recently shown that we can knock down gene expression using ASOs, which is another sort of sub-platform like the enzyme transport vehicle. We now have the oligo transport vehicle. We'll be strategic how we think about partnering. Maybe the last point is that there are indications outside of our core areas. Our core area is really neurodegeneration, and even neurodegeneration associated with rare diseases like lysosomal storage diseases. There's potential for the transport vehicle in broader neurology, including pain, oncology, infectious disease. In those cases, you may see us basically pursuing select partnerships to enable the platform to use it in these other areas where we haven't built our own clinical expertise.
Great. Moving to your lead program in the blood-brain barrier technology platform, so 310. Could you just comment how meaningful the GAG reduction that you've observed in the urine and CSF and frame the implications of lysosomal biomarker reductions?
I think what's important to recognize with the lysosomal storage diseases, they're monogenic, it's an enzyme loss of function, there's a clear track record of clinical success in replacing the enzyme. You replace the enzyme, you reduce the substrate, then you have this downstream sort of distal effective benefit. Heparan sulfate is an incredibly relevant biomarker. It's a disease-causing biomarker. In fact, if you look across the various lysosomal storage diseases, you see that heparan sulfate itself is both necessary and sufficient to cause CNS-related dysfunction. CNS involvement always is associated with heparan sulfate and lysosomal storage diseases. That's one point. The second is that it's a peripheral biomarker that, again, generally correlates with clinical benefit. Our decision-making has really focused on the ability to reduce heparan sulfate.
We had originally set a bar of about a 50% reduction in CSF heparan sulfate, in part because our animal models kind of predicted that 50% reduction may translate to complete rescue of cognition and behavior and motor function, including bone defects. We were actually really surprised to see both in the timing and magnitude of response, basically normalization in Hunter patients with DNL310. That it is the hallmark biomarker. It's the driving force for decision-making, and our goal is to essentially normalize that biomarker. We see also further reduction in urine, and I think this is in part because we have a higher dose in Elaprase, number 1. Number 2, it's on a TfR backbone. It's on the Transport Vehicle, which may improve biodistribution also throughout peripheral tissues where transferrin receptor is expressed.
If we actually go back and we look at the data and compare the animal data to the human data, we actually had never normalized heparan sulfate in the animal model, so it probably had a ceiling effect. Yet in humans, we're seeing this normalization. We think this will be the strongest correlate with clinical benefit is in fact heparan sulfate.
We're going to see first-time neurofilament light data this year. You've mentioned that in terms of the reductions there, it may take longer to demonstrate a difference, and that could be also dependent on patient age and severity. What gives you the confidence that patients in either your Cohort A or Cohort B could be capable of demonstrating a robust response?
Yeah. When we set out to basically develop a medicine for Hunter syndrome, we also decided to explore new biomarkers that have never been assessed before. Actually, neurofilament has only been reported once, and it was by us, looking at elevated neurofilament. We also looked at lysosomal biomarkers such as GM3 or BMP. The way we look at it is basically once you've lowered heparan sulfate, you should essentially normalize at some point these other biomarkers or at least reduce them. What was really fascinating is in our animal studies, we really did two experiments. We did one, which was called prevention study, where we treated animals before they had elevated neurofilament. Then we did a study where we treated them after they had elevated neurofilament. What we saw is that among the biomarkers, neurofilament was the least responsive.
We had a mild reduction in serum, about 15% and maybe 20%-30% in CSF. By the way, that could also be that we're halting further addition, because in animal models you see that it steadily increased over time. However, that reduction led to a complete rescue of cognition and motor function in the mouse model, as well as improvement in bone. It may not be as responsive as maybe the lysosomal biomarkers and certainly not as heparan sulfate. Our expectation is that if we can intervene at the right time and for the right duration, we should reduce neurofilament levels as well. We're looking forward to seeing that data. We did a sort of a power analysis, and we realized that five patients is not sufficient to see a significant effect.
We have the complexity that it's not an animal model, it's a human disease. These patients, for example, in Cohort A, are 5 to 10 years of age. They have had neuropathic disease for anywhere between three and seven years with pretty severe neuropathic phenotype. Obviously it's exploratory, it's heterogeneous. It's not elevated to the same level as you see in other diseases like CLN2 or SMA. We're very interested in looking at this as a potential biomarker.
I guess, what is clinically meaningful here?
Yeah. The reality is what's clinically meaningful is the clinical endpoint. We're looking at exploratory global assessment in cognition and behavior. That's ultimately what is going to drive the ultimate success of the program. We don't know what the correlation will be between, let's say, neurofilament and these endpoints or heparan sulfate and these endpoints. When you're blazing the trail and you're the first one to show a biomarker, in some ways it's your accountability to sort of ask yourself how do these things relate over time.
You've also discussed that based on your powering assumptions and small size of Cohort A, it may be difficult to demonstrate statistical significance. What should we be looking for in this mid-2021 update?
Yeah, that's correct. I think part of that was an assessment of looking at variability of neurofilament over time in different diseases. We only had a handful of Hunter patients where we'd have longitudinal data. Again, not a significant magnitude of elevation, some heterogeneity in neurofilament. We haven't set expectations. We just want to see more data, longer duration, intervening earlier. We look forward to seeing that data soon.
Great. Could you talk through your expectations for Cohort B and Cohort C? What are you looking to understand, particularly from the latter Cohort, to help you design the registrational trial or just to give you the overall increased confidence on the program?
When we started this program, Cohort A really focused on somewhat older neuropathic patients. The goal there was to assess does the drug work? Do you get target engagement? Do you get pathway engagement? Looking initially at patient phenotype. Cohort B is really around dose. We have three separate arms in Cohort B, 3 mg/ kg, 7.5mg/ kg, and 15mg/ kg. The question here is what basically dose is required for normalizing heparan sulfate. We already know that 3 mg/ kg and 7.5 mg/ kg is very potent. That's what we saw after four weeks, basically normalization. These patients will be on those doses for a longer period of time before we select the final dose.
Cohort C is really interesting because this is in patients younger than four years of age, neuropathic. Probably have the highest probability of basically cognitive benefit, behavioral benefit, other biomarkers related to neurodegeneration would be in this younger Cohort. Certainly, if our animal models are predictive, that would be the case. That's where we'll have some of our first signs, but we'll look at exploratory data across all the populations, and we'll share that. In fact, our update in July will be pretty comprehensive for Cohort A. At this point, Cohort B is on track, and we're looking forward to beginning enrolling Cohort C. We're really thinking about selecting the dose for that population. There's a lot of interest in the program, and it's advancing rapidly.
Do you have any clarity from the FDA on the endpoints needed in the pivotal trial? Do you have to demonstrate functional benefit?
Yeah. Very much right now involved with the FDA. We look forward to sharing the plans. There are others in development who have kicked off phase II, phase III, so we can get an idea of what the FDA is requiring. Head-to-head comparison with Elaprase, looking at your behavioral and cognitive endpoints is generally where we're going. Let's not forget that there's a very powerful biomarker, which is heparan sulfate. We're obviously engaging regulators. What does this mean? I think here it's just a question of that correlation with reduction of heparan sulfate, let's say it's in CSF, with clinical benefit. When you're pioneering the field, it's more difficult. You have to essentially establish that relationship. At this point, we haven't disclosed the design of that phase II/III trial, but it will certainly include functional endpoints, cognitive, behavioral, as well as biomarkers.
What we're focused on right now with the FDA is what does it look like to be registrational.
Given this data that you've seen for this program, it basically de-risks to a degree your ETV platform. Help us understand how you see the read-through and de-risking there, then also what about PTV and ETV and OTV?
That's a great question, and we get this question a lot. We've looked at now a number of submodalities that you've highlighted. The Enzyme Transport Vehicle, I think there's essentially a 1-to-1 relationship, meaning that we can plug other enzymes now onto the TV, and we should get a very robust pharmacodynamic response. As I mentioned, the animal model is actually in some ways underpredicting the probably capacity for transfer of the blood-brain barrier in humans, and that's again why we saw this normalization of heparan sulfate. We're really enthusiastic about bringing additional enzymes forward. We have six more enzymes in the portfolio. We've made the decision to build our own clinical manufacturing to help accelerate this portfolio. Then it relates to the other molecules.
Progranulin behaves very similarly to an enzyme, and in fact, has a really sustained pharmacodynamic response, meaning that we can give a dose, and you'll have rescue lysosomal function in microglia in granulin knockout mouse for over a month after a single dose. It has this very similar dynamic of, and we know that it's localized in the lysosome. I think that's probably again a 1-to-1 relationship. Where I think it is really fascinating is when you start to look at the antibodies. In the case of the ATVs, we have ATV:TREM2, we have ATV:HER2, and we have ATV:Abeta, all of these moving very rapidly. I think obviously relevant to today's discussion, or at least this week, is what happens if we put ATV on an A-beta antibody.
We see anywhere between about a 10-fold increase of brain exposure, so a much lower dose to achieve equivalent plaque reduction. We're obviously rapidly advancing that program, and Biogen has the ability to opt into that program. With the antibodies, again, the animal model's data is really striking. For TREM2, another example. I think what the ETV does and what the DNL310 data does, it sort of de-risks transferrin receptor as a viable path to the brain. It asks a real fundamental question, which is, does this even work? Can you use the TV to get molecules into the brain? Now it's going to be all about the properties of each of these unique molecules, like TREM2 increasing the number of microglia. How is that going to translate to clinical benefit? What is the dose needed?
What I can say for the antibodies is that when you put it on a TV, they're highly potent. A pretty low dose, and you get very good brain uptake. We're guessing that when we scale to humans, that will certainly be the case as we see a big capacity for transferrin receptor. Maybe my last point is that the ASO is a lot like enzymes in the sense that once you get an ASO into the brain, it has this sustained pharmacodynamic response. Again, I think the data's really promising with the DNL310, but essentially validating that OTV is maybe a viable path as well, or a viable platform as well.
On the TREM2 and progranulin programs that are IND-enabling, when could those enter the clinic?
Yeah. Both of those are basically we received milestones for initiating IND-enabling studies with the data. They have the ability to opt in. We share in cost and financials 50-50 in U.S. and China. Both of those are on track basically for IND and/or CTA filings by end of year, early next year. A lot of work on those. They're in the middle of these studies right now and writing up basically the clinical protocol. We're excited to bring two more Transport Vehicle-enabled molecules into the clinic within the next 6-9 months.
You've spoken about the need to expand your manufacturing capabilities as you brought in this portfolio. Could you speak more to this point, and what scale do you anticipate being necessary as you look to commercial use?
Right. Our manufacturing will be focused on two things, clinical material. We still will use commercial partners to manufacture as we go transition to commercial, and the biotherapeutics platform. We focus on the Transport Vehicle. We have excellent partners now, and we'll continue to work with these excellent partners on manufacturing. Capacity, we have the ability to use other CDMOs to basically advance the portfolio now and in the future. Because the Transport Vehicle portfolio has rapidly expanded, we both in speed, really, I think mainly in speed, but also in cost, it will be more efficient for us to manufacture ourselves. This will be a clinical manufacturing facility, and it will basically enable the future TV portfolio.
How are you thinking of prioritizing your resources here as you expand beyond these first three TV programs? How are you going to decide which ones to move into next? I guess not even just in TV, but also in your other two verticals.
Yeah, right. Obviously we have small molecules and other modalities. For the Transport Vehicle, we've made the decision to build an enzyme franchise. That's a priority for us. In terms of our TREM2 program, our preventative program, those are in partnership with Takeda, so that really enables us to advance the programs forward. Those costs are covered there. Prioritization really comes down to, there are the smaller indications with clearer biological rationale and clearer genetic associations. Then as you go to larger indications there, as we discussed earlier, that risk-benefit is different, and there are often partnerships that allow us to advance forward in Alzheimer's and in Parkinson's disease.
Our portfolio has been prioritized by probability of success, potential for the platform, and you'll see that we've essentially taken at least one molecule for each of the submodalities forward first so we can validate that sub-platform. Then we're expanding each of those sub-platforms. In terms of small molecules, we'll continue as we have to find the highest probability of success targets and bring molecules forward on a regular clip into the clinic against these neurodegeneration targets.
Perfect. On the LRRK2 program, you presented some phase I target and PD engagement data last month. Can you remind us what you found with 151's profiling and what gives you optimism that the inhibitor will be meaningful in Parkinson's disease and how then you're thinking about translation to clinical outcomes?
It's really exciting to see where we've come with LRRK2. I started working on LRRK2 in 2006. It was discovered in 2004. Mutations in LRRK2 lead to increased kinase activity, represents about 3% of the Parkinson's population that's increased in kinase activity. We began even before Denali, working on small molecules that could cross the blood-brain barrier and effectively inhibit LRRK2. We learned a lot about LRRK2. One of the things we learned is that LRRK2 modulates the lysosome and linking lysosomal dysfunction to Parkinson's disease, and there's obviously a link with GBA as well. It's really exciting. We got our first data with 201 and then our data with 151 .
What we see with DNL151 is that we can maintain very robust inhibition with QD dosing, which is superior to what we had with DNL201, which was likely going to be BID dosing. Really, we think about the bookend. On the one end, we want to bring LRRK2 kinase activity back to normal levels, so the mutations increase kinase activity by about 2-fold. That would be sort of the minimal dose, is basically that normalization. On the other end, when you inhibit LRRK2 between 70%-80%, you see changes in lysosomal biomarkers. These lysosomal biomarkers are actually elevated in LRRK2 patients, and we can normalize those lysosomal biomarkers at the higher end of the dose.
Really excited that we've been able to identify a molecule that is generally well-tolerated, and we can get QD and explore these two hypotheses, the kinase hypothesis as well as the lysosomal biomarker hypothesis in terms of the dose we're moving forward. Now it's all about clinical trial design, looking at clinical endpoints, and translating these biomarkers to clinical benefit.
Remind us on the rationale for your RIPK1 program and why you're targeting that pathway for ALS and Alzheimer's disease, and then what we should be looking for from this healthy volunteer data in the second half?
Yeah. RIPK kinase is actually one of the first targets. We started working on that and LRRK2 in the very early days of Denali. What's really fascinating about RIPK kinase is it regulates what's called the necroptosis pathway downstream of TNF receptor 1. There's a lot of data across different degenerative diseases that there's an inflammatory component to these diseases that essentially TNF is elevated among other cytokines. Some of the hypotheses is when you actually activate RIPK in certain cells, such as microglial cells, they become inflamed. In other cells, they go through this necroptotic cell death. The strongest rationale for a RIPK kinase inhibitor is actually in peripheral inflammatory diseases, and hence the reason we developed a peripherally restricted compound, DNL-758, that Sanofi's advancing. In neurological diseases, there are both genetic and pathway links to RIPK kinase.
There's, for example, in Alzheimer's disease, substantial evidence around microglial dysfunction and hyperinflammation. That's one of the strong connections there. In ALS, there's actually a more of a genetic link to optineurin and TBK1 links to RIP kinase signaling, that's one of the reasons we're pretty enthusiastic about inhibiting RIPK in ALS and in Alzheimer's disease.
On DNL343, which is your CNS penetrant activator of eIF2B. Remind us why this is an intriguing target also in ALS but then in FTD, and you've guided to starting a trial in the second half. Of all your portfolio, why this next?
In fact, we've already announced that we're now initiating that ALS study. A little bit ahead of time based on the data that we have from the healthy volunteer study. Let me tell you a little bit about the eIF2B. It regulates what's called the integrated stress response pathway, and I think the simplest way to think about this is that when cells are undergoing cellular stress. They lock down their mRNA and they stop translating, and it's a transient protective mechanism. Interestingly, mutations in this pathway lead to diseases like vanishing white matter disease. In fact, in ALS, about 40% of the genetic associations are related to this integrated stress response pathway, and specifically RNA and DNA binding proteins such as TDP-43 or FUS.
We believe what happens in ALS is that the body goes through some cellular stress, and certain individuals are predisposed to lock these RNA stress granules into place, and as a result, the cells then starve, and they die. When you activate eIF2B, you can unlock these stress granules. In fact, we've shown that in cells that form these stress granules, TDP-43 associates with these stress granules, and we can add DNL343 and essentially dissolve the stress granules within minutes which is really fascinating. We want to go into a patient population that has pretty much definitive evidence of these RNA stress granules. ALS, 95% of patients have these TDP-43 positive inclusions, so I think the exception would be the SOD1 mutation population, but we wouldn't likely go in that population.
Essentially what we've seen across multiple models, including vanishing white matter, retinal ganglion cell damage, ALS, is that when we inhibit eIF2B, we essentially protect cells from dying. What it really does is it sends them back into a homeostatic state, allowing them to translate proteins. In terms of the data there, we have begun that healthy volunteer study. Now at dose escalated, we're in the multi-dose, and we have obviously the data in hand to make that decision to report in the phase I. The other comment, it's a competitive target. There's at least one other clinical-stage program. Now for us, it's really about validating the target going forward in ALS and exploring other indications as well.
Ryan, maybe as a last question here, what else should we be focused on with Denali as you continue to evolve as a company in this neuro space?
Yeah. It's been an incredible transition in the last year for Denali. I think we went from getting our first patient data in Alzheimer's as well as in Hunter syndrome to then expanding our portfolio, expanding our partnerships, and now we're making that transition to basically manufacturing our medicines and beginning really the commercial stage, thinking about commercialization, building an enzyme replacement therapy commercial franchise. I think that's some of where we're going now is becoming a fully integrated global biotech company, and I think it's exciting to see that the initial data validates the platform, puts us in a position to now build more broadly. That's it. I mean, for us, it's about now getting our medicines to patients. Very excited that we're in a number of patient studies now.
Perfect. Well, with that, Ryan, thank you so much for your time today.
Thank you so much.