Stifel 2026 Healthcare Conference - DENALI THERAPEUTICS INC

uh great thanks sorry man i got my drink station yeah uh yeah thanks very much everybody uh happy to be moderating this chat with joe lewcock chief scientific officer of denali therapeutics uh i think we'll kick off and maybe hit a couple questions on the on the avalea launch and how that's all going and then i think will use this as an opportunity to maybe do a deeper dive into each pipeline program and preview some of the data readouts next year um but yeah thank you joe so maybe maybe to kick it off like if you want to just level set for people and review uh the updates you gave on avalea in the past quarter and like overall how's that launch gone relative to your guys expectations yeah thanks paul thanks for having us by the way um very excited about the avaleia launch so far um seeing a lot of strong interest uh in in the product and really um what we're hearing from both patient families and kols is that the drug is really making an impact for patients, which is fantastic. And it really takes patients and physicians and payers working together in order to have a strong launch like this, and that's exactly what we're seeing. So we have about 70% of commercial lives covered, with 20 states covering on Medicaid coverage at this point. So very encouraging start to date, and it's led to $7.8 million in commercial revenue in just the second quarter after launch, which is fantastic. Yeah, that's great. I think with Hunter, there's always been this kind of question around what percent of patients have meaningful CNS symptoms. How do you define that? With now being in the market for a bit, what are you seeing in terms of the way physicians are segmenting patients and sense of urgency to treat the LAPRase-treated population with this medicine? Yeah, we're seeing a strong level of interest. And I think, you know, our feeling is the majority of patients have some sort of neuropathic symptoms. And, you Know, of course, we're targeting patients within within our label. But really, what we're hearing from KOLs is that it's making an impact across a broad patient population. Okay. Yeah, understanding that your label doesn't cover like everybody on L.A. Price, but for the overlapping population there, like, at this point, what do you think is like a realistic goal in terms of, you know, penetrating that population? Like, do you think like it's a goal to switch most patients eventually over time? Like what's kind of the thought process? Yeah. I mean, our goal is to really, you know, to, to switch a hundred percent of eligible patients. So in the U S there's about 500 patients with Hunter's disease, but 375 of those are eligible under our label. Um, and our eventual goal is really pivot all of those patients over tab layer. Okay. And so you guys have been guiding like each quarter, like for the next quarter, um, maybe just talk about how you guys have set expectations for the next quarter and just like more broadly like what what metrics or things might you share might you not share i guess going into 2027 do you have a sense of that yeah so uh you know so in our first quarter uh we we you know we had a pretty big leap from our first quarter or second quarter from 3.6 million to 7.8 million um that was well ahead of what we had predicted so we had we had guided around 10 to 12 um and significantly beat that and the drivers of that were um really you know faster expansion of payer coverage and and and that was fantastic but then also a number of patients from our clinical trials switching over more quickly than we anticipated which was great to see so it was really rapid growth uh in in the past quarter but what we've described many times is that um that we expect somewhat of an s-shaped curve here where uh you know we see us we'll see a steep ramp up at some point and i think what we saw was based based on those factors I mentioned, that that S-shaped curve was pushed in a bit faster than we had thought. So we're still expecting growth, but in a more measured way moving forward. So we've guided for the fourth quarter to be between $30 and $32 million in commercial revenue. We think that that's going to be a more predictable number. Okay. Okay, great. You're also set to, I think, complete the confirmatory trial next year. You know, I think from our perspective, Like, I think it's pretty clear Avalea works given the heparin sulfate data and the neurofilament data. But there's always this risk of going from an open-label study to placebo-controlled on clinical and functional endpoints. Maybe talk about, like, how that study is designed and, like. Your level of confidence that in the absence of placebo-control data, you've powered that, like somewhat conservatively. Yeah, great question. You know, we have a lot of confidence in the outcome of COMPASS, which we'll get data next year and then hopefully file on it in 2028. and the reason why is we've already have 47 patients of data as part of our phase one and phase two programs so a really high number of patients and what we're able to do you know in that first study is not only show a biomarker readout which was the basis for approval but a lot of other behavioral and cognitive endpoints as well and so we were able to use that data to power compass in a way that we felt like we had a lot of confidence in and when we do go and file will file based on the entirety of the data so i think we have a high level of confidence we're going to be able to reproduce those results in a placebo controlled fashion maybe like more specifically on the actual like primary outcome measure for compass like what what is your like expectation for the placebo arm and like how that might all play out yeah i mean i think that we have we have good idea we feel of of how that placebo is going to behave based on natural history data that's been out there both uh from what we've used in our in our previous powering study um so i think that again i think we can make some good predictions that now with a rare disease you know powering getting enough patients to run that trial you know in a convincing fashion is always a challenge but we've tried to really you know run a robust study not just to understand the cognitive readouts but then we also have a second you know part b of that study to look at uh you know to look At other aspects somatic aspects of disease and so the hope is really that compass will open us up to really the full patient population uh in hetero disease including adults okay and so that's reading out in the first half of 2028 it's reading now yeah it's reading on 27 and we'll have the we'll file based on in 28 okay so the data will actually get next year 28 today data will read out in 28 oh good okay okay sounds good um and then for for complete in 27 sorry that's what i thought okay but no worries um thanks for clarifying as it relates to uh san felipo um maybe talk about some of the initial data you've generated there and like what what do you think is the necessary package there to garner uh accelerated approval yeah so we've added a lot of interactions with the fda around our san felippo program um and and spent a lot of work to align on heparin sulfate reduction as a basis of accelerated approval for that program um and so you know that that that's really exciting i think leveraging some of what we learned with Avlea. And so what we've seen thus far with that program, you know, very encouraging results. So even in our dose finding cohort, we're seeing, you knows, greater than 80% heparin sulfate reduction with many of those patients normalizing on treatment. So very encouraging data so far. Do you expect to share neurofilament data at some point? And how important is neurofilamen or not to sort of a corroborating, as a corrobarating component to like a filing there? Yeah. So, I mean, I think that the basis of the filing will, of course, be heparin sulfate. We do feel like neurofilament as a biomarker can be very useful, right? And I think we showed this as part of our Avalaya program, where really, you know, an impact on some of the behavioral endpoints correlated well with a reduction in neurofilment. And so, I think what neurofiliment tells you is not just that you're, you're impacting the lysosomal biology, but you're having downstream impacts on disease as well, and so that's something we'll plan on looking at as part of our San Felipe program as well. Okay. Do you have the timing of that next data update there? We, so in terms of our, so we're planning on a filing based on a cohort of 20 patients. Those patients have completed the study already, and we plan to present a detailed data in the World Conference early next year, and based on that, we'll plan to have a filing at some point during 2027 okay okay great um you know as you expand the the portfolio uh in lifestyle and storage disorders you have this this pompeii program that i think is going to have some initial data there um maybe talk about like the thesis there and you know i guess the secondary question to that is we have you know erts for pompeia like what's sort of the evidence out there that those are inadequately controlling the disease or not getting sufficient target engagement and tissues like muscle and diaphragm? Yeah. So, uh, yes, existing therapies, a number of existing therapies for Pompe disease. All of them are, you know, the first generation was a standard enzyme. The second generation molecules were an enzyme with additional M6P. So that's the receptor that, uh. Usually enables enzymes to be taken up. Um, if you talk to the community, I think there's a broad sense that, the impact on disease is inadequate and there's still unmet medical need there in muscle. And I think part of the challenge in muscle is that it has very low M6P receptor. So the uptake of those enzymes is quite difficult. Actually, Pompe drugs are some of the highest dosed ERTs out there. And we think it's partially for that reason. And what we've been able to show, you know, and even with the second generation molecules, they were not able to shows superiority over the first generation molecules. So I think it is kind of consistent with that biology. What we've been able to show, at least pre-clinically, is that transferrin, you know, we focused on its ability to deliver to the CNS, but it also very effectively delivers to muscle tissue. And in pre-clinical models, we've shown pretty clear superiority of a TFR, our TFR-enabled product, DNL952, pardon me, over some of these first and second generation enzymes. So very excited about the potential to replicate that and really more, you know, better deliver not just to muscle as a tissue, but to, you know really the lysosomes and the right components of the cell within those muscle cells in order to have an improved beneficial clinical effect. In the absence of doing muscle biopsies, which I think you're not doing, how might you prove out differentiation in the proof of concept readout here? Yeah, good question. So our first study, our phase one, ongoing phase one study in Pompe patients. I think it's important to note that these patients are already on treatment. So what we're doing is somewhat of a switching strategy to start, then looking at impact on biomarkers for patients who are already one of the current enzyme treatments. So we'll be able to see a little bit of a differential impact there. And we're looking at two specific biomarkERS to start with, urine GLIC4, and that's really a readout of glycogen, which is the substrate of the GA enzyme for Pompe disease. And that will be like significantly elevated in these patients? So, so the, you know, there is a challenge with, with these patients that for some patients who are on standard of care, their, their GLIC4 is, is normalized. Some patients are not right. And so I think it's again, evidence that you're not having complete an impact on the pathway with those existing medicines. Um, but it's something that we're going to have to monitor as courses study. The second thing we're going to look at is serum creatine kinase. And so that will be a direct readout of muscle health. Yep. Okay. Okay, makes sense. And so we'll get some data on this next year. Is that right? Okay, great. Maybe like we'll try to hit on everything else. So I think you're also going to have some data next year for your a beta brain shuttle. Maybe talk about like how this program is differentiated from some of the other shuttles in the clinic yeah so uh we're very excited about our our alzheimer's programs including our anti-abeta program uh of course we're not the only player in that field um and you know there there are a number of competitors including trontinamab from roche uh i think the positive side of that is what tranti has shown is is very encouraging data in terms of plaque clearance um and that's you know that's a that's an exciting molecule as well but not without its liabilities and so So maybe to start, I'll talk about how our platform differs from those like Roche's brain shuttle. And I think a key element there is that we don't have any appended sequences on the molecule. So Roche is brain shuttle is characterized by an appended domain that binds TFR, where our transport vehicle platform is based on protein engineering of directly in the FC domain of an antibody in order to introduce low affinity TFR binding. We think that's going to be critical. We think that appendage sequence increases the risk of immunogenicity, and this is an issue that Tronte has had a bit of in their clinical studies, at least what they've reported, as well as it can potentially be clipped off, which would limit then the ability for brain uptake. and and and the last differentiator is we've carefully engineered our anti-beta molecule to have effector function so antibody effector functions seems to be critical for efficacy of these molecules for the plaque clearance part you need that antibody to be active but combining effector funktion with tfr binding causes risk of anemia this is something that i think is also have potential with other molecules this is we have shown pre-clinically at least we haven't talked about or shared any of the clinical data yet, but that we do not preclinically see anemia with this molecule because our molecule is designed to bind either transferrin receptor or FC gamma receptor for effector function, but not both at the same time. So we feel like there's going to be some important distinctions in terms of safety there in particular, where we're going to be able to differentiate from some of the competition in the A beta space. Yep. Okay. That makes sense. And do you feel like this is the kind of thing where like in a short initial data readout, you can answer the questions related to like robustness of plaque lowering, ARIA, things like that? Like when might we get those insights? Yeah, so we're starting our phase one study with DNL921, which is our anti-beta molecule in Healthy Volunteers. And just in Healthy volunteers, you'll be able to get to some of these questions around potential for immunogenicity as well as anemia. Will you be looking at CNS exposure? We will be looking to see if we can get to that. We're looking at exposure broadly. I think we have an understanding enough of how our platform behaves in human from Avalay and other products. It's also worth noting, and I think this applies to all TFR-enabled molecules, is measurement of CSF antibody is actually not a very good proxy of brain levels of antibody. Why is that? It has to do with TFR being – it's really its capillary-mediated distribution, right? So it turns the brain into any other organ in terms of the way that drug is delivered. And we've shown in a range of preclinical studies over years that the CSF levels of drug are not reflective. what it matters is target engagement. And so to get to your point, the healthy volunteers will be helpful for looking at anemia, looking at some of these other things. The next step will be to go to patients and look at our ability to clear plaque. I think that will be critical in terms of our, you know, the best measure of brain uptake and activity of the molecule. That's something that we think, based on available biomarkers, that we can do pretty early on within our patient study. We'll of course also look at ARIA-based side effects as part of that study. But in order to get really hard numbers on ARIA, of course, the incident rate is relatively low. So you're going to need larger numbers to get, you know, to really refine that. But I think we'll get an initial read from the first patient studies. How would you characterize your confidence right now that you can get to a relatively infrequent sub-Q administration? so uh you know we we are we're looking at various routes of administration i think we're you know we're not guiding it yet on exact dosing uh paradigm uh but what we do feel is that we are exploring sub-q administration as potential uh for this molecule and that's another point of you know area that we're very excited about okay and do you guys envision yourselves partnering this after proof of concept or taking it all the way yeah so i mean i i think it's important to now to take a step back and mention i think denali you know we're we're well capitalized at present so we ended last quarter with 1.01 billion in cash so we do have the capital to progress these molecules right now through early stage studies um i think once we generate some of these initial data points that we're talking about uh our alzheimer's disease programs are you know great fits for potential partnering um but i think we'll decide at that time based on how the data looks whether we're going to entertain partnerships or continue developing the molecules on our own okay to that point um you're also working on tau um you know i think the biogen data we're we're promising but not without controversy what do you make of that data and what's the read-through to your tower approach more broadly okay yeah so uh not you know, not to comment too much on others' data, but I think that that Biogen data was an important data point for the tau field. The first thing I'll say is there is a lot to be encouraged about from the Biogen data. And, you know, the first thing to be discouraged about is that, you, you know, they were able to reproduce their tau lowering in a larger clinical study and correlate that with tau PET, so looking at readouts of tau pathology, and really validating for the first time that you could lower tau expression and this very reproducibly results in a reduction of tau pathology is a huge leap forward for the field having worked on tau for some time this is something that people have been interested in for a long time and and really seeing that come to fruition is is fantastic i think where it gets a little bit more tricky is looking at the correlation between tau pathogy in that study and some of the clinical end points Right. And they, you know, of course, saw somewhat of an inverse dose response. Again, I think the encouraging part is they did see an impact on cognitive endpoints in that study. I think that concern is, you Know, the the the reasons behind behind why there's that inverse dose response and what it means for other Tau therapies like Denali's. Yeah. OK. So, you know there's it seems like the two ways people are looking at tau in the brain are csf and pet um what's your view on like the relevance of each of those like i guess from my perspective like it feels like pet is really what's telling us ultimately what's happening with like toxic intracellular tau like do you agree like because i it's i would think for your approach it's going to take or for any approach it'S going to take some time to really be able to like read out pet right that's right yeah and if you look at the biogen data you know they're measuring pet it 18 months after dosing, right? So the way that I would think about the different biomarkers in the tau pet space, and again, like A-beta, we've really been enabled in this space because there's good biomarkERS now to help us understand what these drugs are doing. And so looking at tau levels in CSF, from our perspective, that's essentially a target engagement. You're asking, are you knocking down tau expression? Are you getting it to the right parts of the brain? or you're a drug to the right parts of the brain. I think the real key is that tau PET. There's a lot of data out there showing that tau pathology is the best correlate with cognitive outcomes in Alzheimer's disease. So as tau pathologie increases, your cognitive outcomes decline. And I think that's why people are so excited about tau as a potential therapeutic strategy. And so I think that this is where, you know, in expanding upon how our program might differ from, you know, an inter-thecal-based program like Biogen's, you know, again, is that much like any of our TFR programs, it's delivered through capillary-mediated delivery in the brain, right? So when we think about the Biogen data and say, is there a narrow therapeutic window for tau? Is it that if you knock down tau too much, you're going to have issues? I think that we can't rule out that possibility, but I think what's more likely potentially is that they're dosing very high doses of this ASO therapeutic, and when you look at biodistribution, and Biogen has shared some of this data publicly as well around the CNS biodistribution of that therapeutic, it's very uneven. you get very high concentrations of drug in certain brain regions, not high concentrations of drug and others. And so that also, you know, and, you know, in that study, they also saw increase in safety signals at higher doses that that may be related to drug levels. Right. So the other possibility is that there is just, you know, the drug levels are causing effects that would impact that clinical output. That's something that we don't think that we would see to the same extent with our TFR based approach. And I think for a couple of reasons. One is we're, you know, we're delivering, you know, systemically and we're again, capillary media delivery. The second is we've shown, you know a number of times that our TFR media delivery has very even biodistribution throughout the CNS. So we think that there's going to be distinctions there and it's going to put us in a better position to get to the right level of town knockdown safely. Yep. Okay. Makes sense. Any more color on what we can expect with the initial data readout, like number of patients, duration of follow-up, things like that? Yeah. So with our TAO program, the first readout that we're looking for is TAO knockdown in the clinic. That's CSF. That's CSV TAO knocked down. Yes. Thank you for clarifying. And the reason why, again, is back to what I said, that your tau PET readout, which again would be the next step after that, that's an 18-month readout. So that takes quite a long time to hit a point where you're impacting pathology meaningfully. Even tau knockdown in the clinic, it takes about three months to knock down tau protein levels to the extent that you're interested in. And that's likely a result of tau half-life, right? So you're knocking down expression, but then it takes a while for the protein levels to go down to where you want. So that's going to be the first meaningful readout, CSF tau levels that we're going to see from that study. Okay, great. You'll also have some data coming up for the progranulin program. Do you want to maybe talk about what to expect from that readout? And, you know, I think one interesting thing that you guys have kind of previewed is that you'll be also focused on neurofilament at 12 months. Maybe give some context there as well. Yeah, definitely. So we recently made the decision to extend that study from six months to 12 months. This was something that we had actually had interest in doing for quite some time. Recall that this program for a while was partnered with Takeda. And so we had aligned initially on a six-month endpoint with our partners. Once we got full rights to that program back from Takedo, we had the liberty to do what we felt was the best study. And you're absolutely right that we're focused on NFL. And the reason we're focus on NFL is we feel like progranulin, just to take a step back, that program in many ways behaves like one of our enzyme programs, that we feel like the active area in the cell for progranulan to go is the lysosome. The difference there is compared to our lysosomal storage disease programs, there's not super strong biomarkers, lysosoma biomarker that we can measure clinically for progranulin patients. So, you know, we're not able to do some of that proximal target engagement type of work that we talked about for Pompeii or SJSH or Ablea. And so then, you know, it really puts increased emphasis on the NFL readout there. And we feel like also, again, looking at our ERT programs, what we saw is sometimes NFL takes time to really, you know hit that impact on nfl that we're interested in so we wanted to extend that study to make sure that if there was a signal there we gave ourselves the best chance to see it how well do we understand the kinetics of nfl nftd grn um i followed and i know you followed it's your neighbor the elector development program there and i remember when they read out nfl and it was so variable they were putting it on like a logarithmic scale and it just kind of i don't know it's sort of i think that and a number of other readouts have sort of shown us that neurofilament can have you know very different variants and kinetics across different diseases so how are you thinking about that as relates to interpreting this 12 it's a it's great question and i i think the short answer is we don't know much right i think in the absence of having a therapeutic that's effective and being able to see an impact on that readout as a as a readout of therapeutic benefit it, it's hard to make predictions. And I think what, what you see is if there's not a lot going on, then you try your best to figure out like whether there's something there. I think what we've learned from our ERT programs, you know, and we're not necessarily setting a bar for what type of NFL we want to see with progranulin for that reason. You know, but we want to be able to see something that is meaningful and is really, you know, making it clear to us that we're having an impact on that biomarker, especially given the weight that we're putting in it. Okay. And so if those data look promising, like you're showing a decrease in NFL, like what's next on the plans there, regulatory engagement? Yeah, I mean, I think that we are definitely going to explore the potential for an accelerated approval in that indication. You know, that's something that we haven't had, you know, conversations with regulators on yet, but something that would be interested in doing. And I think beyond that, it really depends on what that data readout looks like in our terms of how we take that program forward. And so what's the timing of that readout, Joe? So that read out will come in 2027. Okay, but nothing more specific than that? I don't think so, yeah. Okay, okay, great. We have like a minute and a half here left. Anything else you'd like to add that we didn't cover? No, I mean, I think we're excited overall about the portfolio. So, you know, a couple of advanced enzymes. We talked about Ablea, StrongLaunch, which is fantastic, and our Zafi program, SDSH, you're shortly behind. You know, our third enzyme is getting ramped up. I think where we're also really excited about is our Alzheimer's programs. So both the A-beta program and our tau program, there's good reason to be excited there, you know, to really impact a broader population with our therapeutics. Yeah. Okay. Great. Thank you very much for the time. Best of luck. Appreciate it. Thank you. Yep.