Denali Therapeutics Inc. ($DNLI)

Thank you for standing by, and welcome to the AVLAYAH FDA Approval Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Laura Hansen, Vice President of Investor Relations. Please go ahead.

Thank you Jonathan, and good day, everyone. Thank you for joining us today for our AVLAYAH FDA approval conference call. I'm Laura Hansen, Vice President of Investor Relations at Denali Therapeutics. Joining me on the call today are Ryan Watts, Chief Executive Officer; Alexander Schuth, Chief Financial and Operating Officer; Peter Chin, Chief Medical Officer; and Katie Peng, Chief Commercial Officer. Earlier today, we issued a press release announcing the FDA approval of AVLAYAH. The press release and the slide presentation to accompany today's call are available in the Investor Relations section of our website at denalitherapeutics.com. Before we begin, I'd like to remind you that today's call will contain forward-looking statements within the meaning of the federal securities laws, including statements related to the approval, commercial launch and potential therapeutic impact of AVLAYAH tividenofusp alfa-eknm, our expectations regarding patient access and uptake, the potential addressable patient population and our plans and objectives for commercialization and future operations. These statements are based on information available to us as of today and are subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation to update these statements, except as required by law. For a discussion of factors that could affect our results, please refer to our recent SEC filings, including our annual report on Form 10-K and its risk factor discussion. On today's call, we will discuss the U.S. Food and Drug Administration's approval of AVLAYAH, the first enzyme replacement therapy designed to cross the blood-brain barrier using our transport vehicle platform for the treatment of Hunter syndrome, and we will outline plans for commercial launch. Following our prepared remarks, we will open the call for your questions. And with that, I will turn the call over to Ryan.

Thank you, Laura, and thank you all for joining us on short notice. Many of you have followed our progress over the years, and this is a significant moment for Denali. We're excited to share what this approval represents. To begin, I want to recognize the Hunter syndrome or MPS II community that made this milestone possible. As shown on Slide 4, each of these photos represents just a few of the individuals and families who have been so instrumental in reaching this moment. We are deeply grateful to this community for their partnership, their courage and for continually challenging all of us to move faster and do better. At the same time, this approval reflects the collective efforts of many, including clinicians, researchers, advocacy partners and especially the entire Denali team, all working with a shared sense of urgency to address a devastating rare disease. We also want to recognize the FDA for a rigorous, thoughtful and highly constructive review process. This approval under the accelerated approval pathway based on a surrogate biomarker represents an important scientific and regulatory advancement. It underscores both the strength of the data and the shared commitment to bringing meaningful therapies to patients as efficiently as possible while continuing to build the evidence base. Hunter syndrome is a progressive life-limiting condition that affects children from a very young age. While some aspects of the disease have been managed historically, the neurological manifestations have remained largely out of reach. What has always stood out to us is the clarity of what this community has been asking for, therapies that reach the brain. That input has shaped how we think, how we design our studies and how we move with urgency and purpose. We view this moment as a shared achievement and also as a responsibility to continue delivering for this community. And importantly, we believe this regulatory path may help open the door for future programs targeting similar diseases. With that foundation, let me highlight why this approval represents such an important inflection point, both for the MPS II community and for Denali on Slide 5. First, this is a historic FDA approval. AVLAYAH is the first and only therapy for Hunter syndrome designed to address the whole body, including the brain, directly targeting one of the most critical unmet needs in this disease. Second, this marks the first meaningful therapeutic advance for MPS II community in nearly 2 decades. Importantly, AVLAYAH demonstrated significant reduction and normalization of cerebrospinal fluid heparan sulfate, a key disease biomarker, supporting activity in the central nervous system and forming the basis for this accelerated approval. Third, this approval validates our transport vehicle platform. This is the first FDA-approved biologic and a new class of medicines engineered to cross the blood-brain barrier, one of the most persistent challenges in medicine. Fourth, this milestone has broader implications beyond MPS II. It provides a regulatory and scientific framework that may inform the development of other programs, including DNL126 for Sanfilippo syndrome and additional lysosomal storage disorders. Finally, this establishes the foundation for Denali's lysosomal storage disease franchise. We are entering commercialization prepared. And we see this as the beginning of a broader opportunity to address diseases across the MPS spectrum. Stepping back, as we noted in our announcement, this milestone validates our platform and its potential to overcome the long-standing challenge of delivering biologic medicines across the blood-brain barrier with the aim of transforming treatment for a wide range of serious diseases. Taken together, this is not just a single product approval, it represents a meaningful step forward for patients and an important advancement in how therapies can be developed and approved and a defining moment for Denali. So building on what I just outlined, both the significance of this approval for MPS II community and what it represents for Denali, let me walk you through how we will spend our time today on Slide 6. I've just framed the key messages coming out of this approval and what we believe matters most from a clinical, scientific and strategic perspective. Next, Peter Chin will take you deeper into Hunter syndrome, the disease burden, the long-standing unmet need and why reaching the brain has been such a critical challenge for this community. Peter will also review the clinical data and the FDA label for AVLAYAH, including the biomarker evidence supporting approval and how we're continuing to build the data set through our ongoing COMPASS study. Katie Peng will then present our launch readiness and commercialization strategy, including how we're working closely with the community to enable access. I'll come back at the end to connect this approval to the broader Denali story. particularly how it advances our transport vehicle platform and expands the opportunity across our pipeline. And then we'll open it up for questions. I will now turn the call over to Peter.

Thank you, Ryan. Turning to Slide 8. Mucopolysaccharidosis type 2 or Hunter syndrome is a rare inherited lysosomal storage disorder caused by deficiency of the iduronate 2-sulfatase or IDS enzyme. IDS deficiency leads to accumulation of glycosaminoglycans or GAGs throughout the body. The disease course can vary across patients, but progression begins early in childhood and life expectancy in severe forms often extends only into the teenage years. Cardiac and respiratory failure are the leading cause of premature mortality. On Slide 9, MPS II is a multisystem disorder with manifestations that can affect nearly every organ system as depicted on the figure on the left. The most prominent neurologic manifestations are progressive cognitive decline and behavioral changes, but can also include motor impairment and hearing loss. At the same time, patients develop significant peripheral disease burden, including cardiac, respiratory, skeletal and gastrointestinal complications. Because of this, it is important to address both the peripheral manifestations and the disease in the brain with a whole body treatment approach. Turning to Slide 10. The current standard of care for MPS II is intravenous enzyme replacement therapy, which does not cross the blood-brain barrier. There remains a significant unmet need for therapies that can address the neurologic manifestations and better address full body disease. As a result, neurologic manifestations, including cognitive decline, behavioral symptoms and hearing loss remain inadequately addressed. Moreover, patients may continue to experience peripheral symptoms and show abnormal urine GAG levels even after treatment with IV ERT, and cardiac, skeletal and other manifestations may persist or progress despite treatment. Thus, new therapies in MPS II should aim to address both the neurologic and peripheral manifestations of disease. This is exactly the challenge AVLAYAH was designed to address. With today's approval, we now have a therapy engineered to reach both the periphery and the brain, enabled by our transport vehicle platform. Let's go to Slide 12 to discuss further how that works. AVLAYAH uses Denali's transport vehicle technology, which is designed to optimize delivery of biotherapeutics across the blood-brain barrier. The approach leverages the transferrin receptor, which is naturally expressed on cells of the blood-brain barrier and throughout other tissues. AVLAYAH is designed to deliver IDS to both the brain and the body. On Slide 13, the clinical data supporting AVLAYAH were recently published in the New England Journal of Medicine, describing results from the Phase I/II study of tividenofusp alfa in pediatric patients with Hunter syndrome. Treatment with tividenofusp alfa produced large and sustained reductions in biomarkers of disease activity in both the CNS and the periphery. CSF heparan sulfate, a biomarker of primary substrate accumulation in the CNS and the basis of this accelerated approval was substantially reduced to levels seen in unaffected children. Neurofilament light, an established marker of neuronal injury was also reduced to normal levels. urine heparan sulfate normalized to levels in unaffected children, reflecting clearance of peripheral substrate in both previously treated and ERT-naive participants. On Slide 14, overall mean change in Vineland adaptive behavioral raw score functional composite demonstrated continued skill gains over time. Bayley Scales cognitive raw scores similarly demonstrated improvement with continued cognitive skill gains. Improvements in hearing threshold as assessed by pure tone average were maintained throughout the period of follow-up. These data show the potential for treated patients to improve or stabilize meaningfully. On Slide 15, with respect to safety, infusion-related reactions, a known risk of ERTs were the most common adverse event, decreasing in incidence and severity over time. Hemoglobin levels remain generally stable during treatment following an initial decrease. Overall, the safety results were consistent with ERTs and manageable for chronic therapy. Taken together, these data represent the culmination of years of work to address the full spectrum of peripheral and neurologic manifestations of Hunter syndrome, applying our understanding of the disease and leveraging the transport vehicle platform to deliver therapy to the whole body, including the brain. Importantly, this body of evidence has now translated into regulatory recognition in the United States, marking a meaningful step forward for patients. With that context, I'll turn to Slide 16 to highlight key elements of the AVLAYAH U.S. prescribing information. Here are select highlights of the U.S. label. AVLAYAH is now approved under U.S. accelerated approval for the treatment of MPS II based on CSF heparan sulfate as a surrogate biomarker reasonably likely to predict clinical benefit. AVLAYAH is indicated for the treatment of neurologic manifestations in patients with Hunter syndrome when initiated in presymptomatic or symptomatic pediatric patients weighing at least 5 kilograms prior to advanced neurologic impairment. AVLAYAH is not recommended for use in combination with other enzyme replacement therapies. The recommended AVLAYAH maintenance dosage is 15 milligrams per kilogram administered once weekly as an intravenous infusion over approximately 4 hours. Treatment should be initiated with a dose escalation regimen. The prescribing information reflects the robust effects on the primary substrate of IDS in both CNS and periphery. With respect to CSF heparan sulfate, treatment with AVLAYAH resulted in a significant 91% mean reduction of CSF HS from baseline with 93% of patients having CSF HS levels below the upper limit of normal at week 24. For urine GAG at baseline, 4% of patients had total urine GAG levels below the upper limit of normal. After treatment with AVLAYAH, 68% of patients had total urine GAG levels below the upper limit of normal at week 24. With respect to safety, the prescribing information includes the following: a box warning regarding hypersensitivity, including anaphylaxis consistent with other approved ERTs guidance on management of infusion-associated reactions, anemia typically occurring early with guidance to assess hemoglobin prior to treatment initiation 3 months after initiation and as clinically indicated thereafter. and membranous nephropathy related to immune complex deposition in reported case. General guidance is to monitor serum creatinine and urine protein to creatinine ratio at a frequency to be determined by the prescriber. On Slide 17, AVLAYAH's clinical development continues with a clear path from U.S. accelerated approval to full approval. The Phase I/II study with 47 participants supported U.S. accelerated approval and will continue to support select country approvals. The COMPASS Phase II/III confirmatory study in approximately 63 participants is ongoing. The design is a head-to-head randomized controlled trial versus standard of care ERT across disease phenotypes and a broad age range. This study is designed to evaluate both neurologic and somatic clinical outcomes. COMPASS includes adults living with Hunter syndrome and represents an important evidence package to potentially broaden future access in the United States and internationally. And now I'll turn it over to Katie Peng.

Thank you, Peter. Good afternoon, and thank you for joining us on this milestone day for Denali and the MPS II community. Today, I'll briefly cover what this approval means and how we are positioned to execute on a successful launch. On Slide 19, as Peter outlined, MPS II is a progressive and multisystem condition. What is most compelling to physicians about the AVLAYAH data is that patients achieved normalization of CSF HS in 9 of 10 patients as early as 6 months with sustained normalization at 12 months. None of the patients in the study had normal CSF HS at base line. AVLAYAH also achieved normalization of urine GAG, a key biomarker of disease progression in 9 of 10 patients by 12 months. Only 2 patients had normal urine GAG at base. Importantly, a majority of patients in this study were previously receiving standard of care enzyme replacement therapy, reflecting a real-world transition as more than 90% of patients today are on treatment. No other therapies to date have demonstrated this level of normalization across key disease biomarkers. This is setting a new bar. For the first time, we are seeing data that support addressing both systemic and neurologic disease burden in a single therapy. Slide 20. Now let's step back and take a look at the broader landscape. In the United States, approximately 30 new patients are diagnosed each year. There are roughly 500 patients living with MPS II in the U.S. and 2,000 worldwide. With this approval, the opportunity is to capture approximately 75% of the treated U.S. prevalent population. With a positive COMPASS study, we should be able to address the entire MPS II population. Today's prevalent population reflects the reality that individuals born with severe disease often experience shortened lifespan. With AVLAYAH, we believe there is the potential to alter that trajectory over time. Early treatment may improve neurologic outcomes and longer survival could gradually expand the prevalent population. While this evolution will occur over time, it represents the potential for meaningful long-term impact for families and a durable opportunity for Denali to continue advancing therapies in rare disease. Slide 21. Our commercial confidence is grounded in stakeholder insights gathered prelaunch. 90% of physicians view AVLAYAH's data as highly motivating to prescribe. 80% are aware of new treatments in development and are excited to try AVLAYAH. We have also engaged with payers that cover approximately 90% of commercial lives. The feedback has been constructive. Payers recognize the unmet need and have indicated that they will likely manage to the FDA-approved label. We have seen similar excitement from the patient and advocacy community and have been engaging with them frequently as they were critical in helping to shape our launch. This is not a market where awareness needs to be created from scratch. It is a community that is informed, organized and ready for change. On Slide 22, the structure of the MPS market is an advantage for our launch. Of the 500 U.S. patients currently treated with enzyme replacement therapy, the majority are managed by clinical genetics in about 100 centers of excellence. The concentration enables a small and focused field team. We have already established relationships with all major MPS II centers. Our sales team have profiled and segmented all accounts with MPS II patients to optimize execution from day 1. Slide 23. I could not be more excited or confident in the team we have in place. Our leadership team brings experience across product strategy, U.S. and global marketing, market access, analytics and medical affairs. We have marketed oral products, injectables and IV-infused products. Collectively, the team has launched 19 products or indications, including global blockbusters and rare disease therapy. Across our field organization in the U.S., 96% of our teams have lysosomal storage or rare disease experience. The depth of that experience is on average 12 years. Slide 24. As the first TfR-enabled enzyme replacement therapy designed to cross the blood-brain barrier, AVLAYAH addresses progressive neurologic decline in MPS II, a critical unmet need not targeted by existing therapies. The innovation meaningfully differentiates AVLAYAH within the current MPS II treatment paradigm. The degree of biomarker normalization and CNS engagement is unprecedented and reflects the differentiated value of the therapy. AVLAYAH's pricing balances our 4 core principles: access, affordability, sustained R&D investment and the therapeutic innovation of our medicines. Our wholesale acquisition price is $5,200 per 150-milligram single-use vial. AVLAYAH is dosed weekly at 15 milligrams per kilogram. Most pediatric patients will require 2 to 3 vials per week depending on weight. The annual cost of maintenance dosing for a 10-kilogram infant is about $270,000. The annual cost of maintenance dosing a 30-kilogram child is about $811,000. We are deeply committed to broad and equitable access for eligible patients. Our teams have engaged with payers prelaunch and we will continue those discussions to support coverage for eligible patients at launch and beyond. Importantly, this launch establishes a sustainable revenue stream that supports expansion of our TfR-enabled platform across additional neurodegenerative diseases. We believe AVLAYAH is well positioned for long-term success, driven by the significant unmet need it addresses and the strength of our commercial execution. We are confident in this price supports a successful launch while balancing innovation, access and sustainable value creation. Slide 25. Market access execution is critical in rare disease, so we invested heavily here. Through our Denali Care Program, we will provide personalized support throughout the treatment journey. Our comprehensive patient support services include benefit investigation, prior authorization and assistance navigating insurance coverage. In addition, the team will support treatment coordination, provide information and educational resources and financial assistance support where appropriate. Our objective is simple: reduce the time from prescription to first infusion and minimize friction for families. Slide 26. Looking ahead, our road map is structured across stakeholders. For physicians, we are supporting in-service education, infusion training and robust scientific exchange to instill confidence in clinical use. For payers, we are securing commercial coverage policies, advancing Medicaid access and operationalizing prior authorizations and acceptance processes. For patients and caregivers, we are activating with the advocacy community, driving awareness and consideration and focusing on reducing the time to therapy initiation. AVLAYAH is expected to be available in the United States 2 weeks from tomorrow. We are prepared operationally for that time line. Rare disease launches follow a predictable uptake curve. In 2026, the focus is activation and access. In 2027, we expect adoption acceleration when we will see coverage policies in place and revenue inflection as workflows stabilize and confidence in AVLAYAH matures. Slide 27. Let me briefly walk you through how we think about global access following our U.S. approval. The U.S. decision really serves as the anchor for our ex-U.S. regulatory strategy. In many markets, we can leverage that approval through a mechanism like the Certificate of Pharmaceutical Product, or CPP, and other conditional approval pathways to begin the registration process. Of course, registration is just the first step. After approval in each country, we will still need to go through local reimbursement processes to ensure patients can access the therapy. We expect global access to occur in phases. Roughly 1/3 of the market could become available in the near term with additional markets opening in the mid and longer term as both regulatory and reimbursement processes are completed. To support that expansion, we have already established distributor partnerships across select markets in Lat Am and MENA regions. Slide 28. Let me leave you with a few key takeaways. AVLAYAH represents the first meaningful advancement in MPS II treatment in 20 years. Second, we have built a fully staffed and experienced rare disease commercial organization. Third, the competitive landscape is favorable and no direct CNS penetrant therapies are currently approved. And fourth, the community is ready and waiting. Our priorities are super clear: drive patient starts, ensure smooth reimbursement, deliver a consistent high-quality patient experience and build a durable franchise starting with MPS II. We look forward to updating you as we move through the first phases of launch. Now I'll turn it back to Ryan.

Thank you, Katie. Slide 30. Established by today's approval of AVLAYAH, I'd like to discuss the broader strategic context, which is the ETV franchise we are building in lysosomal storage disorders. What this slide shows is that we are not pursuing a single indication, but a platform-driven opportunity across multiple diseases with meaningful patient populations, including MPS II, MPS IIIA, Pompe, Gaucher and others. Collectively, this represents a substantial addressable market. What differentiates our approach is that the ETV platform is designed to address both systemic and neurologic disease. Historically, enzyme replacement therapies have been limited to peripheral tissues, leaving the brain untreated. We believe AVLAYAH demonstrates that this paradigm can change. From a commercial standpoint, this is also a highly leverageable model. We can build on existing infrastructure, apply a consistent development and launch approach across indications and drive efficiencies as we scale. Importantly, we are entering a large, well-established ERT market with significant precedent for adoption, reimbursement and long-term value creation. So when we talk about AVLAYAH, we see it not just as a product but as the foundation of a durable multi-program franchise in lysosomal storage disorders. Slide 31. Let me close by putting this moment into perspective. With AVLAYAH, we believe we have reached an important first summit, one that reflects years of scientific invention, disciplined execution and deep partnership with patient community. First, this is proof. AVLAYAH is the first FDA-approved biologic design to cross the blood-brain barrier, demonstrating that we can deliver medicines to the brain in a meaningful way. Second, this validates our platform. The transport vehicle is now proven in humans, opening the door to an entirely new class of biologic medicines. Third, this fuels our pipeline. What we've established here creates a clear path to expand into additional lysosomal storage disorders, including DNL126 for Sanfilippo syndrome, which we plan to advance towards launch next year as well as into broader neurodegenerative diseases such as Alzheimer's disease. where we expect to have 2 programs in clinical development this year. And most importantly, this is about our patients. While we are starting in rare diseases, our ambition is much larger to transform treatment for millions of people affected by serious diseases. So while today marks a major milestone, we see it as the beginning of what this platform can deliver. We remain steadfast in our purpose to transform life for patients. We look forward to continuing this journey with all of you. And now we will take your questions. Operator, could you please open the lines for questions?

[Operator Instructions] And our first question for today comes from the line of Andrew Tsai from Jefferies.

Congratulations on approval. It's exciting. I know you guys have mentioned to think about an S-type trajectory acceleration later in 2027. Is there a low-hanging fruit though right now, maybe within naive or switch patients? And maybe asked another way, what exactly would it take for this S curve to look more linear or parabolic instead?

Thank you, Andrew. I'll hand back to Katie to answer that question.

Thanks for the question. Yes, I mean, certainly, the patient population is very excited. We've already gotten a lot of outreach since the announcement from the community, excited to start. And I think as we've spoken before, a lot of it has to do with the mechanics of getting reimbursement, and it will take time for, of course, the product to get into the channel, which will take about 2 weeks. and then for the reimbursement process to start. And that's why we're guiding to an SJ curve more because of the mechanics of launch and not for the lack of excitement from the community.

Makes sense. And as you guys mentioned, you clearly have data showing clear benefits on functional outcomes violin Bayley. The label technically doesn't have that right now. So can your sales reps technically go out and message the functional data you're seeing? It was published in the NEJM paper or do we have to technically wait for COMPASS data in order for you to promote that?

That's a great question. Our sales team will focus on promoting what is within the label and consistent with label. In terms of the clinical data that's available through the NEJM article, our medical affairs team will be able to speak to that in engaging on scientific exchange with the physicians. So it's a dual approach essentially with our field team very much focused on the biomarkers and the safety data that's in the label, but med affairs will certainly be able to talk to the data set that is in New England Journal of Medicine.

And our next question comes from the line of Salveen Richter from Goldman Sachs.

This is Lydia on for Salveen. Congrats on the approval. I guess just given the language in the label, do you anticipate any payer pushback for the non-neuronopathic or attenuated patients? And then if you could just talk about your plans to monetize the PRV.

Great. Thank you, Lydia. Great to hear from you. Katie will answer your first question around payers and the details on label, and then Alex will answer your second question on the PRB.

Yes. So that's a great question. No, we don't expect there will be any limitations from the payers because the label indicates that it's for presymptomatic and symptomatic patients. So attenuated less severe patients also have neurologic manifestations. So our expectation is that the payers would cover to the label indication.

Yes, Lydia, we are, of course, pleased that the FDA has granted the rare pediatric disease priority review voucher, the PRB for the approval of AVLAYAH. As you know, this PRV can be transferred or sold, and we intend to do so in support of our operating expense in support of our long-term goal. So stay tuned on that.

And our next question comes from the line of Michael Yee from UBS.

Congrats on the approval. Two questions. I guess just thinking about the ramp, how do you technically determine if someone is neuropathic or has neurological disease? Is there a specific or requirement to determine the eligibility for that? And then secondly, how does this approval and your regulatory discussions you just went through read through to Sanfilippo and the process there and how that's going?

Thanks, Mike. I'll have maybe both Katie and Peter comment on neurologic manifestations. And as you sort of define that, maybe we'll start with Katie. And then the read-through on this for Sanfilippo will have Peter comment on that.

Thanks, Mike, for that question. In terms of how you think about the treatment landscape, the disease is really a spectrum disease. So in practice, we don't really think about neuronopathic versus non-neuronopathic. And if you look at the label today, it's really covering all of the pediatric patients, they should be able to gain access and specifically address in thinking about neurologic manifestations, which is different than neuronopathic. If you look at the literature as well as our claims data, about 90-plus percent of patients actually have neurologic manifestations. So that is not necessarily only relegated to neuronopathic patients. So that's why we're thinking in terms of the opportunity, it is really the pediatric population in the prevalent population in the U.S. So hopefully, that addresses your question.

And maybe I can add to what Katie has just shared. I do think it's important to note the distinction in the labeling language between neurologic manifestations versus neuronopathic. There's no mention of neuronopathic or non-neuronopathic or attenuated phenotypes. And really, the focus is on neurologic manifestations, recognizing that CSF HS is the basis of approval as a surrogate marker. On the question of Sanfilippo, I think what this precedent sets is that CSF HS is an approvable surrogate marker for -- as a reasonably likely to predict clinical benefit. And in our discussions with the agency through the START program, we have frequent interactions and anticipate and have already had discussions that CSF HS could lead to an approvable path. Each disease is different. I think that's an important thing to consider as well. And I also note that at this time, Sanfilippo has no standard of care. And so we'll have specific discussions in that disease state.

And our next question comes from the line of Sean Laaman from Morgan Stanley.

This is Mike Riad on for Sean. Congratulations on AVLAYAH's approval. Could you just maybe comment more generally on like neurological manifestations? Is this like restrictive or advantageous in terms of the positioning versus Elaprase? Like how does that influence early age uptake and commercial positioning over the long run?

I'll hand that to Katie to comment.

Yes. So in terms of commercial positioning, it really doesn't change. The only difference compared to the current standard of care has to do with the separation between pediatric and adults. But we feel with the current label, it is holistically being able to treat all different manifestations of the disease, whether it's symptomatic or presymptomatic. So if a physician deems that a patient even presymptomatic has the likelihood to show neurologic manifestations, they are able to treat. So I feel like this label is very holistic and able to help us address the pediatric population with MPS II.

Perfect. And just a quick follow-up. So you noted that like with the expansion of a prevalent patient population with disease burden reduction over time that, that would grow the patient population. Is this more of a result of just early intervention? Or like post COMPASS, would there be additional label expansions to help grow the addressable population?

Yes. So I think it's threefold. Newborn screening is now increasing in the United States. So we'll be able to identify patients earlier on. And certainly, with this disease, earlier treatment will result in better benefit. And as you know, with the severe population today, lifespan is shortened, right? It's late teens. And so we believe with early treatment, newborn screening, we will be able to address the disease more holistically. And over time, we expect with the COMPASS data set, we would then be able to unlock adult patients as well. So given these 3 things over time, we believe the prevalent population should grow with MPS II.

And maybe just 2 comments. One is I want our resident neurologist, our lead neurologist, Peter, to make a comment on neurologic manifestations and just to restate what we stated before about the breadth. The second is that this is -- I think it's important to understand that on initiation of treatment, it's in the pediatric time period, but patients will stay on drug throughout life. So they will continue as adults on AVLAYAH. Maybe a comment on neurologic manifestations.

Yes. Thanks, Ryan. I think echoing what Katie has said, neurologic manifestations are prevalent across the spectrum of MPS II. Importantly, the indication includes presymptomatic and symptomatic stages of the disease prior to advanced neurologic impairment. And I think that's important from a clinical perspective because it allows the patients and the families to make the assessment of the most appropriate treatment. And so even in the presymptomatic stage, one can anticipate that patients will develop or may develop neurologic symptoms.

Congratulations on AE approval.

And our next question comes from the line of Tazeen Ahmad from Bank of America.

This is Daniel on for Tazeen. Congratulations on the approval. Just 2 on our side. We're just wondering what kind of metrics you plan to provide to help us track the launch once you get this product on the market? And then in terms of coverage, do you expect there to be differences between patients switching versus newly diagnosed patients? Do you expect any sort of step edit requirements before patients can start on AVLAYAH?

I'll hand that to Katie.

Okay. I'll answer your second question first, which is, no, we do not expect there would be any differences in how payer would handle naive patients versus switch patients given the strong label that we have. In terms of updates on the progression of the launch, I think for the first year, we're not going to be providing a lot of details other than to give qualitative updates on the mechanics of what with the launch. And as the data and our launch evolves, we will then share additional information.

And our next question comes from the line of Paul Matteis from Stifel.

Let us offer our congratulations. This is Julian on for Paul. I guess I think a lot of people are wondering whether you guys think there's a bolus of patients that may be lined up waiting to switch from Elaprase. Anything that you could say about that? And I guess, just thinking about what types of patients you think may be interested, again, that are in line with the label. And then one other follow-up question is FDA mentioned in its press release that you're 95% enrolled for the confirmatory Phase III. Just wanted to get your thoughts on how far along you think you need to be enrolled for the Sanfilippo study in order to file a BLA there? And if any specific considerations for that indication we should think about with respect to regulatory?

I'll hand it to Katie on the first one and then myself and Peter will comment on the Sanfilippo enrollment.

Great. In terms of bolus, I would not think of it as a bolus. Usually, you think about that when there's no treatment available in a current disease area. What I will say is the bottleneck will be access and reimbursement, right? We won't have coverage from payers from day 1. And so there will be a medical acceptance process in order to get reimbursement for patients. And as you know, with rare disease being expensive, patients will not have access until reimbursement can be assessed for each of the patients. In addition, there is logistics of getting back into the clinic for infusion. So those are the sort of mechanistic bottlenecks. In terms of patients that are excited and waiting, certainly, the newly diagnosed patients, the younger patients that have been identified as having more severe disease. We have already heard a lot of excitement from the community on getting these patients on treatment as soon as possible. And we always think about time is neurons, so we need to get these patients on. But it's more about logistical hurdles that we'll have to work through and launch and not about excitement. There's not a lack of that in the community.

I'll add a couple of points to the second question around Sanippolics maybe just make a general comment the standard of care. But obviously, getting the Phase III off the ground is a priority as we will file for accelerated approval next year. Any other thoughts on that, Peter?

Yes. Just one additional thought. I think that it's important to note that the COMPASS study started years ago with the intent for a robust Phase II/III design to enable global approval, not just confirmation for the accelerated approval today. So while the FDA noted the 95% enrollment, I don't think that is a regulatory expectation per se. It's that the confirmatory study is underway.

And our next question comes from the line of Mayank Mamtani from B. Riley Securities.

Huge congrats on getting the brain shuttle field its first FDA approved product. Sorry if I missed this. As you mentioned, the initial focus is on the early symptom pediatric subjects. And there's some dose escalation monitoring period up to, I think, 8 weeks for a variety of things, infusion reactions, anemia, et cetera. Could you sharpen the split between the Elaprase naive newly diagnosed versus the switch patients that you intend to get on drug in sort of the next 2, 3 quarters? And also, I wonder in your physician research, how important some of the attributes that you have in your data like hearing improvement and even NfL improvement how does that kind of weigh in versus some of the other things that may come later like the 6-minute walk test or other neurological endpoints, which are obviously not in the label. If you could maybe give some more color there, that would be great.

Okay. I'll hand it to Katie and Peter will sort of tag team on this question.

I'll start with that. So in terms of the dose escalation, so 2 things. The patients -- the switch patients as well as the new patients, naive patients will need to come into the centers of excellence to get their infusion. And the dose escalation schedule is 3, 7 and 15. And so there are some logistics around getting patients set up for infusion. This is why we have guided to the S shape uptake curve because of the -- getting the patients back into the clinic. That is very common for new ERTs approved. With a new safety profile, physicians will need to gain experience infusing the product in the clinic before patients can be sent home. But we do very much expect all patients to be able to go home for home infusion for those that would like to get their infusions at home.

And maybe just to add, the dose escalation was scheduled to support positive patient experience by reducing infusion-related reactions early on. Remember that the data suggests that the incidence was highest early upon initiating treatment. And so the dose escalation really is designed to support a positive patient experience. We want patients to get to the maintenance dose as rapidly and as predictably as possible. I think the second part of the question had to do with NfL and other outcomes. The label -- I want to emphasize the label is based on the Phase I/II study design, and that design had a primary study period of 24 weeks. And so the label outcomes are based on that primary study period. Now that said, as we've talked about before, we're highly encouraged by the NfL results and the large proportion of participants who normalized on NfL. And we think that also is highly meaningful. COMPASS is our confirmatory trial, and we will be analyzing a large number of outcomes, both peripheral and CNS across a very broad population from age 6 to 26. So that will -- that is intended to provide a very definitive and comprehensive efficacy.

I think I'll just add one other point, which I think you asked about hearing and some of these other endpoints. I think very much meaningful. within the community. And I think the great thing we have here is we have a rigorous FDA that based a label on the 24-week endpoint from the Phase I/II. And then we have the New England Journal publication that shows really longer-term data and what this medicine can actually do. I think it's a great combination. And then, of course, what Peter already mentioned, which is the COMPASS study as follow-up, but definitely viewed as meaningful, obviously, behavior cognition, and I think we hear a lot about hearing in particular.

And our next question comes from the line of Ananda Ghosh from H.C. Wainwright & Company.

On the data and of course, on this very fulfilling journey since inception. I have 2 questions. The first one, given the concentrated prescriber base, what does your survey work kind of tell about the percentage of docs willing to prescribe now versus those willing to see or wishing to see results from the head-to-head ERT study -- the study in the ERT?

Go ahead, Katie.

So our market research suggests that once they see and understand our biomarker data, they do see it as unprecedented given that no one has shown normalization in this treatment paradigm. Of course, with all launches, there will be a segment of physicians who have the wait-and-see approach, but there are much fewer of those because as I stated earlier, 100 -- 100 centers of excellence are managing these patients, and they have the level of depth and understanding of what is not being addressed with the current standard of care. And given that this is a progressive disease, we do see the level of excitement and willingness to prescribe. And I would say there may be a segment of physicians that's not as familiar with our data today that, of course, we're going to need to get to as part of this.

And maybe...

I just -- you have a second question, A. Go ahead.

Yes. So the second question is, I think, extension of what others have already asked, and that is based on some of the regulatory interactions you had over the past several months now, what are some of the -- what's the regulatory ramification with respect to some of the other assets in the platform beyond Sanfilippo? So what have you learned from this process? And how do you see a path forward for other programs?

Yes. I'll comment on that. Just to restate what we've stated before. I think it's obviously positive read-through, especially for Sanfilippo, which is a very aggressive neurologic disease where there is no standard of care, patients advance very rapidly. And I think importantly, it's precedent setting that heparan sulfate is used as a surrogate biomarker reasonably likely to predict clinical benefit. Now we think about the broader pipeline. So that's, I think, clear for Sanfilippo, but our broader pipeline, each one of our medicines and each one of our desired therapeutic areas will have its own nuances. Pompe, for example, Gaucher, Alzheimer's. But I think most importantly, these data and this approval validates that the transport vehicle works. We can get biologics into the brain, but we'll approach each of those separately. We, of course, are looking for indications where biomarkers can allow for an accelerated approval. That's obviously advantageous.

And our next question comes from the line of Laura Chico from Wedbush.

Just a couple of follow-ups on my side here. Great color from Katie on the launch setup. Just wondering if you could expand a little bit more on the expectations around the payer mix within the U.S. And then this is more of a logistical clarification. Will there be patients converting from the trial to paid status? I know you're not looking for a bolus of switches or anything like that coming through. But just trying to understand if there's a conversion that has to happen here for AVLAYAH patients already on drug.

I'll hand back to Katie for those questions.

Thanks, Laura, for your question. In terms of the payer mix, our expectation is that 50% will be -- roughly 50% are commercial payers who have MPS II today and then the other 50% is likely Medicaid with very little Medicare. And maybe I'll address maybe part of your question, Peter can add in terms of the study. Now of course, with the U.S. approval, patients could drop out of study to get on to commercial therapy. But we haven't made any decisions or announcements in terms of our E2 program. So there will be more to come on that.

Yes. I'll just add that the study remains ongoing at this time.

And our next question comes from the line of Peyton Bonsek from TD Cowen.

This is [indiscernible] on for Peyton. I guess the first one is, when you look at the label and you finish the confirmatory trial, do you think that you could broaden it and get rid of the manifestations as part of the label? And the second thing is if you have any dose interruptions, do you imagine that you will have to go through a reauthorization step?

Okay. We'll have Peter talk about broadening the label, and then Katie will talk about if there needs to be reauthorization. Go ahead, Peter.

Yes. So thank you for the question. The question about the neurologic manifestations, that is a reflection of the accelerated approval based on the CSF surrogate. I think with the confirmatory study and the way that we have designed this with Cohort A with neurologic manifestations and Cohort B, which is an attenuated population and the totality of endpoints that we anticipate showing efficacy on we should be able to remove the neurologic manifestations because the study -- the confirmatory study is designed to assess comprehensive efficacy across a broad population.

In terms of reauthorization, what we understand from the standard of care today is that the reauthorizations and payers are usually at 6 months or at 1 year. And that's our assumptions to date.

I'm just going to add one other point around neurologic manifestations that Peter made earlier in the call. Again, linking it to CSF heparan sulfate is key, and that was, I think, a key for the FDA. But importantly, the majority -- the vast majority of patients experienced neurologic manifestations, both neuronopathic and attenuated. So I think what we think more about is would we initiate treatment in adult, which of course is a smaller fraction of the overall patient as we think about the expansion of the label. But we're very happy with the label. We think it does reflect the Phase I/II data, and it's a great place for us to start.

And our next question comes from the line of Myles Minter from William Blair.

This is John on for Myles. Congrats on the approval. So maybe just one final one on the neurological manifestations. Can you just talk a little bit more about how clinicians are defining these? And then maybe could you just provide us some clarity on what percentage of the attenuated population would not have those manifestations and therefore, would not be eligible as indicated?

Yes. Okay. We'll start with Peter on defining neurologic manifestations and then we'll hand it to Katie around the percentages.

Yes. Thank you. Thank you for the question. I think the first thing to reiterate from my perspective is the indication is for neurologic manifestations in the presymptomatic and symptomatic stages. And remember that approximately 2/3 to 70% of MPS II patients are -- have a more severe phenotype with neurological involvement. And as Katie noted earlier, a large proportion of patients who are attenuated or classified as attenuated will also develop neurologic manifestations. So it's hard to put a specific number to it, but it's the majority of patients are expected to have neurologic manifestations. The other thing I would say is important in the indication statement, there is a note that AVLAYAH is not recommended for use in combination with other therapies. And that is an implicit acknowledgment that AVLAYAH does address peripheral manifestations as well. And the urinary GAG normalization is also labeled in the pharmacodynamic results.

And maybe I'll just add a little bit of color because what the data that we have, there is a paper published that shows that actually before the age of 10, attenuated patients will develop neurologic manifestations. And based on our claims data set, when we looked at the list of what is considered neurologic manifestations, about 94% of patients have codes that cope to neurologic manifestations. So that's why we believe it is the majority of the population of the pediatric population.

I think we have time for at least one more question. I know we're at time, but we want to be able to get more questions. I think as we start repeating some questions, we realize we've kind of hit that limit. So let's take another question.

Our next question comes from the line of Jay Olson from Oppenheimer.

Congratulations on this landmark approval. We have a few questions. Can you talk about any educational support that you'll provide for patients to transition from Elaprase to AVLAYAH in clinical practice? And then second, can you share any color on the potential launch timing and strategy for countries outside the U.S. that also might provide approval based on your Phase I/II study results? And then finally, can you talk about whether there could be a platform technology designation granted by the FDA along with this AVLAYAH approval? And if so, how important would that be for future programs?

I'll hand it to Katie.

Great. Thanks, Dave, for your question. So our Denali CRE program or the care team, they will absolutely be supporting every patient and family with educational resources on how to transition from the current standard of care to AVLAYAH. And so our team is ready and waiting to be able to do that. In terms of the global expansion, yes, and Peter mentioned this as well, we will be seeking regulatory approval with the U.S. approval now in hand, we can leverage the CPP or CMA process to be able to access other markets. But as you know, other markets will also require reimbursement unlike the U.S. market where we can go on day 1. So we'll have to be able to obtain reimbursement in those countries. And it will be local country by country as we go forward with registration in these various countries.

Yes, I'll end and we'll end the call after this comment. So great question around the platform designation. It's something that we've contemplated multiple times. And as you know, we have 3 different platform franchises, the enzyme transport vehicle, the oligonucleotide transport vehicle and the antibody transport vehicle. In our assessment, of the 3, the one probably most likely to qualify for platform designation may actually be the oligo transport vehicle because the core can be similar across medicines. With the enzyme, each enzyme actually behaves pretty differently. For example, SGSH and IDS behave differently. That being said, it's something that we're -- we would pursue that path if we believe it would be the fastest way to get more medicines to patients. And I think with that, we'll close questions. Those that we didn't get to, we apologize, we'll be following up with you directly.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.