We're going to get started on our next session. I'm Andrew Tsai, senior biotech analyst at Jeffries.
Thanks for joining me, and it's my pleasure to have Ryan Watts, CEO of Denali, joining me today. Welcome, Ryan.
Yeah, great to be here, Andrew.
Of course. So for those in the audience less familiar with the story or revisiting the story, can you maybe help us level set where Denali is, what programs you might be working, there's a lot, But what programs you're working on and the milestones over the next 12, 18 months could be very helpful.
Thanks. Thanks, Andrew. It's great to be here. And definitely a lot has happened at Denali in the last year in particular, especially with our recent approval of Avala a little more than two months ago. And so just as a little bit of a background, we set out to solve, I think, one of the bigger challenges in drug development, development, which is the blood-brain barrier, inventing medicines that readily cross the blood-brain barrier, especially biologic medicines. It's an area where 11 years ago, in the founding of Denali, not many companies were working. In fact, I think it was in the late 1980s when the first idea of engineering a molecule to cross the blood-brain barrier using some type of natural transporter was proposed, but it's taken from that point until now to actually get the first FDA-approved medicine. So, over the last 11 years, we've invented a platform which we call the transport vehicle platform. It's one of these broader categorically brain shuttle technologies using a natural transporter known as transferrin receptor to cross the blood-brain barrier. And, you know, looking back now just 11 years ago in the founding of Denali and 20 years ago when we first started working on blood-brain barrier technologies, it's amazing to see how this space has so rapidly evolved and is quickly becoming, I think, the next really hot area in biotherapeutics. For us, the proof of concept was in enzyme replacement therapy, and I think the reason we chose that as the first place is that enzymes have had a very high success rate. There are, you know, a number of enzymes that have been approved, I think about 85 percent success rate in developing enzymes for enzyme replacement therapy, but those enzymes do not treat the neurologic manifestation of disease, and Hunter syndrome was the first of now a number of areas that we're going to test this hypothesis that we can take an existing enzyme, engineer it to cross the blood-brain barrier, and effectively treat neurologic manifestations, but also whole body, and that's going to be important as we talk about Avala and its differentiation from potential standard of care. So we set out to do that 11 years ago, and for me it's been a 20-year journey working on blood-brain barrier technologies, and so the approval on March 24th was, I think, a really key step for us. But that approval, you know, is just the beginning, obviously, especially for the patient community. But within two weeks, we had, you know, filled the channel, as we call it, and within three and a half weeks, the first patient was dosed in the commercial setting. And so we were ready to go and have been very excited about the launch of Ablea. I think the reaction from the patient community has been two-fold. The first is great enthusiasm. It's the first medicine in 20 years. It's ironic, 20 years ago we started working on blood-brain barrier, and then it took 20 years to get the first approved medicine that treats neurologic manifestations and the whole But also a little bit of disappointment because there's an adult segment in which the label does not cover. And so a lot of enthusiasm broadly throughout the patient community, so what we've seen is, you know, pretty significant engagement from prescribers and, you know, obviously key opinion leaders and families, and it's been a really exciting time at Denali. So that's where we are today. So the question is what's next, and I think the next six to 12 months is also very data-rich. We have, we'll have our second BLA filing for San Filippo. We also have began studies in Pompe disease, so this is another enzyme replacement therapy, therapy, and then we have a progranulin replacement therapy, so very similar to enzyme replacement therapy, so a number of medicines. Those are moving forward. I'll put those categorically in the enzyme franchise, but also what we have to think about is the next big wave, and for us it's Alzheimer's disease. We're now dosing patients with a MAPT oligonucleotide, which suppresses the expression of MAPT, which leads to a reduction in tau protein expression, and we'll soon begin testing in the clinic, our own A-beta antibody using the transport vehicle technology. And so, if you think about the next 6 to 12 months, you're going to be seeing data across the enzyme platform, but also now in the broader neurodegenerative diseases, and specifically Alzheimer's disease. And it's just worth mentioning that that is the ultimate goal, I think, of Denali, is to defeat degeneration, to focus on the neurodegenerative diseases, ultimately, but we also believe of the enzyme franchise is a great foundation to begin building our commercial footprint.
Great, so again, congratulations on the approval. It's a huge milestone. And so you mentioned you're differentiated because you can cross the brain, BBB benefit clinical manifestation. So as we think about the standard of care starting with Hunters with this launch, Aliprice, I think they're doing 700 million worldwide sales. So how are you superior, long story short, to that product?
So we obviously have a head-to-head study ongoing now. That's the COMPAS study, which is the Phase III confirmatory study for accelerated approval. But I think it's worth noting, and this data was published in the New England Journal at the beginning of the year, the vast majority of patients in that Phase I, II study switch from Eliprase to Avalea or Tividenifusp Alpha at the time. And basically, what we see is, obviously, the most striking is the normalization of cerebral spinal fluid, heparin sulfate. That's evidence of crossing the blood-brain barrier. We subsequently see the normalization of neurofilament, which is a marker of neurodegeneration. So that's highly differentiated. And so recall that most of these patients are on standard of care, but they have elevated heparin sulfate in CSF and in brain. But what's also striking to us is that we can also see a robust reduction in peripheral heparin sulfate. So I think that basically tells you that we're based on our dose and also biodistribution that the biomarkers of both the central nervous system but also the periphery are enhanced with the medicine. And so this is important. And I think we had an important decision to make early on with Ablea, which was around dose. dose, and part of it was I think most enzyme replacement therapies experience what are called anti-drug antibodies, they're recognized as foreign, this is well-known, and fusion wave reactions are the most common adverse effect for all of these medicines, and often I think are limiting for dose, but we made the decision, especially because of our architecture, which is an FC fusion, to really push dose, and the goal here was to get not just superior superior brain exposure, but also, ideally, superior reduction in peripheral biomarkers as well, which we believe will ultimately lead to a broader clinical benefit.
And so, you've launched dose-to-first patient in April, where in June, I must ask how many patients, to the extent you can share, how many patients have you dosed, I guess, with Avilaia, and are they coming from Eliprase, or are they naïve patients?
Yeah. So, I was thinking about this particular question, which we get often. I mean, it's so early in the launch. It's like nine weeks since approval, although it feels like a year ago now, now immediately becoming a commercial company. What we can say is that we, the interest has exceeded our expectations. So, maybe that shouldn't be surprising. We are debating, you know, what are the right metrics to share at the right time to basically provide meaningful data to be able to predict the future of this medicine. I think for now, what we've seen is just great enthusiasm across all patient segments. So there are those who are newly diagnosed, which come in, as you know, there are about 500 patients in the U.S. and 2,000 worldwide, but especially switch. So, in many ways, this is a switch market, and all patients are, generally speaking, known, at least by age three or four, and what we're seeing is a pretty significant interest in switching to Avala. But I'd say stay tuned on exact numbers. I think we're just, you know, we're gathering the information now and looking forward to, hopefully, a very successful launch.
And you mentioned earlier, in the community, there's a slight disappointment that the label does not cover all 500 patients in the U.S. So, what does your, what proportion of those 500 U.S. patients does your label cover?
Dr. So, it covers 70 to 75 percent of the population today. So, it's the pediatric population. And if you think about, actually, Hunter syndrome, it's about 70 plus percent that have severe mutations that invariably lead to severe neurologic impairment. But But what's been interesting and I think very striking is that neurologic manifestations is seen throughout the entire spectrum of disease, even in what we call attenuated patients. Good example of that is hearing loss, and that's one of our most striking, I think, data points that was published in the New England Journal was improvement in hearing. And so, what the community generally understands is that this, in the label where it states neurologic manifestation, which is linked to the CSF heparin sulfate as the biomarker for accelerated approval, that that basically represents essentially all patients. At some point in disease, we'll have a neurologic manifestation if it's behavioral, sleep disturbances, And so, but the label itself covers roughly 75 percent of the existing population, so very significant.
And in the meantime, like you said, you're running a confirmatory study called With COMPASS, I think the data reads out second and half, 2027. That's a head-to-head study versus alloprase. That should also, you know, not only can you prove superiority, but I think it can confirm it opens the door to all 100 percent of the U.S. population.
Marc Williams Yeah, that is the goal of COMPASS, ultimately, and they're two cohorts. They're those that are sort of, I would say, categorically severe neurologic, and then those that have been categorized as attenuated against, again, all of which experiencing seeing neurologic manifestations, the attenuated patients are generally adult patients. So in the phase one, two, we did not enroll any adult patients, although now there are patients who are, you know, by definition adult that are on Avilaia because they began, you know, treatment at, let's say, age 14 or 15, and now they're 17 or beyond. So that is the goal of, ultimately, of COMPASS, but I think really where COMPASS has its greatest value is likely XUS, as in Europe and unlocking Europe, where it's not just biomarkers that drive approval, but also the correlated clinical benefit that's observed.
And totally understood, your sales reps cannot market superiority, but any AJM article is quite compelling. Is there any way some personnel on your team can flag that to people to convince physicians, patients that you, you know, you have a differentiated product? I don't know how it
works. Yeah, so I think the most important thing for us is when you look at the label is the fact that nine out of ten patients have normalized CSF heparin sulfate. I always worry about the tenth patient. In this case, they also have like 85% reduced CSF heparin sulfate, so it's just near normalization. That's a really important piece is that there's no other medicine that has has shown that level of heparin sulfate reduction and clearly normalization in cerebrospinal That also points to the broader validation of the transport vehicle technology. So for us, we can just focus on really the data that we have, and it's a very distinct profile from standard of care.
And in terms of, so there's one volume, and then there's price as it relates to sales. So, on the pricing side, can you give us a sense of, just based on the average patient, this is weight-based dosing, so the average patient on Avlaio, how much it could cost per year, and how that would compare to the average price per year for Elipris?
So, the whole cell acquisition cost is $5,200 per 150 megavial, so this is the vial. Most patients will need two to three vials per infusion, depending on weight. So, if you do the math, a 10-kilogram patient will be about $270,000 per year, and a 30-kilogram patient will be roughly $800,000 per year. So that's, you know, obviously, that's the exact pricing dynamic. The medicine is priced at a premium, recognizing the invention and the fact that we're treating not just whole body, but also the brain, which is, I think, a key step here. It's also priced in line with more recent enzyme replacement therapies that have launched. And just if you're doing the math, the roughly 30 kilogram price for Eloprase is about $500,000 per year.
Okay, very clear. Thank you. And so gross to net, any color around that? Inventory build for Q2, any color around that?
Yeah, so again, I think it's very early days. It depends on the payer, obviously Medicaid versus private pay, you know, payers. We've, we're just, policies are being put in place now, you know, just reminding myself that we got approval nine weeks or so ago. And so just say, stay tuned. But you know, the math is the math. If you know the 340B, you know, institutions and the discount that's required, you can do that math. It depends on if it's pediatric only or adult, but you can start, I mean, that'll make sense over time, definitely, as we launch and you see more data. I would not over-index on 2026. This is the foundation-building year for the launch. We're excited and we're enthusiastic, certainly by the interest in the community, but it's going to take time, especially as you get payer policies in place.
Well, things seem to be in the right direction, so congratulations. So then shifting to Sanfilippo, then the next leading program that you have, you're filing next year, that's contingent upon full 20 patient worth of data. And my understanding is all those patients should complete around September of this year. When would the data be released, though?
Yeah, so the data cut is not too dissimilar from when we had the data cut for the filing for Avala in the sense that we got data sometime in September, October, you know, obviously go through the database lock, cut, evaluation, or we're aiming towards a world presentation would be February of next year and then filing next year. Right now, the rate limiting step for us is manufacturing. We made the decision to onshore this manufacturing, so Avalea is, you know, manufactured by Lanza and DNL126 for Sanfilippo. We will manufacture ourselves, even commercial product here in the U.S., which we're very excited about. That's the key there. The, you know, as we've reported previously, and we'll probably get into some detail, on average we see about 80 percent reduction of heparin sulfate. We also can achieve normalization, both in heparin sulfate, but also downstream biomarkers of lysosomal dysfunction. What's distinct about Sanfilippo is that it is largely a CNS disease, more than Hunter So, there is components of peripheral disease, but it's mainly CNS. And it is a very rapidly and aggressive degenerative disease, especially with the complete loss of function mutations. And so even like at the volumetric level, when you look at MRI, you already see patients before you begin dosing have pretty significant volumetric loss. And so I think with Sanfilippo, we need to get a drug approved, and then it's going to be about newborn screening to just get there as early as possible to see a huge benefit in these patients. Hunter doesn't have the same volumetric loss. The reason I just state that is that in addition, heparin sulfate is actually two times higher in San Filippo in brain than it is in Hunter syndrome, and probably is where SGSH is expressed versus Ida sulfates. Interestingly, we're both looking at heparin sulfate as this class of MPS diseases, and so we're really enthusiastic about the initial data. The 20 patients will complete the 49-week point in September, and then we'll begin, you know, looking at that data and preparing for filing and presentation in in in 2027 at world okay thank you and we've discussed before
the next batch of technically the remaining 12 patients um to be presented at world our dose at a higher dose we should get better efficacy so to me the likelihood of success is very high for to support an accelerated approval so and i think just a point related
to that if you look at our world presentation from this year it's what we did with the first eight patients, it was all about dose finding. It was dose frequency, dose finding, dose levels, and so we started with every other week dosing, and I think it was really striking is that with enzyme replacement therapies, specifically with SJSH, the drug is better tolerated with weekly dosing. It tells you something about building tolerance, and so having more frequent dosing and having drug on board was an essential learning from that initial study. We then kind of went to what we thought would be the optimal dose to weekly dosing, but many of the patients weren't really at that dose when we took the data, cut it, and presented So at this point, obviously with the 12 additional patients, we'll be using that optimized dose regimen.
And help us frame the patient sample size in the U.S., the peak sales opportunity relative
I think it's similar to Hunter. the difference is there is no standard of care and as a result not all patients are identified like you have with hunter syndrome and so there's no existing enzyme replacement therapy in part because it's a largely neurologic disease and so standard ERTs are not treating the very rapidly progressing degeneration that is observed in san philippo nice but we think the numbers will be will be roughly similar maybe a bit smaller it depends on whose epidemiology you're reading but But obviously having an approved medicine will be really important in this disease area.
And so because there's no approved medicine, as we think about the confirmatory study, that I believe you said you're going to start later this year. Is that still the plan?
So we're in startup mode right now. We've been using the word start. We were selected as, you know, for the start program by the FDA, which is quarterly engagement with the FDA around designing the phase three. We think that's very important. And obviously, again, with no standard of care, the dynamic is different than what we've designed for Compass. And so I'd just say with that, stay tuned. We continue to engage with the FDA, but we're definitely in study startup mode for the Phase 3 for San Filippo.
And so because of no standard of care, there is this potential, maybe, to be an open label rather than a placebo control, which maybe means you can enroll pretty fast and generate the data pretty fast.
Yeah, I think what's implied in that question is that patients are excited to join trials where they know they're gonna get active drug, and that's generally true, and certainly that's been the case with the phase one twos for both of these studies, for both of these medicines, for both Avala and for one, two, six.
Okay, very good. And so I guess later this year, you'll have a progranulin readout, shifting gears in FTD dementia, up, and it's, I would just like to know what exactly are you seeing with, what do you want
to see to move forward, basically, in the study? So our sort of hypothesis with FTD granulin is that it's a progranulin replacement therapy. So take what we've just talked about with Hunter and San Filippo, and now apply that to FTD, where you have a loss of function, although it's a single-copy loss of function. And so, you know, we published a paper in 2021 in Cell describing the mechanism of progranulin in the lysosome and associated lysosomal biomarkers. And so, here we'll be looking at a panel of biomarkers around lysosomal function, both those are what I call the proximal biomarkers, and then also distal biomarkers like NFL. Our experience with NFL, you can see it in the New England Journal paper, is that at least, and actually for most lysosomal stores, it takes some time. So, at six months, we didn't see a reduction, but by 12 months, we were clearly seeing a reduction, and then by 18 months, you know, we're just starting to see patients that normalize. So those are the distal biomarkers, both of which are going to be important also in FTD granulin. I think, one, if you look at that paper, the only cautionary note is that the signal to noise for biomarkers with a single loss of, a single copy loss of function is not as great than with the enzyme replacement therapies and some of these MPS diseases. And so, you know, we don't have huge patient numbers, but we do have more than, let's say, like eight patients or so, which we had in the original LSD studies. And so, anyway, so that's, those are the biomarkers. That's what we'll be looking at end of year in cohort B3.
Okay, great. And so, I do want to spend some time on top. But before that, you recently had a LARCH2 update for Parkinson's or a LARCH2. Unfortunately, it failed, but to many people, maybe not too surprising because it did evaluate a broad Parkinson's population, not necessarily just LARC-2 specific. By chance, did you happen to see a signal, though, in that LARC-2 specific population? Or else, why continue on this other study that you have, Beacon, to completion, which is evaluating LARC-2 specifically?
So it's interesting. We talked about the last 20 years working on blood-brain barrier. We also, in parallel for 20 years, have been working on LARC-2, which was first described in 2004, so I guess 22 years ago. This is the first medicine to test LARC-2 in idiopathic Parkinson's disease. This is the, like, let's call it the home run study. What we saw is robust inhibition in periphery and brain, and I think it's important to look at the biomarkers that we use to assess that. So one is phosphoserine 1292, or I guess it's 935 or something. We, that particular biomarker, we saw greater than 90 percent inhibition in the periphery. In brain, we use phosphorab. And the reason we use phosphorab is the same biomarkers you can't actually measure in CSF. And in a LARC2 knockout, phosphorab is reduced 40 percent. So 100 percent inhibition of phosphorab is roughly a 40 percent inhibition. So we're achieving, you know, greater than 30 percent inhibition of phosphorab. So again, probably about 90 percent inhibition. So, we think it's a good test of the LARC-2 hypothesis in idiopathic Parkinson's. The study itself only enrolled 11 LARC-2 carriers, so it's too few. In fact, it really only 10 that have full data sets. One was from the original Lighthouse study, and so we don't have enough data to be able to determine if there's a signal or not in LARC-2, so that's a very specific answer to your question. I think five placebo, five treated with data. The Beacon study is only LARC-2 carriers, 50 patients enrolled, but I think importantly there, it's focused on LARC-2 specific biomarkers. And so we want to read, that data we'll read out by the end of the year, and we'll understand where we're at from really the target engagement perspective with the medicine. It is not designed to look at UPDRS, unlike this 650 patient study, the LUMA study, which was powered for clinical efficacy.
I see. Thank you. And then finally, then shifting gears to your Alzheimer's portfolio of a tau and a beta, like you said. Starting with the tau, it's pretty interesting. Biogen just shared their own tau intrathecal, given intrathecally. I think you have an IV version, and so what is going to be the exact dosing frequency of your IV? And is there a possibility to even go to sub-Q over time with the Tau?
I mean, we could have started here. There's so much to talk about in Alzheimer's disease. And certainly, if you look at our portfolio, the most competitive area is Tau and A-beta, not surprisingly, using the transport vehicle technology. So, DNL 628 is what we call OTV MAP-T, and OTV is oligo transport vehicle. It's delivering an antisense oligo to MAPT, delivered IV and or sub-Q. The ultimate goal will be sub-Q delivery for these medicines. We're obviously, again, optimizing dose, therefore IV is the best place to start. And our goal there is to see tau reduction with a systemic delivery of an oligonucleotide. And I think the recent data from Biogen is very encouraging. I think it's like early days A-beta, where you're looking for a correlation between reduction in some pathological marker, in this case it would be tau or tau imaging, leading to some correlation with clinical benefit. I think the numbers are small, so probably looking at, you know, all treated patients pooled. The biggest difference between the intrathecal delivery and the systemic delivery is the difference in biodistribution. So with intrathecal, this is our own data, but also data presented by Biogen and others, you have basically pretty significant heterogeneity from patient to patient, but also within the brain. So a lot of intrathecal delivery, you get great delivery around areas that are adjacent to cerebrospinal flu, but not into deeper brain regions. When you deliver with transport vehicle technologies, you can actually cross capillary beds, and we've shown this even distribution and even knockdown of expression. So we think that will dramatically reduce the heterogeneity. And also, we don't, like when we look at monkeys that are treated with OTV, we have even from monkey to monkey the same distribution in the brain, whereas when we do intrathecal, some monkeys will get good brain distribution, some will get less, some will get none. And even when you're injecting it intrathecally, there's pretty significant variability.
So aside from the dosing convenience, you saturate the brain better, I guess, that could lead to better efficacy overall, more patients respond.
Yeah, and when you think where tau pathology exists in, you know, entorhinal cortex, hippocampus, ultimately cortex, there's an unevenness about the adjacency to cerebral spinal fluid. And so it's better to have a technology that gives you that even distribution.
I guess there's a debate in the community. Is it your view stronger tau reduction leads to greater cognitive benefit? Is there too much tau reduction?
Well, I mean, if anything, what you saw from the biogen data is that, you know, again, and taking it at face value, the lowest dose had the greatest benefit. That's probably because the lowest dose had the fewest number of patients and subject to the most heterogeneity would be kind of my explanation, but let's wait until we see the totality of the data. But the reality is that there doesn't seem to be a dose response. So if the higher dose is giving you more tau reduction, it's not necessarily leading to better cognitive benefits. So I just think it's too early to make sense.
We'll just wait for the data in July.
And probably need more data.
And so, then A-beta, also starting phase one. This is interesting. So, the Tau, I think you're starting, you're doing phase one in actual patients, and then the A-beta, I think you're starting sad doses in healthy volunteers first, then mad dosing in actual patients. All of the data is in 2027, but in healthies, what exactly do you want to see? Why is that important?
Yeah, so I think we published a paper in Science last year in August that describes our approach to A-beta, and there are two major differentiators. One is, again, the biodistribution that leads to even plaque reduction and less, you know, ARIA-like effects in mice and hopefully in humans, so less vasogenic edema, which is one of the limiting factors, right? The other is we engineered the molecule to be immune silent when bound to transferrin receptor, and as a result, it preserves any reticulus sites that express very high levels of transferrin receptor. So the advantage of doing a healthy volunteer study is we can very rapidly test that first hypothesis or the second hypothesis around retics, in particular in hematology, and then we can rapidly move to patient studies and look at plaque reduction. So the ultimate goal for differentiation is a safer, ultimately sub-Q delivery with robust plaque reduction. that's what we're trying to achieve with atva beta dnl921 right okay i think that's all the
time we have but i look forward to connecting with you in a few months and then we'll talk again but
thank you everyone for listening