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 fourth quarter and year ended
December 31, 2023, and provided business highlights.
"2023 was a year of significant progress across our broad
therapeutic portfolio and further clinical validation of our
BBB-crossing Transport Vehicle (TV) platform," said Ryan Watts,
Ph.D., Chief Executive Officer of Denali. "In 2024, we expect to
complete enrollment of our late-stage trials in MPS II and ALS as
we establish commercial readiness for our product candidates in our
first peak of programs. In addition, we are well positioned to
expand our TV-enabled portfolio to address large neurodegenerative
diseases with TV-enabled enzymes, antibodies, and oligonucleotides.
We recognize the urgent needs of patients and families living with
neurodegenerative and lysosomal storage diseases and we will
continue to push for the fastest path to approval of effective
medicines."
Fourth Quarter 2023 and Recent Program
Updates:
Late-stage and mid-stage clinical programs
Tividenofusp alfa (DNL310): Enzyme
Transport Vehicle (ETV)-enabled, iduronate-2-sulfatase (IDS)
replacement therapy in development for MPS II (Hunter syndrome)
- Presented additional interim data from the open-label,
single-arm Phase 1/2 study of DNL310 at the 2024 WORLDSymposium™.
Data out to 104 weeks showed additional improvement and
stabilization in multiple measures of clinical outcomes, including
those of adaptive behavior, cognition, hearing, and growth
trajectory. In addition, robust and sustained responses in
biomarkers of neuronal health (e.g., CSF heparan sulfate,
neurofilament light (NfL)) and peripheral activity (e.g., urine
heparan sulfate and dermatan sulfate) were observed. DNL310
continued to be generally well tolerated.
- Participated in the Reagan-Udall Foundation for the Food and
Drug Administration (FDA) workshop that brought together FDA
representatives, patient advocates, clinical and basic science
researchers, and industry to explore a case study of CSF heparan
sulfate as a relevant substrate biomarker to support accelerated
approval in neuronopathic mucopolysaccharidoses (MPS).
- Enrollment continues in the global Phase 2/3 COMPASS study and
is expected to be completed in 2024.
DNL343: eIF2B activator in development for the
treatment of amyotrophic lateral sclerosis (ALS)
- Enrollment continues in Regimen G (DNL343) of the Phase 2/3
HEALEY ALS Platform Trial and is expected to be completed in
2024.
SAR443820/DNL788: CNS-penetrant RIPK1 inhibitor
in development for the treatment of multiple sclerosis (MS)
- As previously announced, Sanofi informed Denali that the Phase
2 HIMALAYA study evaluating SAR443820/DNL788 in participants with
ALS did not meet the primary endpoint of change in ALS Functional
Rating Scale-Revised (ALSFRS-R). Sanofi intends to present the
detailed efficacy and safety results of the ALS Phase 2 HIMALAYA
study at a future scientific forum.
- Sanofi is evaluating SAR443820/DNL788 in another Phase 2
clinical trial in participants with MS, and the outcome of HIMALAYA
study has no impact on the ongoing MS study.
BIIB122/DNL151: LRRK2 inhibitor in development
for the treatment of Parkinson’s disease (PD)
- Today Denali also announced the execution of a Collaboration
and Development Funding Agreement in January 2024 with a third
party related to a global Phase 2a study of BIIB122/DNL151, which
Denali plans to solely operationalize to evaluate safety and
biomarkers associated with BIIB122 in participants with Parkinson’s
disease and confirmed pathogenic variants of LRRK2. This agreement
includes committed funding of $75.0 million, of which $12.5 million
was received in January 2024, and the remainder will be triggered
based on time and operational milestones in the study. Biogen will
continue to conduct the ongoing global Phase 2b LUMA study in
early-stage Parkinson’s disease. Denali and Biogen will
co-commercialize BIIB122/DNL151 assuming regulatory approval. The
third party will be eligible to receive low single-digit royalties
from Denali on annual worldwide net sales of LRRK2 inhibitors for
the treatment of Parkinson’s disease, with royalty amounts varying
based on the scope of the label.
Eclitasertib (SAR443122/DNL758): Peripheral
RIPK1 inhibitor in development for the treatment of ulcerative
colitis (UC)
- Sanofi is conducting the Phase 2 trial of SAR443122/DNL758 in
UC.
Early-stage clinical and preclinical
programs
DNL126: ETV-enabled N-sulfoglucosamine
sulfohydrolase (SGSH) replacement therapy in development for the
treatment of MPS IIIA (Sanfilippo syndrome Type A)
- Initiated dosing in the Phase 1/2 study of DNL126 in MPS IIIA;
biomarker proof of concept and safety data are expected by the end
of 2024.
- Presented preclinical data at
WORLDSymposium™ demonstrating that DNL126 improves lysosomal
and microglial morphology, neurodegeneration, and cognitive
function in adult MPS IIIA mice.
TAK-594/DNL593: Protein Transport Vehicle
(PTV)-enabled progranulin (PGRN) replacement therapy in development
for the treatment of frontotemporal dementia-granulin (FTD-GRN)
- Announced Part B has been voluntarily paused in the DNL593
Phase 1/2 study in participants with FTD-GRN to implement protocol
modifications, and is expected to resume this year.
Oligonucleotide Transport Vehicle (OTV)
platform
- Announced two lead OTV programs in the investigational new drug
(IND)-enabling stage of development: OTV:MAPT targeting tau for
Alzheimer’s disease and OTV:SNCA targeting alpha-synuclein for
Parkinson’s disease.
Antibody Transport Vehicle Amyloid beta (ATV:Abeta)
program
- ATV:Abeta using Denali's TfR-targeting TV technology is
licensed by Biogen and is in the IND-enabling stage of
development.
- Presented preclinical data showing superior amyloid plaque
binding and reduction with ATV:Abeta compared to a conventional
Abeta antibody and the potential for ATV:Abeta to reduce the risk
of amyloid-related imaging abnormalities (ARIA) associated with the
treatment of Alzheimer’s disease.
Discovery programs
Denali continues to use deep scientific expertise in
neurodegeneration biology and the BBB to discover and develop
medicines and platforms with the focus on programs enabled by the
TV technology and targeting neurodegenerative disease, including
Alzheimer’s and Parkinson’s, and lysosomal storage diseases.
- Announced the second TV platform,
which targets CD98 heavy chain (CD98hc), an amino acid transporter
expressed at the BBB. The CD98hc-targeting TV platform, having
distinct properties from Denali's TfR-targeting TV platform, may
enable selection of the optimal platform for a given drug
target.
Corporate Updates
- Announced entering into a securities purchase agreement with
certain existing accredited investors to issue and sell an
aggregate of 3,244,689 shares of Denali's common stock at a price
of $17.07 per share and pre-funded warrants to purchase an
aggregate of 26,046,065 shares of Denali's common stock at a
purchase price of $17.06 per pre-funded warrant, through a private
investment in public equity (PIPE) financing. Denali anticipates
the gross proceeds from the PIPE to be approximately $500
million.
- Announced the intention to spin out the company's preclinical
small molecule portfolio. Denali will maintain ownership of and
continue to advance its current portfolio of clinical stage small
molecule programs. The decision was made based on clinical
validation and prioritization of Denali’s TV-enabled platforms for
brain delivery of large molecules.
2024 Guidance on Operating Expenses:
Cash, cash equivalents, and marketable securities were
approximately $1.03 billion as of December 31, 2023. For the
full year 2024, Denali anticipates its operating expenses will be
less than or equal to those in 2023 based on prioritization of its
portfolio. With the anticipated proceeds from the PIPE financing,
Denali expects the company’s cash runway to extend into 2028.
Participation in Upcoming Investor
Conferences:
- Cowen 44th Annual Health Care
Conference, March 4-6
- Leerink Global Biopharma Conference, March 11-13
- Jefferies Biotech on the Bay Summit, March 12-13
- Stifel 2023 CNS Days, March 19-20
Fourth Quarter
2023 Financial Results
Net losses were $119.5 million and $145.2 million for the
quarter and year ended December 31, 2023, compared to net losses of
$98.7 million and $326.0 million for the quarter and year
ended December 31, 2022, respectively.
There was no collaboration revenue for the quarter ended
December 31, 2023, compared to $10.3 million for the quarter
ended December 31, 2022. Collaboration revenue was $330.5 million
for the year ended December 31, 2023, compared to $108.5 million
for the year ended December 31, 2022. The decrease in collaboration
revenue of $10.3 million for the quarter ended December 31, 2023,
compared to the comparative period in the prior quarter was
primarily due to a decrease of revenue earned under the Sanofi
Collaboration of $10.0 million for a milestone triggered in
December 2022 upon first patient dosed in a Phase 2 study of
SAR443122/DNL758 in individuals with UC. The increase in
collaboration revenue of $222.0 million for the year ended December
31, 2023 compared to the previous year was primarily due to $293.9
million in revenue recognized in April 2023 under the Biogen
Collaboration Agreement as a result of Biogen exercising its option
to license our ATV:Abeta program, partially offset by a decrease of
$41.9 million in revenue earned under the Takeda Collaboration
Agreement, as well as a decrease of $28.4 million in milestone
revenue earned under the Sanofi Collaboration Agreement. The
decreases in revenues from the Sanofi and Takeda Collaboration
Agreements are due to the timing of underlying activities and
achievement of milestones under the collaboration agreements.
Total research and development expenses were $107.8 million and
$423.9 million for the quarter and year ended December 31, 2023,
compared to $92.1 million and $358.7 million for the quarter
and year ended December 31, 2022, respectively. The increases of
approximately $15.7 million and $65.2 million for the quarter
and year ended December 31, 2023 compared to the comparative period
in the prior year were primarily attributable to increases in
ETV:IDS and eIF2B program external expenses reflecting the
continued progress of these programs in clinical trials; and an
increase in personnel-related expenses mainly driven by increased
salary costs as a result of higher headcount. Furthermore, net cost
sharing with collaboration partners shifted from reimbursements to
payments due to decreased reimbursements from Takeda and increased
payments to Biogen. These expense increases were partially offset
by decreases in TV platform and other program external expenses,
PTV:PGRN program external expenses and other external research and
development expenses due to the timing of significant external
research and manufacturing related activities period over period,
and LRRK2 program external expenses due to the transition of LRRK2
clinical activities to Biogen. Further, for the quarter ended
December 31, 2023, there was also a decrease in other unallocated
research and development expenses as a result of reduced facility
costs.
General and administrative expenses were $24.8 million and
$103.4 million for the quarter and year ended December 31, 2023,
compared to $23.5 million and $90.5 million for the quarter
and year ended December 31, 2022, respectively. The increases of
approximately $1.3 million and $12.9 million for the quarter and
year ended December 31, 2023, respectively, were 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 was an increase in facility and other corporate
costs for the year ended December 31, 2023 associated with the new
Salt Lake City manufacturing facility.
Cash, cash equivalents, and marketable securities were
approximately $1.03 billion as of December 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; statements
made by Denali’s Chief Executive Officer; plans, timelines, and
expectations regarding DNL310 and the ongoing Phase 2/3 COMPASS and
Phase 1/2 studies as well as the timing of approval; plans and
timelines regarding DNL343, including enrollment for Regimen G of
the Phase 2/3 HEALEY ALS Platform Trial; plans, timelines, and
expectations of both Denali and Sanofi regarding DNL788, including
the Phase 2 study in MS and the timing of data in the Phase 2 study
in ALS; plans, timelines, and expectations regarding DNL151,
including with respect to the ongoing LUMA study as well as
enrollment and timing of the proposed Phase 2a study in PD patients
with LRRK2 mutations, the potential for commercialization, and the
achievement of milestones under the third-party agreement;
expectations regarding DNL758, including the ongoing Phase 2 study
in patients with UC; plans, timelines, and expectations related to
DNL126, including the timing and availability of data in the
ongoing Phase 1/2 study; plans, timelines, and expectations of both
Denali and Takeda regarding DNL593 and the ongoing Phase 1/2 study,
including the implementation of protocol modifications and timing
of continuation of the study; plans, timelines, and expectations
regarding the advancement of OTV candidates towards clinical
development; plans, timelines, and expectations of both Denali and
Biogen regarding the ATV:Abeta; plans and expectations for Denali's
preclinical programs and the CD98hc-targeting TV platform; Denali's
future operating expenses and anticipated cash runway; Denali's
PIPE financing, including the number of shares and warrants and the
anticipated proceeds; and Denali's participation in upcoming
investor conferences. 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; 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;
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; 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 November 7,
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 December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Collaboration revenue: |
|
|
|
|
|
|
|
Collaboration revenue from customers(1) |
$ |
— |
|
|
$ |
10,260 |
|
|
$ |
330,531 |
|
|
$ |
105,065 |
|
Other collaboration revenue |
|
— |
|
|
|
23 |
|
|
|
— |
|
|
|
3,398 |
|
Total collaboration revenue |
|
— |
|
|
|
10,283 |
|
|
|
330,531 |
|
|
|
108,463 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development(2) |
|
107,803 |
|
|
|
92,111 |
|
|
|
423,876 |
|
|
|
358,732 |
|
General and administrative |
|
24,769 |
|
|
|
23,516 |
|
|
|
103,354 |
|
|
|
90,475 |
|
Total operating expenses |
|
132,572 |
|
|
|
115,627 |
|
|
|
527,230 |
|
|
|
449,207 |
|
Loss from operations |
|
(132,572 |
) |
|
|
(105,344 |
) |
|
|
(196,699 |
) |
|
|
(340,744 |
) |
Interest and other income,
net |
|
13,129 |
|
|
|
6,660 |
|
|
|
51,505 |
|
|
|
14,774 |
|
Loss before income taxes |
|
(119,443 |
) |
|
|
(98,684 |
) |
|
|
(145,194 |
) |
|
|
(325,970 |
) |
Income tax benefit
(expense) |
|
(30 |
) |
|
|
6 |
|
|
|
(30 |
) |
|
|
(21 |
) |
Net loss |
$ |
(119,473 |
) |
|
$ |
(98,678 |
) |
|
$ |
(145,224 |
) |
|
$ |
(325,991 |
) |
Net loss per share, basic and
diluted |
$ |
(0.86 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.06 |
) |
|
$ |
(2.60 |
) |
Weighted average number of
shares outstanding, basic and diluted |
|
138,245,382 |
|
|
|
132,877,411 |
|
|
|
137,370,897 |
|
|
|
125,530,703 |
|
__________________________________________________
(1) Includes related-party collaboration
revenue from customers of $0.3 million for the quarter ended
December 31, 2022, and $295.5 million and $3.2 million
for the year ended December 31, 2023 and 2022, respectively. There
is no related-party collaboration revenue from customers for
quarter ended December 31, 2023(2) Includes
expenses for cost sharing payments due to a related party of
$3.2 million and $17.7 million for the quarter end year
ended December 31, 2023, respectively, and $4.4 million and
$8.2 million for the quarter and year ended December 31,
2022.
Denali Therapeutics Inc.Condensed
Consolidated Balance Sheets(Unaudited)(In
thousands)
|
December 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
127,106 |
|
$ |
218,044 |
Short-term marketable securities |
|
907,405 |
|
|
1,118,171 |
Prepaid expenses and other current assets |
|
29,626 |
|
|
36,104 |
Total current assets |
|
1,064,137 |
|
|
1,372,319 |
Property and equipment,
net |
|
45,589 |
|
|
44,087 |
Operating lease right-of-use
asset |
|
26,048 |
|
|
30,437 |
Other non-current assets |
|
18,143 |
|
|
13,399 |
Total assets |
$ |
1,153,917 |
|
$ |
1,460,242 |
Liabilities and
stockholders' equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
9,483 |
|
$ |
2,790 |
Cost sharing payments due to related party |
|
— |
|
|
4,388 |
Accrued expenses and other current liabilities |
|
68,499 |
|
|
66,691 |
Related-party contract liability, current |
|
— |
|
|
290,053 |
Total current liabilities |
|
77,982 |
|
|
363,922 |
Related-party contract
liability, less current portion |
|
— |
|
|
479 |
Operating lease liability,
less current portion |
|
44,981 |
|
|
53,032 |
Other non-current
liabilities |
|
— |
|
|
379 |
Total liabilities |
|
122,963 |
|
|
417,812 |
Total stockholders'
equity |
|
1,030,954 |
|
|
1,042,430 |
Total liabilities and
stockholders’ equity |
$ |
1,153,917 |
|
$ |
1,460,242 |
|
Investor and Media Contact:
Laura Hansen, Ph.D.Vice President, Investor Relations(650)
452-2747hansen@dnli.com
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