Denali Therapeutics has raised $250 million. The IPO, the biggest biotech listing of the year, sets Denali up to push drugs against Alzheimer’s and Parkinson’s diseases through early clinical trials.
South San Francisco, California-based Denali hit the $250 million mark by pricing its stock at $18 a share, the midpoint of the range. The result is an IPO bigger than that of Belgian biotech Ablynx, both in terms of the amount raised and the market cap.
That is less important than what Denali plans to do with the money. The startup has earmarked up to $35 million to advance Alzheimer's disease candidate DNL747, which is currently in preclinical trials but is expected to make it as far as phase 2a on the back of the IPO funds. That asset, a small molecule inhibitor of RIPK1, is also set to be tested in patients with ALS.
Denali has set aside another $20 to $25 million to fund development of small molecule inhibitors of LRRK2 in Parkinson’s disease.
As it stands, Denali is looking at two candidates. The plan is to put both drugs through phase 1 before picking one to move into phase 1b in Parkinson’s patients with LRRK2 mutations.
DNL201 is the more advanced of the two drugs, just, but it is subject to a partial clinical hold that imposes an exposure cap. The FDA put the hold in place after reviewing preclinical toxicity data. If the hold is kept in place, Denali thinks LRRK2 kinase inhibition may be restricted to about 50%, potentially capping efficacy and harming the drug’s prospects. Denali has also proposed an interim exposure cap for its other LRRK2 candidate, DNL151.
Denali may end up with an exposure cap in its phase 1 Alzheimer's trial, too, either because it or regulators deem it necessary. High doses of the drug caused toxicity in monkeys in a 28-day safety study.
The IPO is testament to investors’ belief the programs won’t be derailed by these issues. Given the dire need for drugs that show any efficacy in Alzheimer’s and other neurodegenerative disorders, plus the experience of the ex-Genentech team at Denali, there is reason to think the safety challenges can be worked around if the drugs work.