Denali Therapeutics Inc. (DNLI) Earnings Call Transcript & Summary

Thanks very much. It's my pleasure to be moderating this chat with Ryan Watts, Founder and CEO of Denali Therapeutics. I'm sure most folks know the company well, but Denali just provided a great update on a number of programs. So Ryan, maybe you can kind of go through that and set the stage, and then we can do Q&A.

Yes. Great. Paul, great to be here in New York with you at this conference. It's a very exciting time for Denali. I think as some of you may know, we founded Denali to do two things. One was to cross the blood-brain barrier and to develop technologies to get medicines in the brain and the second was to defeat degeneration. So setting that long-term vision. And I think this last quarter is an example of a lot of progress across our pipeline, including our late-stage programs and several new programs, including new modalities entering the clinic with regulatory filings. And so just as a bit of background, our technology is known as the transport vehicle technology, which is part of a broader class of brain shuttles. And the key here is using the natural mechanisms at the blood-brain barrier to get basically molecules into the brain. And in our case, at least the lead programs are using transferrin receptor, which I think has now been validated as a path to the central nervous system. We have three franchises. We have the enzyme transport vehicle franchise where now I'd say our fourth medicine is entering clinical trials in Pompe. The lead program is in Hunter, where we have a BLA that's under review right now. We have a Sanfilippo program, which we plan to file for accelerated approval. That's important. And then we have a progranulin program, which we put categorically in our enzyme franchise because it's a protein replacement therapy. The approach is very similar, and that's for FTD granulin. And as I mentioned before, the fourth one is in Pompe. I think very excitingly, we have our first oligonucleotide molecule now entering the clinic. And I know, Paul, you and I have been discussing this for 4 years. I believe, although I can't say definitively that we are the first ones to show that you can get an oligonucleotide across the blood-brain barrier using transferrin receptor, using the transport vehicle. And this is a really exciting class of medicines. Now I wish we were the only ones doing it. It became highly competitive within the last couple of years, others using their technologies. Our first program is targeting MAPT, which is the gene that codes for tau. And so we're excited to have filed that program. And then I'll just comment that we're close to filing our second Alzheimer's program for amyloid beta. So I think ultimately, you see a span between rare diseases like Hunter and common diseases like Alzheimer's, but the uniform relationship is using the transport vehicle technology to get distribution throughout the whole body and the brain. I'll maybe make one last point. What's unique about the Pompe program is that it's muscle targeting in addition to brain targeting. So in terms of Pompe, there is severe Pompe or infantile onset, but there's also LOPD, which is basically the disease that really focuses mainly on muscle. And what you see with these transferrin receptor-enabled technologies is also improved distribution to muscle, bone and brain.

Great. Sounds good. So let's talk about 310 briefly. Any updates you can give on the regulatory review, and there was this major amendment recently. Anything to that, that kind of suggests the review is going in a different direction? Or do you feel like it's more or less administrative?

Yes. I think we were very surprised to get the major amendment based on a clerical error around the molecular weight of TV. But it was done in our experience, a very collaborative way with the FDA. They've been engaged from the beginning since we got priority review. Obviously, that shifts the PDUFA date from January 5 to April 5. I think we immediately identified where this clerical error originated from and how it affects specifically just one portion of our BLA, which is the population PK calculation based on this theoretical molecular weight. That's very easy to correct. That being said, we've continued very positive engagement with the FDA, including beginning label negotiations and finish the late cycle meeting. So we see a lot of momentum with the FDA regardless of this shift in timing. So I think the way we're viewing it right now is that we're planning to April 5 as our PDUFA date...

But you're in [indiscernible] discussion.

That's right.

That would suggest things could actually close out a lot sooner.

That's possible. I think so. And I think if I look at the overall engagement from the beginning of the review, the FDA has been highly engaged, very relevant questions. And so we've been impressed with that. It's the same team we've worked with now for multiple years in the rare disease and medical genetics. It's the same team we work with on the START program for Sanfilippo and now for Pompe. So that consistency has been important for us. And obviously, we were disappointed. And I think technically, the FDA has that ability to delay the review based on having to recalculate the population PK. I should just comment that, that theoretical molecular weight shift doesn't change anything in terms of the conclusions of the data package, which I think is really important.

Right, right. Okay. Makes sense. So maybe just on the launch preparation side, how are you building out that infrastructure in the U.S.? And I've asked you this many times, but like what percent of the ex U.S. market is unlocked by accelerated approval in the U.S.?

Yes. So I think I'll frame a couple of -- sort of asking two questions there. So in terms of launch preparedness, we have a small but mighty team, low double digits, ready to launch in terms of the field team, all in place, ready to go. That's the same team that will launch not only Hunter, but Sanfilippo. And then obviously, by the time we get to the point of launching in Pompe, we will expand that team. But that's the value of having a franchise like the enzyme franchise. In fact, all the physicians -- treating physicians are the same across Hunter and Sanfilippo. In terms of the U.S., ex U.S. markets, the way we think about it today is 1/3, 1/3, 1/3. So 1/3 of the market is the U.S. And then 1/3 is a portion of the market that we think we can access with the accelerated approval data package, okay, rather than the COMPASS data package, that will represent another 1/3. And then the final 1/3 is likely Europe generally, where it may require the clinical endpoints, although we have robust clinical data, it's not active comparator controlled, which is essentially what...

But it sounds like, areas like Brazil and South America...

Yes. Exactly right. MENA, other areas that we're looking at, U.K., Japan, these are areas where we will take the data that we have and then advance. So it's -- rather than being like two binary events, it's kind of going to be a stream of launch events now with U.S. accelerated approval.

Right. Okay. Okay. And can you update us on Sanfilippo data you've generated to date and how kind of close you are to figuring out what you're going to need to file there?

Yes. So I think exciting -- again, I mentioned this quarter, a lot of advances in the portfolio. So we completed enrollment of the Phase I/II portion of the study that's required for accelerated approval. So that's roughly 20 patients. And so as a perspective, when we enrolled the TV trial, we have 47 patients in that filing package. And so our goal is to have learned from that, be able to do things ideally half the size, twice as fast. And certainly, in the case of Sanfilippo, we're looking at 20 patients. That enrolled in September. That's 49-week endpoint. So 49 weeks from September, that data package will be complete, and then we'll start preparing the filing package for the BLA. What's a little unique about Sanfilippo or this particular program is that unlike the Hunter program where we're manufacturing out of Lonza, we're going to be manufacturing ourselves the Sanfilippo program. So we have our own site. We've now onshored most of our manufacturing, but we began manufacturing that particular program. So that means we'll also do the commercial manufacturing for that. So I think that will end up determining our time line for BLA filing. We just want to be really ready to go because it will be the first time launching a product out of our own facility.

Yes. Yes. And any clinical data you can speak to there?

Yes. So what we had mentioned before, we had top line that we had 24-week of data, the first, I think, roughly 8 patients where we had robust biomarker effects, and we've now seen up to 49 weeks of data. We plan to have our first actual data presentation, an interim look, obviously, it won't be the entire data package that's in the filing -- that will be in the filing because that obviously comes out in September. But at this upcoming world, we plan to present that data at that medical conference.

Okay. Okay. And then I guess for each of these indications, obviously, with 310, you're well underway, right, with like a confirmatory trial. And from my seat, right, it's like the biomarker data proves 100% that the drug works, but there's still just the risk of going into a placebo-controlled study, like not fully understanding placebo effects, like variability. So maybe start with 310 and just kind of your confidence that you've designed the pivotal study conservatively and then how that's going to follow through to Sanfilippo.

Yes. Well, I appreciate that you feel the way we feel, which is the data is very compelling that the drug works...

The heparan sulfate and neurofilament data are like unequivocal. It's just neurocognition, sortilin or how do you -- I'm sure you guys have thought ton about that.

Yes. I think what's been nice for us and I think very valuable is seeing the neurocognitive data, the behavioral data, the hearing data mature in our own data set. And I think it's becoming very clear, unequivocal that we have a medicine that has really robust pharmacological activity and efficacy. Now the question is how do you design the trial? And it's actually interesting because we're putting this in the context of Hunter, but it's also important to think about it from Sanfilippo and from regulators' perspective there. So in the case of Hunter, this is an active comparator control. So we're comparing to idursulfase. Now interestingly, the vast majority of our patients in the Phase I/II were on idursulfase. So they already -- they're switching. So we look at hearing improvement after, let's say, 4 or 5 years of idursulfase and hearing is declining, then they go on to TV and they're -- we're seeing an improvement in hearing as an example. Same with cognition and behavior. And I think as that data matures, it becomes more and more clear. So what we're looking at in the COMPASS trial is a 2:1 randomization and the co-primary endpoint is CSF heparan sulfate, and we know where that's going to play out. And the other is basically the VABS, which is the vineland, which is a behavioral scale. And there, if you look at our Phase I/II data, basically all patients either stabilize or improve, which is very different than what you see in the natural history data. So I think we're confident in that. Now it's always about powering and scale, and these are rare diseases. So it's hard to enroll 200-, 300-patient trials. This is 42 patients in Cohort A in the neuropathic. And so that being said, it's a 2-year endpoint. That trial will complete enrollment essentially at the end of this year. So you're looking at 2027 to complete that trial. Now in Sanfilippo, it's a different story. Their regulators, both in the U.S. and in Europe, are very open to using natural history as your comparator. So rather than having to do a placebo control...

Because they have no standard of care.

That's exactly right. You have -- there's no. So it's really -- I think in the case of Hunter, the argument was you have Elaprase that's providing some clinical benefit. So that's fine. But in the case of Sanfilippo, there's no standard of care. And so it's likely, although we're finalizing that now, this will be part of our AA sort of package for Sanfilippo that we'll use natural history as the comparator and will prespecify what we expect to see in terms of benefit across endpoints for these patients. Again, similar endpoints, behavior or cognition that we're testing in Hunter.

Yes. Okay. Okay. And to round out the enzyme conversation, and then I want to talk about Alzheimer's. But on the Pompe program, so like obviously, logical application with the transferrin platform. The one question I have is like do we have good evidence that the existing drugs for Pompe are inadequately clearing toxic substrates like within the muscle? Because I feel like usually the biomarkers in these indications are not actually like in the proximal tissues.

Yes, that's a great question. So I think the answer is there's definitely still an unmet need, both in sort of categorically two ways. One is in IOPD, anything neuro-related, there's definitely an unmet need. And so that is something that could be addressed with ETV GAA or DNL952.

Is that a big component of Pompe?

It's a small, very small component. And it would be like the obvious place for some additional proof of concept. But actually, we didn't develop ETV GAA for that. We developed it for the entire population. And there, we also believe there's an unmet need around muscle. But I think what you do is you are looking at distal biomarkers initially to show activity and then you look at proximal endpoints and there, it's really around muscle strength or clinical endpoints, right? So I would say stay tuned. We have an Analyst Day on December 4. We're going to talk more about our strategy for Pompe. At least it will be the first glimpse looking at the strategy. We'll also talk -- answer your questions around the addressable markets, U.S., ex U.S. broadly for Hunter. But that will be a great time for us to just to talk about Pompe. And I think notably, as we have key opinion leaders who work in this area and physicians, they work in the Hunter, Sanfilippo and Pompe area and very much understand where the unmet need is. And so therefore, we tailor our trials addressing that.

Yes. Yes. Okay. Okay. Anything you want to kind of close out this ERT discussion or enzyme replacement discussion with FTD? And maybe one, where things stand with your program? And two, like any learnings or implications from the Alector failure?

Yes. So I think it's -- I think we've now correctly put PTV progranulin into our enzyme franchise because the mechanism is essentially protein...

It's a lysosomal...

It's a lysosomal mechanism, protein replacement therapy. I think what we've learned from -- I mean, a couple of things we've learned from Alector. At the time that we first started our trial, it was actually difficult to enroll because there are others like Prevail and Alector who were enrolling. And our enrollment has very much accelerated as those programs have stopped enrolling. So B2 enrollment is complete. We're now enrolling very rapidly Cohort B3. We'll talk about that clinical trial design, I think, for the first time at this Analyst Day as well. And I think what to think about is that this is an entirely different mechanism than blocking a natural receptor. So the approach that Alector took was let's block sortilin, which is one of the natural receptors and then you get an increase in progranulin measured extracellular. You can measure it in blood, CSF, wherever you want to measure it. In our case, we're replacing progranulin because these are homozygous patients. They have a loss of at least one copy. And basically, what we can do is replace the protein that's missing. And I think the best example to look at is our Hunter program or the Sanfilippo program. Our focus will be on biomarkers that are both proximal and distal to progranulin. So the proximal biomarkers would be like glucosylsphingosine and anything related to lysosomal function and distal would be like GFAP and NfL. And I think NfL would be -- obviously, that's would be ultimately the goal...

And those patients have very high NfL levels.

That's right. They have elevated NfL levels.

Okay. Okay. Okay. Got it. Great. Switching gears on the OTV side, maybe walk through with tau, just the preclinical data you've generated. And I guess I think the key question is really that with delivering an oligo to the brain via the transferrin receptor, do you get the same kind of biodistribution and knockdown in the key areas that are going to matter for Alzheimer's?

Yes. I think it's a great, great question. And I would say that what you're comparing -- what implied in that question is today, the standard of care for oligonucleotide delivery to the brain is intrathecal delivery, right? So you inject it in the spinal cord. And you have -- and we show this, I think, pretty clearly and others as well, you have an uneven distribution. You get very high concentrations of oligonucleotide in the spinal cord and you get decent concentrations in regions that are adjacent to cerebrospinal fluid, but not so much in deeper brain regions. And so what the transport vehicle enables, and this, I think, is the key point, is an even distribution throughout the central nervous system. In a disease like Alzheimer's, which affects many regions of the brain, not the least of which is the hippocampus and then obviously cortical regions, we would expect to see a robust biodistribution, and that's the advantage of the transport vehicle, which is much more challenging with intrathecal delivery. So the preclinical data that we have is that -- and this is why it took us a bit of time. We had to do further engineering on the oligonucleotides. We've since expanded and are using all types of oligonucleotides, SI, ASO. And the reality is any type of oligonucleotide, we can transport across the blood-brain barrier. But this particular program, we specifically engineered in ASO, took additional time to really fortify the chemistry around that particular molecule. And what we see now is a very sustained reduction of MAPT, which then is a sustained reduction of tau. When you think about it from a clinical perspective, we're going directly into patients and you're looking at two things: CSF reduction in tau protein, which takes some time because tau has a decently long half-life; and then the second is ultimately tau PET imaging, where you'd want to see a reduction in the PET signal.

Yes. And are these both going to be endpoints of the Phase I?

They will, definitely.

Okay. Yes. Okay. How long -- maybe just walk through that design. How long are you treating or following patients? And what's your expectation for like the time points at which you should see these PD markers?