Denali Therapeutics (NASDAQ:DNLI) is seeing early commercial interest for its first approved drug, AVLAYAH, following its March 24 accelerated approval for Hunter syndrome, Chief Operating Officer and Chief Financial Officer Alexander Schuth said at a Bank of America Securities conference.
Speaking with Bank of America Senior Pharmaceuticals Analyst Geoff Meacham, Schuth described the approval as a “big transition” for Denali and a significant moment for the Hunter syndrome community and for the broader field of blood-brain barrier transport.
AVLAYAH is indicated for the treatment of neurologic manifestations in pediatric patients with Hunter syndrome, a rare pediatric lysosomal storage disease with a severe neurodegenerative component. Schuth said traditional enzyme replacement therapy does not cross the blood-brain barrier, while Denali’s technology is designed to treat the whole body, including the brain.
Early Launch Activity Ahead of Denali’s Expectations
Schuth said Denali is encouraged by the “level of engagement” and “level of interest” in AVLAYAH across age groups and levels of disease severity. He said the first commercial patients are now on therapy and clarified that these were not patients who transitioned from Denali’s clinical studies.
In one case, Schuth said a patient moved onto the drug commercially within three and a half weeks after approval through a medical exception process. He said Denali is seeing start forms but is not yet disclosing the number, because the company wants more experience converting those forms into revenue in a buy-and-bill setting.
“From an engagement and an interest perspective, I think we’re safe to say that we’re ahead of expectations,” Schuth said.
Schuth emphasized that Hunter syndrome is an ultra-rare disease but said patient identification should not be a major hurdle because enzyme replacement therapy has been available for about 20 years. He said Denali knows where U.S. patients are treated through prescription data and that the company’s field team has been in contact with every treating physician.
On reimbursement, Schuth said Denali has engaged with major national and regional payer systems. He said prior authorization and medical exception processes have gone smoothly for many early patients, while some denials have occurred as expected before formal reimbursement policies are established.
Market Opportunity and Label Expansion
Schuth pointed to ELAPRASE, the current standard of care, as a benchmark, saying it generates about $700 million in annual sales. He said Denali believes AVLAYAH has advantages because it can enter the brain and treat the whole body, and he noted the drug carries a price premium over ELAPRASE.
Denali typically frames AVLAYAH and its Sanfilippo candidate DNL126 together as a potential $1 billion market opportunity, Schuth said, adding that the assumption is “quite conservative.”
Schuth said Denali does not view AVLAYAH’s label as more limited than expected. He said the label covers pediatric patients, which he estimated at about 70% of the Hunter syndrome population, and includes symptomatic and pre-symptomatic patients. He also said the restriction excluding patients under five kilograms reflects the population studied and corresponds roughly to a three-month-old child.
Denali expects the label could expand after data from the Phase 2/3 COMPASS confirmatory study, which Schuth said includes adult patients up to age 26. Denali expects data by the end of next year, and Schuth said the company would expect the pediatric limitation to be lifted if the data support it.
Sanfilippo, Pompe and the Enzyme Replacement Pipeline
Schuth said Denali’s next enzyme replacement therapy program is DNL126 for Sanfilippo syndrome, or MPS IIIA. He said the company presented Phase 1/2 data in February showing a mean 80% reduction in heparan sulfate, a cerebrospinal fluid biomarker qualified by the FDA as reasonably likely to predict clinical benefit and serve as a basis for accelerated approval.
Schuth said Denali believes it has the data package to submit a biologics license application for DNL126 in 2027 and potentially achieve approval in 2027, depending on the timing of the filing.
He said Sanfilippo is roughly comparable in market size to Hunter syndrome, though the epidemiology is less well understood because there is no current standard of care. He also said there is “almost perfect overlap” between the physicians and treatment centers involved in Hunter syndrome and Sanfilippo, meaning Denali does not expect to expand its commercial team substantially if DNL126 is approved.
Denali is also preparing to begin its first clinical study in Pompe disease. Schuth said the program will test whether Denali’s transferrin receptor-based transport approach can improve distribution to muscle and bone, where current enzyme replacement therapies may have limitations.
Parkinson’s, Tau and FTD Programs Remain Key Readouts
Schuth also discussed DNL151, also known as BIIB122, Denali’s LRRK2 inhibitor partnered with Biogen for Parkinson’s disease. He said Biogen is leading a 650-patient study in idiopathic Parkinson’s disease using the Unified Parkinson’s Disease Rating Scale parts 2 and 3 to measure progression.
Schuth said Denali is looking for a clinically meaningful slowing in disease progression. A second study, BEACON, is testing the drug in patients who carry LRRK2 mutations. Schuth said decisions about the program’s future should be made in the context of both studies, with readouts expected by the end of this year.
On Denali’s tau program, Schuth said Biogen’s tau readout could be informative for the broader tau hypothesis, but he argued Denali’s bloodstream-based delivery approach may offer better brain distribution than intrathecal approaches.
Schuth also reviewed DNL593, Denali’s protein transport vehicle-enabled progranulin program for frontotemporal dementia patients with progranulin deficiency. He said a Phase 1b study in 40 patients is expected to read out by the end of this year, with Denali focused primarily on lysosomal function markers. Longer term, he said reductions in neurofilament would help support moving into an efficacy study.
About Denali Therapeutics (NASDAQ:DNLI)
Denali Therapeutics is a clinical‐stage biopharmaceutical company focused on developing therapies for neurodegenerative diseases. The company's research leverages a proprietary Blood–Brain Barrier Transport Vehicle (TV) platform designed to enable large molecules, including antibodies and enzymes, to penetrate the central nervous system. Denali's approach includes small molecules, monoclonal antibodies and gene therapy candidates aimed at key drivers of disorders such as Alzheimer's disease, Parkinson's disease, amyotrophic lateral sclerosis (ALS) and frontotemporal dementia.
Among Denali's lead programs is an orally delivered leucine‐rich repeat kinase 2 (LRRK2) inhibitor for Parkinson's disease, and an anti‐TREM2 antibody designed to modulate microglial activity in Alzheimer's patients.
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