All right, I think we're going to get started so welcome back to the 45th Annual TD Cowen Healthcare Conference. I'm Brendan Smith, Senior Biotech and Life Science Tool and Diagnostics Analyst. It is my pleasure to introduce the COO and CFO of Denali Therapeutics, Alex Schuth. Thanks for joining us.
All right, thanks, Brendan.
All right, so there's a lot going on at Denali these days, a lot going on in the neuro space in general. So do you want to maybe just take a quick second to give us a lay out of 2025? So we'll dive into the individual verticals, we'll dive into the individual programs, but what are the most important milestones for Denali coming this calendar year?
Yep, and thanks again, Brendan, for the invitation to the conference, which is awesome as always, and thanks to all of you for joining. So when we started the company, our goal was to discover, develop, and deliver a new class of medicines, a new class of barrier-crossing medicines, right? And the blood-brain barrier historically has been one of the major obstacles for drug development in the CNS space. Biologics are fantastic drugs, the blood-brain barrier necessary for survival, but it doesn't get these medicines into the brain. So what we have done over this period of time, we discovered and I think now validated what we call the transport vehicle. The transport vehicle can be used to develop, to deliver, and you mentioned the vertical, so we call it franchises, to deliver enzymes, antibodies, oligonucleotides into the brain, and we've built a broad portfolio on that.
We're specifically excited because we feel we're exactly now at this point where we're preparing for our first launch, hopefully by the end of this year or early next year, where we're at the point where not only our technology is validated, but the whole field of blood-brain barrier transport is really breaking open right now, and we can talk about sort of differentiation to others in this space, which we see as very encouraging progress broadly. So specifically with respect to this year, it's going to be a big year, probably the biggest year in our 10-year history, right? So the first milestone is the filing of our BLA for DNL310 for Hunter syndrome, where we're 100% on track for that filing. We've guided to early this year, which we're still pursuing.
The second is that following on DNL310, we have DNL126, which is a related enzyme and a related indication in Sanfilippo syndrome, which is MPS IIIA, and here we're having conversations with the FDA based on the START designation that has been granted to us to accelerate the clinical development path, so here our goal is to keep those two products, DNL310, tividenofusp alfa, we call it TV, TV for Hunter and 126 for Sanfilippo to keep them close together, so we'll have conversations with the FDA, so that's the second milestone. The third is now going beyond enzymes, which we think will be the commercial foundation for the company, but to go beyond enzymes and to bring the first oligonucleotide transport vehicle project into the clinic as well. We have two preclinical programs for tau, for alpha-synuclein.
So we haven't announced yet which one it will be, but that will be the third milestone.
All right, great. So a lot to unpack there. So maybe let's start quickly on 310.
Yep.
On Hunter syndrome. So maybe just give us a sense if it launches toward the end of this year, what are you doing to prepare to really capture the early launch dynamics, maximize Denali's share there, but really how is this differentiated versus what's out there versus what's coming and how much read-through we realistically can expect to, actually, the MPS IIIA program too?
Yeah, okay. So let me start. So Hunter syndrome, rare pediatric disease, there are about 2,000 patients worldwide. There is a standard of care called Elaprase, which is traditional enzyme replacement therapy. Elaprase was approved in 2006, and essentially every diagnosed patient with Hunter syndrome is currently on Elaprase. Elaprase sells about $700 million a year. The key challenge for Elaprase is it does not get through the blood-brain barrier. It has some peripheral effect. Children live longer, they grow, but from a mental perspective, from a neurocognitive perspective, tragically they never thrive. They typically regress after diagnosis and regress down. They become nonverbal. They lose the ability to hear. It is a really tragic clinical presentation. So to your question, I think how does it differentiate? What is the unmet medical need? The unmet medical need are the neurocognitive symptoms.
In the open label phase one-two, we have shown that we can, and we're the only ones who have shown that, that we normalize the substrate of the enzyme that is missing, which is heparan sulfate, that we also normalize neurofilament light, which is an established marker of neuronal damage. It's been established in MS and in ALS and in SMA. So neurofilament is a structural protein in neurons. When neurons die, essentially neurofilament spills out into the CSF and into the blood. And we have shown that we normalize neurofilament, which means brain cells don't die anymore in the brain. And we've also shown that children continue to learn and grow and achieve milestones on the developmental stage, which is not expected. Now it's an open label study, right, with all the caveats of an open label study, but it is very encouraging data.
Based on this development path, we've achieved alignment with the FDA on that. So that's on three. So they say all of this, Elaprase sells $700 million. Our goal is to become the standard of care for Hunter syndrome. Elaprase is priced at about $360,000. It's essentially the same price in the U.S. and outside of the U.S. We aim to have a broad label. We designed the clinical development plan in such a way that from an age perspective, from a clinical presentation perspective, we cover all those patients, and that's our goal.
How long do you think it would take to reach that level of penetration within that MPS II market?
Yeah, so I don't have a specific timeline for you on that, but what I can say is that a few things. One, so the switching strategy, right? So switching can have a big advantage or it can be a challenge, and in this case, we think it's a big advantage because our modality is exactly the same modality as what patients and prescribers are already used to. It's an IV enzyme replacement therapy, except that ours gets into the brain and theirs doesn't get into the brain. So I think that makes the switching easier. That's number one. Number two is there is enormous enthusiasm in the community. We have about 100 patients in our clinical program between the phase one-two and the phase two-three out of the 2,000 patients that are worldwide.
So it's a substantial portion of the field that is already switching, and the clinical trial is done in a switching paradigm. So the vast majority of patients in our trial, even the open label extension, were on Elaprase up until a few weeks before the trial, and then they switched onto our drug. And I just want to add one thing about the clinical efficacy as well. So I highlighted the benefit in the brain, but what's really important, and we not necessarily expected that, but what we saw is improved efficacy in the periphery as well. So on peripheral biomarkers, urine biomarkers, urine heparan sulfate, after switching from Elaprase, we see a significant drop in urine biomarkers. And the reason for that is because of a transferrin receptor, which drives the drug into the cell, into the lysosome, and we have more efficient tissue distribution.
Okay, all right, great. So I guess, look, you've made a lot of progress with FDA on the MPS II program. Given kind of the mechanistic similarities between Hunter and MPS3A, this is DNL126 now I'm shifting to, at what point, number one, are you expecting to have alignment with FDA on what they would expect and if there is a path to accelerated approval there? And then just high level, I understand it's a moving target, but what you're thinking is now on potential timing once you do have alignment with FDA on what's expected?
Yeah, and to your question, what's the read-through? We think there is tremendous read-through between the two, right? So clinical, regulatory, commercial, these are very similar patient populations. Clinical development plans affect the same endpoint, heparan sulfate, neurofilament, the same behavior scales. And then, of course, regulatory, commercially, it's the same physicians that treated, so there is great read-through. We are in conversations with the FDA about the accelerated path, which is through the START designation again, right? So the START designation, spearheaded by Peter Marks, modeled after Operation Warp Speed in the pandemic, called warp speed for rare disease, right? With the goal of how can this be done, how can, in these rare patient populations, how can it be done more efficiently? Based on that, we increased, based on START designation, we increased the trial size of the phase 1-2. It was eight patients early on.
We had two cohorts of four, and now we increased that to five cohorts to 20 patients, so that is our phase one-two study, which we're using as a basis for conversations with the FDA. Those conversations are ongoing, and once we have, just like we did with Hunter, we don't want to raise unrealistic expectations. Once we have something specific to discuss or to declare, right, to announce, we will do that.
Great. So the underlying presumption being that the expansion of that phase 1-2 would hopefully be sufficient to let you kind of carve out that path to accelerated approval.
That's exactly right. Yeah.
So I guess in terms of upcoming data from 126, to support that potential pathway, what decrease in what response in biomarkers do we need to see, do you all need to see to kind of give you confidence that that's still a viable pathway forward? Is it a static reduction? Is there an actual cutoff in your mind based on conversations about MPS II? Where's that kind of benchmark now?
Yeah, so in our mind, we have seen that data, and we do have the confidence. We did not show the data, but we described the data late last year in that we have achieved proof of concept, which means a significant reduction in biomarkers, including normalization in some patients. This is when we look back into 2020. November 2020 was when we had the first cohort from the Hunter syndrome trial. We saw exactly that. At that point, it was significant reduction of heparan sulfate, including normalization, and we see the same pattern play out now. From our perspective, we do have the confidence in the drug. Now it's the conversation with the FDA exactly about the path. The difference, of course, between Sanfilippo and Hunter is that there is no standard of care for Sanfilippo, right?
There is a tremendous urgency on having a drug available for patients.
Okay, so we'll have updated phase 1-2 data from 126 later this year, fair to say?
So the data are coming in. We have not decided if and when to present those data for us. The focus is we have the confidence on the data for us. The focus is on having the conversation with the regulators about what the path is going forward.
And clarity on that you think could potentially come this year then?
Yeah, absolutely. We definitely want to drive to clarity on the development path this year.
Okay, all right. So now maybe let's move to the next TV modality. So you have 594 in the clinic, right? This is FTD, GRN. Obviously, there's a number of players now in this space. I think we touched on this when we spoke, I think last week. I think maybe whether it's because it's tough to find them, tough to diagnose, or just a smaller market than people anticipated. I think enrollment across a number of FTD, GRN, specifically players, it's been a little bit slower or more protracted. But maybe speak to where this study is now and how you could fit into some of the competing therapies out there with 594.
Yeah, so the PTV progranulin program is very closely related to the enzyme portfolio because really what it is in these patients, it's a progranulin deficiency. progranulin is not an enzyme, but it's a protein. From an engineering perspective, it looks the same. So we have the Fc, we call it a transport vehicle, and we fuse progranulin. It's IV administered. What we have shown already, we showed that last year was that after the healthy volunteer part of the study in 36 individuals, we showed that we can deliver up to 27-fold normal progranulin levels to the brain. So we know that we can get safely, can deliver large amounts of progranulin to the brain. Now, preclinically, if you look at progranulin knockout models, we can achieve concentrations that are far in excess of what improves lysosomal function and what improves symptoms of neurodegeneration preclinically.
That gives us the confidence in this mechanism, which is again a very direct mechanism. Now where we are, we're in the phase 1b, phase 2a portion of the trial where we are treating individuals with FTD that have the GRN mutation. The study's enrolling. As you may know, we had paused it for a period of time to change the protocol to allow for pre-medication, to allow to manage infusion-related reactions, which were mild and which were manageable, but we changed the protocol. Now the study is enrolling again. It's enrolling well. We have not guided when the study reads out. Now, where it fits into the paradigm, so our mechanism, we believe, is the most direct mechanism of addressing the underlying cause of this disease, which is a progranulin deficiency. We are substituting progranulin. Just like enzyme, the enzyme is missing, you substitute the enzyme.
progranulin is missing. We substitute progranulin. Other mechanisms are more indirect. For example, blocking sortilin with an antibody blocks the uptake of progranulin from the interstitial space into the cell. It increases extracellular, but it probably doesn't do a whole lot for intracellular progranulin. We think mechanistically we have a very clear advantage on the direct mechanism.
Okay, so will we get updated data from that program this year or is that likely 2024?
It really depends. So we cannot guide on that because it really depends on the enrollment. It's enrolling well. What we have stated and what's on clinical trials is that we want to enroll 106 patients. So we do want to enroll a sizable study so that we actually see an effect. It does have a placebo cohort in it as well so that we can compare to baseline, but then we can also compare to a placebo group. So here we feel it's not about rushing it, but having a phase 1b, phase 2a that is substantial and robust enough for us to make decisions on.
All right, great. So you also alluded to some of the earlier stage oligonucleotide conjugates, right? So I think, look, your couple of enzyme ETVs are advancing through the clinic. We touched on the protein now. You're pretty well capitalized at this point, and you've divested the small molecule business. So it's very streamlined and focused on really the TV platform. We can kind of touch on Parkinson's in a bit, but so give us a sense of the cadence over the next couple of years, how you're prioritizing which oligonucleotides to advance, chances at potential partnerships, and really what's driving some of the investment decisions from Denali at this point in that respect.
Yeah, okay, so that's a big question. So on one hand, we have tremendous opportunity. We think the transport vehicle is de-risked. It's validated. We can take it in many different indications. We are well capitalized at this point. We're at $1.2 billion in cash at the end of the year. Last year, we spent net cash $350 million. We've guided towards a runway of about three years into 2028. So we do have flexibility. Flexibility to do more, but also I will say in a capital constrained environment where capital efficiency may be even more important than it is now, we also have the flexibility to add down our burn if we wanted to. So the base case is that we bring one to two INDs into the clinic per year for the next three years. So we currently have six programs in IND enabling studies.
That's three more enzymes, two oligonucleotides, and one antibody. We can go through the antibodies, ATV Aβ, right? So we have six programs on deck, and we want to bring at least one, maybe two, into the clinic. Now, how we prioritize that, number one is data-driven, of course, right? So we have to look at all the data, how the data turn out. The second is, however, we do want to go into larger indications. And I think it gets sort of to your question about sort of portfolio strategy. We're very excited about the enzymes. The enzymes can be the commercial foundation for the company. They have a very high probability of success. Enzymes historically, it's amazing. They have like 80%-90% probability of success. We think the transport vehicle works, so high probability of success. That's the commercial foundation.
But we set up the company. We say defeat degeneration. So we do want to go after neurodegeneration. We want to go after the larger indications. So that plays it will probably be a balance between strengthening the enzyme franchise to build that commercial foundation, but also going for the larger neurodegenerative diseases, but pick those where there is a fast path to proof of concept. And I think Aβ, tau actually have that now because you can use imaging for Aβ, CSF, tau reduction, CSF reduction for tau, where in early clinical development, you know if you're on the right path. So that's probably the, or that is sort of the balance that we're looking at.
Okay, so we're talking about runway for about three plus years, right? So within that three-year timeframe, kind of lay out, we'll have potentially MPS II on the market. Meaningful progress of MPS3A, if not very close. We'll see what the development path for 594 looks like, but presumably then you'd have at least three upwards of four, five, maybe six of these earlier stage in the clinic. But how are you thinking about kind of pushing some of those earlier stage ones forward more to get some of that proof of concept? What are some of the levers you can kind of pull internally? You're talking about some of the investment opportunities that you kind of have existing within the franchise today to kind of push for some of that data within three years.
Yeah, no, I mean, you summarized it exactly well. And I think there was a second part of your question, which was how does partnering fit into that, right? Which is, of course, another element as we think about the capital requirements. So we're very well financed for the next three years, but in order to capture the full opportunity, we will need more capital, right? Partnering is always an opportunity. We actually call it one of our core strategic pillars. We have three strong partnerships with Biogen, Sanofi, and Takeda, and there are definitely more opportunities. We've seen in the last year more interest in blood-brain barrier technologies than ever before. You've seen deals in the space, AbbVie buying Aliada for $1.4 billion. BMS just did a blood-brain barrier deal. There are opportunities.
There are opportunities, I would say, on the enzyme side, but there are also definitely opportunities on the neurodegeneration side. We're always in conversations with partners. Again, right now, the base case is we advance our portfolio forward, create clinical proof of concept on the neurodegeneration side, launch one to two products on the enzyme side. But if there is a deal that can truly create value, right, where there is something where we can do something better, faster, where we can do more with a partner, then we would absolutely consider that.
Yeah, I mean, let's just tap into that a bit. So I think what does that deal look like, right? Is that kind of focus on Denali's technology platform? I mean, you guys have continued to innovate on this too. You've changed, updated the blood-brain barrier technology over the years too. So is it target-specific? I imagine there's a few different pathways in that respect too. So based on kind of your experience with Takeda, Sanofi, and Biogen now, what's the feedback been that you're kind of using to shape the future of the TV platform for you guys in the partner?
It all depends. And every deal is different. And our three deals, they are different as well. But all of them is really about this creating value, right? So with Takeda, it was three programs, right? And they helped us sort of expand the portfolio early on, right? I mean, with Biogen, we could immediately go from LRRK2 carriers to idiopathic Parkinson's disease, right? With Sanofi, the same thing. We could do more studies in parallel. And that is probably something that we would want to look at here as well. I mean, one area for enzymes, conceptually, what you could think about is sort of global commercialization, right? So our base case is we launch in the U.S. and we're building in the five, four European countries plus the U.K. and Canada. We have a small office in Zurich. We're building the groundwork there right now.
But if we could reach global peak access faster, that might be an opportunity as well.
Okay, so maybe let's also just touch on the Biogen partnership too because that study is, I think, the first LUMA study, I believe, is set to finish enrolling this year.
That's right.
Maybe help us kind of contextualize that one versus the other study with the LRRK2, which patient populations will be in which, and kind of timing of both of the study just based on the designs and when we could potentially get data from those.
Yeah, so Parkinson's disease is obviously the second largest neurodegenerative disease, about 10 million patients worldwide. LRRK2 is the strongest genetic risk factor for Parkinson's disease. LRRK2 is a kinase, and it modulates lysosomal biogenesis. It's a negative regulator of lysosomal biogenesis. In fact, it's sort of a brake on lysosomal function. What LRRK2 inhibition does, it improves, it boosts lysosomal function. So you inhibit LRRK2 and suddenly these lysosomes, you can actually see it within 24 hours, you can see the lysosome expand, the lysosomal network, and it can more efficiently process proteins. Protein processing is very important. In Parkinson's, obviously, it's a protein misfolding disease. If you think about Lewy bodies, aggregated Lewy bodies, inclusion bodies. So it's a mechanism of LRRK2 inhibition, genetically linked, directly genetically linked to the disease, and the mechanisms to improve lysosomal function.
The study that we're running with Biogen, and this is back to a 2020 deal with Biogen, is an all-comers idiopathic Parkinson's disease study because lysosomal dysfunction is a pathology in all of Parkinson's. Interestingly, right, for example, GBA mutations in a homozygous form cause Gaucher disease, a lysosomal storage disease, but in the heterozygous form, GBA mutations are a massive risk factor for Parkinson's disease, so in some way, Parkinson's is almost sort of on the spectrum of lysosomal storage diseases, right, so that is the mechanism. The study that you were referring to, the LUMA study, which will fully enroll this year, is 640 patients. It's a phase 2b study, which was prospectively designed in such a way that it could support approval, and it will measure time to worsening, time to progression on the UPDRS Parkinson's scale.
That is a study that will test the LRRK2 inhibition hypothesis in the broad Parkinson's population. Now, in parallel, what we're running is a biomarker study in just genetically defined patient population with the LRRK2 mutation. We hope that the data from those two studies, by the way, LUMA is a one-year treatment duration. So if it fully enrolls this year, we expect data from that study next year. By the time we have the data from LUMA, that we also have the biomarker data from the genetically defined population. Overlay those two, have a full big picture, which if the data are very strong, we would look for regulatory conversations. Base cases, we probably have to, together with Biogen, have to run a second confirmatory study. But if the data are really strong, we would seek that conversation.
Okay, so that gets actually my next question. So for the phase 2b LUMA data, I mean, do you have a sense what that data would need to look like based on the powering of the study design today?
We have, neither Biogen nor us have disclosed the actual power, but it's power to a meaningful clinical benefit in the context. 640 patients is a good size trial, right? So in that, it could be used as one of the two registrational studies.
Okay, great. So I guess, and then just remind us for the second study where you are in enrollment there and then potential timing for that data too?
So yeah, so here the study, we would want those two data sets to come in at the same time. It's enrolling well. Yeah, it's a good size study. It's a shorter placebo period followed by a longer open label period.
All right, so I guess maybe just in the last couple of minutes here, I want to zoom out just a bit as we kind of walk through the 2025 inflection points. And then we've kind of touched on 26 now. So you've laid out even the next three years with the current guys run right away. So kind of the Denali strategy from diversifying within the TV portfolio now that you have a streamlined focus on TV, what does Denali of 2030 look like? Assuming launch in MPS II, assuming success in MPS3, you have a few INDs moving through the clinic there. Ideally, what is kind of the breakdown between enzymes versus this neurodegeneration portfolio and how do you get from here to there? What are the important value drivers to get there?
Yeah, so back to, we want to build the fully integrated independent company that discovers, develops, manufactures, and commercializes a new class of medicine, sort of a new class of tissue-enhanced distribution medicines or barrier crossing medicines. We are in our path to the fully integrated company. We built our clinical manufacturing facility in Utah to manufacture all of our protein clinical grade. That brings down, in the context of capital efficiency, that brings down our operating cost significantly. It also makes it faster. So that's ultimately the goal. Now, where the company is, you're exactly right. We hope to have two to three products on the market at that point. We also have to have a broad and thriving clinical portfolio, which goes across the different franchises. Additional enzymes, we have in IND enabling study.
We didn't speak about it here, but we have ETV:GCase and ETV:GAA for Gaucher and Pompe. Those are the next two enzymes larger indications. We have preclinical data that show significant superiority to the existing standard of care with respect to muscle distribution, so we'll have additional enzymes. We should have clinical proof of concept with Aβ, tau, maybe synuclein, and then something that is sort of on the horizon, but as we're looking sort of into that, it could be other indications outside of neurodegeneration. You could think about oncology, brain metastases, primary brain tumors. Antibodies are great cancer drugs. They don't get into the brain. We can get them into the brain, so there's a whole nother, if we look into that into the early 2030s, there is a whole nother field of opportunities which we might go for.
Okay, and I think with that, we are just over time. So I want to thank you for joining me today. I want to thank you all for listening in. We have a couple of topical panels after this session, and then we have all the day lined up tomorrow. So thank you guys.
All right, thanks, Brendan.