Denali Therapeutics Inc. (Nasdaq: DNLI), a biopharmaceutical
company developing a broad portfolio of product candidates
engineered to cross the blood-brain barrier (BBB) for the treatment
of neurodegenerative diseases and lysosomal storage diseases, today
reported financial results for the first quarter ended March 31,
2023, and provided business highlights.
“In the first quarter, we continued to make significant progress
across our broad therapeutic portfolio, including the advancement
of multiple late-stage programs,” said Ryan Watts, Ph.D., Chief
Executive Officer at Denali. “As the global Phase 2/3 COMPASS study
of DNL310 (ETV:IDS) enrolls children with MPS II, we were excited
to share new interim, open-label Phase 1/2 data demonstrating
positive changes in behavioral and cognitive aspects of the disease
that are particularly important to MPS II families and data
suggesting additional peripheral activity in children who switched
from standard of care. In addition, at the recent AAN meeting, we
reported positive biomarker and safety data from the 28-day Phase
1b study of our eIF2B agonist, DNL343, and we are eager to learn
more about the potential of DNL343 from its planned inclusion in
the Phase 2/3 HEALEY Platform Trial. We look forward to continued
collaboration with individuals, families, and communities impacted
by neurodegenerative and lysosomal storage diseases as we strive to
discover, develop, and deliver safe and effective new
medicines.”
First Quarter and Recent Program Updates:
TV-ENABLED PROGRAMS
DNL310 (ETV:IDS): MPS II (Hunter syndrome)
DNL310 is an investigational, intravenously administered, Enzyme
Transport Vehicle (ETV)-enabled, brain-penetrant
iduronate-2-sulfatase (IDS) replacement therapy designed to address
the behavioral, cognitive and physical manifestations of MPS II
(Hunter syndrome).
- In February, Denali reported new
interim results at the WORLDSymposiumTM from the ongoing
open-label, single-arm Phase 1/2 study of DNL310 in children with
MPS II, including data from additional participants and up to 104
weeks of treatment. Over 49 weeks of DNL310 treatment, positive
changes across measures of exploratory clinical outcomes including
VABS-II (adaptive behavior) and BSID-III (cognitive capabilities)
scores and global impression scales were observed. In addition, the
interim data also suggested that DNL310 improved hearing, as
assessed by auditory brainstem response testing. Additional
biomarker data out to 49 weeks continued to demonstrate that DNL310
enabled rapid and sustained normalization of CSF heparan sulfate to
normal healthy levels and improvement in lysosomal function
biomarkers. Reduction in urine heparan sulfate and dermatan sulfate
after switch from standard of care to DNL310 suggested additional
sustained peripheral activity of DNL310. The safety profile of
DNL310, with up to two years of treatment, remained consistent with
standard of care.
- The interim Phase 1/2 data continue to
suggest robust central nervous system (CNS) and peripheral activity
of DNL310 and support continued recruitment of participants with
MPS II, with and without neuronopathic disease, in the global Phase
2/3 COMPASS study.
TAK-594/DNL593 (PTV:PGRN): Frontotemporal
Dementia-Granulin (FTD-GRN)
DNL593 is an investigational, intravenously administered,
brain-penetrant progranulin (PGRN) replacement therapy enabled by
Denali’s Protein Transport Vehicle (PTV) technology, which is being
co-developed with Takeda. Recruitment of participants with
symptomatic FTD-GRN loss of function mutations in Part B (ascending
multiple doses) of the Phase 1/2 study is ongoing.
- In March 2023, a $10 million milestone
payment from Takeda was triggered upon achievement of a specified
clinical milestone in the Phase 1/2 study, which is due in May
2023.
- Additional healthy volunteer data from
Part A of the Phase 1/2 study will be presented at the Alzheimer's
Association International Conference, which is taking place July
16-20, 2023.
TAK-920/DNL919 (ATV:TREM2): Alzheimer’s
disease
TAK-920/DNL919 is an investigational, Antibody Transport Vehicle
(ATV)-enabled, brain-penetrant TREM2 agonist intended to improve
microglial function as a potential treatment for Alzheimer’s
disease, which is being co-developed with Takeda. A Phase 1 study
of DNL919 in healthy volunteers is ongoing in the Netherlands.
DNL126 (ETV:SGSH): MPS IIIA (Sanfilippo syndrome Type
A)
DNL126 (ETV:SGSH) is an investigational, intravenously
administered, ETV-enabled, brain-penetrant N-sulfoglucosamine
sulfohydrolase (SGSH) replacement therapy designed to address the
behavioral, cognitive and physical manifestations of MPS IIIA
(Sanfilippo syndrome Type A).
- In February, Denali presented
preclinical data at the WORLDSymposium, which support plans to
advance DNL126 into clinical development.
Oligonucleotide Transport Vehicle (OTV)
platform
Denali’s OTV platform is designed to enable peripheral
administration of oligonucleotide therapeutics such as antisense
oligonucleotides (ASOs) to address a wide range of
neurodegenerative and other neurological diseases. Denali has
selected five ASO targets for further development and is focused on
advancing two OTV candidates towards clinical development.
- In April, the manuscript titled, “Targeting Transferrin
Receptor to Transport Antisense Oligonucleotides Across the
Blood-Brain Barrier” was posted on bioRxiv here.
Antibody Transport Vehicle (ATV):Amyloid beta
(ATV:Abeta) program
ATV:Abeta is designed to increase brain exposure and target
engagement of antibody therapeutics directed against Abeta, which
may enable improved plaque clearance and/or reduced amyloid-related
imaging abnormalities (ARIA). Accumulation of Abeta plaque in the
brain is a defining feature of Alzheimer’s disease.
- In April, Denali announced that Biogen
exercised its option to license Denali’s ATV:Abeta. Biogen will
assume responsibility for all development and commercial activities
and associated expenses. Denali will receive a one-time option
exercise payment and, if certain milestones are achieved, Denali
will be eligible to receive potential development and commercial
milestone payments, and royalties based on future net sales.
SMALL MOLECULE PROGRAMS
BIIB122/DNL151 (LRRK2 Inhibitor): Parkinson’s disease
(Idiopathic and LRKK2-Positive)
BIIB122/DNL151 is an investigational small molecule inhibitor of
LRRK2, one of the most common genetic drivers of Parkinson’s
disease. Targeting LRRK2 has the potential to impact the underlying
biology and slow the progression of Parkinson’s disease. Denali and
Biogen are co-developing BIIB122. Biogen is conducting two
late-stage studies: the Phase 2b LUMA study in participants with
early-stage Parkinson’s disease and the Phase 3 LIGHTHOUSE study in
participants with Parkinson's disease and a confirmed LRRK2
pathogenic variant.
SAR443820/DNL788 (CNS-Penetrant RIPK1
Inhibitor): ALS, MSSAR443820/DNL788 is an
investigational, CNS-penetrant, small molecule inhibitor of RIPK1,
a critical signaling protein in a canonical inflammatory and cell
death pathway. Increased RIPK1 activity in the CNS is hypothesized
to drive neuroinflammation and cell necroptosis and to contribute
to neurodegeneration. Denali and Sanofi are co-developing
SAR443820. Sanofi is conducting the global Phase 2 HIMALAYA study
for participants with amyotrophic lateral sclerosis (ALS).
- In January, Denali announced that
Sanofi initiated a Phase 2 clinical trial in multiple sclerosis
(MS) for which Denali received a milestone payment of $25
million.
DNL343 (eIF2B Activator): ALS
DNL343 is an investigational small molecule activator of the
eukaryotic initiation factor 2B (eIF2B), is designed to inhibit the
cellular integrated stress response (ISR) and prevent or slow
disease progression associated with stress granule formation and
TDP-43 aggregation, which is a hallmark pathology present in nearly
all individuals with ALS.
- In April, Denali presented final data
from the 28-day treatment period of the Phase 1b study of DNL343 in
participants with ALS at the 75th Annual Meeting of the American
Academy of Neurology (AAN). The results continued to demonstrate
that once-daily oral dosing with DNL343 for 28 days was generally
well tolerated and demonstrated extensive CSF penetration. In
addition, robust inhibition of biomarkers associated with the ISR
pathway was observed in blood samples from study participants. The
Phase 1b data continue to support plans to initiate dosing with
DNL343 in the Phase 2/3 HEALEY ALS Platform Trial.
OTHER CLINICAL PROGRAMS
SAR443122/DNL758 (Peripheral RIPK1 Inhibitor): CLE and
UC
SAR443122/DNL758 (eclitasertib), is an investigational,
peripherally restricted, small molecule inhibitor of RIPK1. Sanofi
is solely responsible for the development and commercialization of
peripherally restricted RIPK1 inhibitors. Sanofi is conducting a
Phase 2 study of DNL758 in patients with cutaneous lupus
erythematosus (CLE).
- In January, Denali announced that
Sanofi had initiated a Phase 2 trial of SAR443122 in patients with
ulcerative colitis (UC) for which a milestone payment of $10
million was received in December 2023.
DISCOVERY PROGRAMS
Denali continues to advance a broad preclinical portfolio
including programs enabled by the Enzyme Transport Vehicle, the
Antibody Transport Vehicle, and the Oligonucleotide Transport
Vehicle, and several small molecules engineered to cross the BBB
and intended as potential treatments for patients with
neurodegenerative diseases and lysosomal storage diseases.
Recent Corporate Updates:
- In March, a contingent consideration
payment of $30 million associated with Denali’s acquisition of
F-star Gamma was triggered upon the achievement of a specified
clinical milestone in the ETV:IDS program. This payment fully
satisfies Denali’s clinical contingent consideration obligations
under the Purchase Agreement.
Participation in Upcoming Investor
Conferences:
- Bank of America 2023 Healthcare
Conference, May 9-11
- Jefferies Global Healthcare
Conference, June 7-9
- Goldman Sachs 44th Annual Global
Healthcare Conference, June 12-15
- BTIG Virtual Biotechnology Conference
2023, August 7-8
First Quarter
2023 Financial Results
Net losses were $109.8 million and $65.2 million for the
three months ended March 31, 2023 and 2022, respectively.
Collaboration revenue was $35.1 million and $42.1 million
for the three months ended March 31, 2023 and 2022, respectively.
The decrease in collaboration revenue of $7.0 million for the three
months ended March 31, 2023, compared to the comparative period in
the prior year was primarily due to a decrease in revenue from our
collaboration with Takeda primarily due to completion of the
preclinical research service performance obligations, and a
decrease in revenue under the Biogen Collaboration Agreement due to
completion of the ATV:Abeta Option Research Services. These
decreases are partially offset by an increase in revenue from our
collaboration with Sanofi as a result of the $25.0 million
milestone achieved in January 2023 upon first patient in a Phase 2
study of SAR443820/DNL788 in individuals with MS.
Total research and development expenses were $128.8 million and
$86.1 million for the three months ended March 31, 2023 and
2022, respectively. The increase of approximately
$42.7 million for the three months ended March 31, 2023
compared to the comparative period in the prior year was
attributable to: an increase in ETV:IDS program external expenses
primarily due to the accrued contingent consideration payment of
$30.0 million related to the acquisition of F-star Gamma,
which was triggered in March 2023 upon the achievement of a
specified clinical milestone in the ETV:IDS program; an increase in
other unallocated research and development expenses primarily due
to increased facility costs as a result of accelerated depreciation
on leasehold improvements associated with the termination of the
previous SLC lease; and an increase in personnel-related expenses,
including stock-based compensation, mainly driven by higher
headcount and equity award grants. Further, net cost sharing
reimbursements from collaboration partners decreased as cost
sharing payments owed to Biogen increased. These net expense
increases were partially offset by decreases in TV platform and
other program external expenses and PTV:PGRN program external
expenses due to the timing of significant external research and
manufacturing related activities period over period.
General and administrative expenses were $27.1 million and
$22.5 million for the three months ended March 31, 2023 and
2022, respectively. The increase of approximately $4.6 million for
the three months ended March 31, 2023 compared to the comparative
period in the prior year was primarily attributable to an increase
in personnel-related expenses, including employee compensation and
stock-based compensation expenses, driven by higher headcount and
equity award grants. Additionally, there were increases in facility
costs, consulting, and legal professional services expenses.
Cash, cash equivalents, and marketable securities were
approximately $1.29 billion as of March 31, 2023.
About Denali Therapeutics
Denali Therapeutics is a biopharmaceutical company developing a
broad portfolio of product candidates engineered to cross the
blood-brain barrier (BBB) for the treatment of neurodegenerative
diseases and lysosomal storage diseases. Denali pursues new
treatments by rigorously assessing genetically validated targets,
engineering delivery across the BBB and guiding development through
biomarkers that demonstrate target and pathway engagement. Denali
is based in South San Francisco. For additional information, please
visit www.denalitherapeutics.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements expressed or implied in this press
release include, but are not limited to, statements regarding
expectations regarding Denali’s TV technology platform, including
the Enzyme Transport Vehicle (ETV), Antibody Transport Vehicle
(ATV) and Oligonucleotide Transport Vehicle (OTV); plans,
timelines, and expectations regarding DNL310 and the ongoing Phase
2/3 COMPASS and Phase 1/2 studies, including the continued
recruitment of participants for the Phase 2/3 COMPASS study and the
Phase 1/2 study interim data; plans, timelines, and expectations of
both Denali and Takeda regarding DNL593 and the ongoing Phase 1/2
study, including the recruitment of patients for the Part B study;
plans, timelines, and expectations of both Denali and Takeda
regarding DNL919 and the ongoing Phase 1 study; plans, timelines,
and expectations related to DNL126, including plans for advancement
into clinical development; plans, timelines, and expectations
regarding the advancement of OTV candidates towards clinical
development; plans, timelines and expectations of both Denali and
Biogen regarding DNL151, the ongoing Phase 2b LUMA study, and the
ongoing Phase 3 LIGHTHOUSE study; plans, timelines and expectations
regarding DNL788 of both Denali and Sanofi; plans, timelines and
expectations regarding DNL343, including plans for the Phase 2/3
HEALEY ALS Platform Trial; plans, timelines and expectations
regarding DNL758; plans, timelines and expectations of both Denali
and Biogen regarding the development of Denali's ATV: Abeta for the
treatment of Alzheimer's disease; plans, timelines and expectations
for the new manufacturing facility lease in Utah, including the
potential benefits of such manufacturing capabilities; and
statements made by Denali’s Chief Executive Officer. Actual results
are subject to risks and uncertainties and may differ materially
from those indicated by these forward-looking statements as a
result of these risks and uncertainties, including but not limited
to, risks related to: any and all risks to Denali’s business and
operations caused by adverse economic conditions, such as
instability in the financial services sector, the impact of the
COVID-19 pandemic and increased geopolitical uncertainty; risk of
the occurrence of any event, change or other circumstance that
could give rise to the termination of Denali’s agreements with
Sanofi, Takeda, or Biogen, or any of Denali’s other collaboration
agreements; Denali’s transition to a late-stage clinical drug
development company; Denali’s and its collaborators’ ability to
complete the development and, if approved, commercialization of its
product candidates; Denali’s and its collaborators’ ability to
enroll patients in its ongoing and future clinical trials; Denali’s
reliance on third parties for the manufacture and supply of its
product candidates for clinical trials; Denali’s dependence on
successful development of its blood-brain barrier platform
technology and its programs and product candidates; Denali’s and
its collaborators' ability to conduct or complete clinical trials
on expected timelines; the risk that preclinical profiles of
Denali’s product candidates may not translate in clinical trials;
the potential for clinical trials to differ from preclinical, early
clinical, preliminary or expected results; the risk of significant
adverse events, toxicities or other undesirable side effects; the
uncertainty that product candidates will receive regulatory
approval necessary to be commercialized; Denali’s ability to
continue to create a pipeline of product candidates or develop
commercially successful products; Denali's ability to attract,
motivate and retain qualified managerial, scientific and medical
personnel; developments relating to Denali's competitors and its
industry, including competing product candidates and therapies;
Denali’s ability to obtain, maintain, or protect intellectual
property rights related to its product candidates; implementation
of Denali’s strategic plans for its business, product candidates
and blood-brain barrier platform technology; Denali's ability to
obtain additional capital to finance its operations, as needed;
Denali's ability to accurately forecast future financial results in
the current environment; general economic and market conditions;
and other risks and uncertainties, including those described in
Denali's most recent Annual and Quarterly Reports on Forms 10-K and
10-Q filed with the Securities and Exchange Commission (SEC) on
February 27, 2023 and May 8, 2023, respectively, and Denali’s
future reports to be filed with the SEC. Denali does not undertake
any obligation to update or revise any forward-looking statements,
to conform these statements to actual results or to make changes in
Denali’s expectations, except as required by law.
Denali Therapeutics Inc.Condensed
Consolidated Statements of
Operations(Unaudited)(In thousands,
except share and per share amounts)
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Collaboration revenue: |
|
|
|
Collaboration revenue from customers(1) |
$ |
35,141 |
|
|
$ |
42,141 |
|
Total collaboration revenue |
|
35,141 |
|
|
|
42,141 |
|
Operating expenses: |
|
|
|
Research and development(2) |
|
128,816 |
|
|
|
86,098 |
|
General and administrative |
|
27,140 |
|
|
|
22,541 |
|
Total operating expenses |
|
155,956 |
|
|
|
108,639 |
|
Loss from operations |
|
(120,815 |
) |
|
|
(66,498 |
) |
Interest and other income,
net |
|
11,034 |
|
|
|
1,278 |
|
Net loss |
$ |
(109,781 |
) |
|
$ |
(65,220 |
) |
Net loss per share, basic and
diluted |
$ |
(0.80 |
) |
|
$ |
(0.53 |
) |
Weighted average number of shares outstanding, basic and
diluted |
|
136,524,528 |
|
|
|
122,673,935 |
|
__________________________________________________(1) Includes
related-party collaboration revenue from a customer of
$0.1 million and $2.2 million for the three months ended
March 31, 2023 and 2022, respectively.(2) Includes
expense for cost sharing payments due to a related party of
$4.2 million and $2.7 million for the three months ended
March 31, 2023 and 2022, respectively.Denali Therapeutics
Inc.Condensed Consolidated Balance
Sheets(Unaudited)(In thousands)
|
March 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
68,131 |
|
$ |
218,044 |
Short-term marketable securities |
|
1,220,322 |
|
|
1,118,171 |
Prepaid expenses and other current assets |
|
36,709 |
|
|
36,104 |
Total current assets |
|
1,325,162 |
|
|
1,372,319 |
Property and equipment,
net |
|
42,117 |
|
|
44,087 |
Operating lease right-of-use
assets |
|
28,049 |
|
|
30,437 |
Other non-current assets |
|
14,016 |
|
|
13,399 |
Total assets |
$ |
1,409,344 |
|
$ |
1,460,242 |
Liabilities and
stockholders' equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
2,215 |
|
$ |
2,790 |
Cost sharing payments due to related party |
|
8,538 |
|
|
4,388 |
Accrued clinical and other research & development costs |
|
47,571 |
|
|
16,297 |
Accrued manufacturing costs |
|
19,959 |
|
|
22,307 |
Other accrued costs and current liabilities |
|
9,136 |
|
|
3,682 |
Accrued compensation |
|
7,365 |
|
|
17,087 |
Operating lease liabilities, current |
|
6,539 |
|
|
7,318 |
Related-party contract liability, current |
|
289,757 |
|
|
290,053 |
Total current liabilities |
|
391,080 |
|
|
363,922 |
Related-party contract
liability, less current portion |
|
633 |
|
|
479 |
Operating lease liabilities,
less current portion |
|
50,546 |
|
|
53,032 |
Other non-current
liabilities |
|
379 |
|
|
379 |
Total liabilities |
|
442,638 |
|
|
417,812 |
Total stockholders'
equity |
|
966,706 |
|
|
1,042,430 |
Total liabilities and
stockholders’ equity |
$ |
1,409,344 |
|
$ |
1,460,242 |
Investor Relations Contact:
Laura Hansen, Ph.D.Vice President, Investor Relations(650)
452-2747hansen@dnli.com
Media Contact:
Angela Salerno-RobinSenior Vice President, Media Relations,
Healthcaredna Communications (212)
445-8219Asalerno-robin@dna-comms.com
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