Great. Good morning, everyone. Thank you so much for joining us. It's a pleasure to have the Denali team here with us. We have Ryan Watts, CEO, and Alexander Schuth, CFO. To start here, the recent approval of AVLAYAH in Hunter syndrome serves as Denali's first commercial launch and the first from the Transport Vehicle platform. In this context, can you frame the outlook for your vertical, specifically the blood-brain barrier vertical, your key priorities, and the catalyst outlook as we look to the next 12 to 18 months?
Yeah. Maybe before I talk about the future, I'll just have a comment or two about the past. We've been working on blood-brain barrier technologies for almost exactly 20 years. In fact, it was 20 years ago that the first medicine was approved for Hunter syndrome, idursulfase. For us, it's been a journey of inventing a platform, I think really pioneering this space for over two decades. The last two or three months have been extraordinary for us. It's really exciting to be able to launch our first medicine, to have the first FDA-approved blood-brain barrier-enabled technology with AVLAYAH, it's been an exciting time. I think an important point is this now becomes a new area of biotherapeutics where the competition is rising, which is great news. In biotech, whenever anything works, everyone jumps in.
We're happy to be leading the way with transferrin receptor and with the Transport Vehicle technology. Of course, this is just the beginning as well. Talking about the next really six to 12 months, in addition to everything related to the launch, which is, of course, our focus of the commercial team, we also have the next enzyme replacement therapy, which is for Sanfilippo, where we'll complete the 49-week portion of that study in September, basically get the data ready, ideally present at World, then submit the BLA in 2027. What's exciting about that product is we're actually going to do the commercial manufacturing ourselves. With AVLAYAH, we've worked with CDMOs. Now we're going to be manufacturing for Sanfilippo, and we think this is the beginning of many enzyme replacement therapies. The next will be in Pompe, where we're enrolling that study now.
Also looking at data in 2027. At the end of this year, we've sort of categorically put our progranulin program into the enzyme replacement therapy because it's very similar to enzyme replacement therapies. We'll have our first look at the cohort B3, the highest dose for that study. That's coming up soon. I think what's happened for us is that we often get asked the question, why not just be an enzyme replacement therapy company? You know the technology works. You have your first launch, a lot of enthusiasm around that and in the community to bring forward other programs. Actually, we founded the company to ideally treat neurodegenerative diseases as well, like Alzheimer's and Parkinson's. We'll have our first two data readouts in Alzheimer's disease also in the next 12 to 18 months.
One is an oligonucleotide that knocks down the gene that codes for tau. The other is an A-beta antibody, which we published last year in August 2025 in "Science" around our mechanism of basically removing amyloid plaque, which we hope safer and ideally sub-Q dosing. That's also what's on the horizon. I know we'll go into each of those aspects, but a very exciting time at Denali.
Definitely. Perhaps we can just start on the Hunter syndrome program here. Given the first commercial patients have been treated, could you just speak to early launch dynamics to date, including the conversion rate from start forms to active patients and how the medical exemption process and reimbursement has evolved since approval?
I have to remind myself that it's been about 10 weeks or so since approval. I think what happened first is, let's get the drug into channel. We were able to do that within two weeks, obviously, with the label. In three and a half weeks, our first patient was dosed in the commercial setting. This is not a patient that's switching over from trials, so it's really exciting, and it actually wasn't at one of our trial sites. Now we have multiple patients who have been dosed on the commercial product. It's very early days to understand the dynamic of conversion from start forms to approval and getting the first dose, first infusion.
What we can say is that it's exceeded our expectations in terms of the enthusiasm from the field, and we're seeing really positive trends on time from start form to infusion.
What is the mix of treatment-naïve to newly diagnosed patients and those on prior standard of care? Has there been any pushback on patients or physicians on the need to return to clinic to initiate treatment?
I mean, the vast majority of patients, especially early on, are going to be switch. If you think about it, there's 500 patients in the U.S. I think almost all patients are on idursulfase, or the vast majority, unless it's sort of end-of-life. That dynamic, what's happened in the field is there's just real enthusiasm about the possibility of treating neurologic manifestations in addition to the fundamental treatment of the disease. We also saw our peripheral biomarkers were better than what has been shown for standard of care. We haven't seen really barriers to that. I think, again, the field is driving that enthusiasm. Most of the patients that are on drug now are commercial patients have switched from idursulfase. A handful will be newly diagnosed, and that will just happen over time.
The drug is priced at a premium to previous standard of care, ELAPRASE. As you engage with payers, what has feedback been around pricing and the weight-based dose model?
I'll hand that to Alex.
Yeah. I'll take that one. The pricing does reflect the clinical profile. What we've shown in the clinical studies is that we are able to normalize the key biomarkers, heparan sulfate, and also neurofilaments. It is the one, the first, and the only drug that treats the whole body, including the brain, and that is appreciated by payers. We have not encountered pushback on the price by payers. It has not been a barrier to access at this point. It's priced by weight. The weight-based model is very well understood. It's very standard in enzyme replacement therapy. We feel very good about the price.
Have your expectations for modest revenue this year changed as the payers come online and as you watch the trends that are playing out, just given, I think you've guided to the whole year needed in order to get that payer dynamic settled before you see that inflection in revenue more in 2027.
Yeah. This is, as Ryan said, we're very pleased about how the launch is going. We're very pleased about the interest, about the engagement, about the enthusiasm, in this product and also what's coming in the pipeline. What is expected in a rare disease launch, especially in a buy-and-bill setting, is that prescription activity will outpace revenues in the early stages of the launch. That's exactly what we're seeing right here. 2026 is the setup year. This is why we guide towards the modest revenue, and this is why we use the illustration of the S-shaped curve. We think 2026 is the setup year. 2027 will be the inflection year. We think in 2027, once patients are on drug for a period of time, but especially once all the payer engagements, once the payer policies are in place.
We have guided that, or we've stated that it's about 50/50 with respect to the payer mix. It will take about six months or so for commercial insurance, nine to 12 months for Medicaid. That's when we then expect that in 2027.
What is the status of the European filing?
I'll go on European filing, really international. The international market is very important. About 2/3 of the overall Hunter market is internationally, ultimately our goal is to capture that full market and make sure that every patient that can benefit from AVLAYAH will have the opportunity to do so. We're very actively engaged internationally. In some instances, we can work with accelerated or conditional approval settings. We can work with pharmaceutical product certification, which will allow us to capture part of the international market before COMPASS reads out. That's with the current data set in hand. Specifically with respect to Europe, we will need to wait until COMPASS reads out. COMPASS was fully enrolled by the end of last year. It's a two-year endpoint, we expect the data by the end of 2027, file in Europe.
On the confirmatory study, which includes patients up to 26 years of age, what is your current target for filing a supplemental BLA here to expand the label to include the adult Hunter syndrome patients?
I think there was two reactions to the approval of AVLAYAH. The first was enormous enthusiasm that there's finally a medicine that can treat the central nervous system, the other was disappointment that the drug wasn't immediately made available to adults. Obviously that's one of the important focus for us. What's interesting is once you're on drug, you stay on drug. It's not like as you transition to adult, you then come off AVLAYAH and go on idursulfase. That's important, clearly articulated in the label. The COMPASS study is a little bit more than 60 patients split into two cohorts, Cohort A, which focuses mainly on neurologic manifestations, Cohort B, which has a broader age range, including adults. The key there, that's more peripheral, we're looking for equivalency.
Frankly, ultimately, we should see data that's superior to standard of care, but it's powered to show sort of equivalency on biomarkers, things like liver and spleen volume and six-minute walk. The goal is that that totality of that data will put us in a position to go to Europe, which is the main focus of COMPASS, at least Germany, France, some of the countries that won't really recognize an accelerated path, but also to really focus on expanding the label.
Just maybe broadening out on the Transport Vehicle platform here. Following the preliminary phase I/II data that was presented from DNL126 and Sanfilippo syndrome at the WORLDSymposium, how has your dialogue with the FDA evolved here regarding the use of heparan sulfate as a surrogate endpoint for the BLA filing, and does the 2027 filing remain on track at this point?
I thought this might be the first fireside chat where we don't get a question about the FDA. It's been an incredible journey for the last two or three years. You'll recall, two or three years ago, we were talking about the inconsistency between CBER and CDER, with CBER, I think, being much more aggressive on biomarkers as a potential path to accelerated approval. In some ways, obviously, that switched as everything panned out over the last nine to 12 months. I think what's really been important for us is that the review team has been the same over that three years. The evolution of thinking about biomarkers has been with the same people who have seen, for example, the Reagan-Udall Foundation presentation now over two years or so ago that articulated why CSF heparan sulfate
Should be a surrogate endpoint reasonably likely to predict clinical benefit. That was the foundation of that mindset shift. Those are all the same individuals. Those that were previously concerned about it were the ones who then understood, agreed, and then understood that the approval of AVLAYAH is part of that aim. Our engagement with the FDA on DNL126 has remained consistent. Obviously, setting a high bar, we saw on average 80% reduction of CSF heparan sulfate in Sanfilippo with the ability to normalize. What's different about Sanfilippo is that all patients are treatment naive, and so basically you have to build tolerance, and when you do, you're able to see this robust reduction in heparan sulfate. I think the other thing that's just very distinct about Sanfilippo over Hunter is it is a very aggressive degenerative disease.
Patients will often have pretty significant volumetric loss even before we begin dosing. Early is going to be really important. Our engagement with the FDA remains consistent. I would say the way we've approached it is around the review team. The review division is the most important relationship and interactions that we have for our medicine.
Given there's no standard of care therapy on the market for Sanfilippo here, how do you think the launch trajectory will play out versus Hunter?
I think that's, as I pointed out, no standard of care. It's not a switch dynamic. I think the other point is you need to find these patients and diagnose them. They often are diagnosed in the same center. From a positive point of view, it's the same physicians. We'll have the same commercial team. All the interactions are similar. The MPS Society has been very involved with both Hunter, Sanfilippo, Hurler-Scheie. That part, I think, that dynamic is going to be fantastic because you see the momentum of AVLAYAH, which will then feed into 126. There is no standard of care. I think it's important to continue to push for newborn screening. As I mentioned before, because of the rapidity of how quickly this disease degenerates, finding patients really early is ultimately going to be key to have the most robust clinical benefit.
With similar patient numbers, ultimately, we see the combination of AVLAYAH and 126 as probably a billion-plus opportunity worldwide with just those two products, and that's just the beginning of the Enzyme Transport Vehicle franchise.
Can you just remind us what the rationale was for Takeda's decision to end the collaboration on 593 in the frontotemporal dementia program?
Yeah, I'll take that one. Takeda made a strategic portfolio prioritization decision in the broader context of their restructuring of their rare disease and neurology portfolio. Takeda had been a great partner for nine years, since we started the partnership, now we take the program forward ourselves. It's very strong biology. It's a very direct mechanism, substituting for granulin, which is missing or lacking in these patients with that form of frontotemporal dementia. The study is ongoing. It's fully enrolled now, we expect the data by the end of the year.
What specific biomarker thresholds are we looking for with that data read?
Yeah. I think as Alex mentioned, this form of FTD is a mutation in granulin. These are heterozygous carriers, they have one copy loss of function. We published a paper in 2021 in "Cell" categorizing a set of biomarkers that we think may be relevant that are downstream of this loss of function. They're lysosomal-related biomarkers like glucosylsphingosine and a number of BMP and other biomarkers. Those are the proximal biomarkers. The distal biomarkers are the traditional degenerative biomarkers like NfL and GFAP. For us, we're interested in both proximal and distal. Our experience in Hunter syndrome and in Sanfilippo is that you hit the proximal first, you establish dose, then over time, assuming that this is disease-modifying, you should expect the ability to reduce the distal biomarkers like NfL.
That's what we're looking for early on here is early data trying to understand the proximal biomarker and dose that will then drive ultimately what we believe will be the clinical benefit, which is then obviously looking at biomarkers like NfL. I think one challenge you have here is because it's a single copy loss of function, the signal-to-noise in your biomarkers is not the same as what you see in Hunter and Sanfilippo, where those are complete loss of function. Heparan sulfate is elevated 10-fold, where glucosylsphingosine is elevated 25%, 30%, not even twofold. That's a dynamic that we'll have to be prepared for, and especially as we sort of select dose. I think the ultimate goal would be to pin a decision on the distal biomarkers like NfL with longer-term data.
That's the other thing we've learned quite a bit from Hunter is that we have a fantastic medicine, but it took time to basically normalize NfL.
Following Biogen's recent data from its tau-targeted ASO in Alzheimer's, where we're going to see the full data, I guess, or whatever data we can mid-year at the Alzheimer's conference in London. They commented on demonstrating a slowing clinical decline in tau reductions, but they did not show a clear dose response. Maybe help us understand what you believe is a read-through to your own programs here.
Yeah. Taking at face value, this could be historic. Why? There's really only one drug target in Alzheimer's that has shown clinical benefit, which is A-beta. This would be the second. If you look at the totality of the data, at least as articulated in the press release, what it tells you is reducing tau can slow cognitive decline, and that would then represent the second Alzheimer's target that has clinical validation. I think it's, as usual, complicated to read into dose response. I think added complexity with their particular program is that intrathecal delivery introduces a significant amount of heterogeneity in brain biodistribution. It'll be very interesting to look at the data and understand how many patients were in each of the dose cohorts. If I understood correctly, there were three dose cohorts.
It's possible, for example, that the lower dose had fewer patients and then may be more subject to heterogeneity. I think the take-home message is reducing tau appears to result in a clinical benefit and a cognitive benefit. I think that's historic, actually. Now it's like, how do we improve A-beta? How do we improve tau? We have a real opportunity. I think then enter our approach, which is the Transport Vehicle that allows you to have much more consistency from patient to patient in terms of biodistribution. We saw this in our non-human primate studies. We did intrathecal delivery and compared it to the Oligo Transport Vehicle. With intrathecal, our monkeys, some had decent brain exposure, and some had very little.
You had always had great spinal cord exposure because these are lumbar delivery, but you had very significant heterogeneity in how much gets into the brain. With the Oligo Transport Vehicle, where you're delivering across capillaries, you have an even distribution, and it was consistent from monkey to monkey. I think that's just part of the dynamic, and I think we've seen it in the A-beta field as well, is that as these new technologies, these brain shuttles, and in our case, specifically the Transport Vehicle, they enter, you have now this ability to very rapidly reduce amyloid about three times faster at maybe one-fifth the dose. I think it's very exciting. Very exciting to see another target that may be clinically validated in Alzheimer's.
Remind us on the timelines for your program here.
We're targeting 2027 for the first biomarker data. We're enrolling now rapidly the Alzheimer's patient study. It's a multiple dose out of the gates for OTV:MAPT. The key here is obviously to see tau reduction and understand the dose that drives tau reduction. I think everything will follow. The tau imaging PET, and then ultimately running a study large enough to look at clinical benefit. Again, timing of intervention matters, and we'll also be at AAIC. Very excited to be there.
We'll be presenting there. I think the thesis that I like to articulate is that amyloid is a trigger, tau is an executioner, and then you have all these other contributors to disease that are these microglial targets that probably contribute in the inability to remove amyloid. If you look at the data, it's pretty consistent that amyloid's at the top of the cascade tau, I think ultimately is driving neuronal loss. I think they're both obviously very interesting targets.
You also have the beta amyloid program that's moving forward. Can you just walk us through the learnings that have played out with the programs that are approved also in the clinic and how that translates to your program?
Both OTV:MAPT, which is our tau reducer, and ATV:Abeta as the rest of our portfolio uses the transport vehicle. It's transferrin receptor to get across the blood-brain barrier. What we've learned about Abeta in particular, there's room for improvement. One, it used to be thought very simply, if you remove amyloid, you cause vasogenic edema or what is now termed ARIA. Now that's disconnected. You can remove amyloid much more rapidly and have less ARIA. It's probably around the biodistribution. Similar to we were just discussing with intrathecal for oligonucleotides. In the case of antibodies for Abeta, when you deliver using the transport vehicle technology, you don't have extraordinarily high concentrations in these perivascular spaces that cause breakdown of the blood-brain barrier and vasogenic edema.
Instead, you get this even distribution throughout brain. We show that in our Science publication in August of last year, how that is differentiated. The other important point is we can preserve the effector function. We can preserve the immunological function of the antibody when bound to amyloid plaque. When bound to transferrin receptor, we can silence it, and that is through a unique engineering insight where we create a mutation on the Fc that makes it silent when bound to transferrin receptor. That is distinct and I think is unique to the architecture of the transport vehicle. Our expectation is a safer profile. The binding to transferrin receptor is integrated, so less immunogenicity than what I think is being seen for other brain shuttles. Ultimately sub-Q dosing, where you have rapid plaque reduction and less ARIA.
What are the key metrics from the initial phase I trial in Pompe disease that we should look to understand how that's working out specifically as we look to understand the impact on muscle and bone?
Yeah. Shifting gears now back to the Enzyme Transport Vehicle. Here, we're delivering GAA. There's a series of medicines in Pompe that are enzyme replacement therapies for Pompe. What we're seeing is that there's not fantastic delivery, in particular to skeletal muscle. Even with standard of care, there's still a significant unmet need. I think major advances in cardiac, obviously overall survival is better for IOPD, but a real unmet need. As we engage with, by the way, the same investigators in Hunter and Sanfilippo are also many of these investigators are seeing Pompe patients. The general thesis is that standard enzyme replacement therapy for Pompe relies on this mannose 6-phosphate receptor in muscle, which apparently is not highly expressed. There's not great distribution to muscle.
What we see is a very substantial differentiation with any of the standard of care in Pompe when you use the Transport Vehicle. This is now enhanced delivery to muscle. Obviously, we'll have delivery to the CNS, which standard enzymes don't have. That's going to be important. That would be more in IOPD. What we're looking at in these early studies, Pompe is enrolling now, 2027 data as well, the goal there are these glycogen products to show that we've got the right dose organ engagement, then rely on the biology where we have improvement in muscle delivery, which should ultimately lead to clinical differentiation.
Great, just on the small molecule pipeline here, following the announcement that the phase IIb study in idiopathic Parkinson's did not meet its primary endpoint, were there any analyzable trends that you can talk to that played out in these LRRK2 patients?
I'll take LRRK2. As you mentioned, the LRRK2 inhibitor was part of our legacy portfolio of small molecules, completely separate from the Transport Vehicle. As you mentioned, which was time to confirm worsen MDS-UPDRS Part two and three, and importantly, in the idiopathic Parkinson's population. Essentially, the all-comers Parkinson's population. The study was well-designed, it was well-executed. The molecule performed as expected. We saw very strong target engagement and acceptable safety. I think we have to conclude that LRRK2 inhibition is not the path, at least in idiopathic Parkinson's. Importantly, we have another study ongoing in parallel, called the BEACON Study, which is purely focused on LRRK2 carriers. That is 50 LRRK2 carrier biomarker studies. We expect to see those data by the end of the year.
In LUMA, the number of LRRK2 carriers was too small to really look for a signal in the subset. There were only about 10 LRRK2 carriers out of these 650 patients. That really does not give us any
Alex, another question for you here.
Yeah.
You've been busy all along since the genesis of this company with partnering and business development strategy. Maybe talk to the types of deals that make sense for you from here.
Yeah, absolutely. Thank you for that question. Partnering business development is a key part of our strategy. We have a track record. We set up collaborations early in the phase of Denali, until about half of our portfolio was partnered. There was a period when we prioritized wholly owned programs and advancing those. Now we're at the stage where essentially our portfolio is almost entirely wholly owned. That opens up a lot of new partnering opportunities. The blood-brain barrier field has been very active in the last two years. 10 years ago, we were essentially the only ones. Now we see a lot of activity. There's a lot of interest from large pharma. There are a number of smaller companies as well. We've been engaged in many of those conversations. Right now, we're very well financed.
We ended Q1 with just over $1 billion in cash. We have the ability to really advance the program to the right moment in time of when we would do a deal. I think really to highlight, we are one of the few companies to have a wholly owned Alzheimer's portfolio, as we just discussed. There is A-beta, there is tau, there is a lot of preclinical expertise on additional mechanisms, which at some point will be a very obvious partnering opportunity. We can definitely generate clinical proof of concept, high-quality clinical proof of concept in patients, and that's probably the time when we would look for.
Follow on one of the points you made. The space has been really busy around blood-brain barriers. You have some of these larger companies working on their own programs. How do you think about yours, just given the validity here through the commercial assets that are coming out, and the defensibility and differentiation of it versus what's playing out in the competitive landscape?
The idea of crossing the blood-brain barrier using transferrin receptor was first proposed in the late 1980s. This is the typical story of biotech and discovery and iteration. The industrialization from that academic proposal has been a journey. We started on that journey, as I mentioned, 20 years ago in 2006. That was prior to founding Denali. What we did is we just made every existing platform that was out there to say, do any of these cross the blood-brain barrier in therapeutic concentrations? 20 years ago, the answer to that was actually no. There was no existing platform that we had actually tried that was working, so began the process of the industrialization. The question is, what was wrong? I think the first challenge was that most of the technologies were getting trapped in the blood vessel.
You were not getting therapeutic concentrations across the BBB. Now I think, of the 20-plus competitors that we count, there's probably 30, that have bona fide blood-brain barrier platforms. 97% of them, well, 95% of them, or 90% of them, are all using the original sort of conventional Fab approach. It's an antibody approach, it's a Fab fusion. When we founded Denali 11 years ago, we wanted to build a platform that was highly modular, that didn't give up an arm of the antibody, or didn't have to, in an unnatural way, attach an arm of the antibody, but integrate the binding into the Fc, similar to FcRn or Fc gamma. That began the engineering quest to build that in. We knew that because we'd already seen the first-generation brain shuttles that were out there.
We had already five, 10 years of experience. We knew the limitations, which was stability, immunogenicity. That's the challenge with a lot of these Fab fusions, and that was actually in the original publications. We built the Transport Vehicle in a way that we integrated the binding into the Fc. It is now, and still, the only molecule that does that. Very distinct from the conventional Fabs. As you point out, it's now the only molecule that is FDA approved. It will have commercial validation as well. That allows us now to create an entire portfolio. We had a decision 10 years ago. Alex mentions the partnering strategy. Our decision was not to create a technology to enable the world, but to create a technology to enable our medicines. Then find a way to collaborate on medicines, not on the platform.
There are other BBB technologies and strategies where the strategy is to out-license the platform. Those, again, are the conventional Fab approaches. The Transport Vehicle is definitely distinct in the way that we engineered it. Also had the advantage of a decade worth of experience before building it.
Great. Well, with that, Ryan and Alex, thank you so much.
Thank you.
We appreciate your time today.
Thank you so much.