Hello, everyone. I'm Jay Olson, one of the biotech analysts at Oppenheimer, and it's a pleasure to welcome you to Oppenheimer's 35th Annual Healthcare Conference and our discussion with Denali Therapeutics, a company that's doing exciting work in neurological diseases with high unmet medical needs. It's a pleasure to introduce Ryan Watts, the CEO of Denali Therapeutics. Thank you, Ryan, for joining us here today.
Yeah, great, great to be here, Jay. Looking forward to the conversation.
All right, our pleasure. And for those who may not be as familiar with the Denali story, can you start us off with an overview of Denali Therapeutics, especially since 2024 was an important year for Denali? What were maybe some of the key milestones that you achieved last year?
Thanks, Jay. It's a great place to start to talk about last year and then just more broadly our goals that we have set for Denali. So, you know, when we founded Denali, the goal was essentially to cross the blood-brain barrier and then ultimately to defeat degeneration. We know, obviously, those are two really lofty goals. And I would say over the last four years, we've proven that you can cross the blood-brain barrier. And I think specifically with biologics and the technology that we've invented, which is called the Transport Vehicle technology. Interestingly, in the last two or three years, maybe even the last year, there's been a significant increase in competition around barrier-crossing technologies. And we see that as further evidence that we're on the right track. The second goal around defeating degeneration obviously depends a lot on the therapeutic areas that we're going after.
When we set out, you know, at the beginning, obviously, we're very interested in Alzheimer's and Parkinson's, ALS, some of the bigger, broader neurodegenerative diseases. But we realized that probably the best place to start is in a therapeutic area where the biology is well understood. And we were asking a question around the technology rather than the technology and the biology at the same time. And so we began working on lysosomal storage diseases in parallel with some of our efforts in Alzheimer's and Parkinson's. I think that's ended up being a very good decision for us because it's allowed us to look at biomarkers that are well understood that can correlate with clinical benefit in the central nervous system.
So basically, what's ended up happening, I think some really big milestones last year, probably the most important, at least for me as a neuroscientist, is our ability to either normalize or near-normalize a biomarker of neurodegeneration in these Hunter syndrome patients that have this lysosomal storage disease. And the reason why I think that's important is that not only are we able to deliver the enzyme across the blood-brain barrier, normalize the heparan sulfate biomarker, which is the biomarker of the enzyme itself, but that is leading to basically halting neurodegeneration, that second goal of defeating degeneration. Now, obviously, that's in a defined genetic population. We'd love to see that translate now to broader populations.
But what ended up happening is that, as I think many people know, for decades, it's been very challenging working with regulators to find a path forward in these rare diseases where we might have, for example, an accelerated approval path. And one of the big milestones last year is the FDA basically agreeing to the fact that heparan sulfate is a biomarker reasonably likely to predict clinical benefit. Obviously, it's supported by a lot of data. In fact, we just presented new data last Thursday, not only showing that heparan sulfate is robustly inhibited or reduced for years, but also NfL, improvement in hearing, improvement in cognition, improvement in behavior. These are all key endpoints that show that correlation of clinical benefit with this biomarker.
So this actually came about because of the Reagan-Udall Foundation for the FDA meeting in which there was a number of key investigators who worked on various trials for decades in the enzyme replacement therapy, obviously patient advocates, and then various companies who are working in the space showing data around the role of heparan sulfate and its associated link to disease. Now, in parallel with that, we started our second enzyme replacement therapy in Sanfilippo. And that program was selected for the START program, which is a way of accelerating drug development in rare disease. And then we had several meetings with the FDA subsequently throughout the year with an agreement that we can use heparan sulfate as a biomarker for accelerated approval. And I think sort of to cap it all off very early this year, we received breakthrough therapy designation for the Hunter program.
So we're now in a position where we're all in on filing, preparing for our first launch, expanding the Transport Vehicle technology with additional enzymes, and then oligonucleotides and antibodies coming in short order. So I agree, Jay. 2024 was a fantastic year for us. And we're very excited about what's to come for Denali.
Excellent. Thank you for that overview. That's a lot to be proud of, and especially excited about your alignment with the FDA on DNL310 for Hunter syndrome. I do want to ask you about the data you presented last week at WORLD Symposium, but maybe just on the alignment with the FDA for a potential accelerated approval pathway using HS as a biomarker. Can you talk about where you are in the filing process?
Yeah. So I think getting back, and I just in my quick introduction alluded to the fact that heparan sulfate is, as defined in these single enzyme diseases, a biomarker reasonably likely to predict clinical benefit. And just a side note, but important in Hunter syndrome and in Sanfilippo, the enzymes that are deficient, iduronate-2-sulfatase, for example, is a sulfatase that removes the sulfate group from heparan sulfate. And what happens in these diseases is that as heparan sulfate and dermatan sulfate and keratan sulfate, known as the glycosaminoglycans, as they accumulate, they cause liver damage and spleen damage and brain damage. Ultimately, this accumulation in brain is deleterious to the majority of patients that have these, especially anyone with a severe mutation will have neurological deficits. So one of the things that was really important is that the timeline that was driving our filing is often manufacturing.
A year ago, now maybe a year and a half ago, when it wasn't obvious that the FDA was open to the idea of using a biomarker as a potential accelerated approval pathway, we made the proactive decision to keep manufacturing on critical path with the assumption that maybe we would have an accelerated approval opportunity. That's been kind of the key driver. Now, essentially, we have all the data. It's all about writing. It's all about filing. Our plan is as quickly as possible, with the ultimate goal of approval by the end of this year or early next year and immediate launch of that medicine.
Great. And then I guess looking ahead to that potential approval later this year, what's your view on the sort of ideal label scenario? You mentioned improvements in cognition, a number of functional improvements. Will all that be included on the label?
Yeah, it's a great question. I don't have. I would love to be able to foresee the future and tell you exactly what would be in the label. What I can say is that in the filing, all of that data will be included. And then it's up to the FDA. I think what's important here is the biomarker heparan sulfate is really the driving force for this accelerated approval. But it's the data related to that. I think the data are pretty striking. We're now seeing maturing of improvement in hearing and cognition and behavior. And that's obviously the ultimate goal of these medicines.
OK, great. Yeah, we're super excited about that update last week at WORLD Symposium. Can you maybe highlight some of the key takeaways?
Yeah, and I think what I'll do is I can just show one or two pieces of data. And I think these are downloadable. So I think others have had a chance to see these. But just a reminder of now, with many more patients, we have 47 patients who have completed at least six months of treatment. We're seeing this really robust reduction in CSF heparan sulfate, and also in urine. And the question is why, because actually most of these patients that are subset, that are treatment naive, are on standard of care. And I think the reality is that standard of care, Elaprase, or idursulfase, even at the dose given, is not even sufficient to really fully treat the peripheral disease, as shown here. So this data point includes all patients either on standard of care or treatment naive.
And what we're seeing is, again, a robust reduction in heparan sulfate in both CSF and in urine. And you can see here, I mean, this is the biomarker that will be basically proposed for accelerated approval. Same with NfL. It takes a bit of time. We've presented previously that younger patients have a more rapid decline. But what's impressive here also is that regardless of timing of intervention, this study includes ages two to like 14 or even older. As they are in the study, essentially all patients, you have the robust reduction in NfL, which is a marker of neurodegeneration. And I'll just add to that that we're seeing not only quantitative improvements in hearing, but qualitative. And so Dr. Joe Muenzer, who presented this data, highlighted patients who no longer need hearing aids as part of the clinical benefits of tividenofusp alfa.
But here is a quantitative assessment, Auditory Brainstem Response, which basically measures the ability to sense different tones or decibels in hearing and at different frequencies, as you can see here. And then I think just a side note that peripheral endpoints matter. And the goal here is to replace standard of care. And so we're seeing a normalization of liver volume as well. Not surprising, obviously, it's an enzyme replacement therapy. But we try to remind people this is not on top of standard of care. This is replacing standard of care. So patients will go off of idursulfase and go on to tividenofusp alfa. And the patients that have not been on idursulfase, you're seeing this improvement in liver volume, which is really like some of the original approvable endpoints for these enzyme replacement therapies.
And I think the last point is improvement in cognition and adaptive behavior. What to me is most impressive about these data is it includes all patients. It's not just the younger patients. Because if you think about it, what happens in these diseases, you're on this normal developmental curve. And then you often fall off that curve. And patients actually regress. And we're looking at the whole spectrum here and seeing improvement. That's unusual. It's not seen with some of the competitor molecules where you really have to hit that early window. But we definitely see more robust improvements in patients that are younger. So I think that's the key data there, Jay. I hope that's helpful.
That is super helpful. And congrats again. Those are great outcomes for patients.
Great.
Just maybe one quick follow-up. Is that data included in your regulatory filing?
Exactly. Yeah. That's essentially the six-month endpoint for all patients in that Phase I/II study.
OK, great. And then as we think about the commercial opportunity for DNL310, based on your market research, and I guess especially in the context of the potential for gene therapy approaches, I guess what's the ideal patient population for 310? And any thoughts on the economics around it?
Yeah. So I think what's fortunate for us when it comes to Hunter syndrome is that we have idursulfase, which essentially treats the vast majority of patients. And so you can use that as sort of a comparison. Sells about $700 million a year, about a third in the U.S., a third in Europe, and a third more broadly worldwide and Asia-Pacific. And so that's basically the foundation there. Our goal, of course, in U.S. approval is to go as far and fast as we can with that approval, including other countries that will recognize that approval. We're not commenting on pricing. We always get that question. It's too soon. But at least you get a good idea of what the market looks like for Hunter.
OK, that's super helpful. And then can you just remind us where you are with the confirmatory COMPASS study and when investors should expect top-line results from that study?
Yeah. So actually, it's important. So we completed enrollment of cohort B, or sorry, cohort A, which is the neuronopathic cohort, which includes 33 patients. There are a number of patients actually on the waitlist. So we've actually expanded that study to include nine more patients, which are enrolling now. And then cohort B is the non-neuronopathic. And that's not on critical path. That actually is a one-year endpoint. So when we complete the full enrollment of cohort A, that will determine the timeline in that readout, which will be two years from the last patient initiating dosing.
OK, great. All right. So maybe we'll move on to DNL126 for Sanfilippo syndrome type A. Can you just talk about the learnings and any potential read across you can leverage from DNL310 in terms of the clinical development and filing strategy for 126?
I think there's a very strong relationship between what we've learned and what we're doing in Hunter as to what we're doing in Sanfilippo. I think the only sort of unique thing about Sanfilippo is there is no standard of care, and the disease is much more neurological. It does affect peripheral organs, but much less so than Hunter, but beyond that, the biomarkers are the same: heparan sulfate, the associated lysosomal biomarkers, GM2, GM3 that are downstream of heparan sulfate, and as I had mentioned in the introduction, this particular program has been selected for START, meaning that we have more frequent interactions with the FDA, but I will say that tividenofusp alfa or DNL310 has actually laid that foundation, including it being the exact same biomarker heparan sulfate.
So all of the standards that we've created for heparan sulfate, all of our assays are just applied basically to Sanfilippo.
OK, great. And so does that mean that we could expect a similar requirement for patient numbers and duration of follow-up to file for approval?
Yeah, it's a great question. I think we had a very broad patient population in the Phase I/II for DNL310. And if you look at the data, not surprising, the patients who benefit most, although patients benefit at all ages, are the younger patients, and so the question is, can we run a smaller Phase I/II study that can then put us on that accelerated approval path as we then launch a confirmatory study in Sanfilippo? The other big question mark is, what does a confirmatory trial look like in Sanfilippo? Because there is no standard of care, so when you choose placebo, you're choosing to let these patients decline regardless, and that is a very different dynamic than having a standard of care that does provide some clinical benefit.
And so as we did early on in Hunter, we were arguing for basically using natural history as a comparator. That is actually more compelling in Sanfilippo than it is in Hunter syndrome. So we don't have agreement yet with regulators. But as we work with both the U.S. and Europe, the goal here is, I mean, it's not going to be like exactly what we've done for Hunter. Our goal is for it to be a smaller study, frankly, including the Phase I/II, which has now been expanded to 20 patients. Remember, the Phase I/II for Hunter is 47 patients. That was also because it was the first time taking the Transport Vehicle into the clinic. And we really wanted to understand everything: dose, safety. And also, there was a lot of incoming interest in Hunter syndrome to take this medicine.
The same is actually true in Sanfilippo. We're seeing a lot of interest, although those patients are not as well known because they're not on some standard of care. So ideally, smaller and faster, but using a lot of what we learned from Hunter to apply to Sanfilippo.
OK. And so that's super helpful. And I guess what would be the timeline just to initiate a confirmatory?
Yeah. I think our goal right now is to get an agreement with the FDA on what an accelerated approval path looks like for Sanfilippo. Essentially, that is the goal of the START program. It's aligned. We are aligned with the FDA to try to find that fastest path. As part of that, we need to agree upon what a confirmatory study looks like. That basically both of those are really the goal for the Sanfilippo program this year, in addition to expanding the Phase I/II study and seeing that data mature, ultimately selecting the dose to go forward into that confirmatory study. We'd love to have clarity on all of that this year, basically.
OK. We'll stay tuned for updates on Sanfilippo. Now, you recently disclosed some additional targets within your ETV franchise. Can you talk about your overall strategy there? And what are your priorities for capital allocation to the ETV franchise versus your other programs?
Yeah, great question. What I'm going to do, and if you don't mind, I'm going to share this because I think this is really awesome data. And I love data. So if you don't mind, I'll just show you. This is our ETV franchise as of today. Every program you see on here, we have robust data. Three of the six are already in clinical studies. And we haven't talked about FTD granulin. But we've essentially included the PTV progranulin program in our enzyme franchise, mainly because the mechanism is identical. We've shown that progranulin restores lysosomal function. All the considerations are very similar. So the two new programs that we announced that are in IND enabling studies are for Pompe and for Parkinson's and Gaucher.
Actually, this program, DNL111, is like the first bridging program where, rather than just going after rare lysosomal storage diseases, we're also more broadly going after Parkinson's disease, particularly the GBA mutation carriers. So obviously, there's significant resource allocation to this portfolio. We think that the actual value of this is $3 billion plus for all of these programs as we advance them through approval. One other side note about enzymes, which I think most people intuitively know, but the probability of success of developing an enzyme replacement therapy is probably higher than any other modality. And if you think about it, it's actually we calculate it's about 85%-90% probability of success, which is the opposite of what you have in cancer, which is 93% failure rate, and in Alzheimer's, which is 99.7% failure rate. So we see this as a high probability franchise.
And we'd like to use that to then tackle these broader diseases. So just briefly, the two programs that we announced, GAA, which is for Pompe, we see what you would expect, which is a robust effect in brain using the enzyme transport vehicle compared to standard of care. So these two medicines are Lumizyme and Nexviazyme. And you're looking here at total glucose or glycogen load using total glucose assay. So you get what you expect, which is you're crossing the blood-brain barrier. You're having a robust effect. But what was interesting to us, and now has become very obvious around transferrin receptor and just the Transport Vehicle broadly, is that we get better distribution to muscle as well. We get better distribution to brain, to heart. And part of that is that the transferrin receptor is expressed in these various tissues.
And so you can see that the glucose load is even better than standard of care. This is, by the way, molar equivalent dosing. So we can probably even go lower doses as well. If you look at that histologically, you see that you essentially restore normal lysosomal and autophagic function in the muscle with ETV GAA. And you don't see that with essentially the standard of care. Now, the story is very similar for Gaucher and Parkinson's, where here we get a robust reduction in glucosylsphingosine in brain, liver, and serum. But as a little side note and a twist to this is that we actually further engineered the GCase enzyme itself to improve its stability as opposed to like Cerezyme, which is essentially wild-type enzyme.
This is like the next generation of not only engineering to cross the blood-brain barrier and to improve tissue distribution, but also actually engineering the enzyme to improve its activity through its stability. I hope you don't mind that I shared a few of those slides. I think they're exciting next programs in IND enabling studies. I think we've guided to filing one to two INDs for the next three years. We essentially have more programs lined up in IND enabling phase than we can actually deliver. So, we're sequencing those programs.
Excellent. Yeah, that was really super helpful and exciting to see that your ETV platform looks highly scalable to expand your franchise.
Yeah, exactly. That's the goal. I think that's the goal of a platform, right, is its ability to scale. And I think ultimately to scale to some of these broader diseases as well.
OK, great. And maybe as part of that, how are you thinking about opportunities ex-U.S. for your ETV programs? Are you thinking about partnering? Are you thinking about pursuing ex-U.S. opportunities independently?
Yeah. So I think right now our goal is to launch in the U.S., Canada, and likely the top five European countries, and either using a distributor model outside the U.S. or finding local partners. We, of course, are open to the idea of other types of partnerships. But I think ultimately we want a fully integrated global biotech company that allows us to deliver our own medicines. And the reason for that is it's a great place to start building is in these rare diseases where you have, once your patients are on drug, it's a lifelong relationship. And it helps us to build the organization to then prepare for more common diseases and to launch our own medicines in those diseases as well. That being said, we see a lot of incoming interest in partnering. And we're engaged in those conversations and have been for the last decade.
We think partnering is often a key to success if it creates more value than what you could do on your own.
OK, sounds great. And then maybe shifting gears for a moment over to DNL343. I know there was a recent update that the primary endpoint was not met in the HEALEY ALS Platform Trial. And it seems like the primary endpoint was changed from 24 weeks to 36 weeks. Does that suggest there might have been something interesting there that could have shown up with a longer duration of treatment?
Yeah. So I think that general change in the endpoint is more of a HEALEY platform change where they're coming to the realization that six months is likely not enough. I think the reason for that is if you look at tofersen, which is the most recently approved ALS medicine that had a robust NfL reduction, six months, there was some trend towards clinical benefit. But it really wasn't obvious. I think as the HEALEY platform evolves, there's that realization. I don't think it necessarily hints at any particular signal or not. I mean, we will look at more data as it comes in in the long-term extension and in particular look at biomarkers.
OK. All right. We'll stay tuned for any additional analysis and data updates.
Yeah.
Moving on to your OTV franchise, which we're super excited about, can you talk about your latest thinking about IND filings for OTV programs? And will there be any preclinical data updates this year?
Yeah. So I will go back to sharing a few slides because I love the visuals. So as I mentioned before, the enzyme franchise lays the foundation. And then we have these oligonucleotide and antibody approaches. And so I think highlight number one, in August, we published an extensive study in Science Translational Medicine on the oligonucleotide platform. Some of the data had been shared previously in conferences. But this is a very extensive approach of engineering oligonucleotides to cross the blood-brain barrier. Even like the supplemental data is really insightful. We look at muscle. And we're able to knock down gene expression in muscle. We made architecture of similar molecules that are out there. And so I think a lot of information to glean from this.
What we've learned is that as we pioneer this field, we think is really the first example, at least when we shared this two or three years ago, of being able to achieve this, is that engineering matters. So we've spent a lot of time really perfecting this platform, making it so that we have a high probability of success as we move into the clinic. We now have two IND enabling programs using the OTV. And this is new data that was just shared actually at J.P. Morgan. It may have been shared also at a scientific conference that we essentially dose up to like two weeks here. And then we look at the duration of effect on reduction of MAPT, which is the RNA that codes for the tau protein and then the effects on tau.
You see this very long sustained reduction in tau, which is what you see from many oligonucleotides. So we see this as really foundational work. And one of two of the targets we mentioned. We also have two other oligonucleotide targets that we're working on. And maybe we'll disclose those in the coming year or so.
OK, great. Super, super exciting. Maybe moving on to your ATV:Abeta program, should we be looking for any updates this year?
Yeah. So this is some of the data. And some of it is new data that we shared as well a couple of weeks ago. And I think just the take home is that as controversial as the amyloid field is, I think it's pretty definitively shown genetically that APP, and specifically Aβ, plays a role in Alzheimer's disease. And if you can remove plaque early enough, you will have a robust clinical benefit. And I think what you're going to start seeing is a lot of these prevention studies with donanemab and lecanemab. Now, what we all have seen in the field is that brain shuttle-enabled technologies result in more rapid reduction in plaque and less ARIA. And this is essentially the data that we've generated with our own Transport Vehicle technology seeing exactly that better plaque reduction.
We actually, very interestingly, show that we can capture the vast majority of oligomeric Abeta. So this would be like soluble Abeta that is aggregated as compared to a standard Abeta antibody. Less ARIA-like events. This is in a mouse model. Then importantly, and I think in contrast to what's out there in terms of the other Abeta antibodies using the Transport or using their brain shuttle technology, we can also preserve reticulocytes and not see anemia, which is, I think, one of the limitations of having a full effector function antibody. So this is in IND-enabling as well. And I think, as I mentioned before, all of these programs are sort of lining up for filing. And we're going to have to make some decisions on how we sequence them simply because of monitoring our cash burn.
I mean, we have to be very careful about how we spend, even though we have this robust portfolio.
OK, great. We're just about.
That's a perfect timing. Yeah.
Any other key takeaways you'd like investors to know before we wrap up?
I think it's just 2025, prepare for launch, expand the ETV franchise, and continue to progress the other Transport Vehicle franchises, OTV and ATV. So I think it's pretty clear what we need to do. We just got to get back to work.
OK. All right. Well, thank you so much, Ryan. It's been a pleasure learning about all the impressive progress you're making on behalf of patients in need. And really, thank you for your time here today.
Thanks, Jay.
Great to.