Denali Therapeutics Reports Second Quarter 2020 Financial Results and Business Highlights
August 07 2020 - 3:30PM
Denali Therapeutics Inc. (NASDAQ: DNLI), a biopharmaceutical
company developing a broad portfolio of product candidates
engineered to cross the blood-brain barrier (“BBB”) for
neurodegenerative diseases, today reported financial results for
the second quarter ended June 30, 2020 and provided business
highlights.
“We are thrilled with the strong progress across our pipeline,
the continued productivity across the company despite the current
situation imposed by the COVID-19 pandemic, and a new collaboration
with Biogen on our LRRK2 program for Parkinson’s disease patients
and certain TV-enabled programs,” said Ryan Watts, Ph.D., CEO. “I
am particularly excited that our first therapeutic candidate
leveraging our proprietary blood-brain barrier crossing TV
technology platform has entered clinical studies in patients. We
believe the TV platform could transform the treatment of
neurological disease.”
Second Quarter 2020 and Recent Business
Highlights
- Entered into a Collaboration Agreement with Biogen on
LRRK2 program for Parkinson’s disease and certain transport vehicle
(“TV”) platform-enabled programs for neurodegenerative
diseases - In August 2020, Denali entered into a binding
agreement with Biogen to co-develop and co-commercialize Denali’s
small molecule inhibitors of leucine-rich repeat kinase 2 (“LRRK2”)
for Parkinson’s disease. Biogen will also receive rights to opt
into two programs and a right of first negotiation for two
additional programs, in each case for neurodegenerative diseases
leveraging Denali’s TV technology platform to cross the BBB.Under
the terms of the agreement, Biogen will make an upfront payment to
Denali of $560 million and make a $465 million equity investment in
Denali from the purchase of 13.3 million newly issued shares
of Denali common stock at approximately $34.94 per share,
representing 11.2 percent of Denali’s pro-forma outstanding stock.
Should the LRRK2 program achieve certain development and commercial
milestones, Denali will be eligible to receive up to $1.125 billion
in potential milestone payments. In the LRRK2 collaboration, Biogen
and Denali will share responsibility and costs for global
development (60 percent Biogen; 40 percent Denali), and will share
responsibility and costs as well as profits and losses for
commercialization in the U.S. (50 percent Biogen; 50 percent
Denali) and China (60 percent Biogen; 40 percent Denali). Outside
the U.S. and China, Biogen will be responsible for
commercialization and pay Denali tiered royalties. The transaction
is expected to close after satisfaction of requirements under
applicable antitrust laws and other customary closing conditions,
and with respect to the collaboration, execution of a definitive
collaboration agreement.
- Selected DNL151 to advance into late stage clinical
studies in Parkinson’s disease patients - In August 2020,
Denali announced that DNL151 has been selected to progress into
late stage clinical studies in Parkinson’s disease patients with a
kinase activating mutation in LRRK2 and in sporadic Parkinson’s
disease patients. Patient enrollment is expected to commence in
2021.
- Commenced dosing of DNL310 in Hunter syndrome
patients - In August 2020, Denali commenced dosing of its
ETV:IDS biotherapeutic (DNL310) enabled by its TV platform
technology in a Phase 1/2 Hunter syndrome clinical study. DNL310 is
an intravenously administered recombinant form of the iduronate
2-sulfatase (“IDS”) enzyme engineered to cross the BBB using
Denali’s TV technology. It is intended to treat overall clinical
manifestations of Hunter syndrome, including cognitive and
behavioral function, which are not adequately addressed by current
standard of care.
- Publication of two scientific papers describing
blood-brain barrier transport vehicle delivery technology
- In May 2020, Denali announced the publication of two new papers
describing its BBB delivery technology in Science Translational
Medicine. The first paper describes the invention of Denali’s TV
technology and demonstrates its ability to successfully deliver
therapeutic antibodies to the brain at levels sufficient for robust
effects. The second paper focuses on the application of the TV
technology for lysosomal storage disease by delivering enzymes
across the BBB resulting in the normalization of biomarkers in a
disease model of Hunter syndrome.
- RIPK1 CNS program update - In June 2020,
together with partner Sanofi, Denali announced results from Phase
1b clinical studies with small molecule RIPK1 inhibitor DNL747 in
Alzheimer’s disease and ALS. Denali and Sanofi have paused DNL747
and switched to DNL788, with plans to initiate a clinical study
around year-end 2020.
- RIPK1 peripheral program update - In July
2020, Denali announced that partner Sanofi has commenced dosing of
DNL758, a peripherally-restricted small molecule inhibitor of
RIPK1, in a Phase 1b clinical study in hospitalized adult patients
with severe COVID-19 lung disease. Prior to this, Sanofi
successfully completed the Phase 1 healthy volunteer study with
DNL758, which appears well tolerated at doses tested. Further
clinical studies in multiple indications are being planned by
Sanofi.
- Leadership promotion - In June 2020, Denali
appointed Joe Lewcock, Ph.D. as Chief Scientific Officer. Dr.
Lewcock had previously served as Senior Vice President of Biology
Discovery.
- COVID-19 response update - To address risks
posed by the COVID-19 pandemic, Denali has implemented policies
that enable some of its employees to work remotely. For all on-site
personnel, Denali has implemented several safety protocols,
including regular, mandatory COVID-19 testing procedures and
compliance measures for social distancing and use of personal
protective equipment. After initial COVID-19 pandemic shutdown
restrictions were put in place in March 2020, Denali experienced a
pause in patient recruitment in several clinical trials.
Recruitment has since resumed for all affected clinical
trials.
Second Quarter 2020 Financial Results
For the three months ended June 30, 2020, Denali reported a net
loss of $58.8 million compared with a net loss of
$58.3 million for the three months ended June 30, 2019.
Collaboration revenue was $5.8 million for the three months
ended June 30, 2020, compared to $4.2 million for the three
months ended June 30, 2019. The increase of $1.6 million in
collaboration revenue was primarily due to a $4.8 million increase
in revenue recognized under the Takeda Collaboration Agreement,
partially offset by a $3.2 million decrease in revenue
recognized under the Sanofi Collaboration Agreement.
Total research and development expenses were $53.2 million
for the three months ended June 30, 2020, compared to
$51.9 million for the three months ended June 30, 2019. The
increase of approximately $1.3 million was primarily due to an
increase in personnel-related expenses, including stock-based
compensation, attributable to an increase in Denali’s research and
development headcount and new equity award grants. Additionally,
there were increases in external expenses related to progression of
Denali’s portfolio, including the ETV:IDS and EIF2B programs due to
the progress of these programs in the clinic. These increases were
partially offset by decreases in the LRRK2 platform associated
expenses, reflecting completion of the DNL201 clinical activities
and slowdown of DNL151 clinical activities in the three months
ended June 30, 2020 as a result of COVID-19, and certain other TV
platform and other research and development expenses.
General and administrative expenses were $14.0 million for
the three months ended June 30, 2020 compared to $15.1 million
for the three months ended June 30, 2019. The decrease of
approximately $1.1 million was primarily attributable to a
decrease in personnel-related expenses, including stock-based
compensation, primarily driven by lower stock-based compensation
expense related to certain performance and market-based awards,
partially offset by increases in professional services costs.
Cash, cash equivalents, and marketable securities were
$556.8 million as of June 30, 2020.
About Denali Therapeutics
Denali Therapeutics is a biopharmaceutical company developing a
broad portfolio of product candidates engineered to cross the
blood-brain barrier for neurodegenerative diseases. Denali pursues
new treatments by rigorously assessing genetically validated
targets, engineering delivery across the BBB and guiding
development through biomarkers that demonstrate target and pathway
engagement. Denali is based in South San Francisco. For additional
information, please visit www.denalitherapeutics.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements expressed or implied in this press
release include, but are not limited to, statements regarding
Denali’s progress and business plans; expectations regarding the
proposed transaction with Biogen, including all financial aspects
of the collaboration and equity investment; the potential benefits
and results of the proposed transaction with Biogen; the
anticipated completion of the Biogen transaction; plans to conduct
clinical development activities and commercialize products; LRRK2
inhibitors as modifying therapy for Parkinson’s disease; plans,
timelines and expectations related to DNL151, DNL310 and Denali’s
TV technology; plans, timelines and expectations related to DNL747,
DNL788 and DNL758 of both Denali and Sanofi; and statements made by
Denali’s Chief Executive Officer.
Actual results are subject to risks and uncertainties and may
differ materially from those indicated by these forward-looking
statements as a result of these risks and uncertainties, including
but not limited to, risks related to: any and all risks to Denali’s
business and operations caused directly or indirectly by the
evolving COVID-19 pandemic; the risks that the proposed transaction
with Biogen may not be completed in a timely manner or at all; the
possibility that certain closing conditions to the proposed
transaction will not be satisfied, including the finalization of a
definitive collaboration agreement; risks related to obtaining the
requisite regulatory approvals, including those required under
antitrust laws; risk of the occurrence of any event, change or
other circumstance that could give rise to the termination of
Denali’s agreements with Biogen or any of Denali’s other
collaboration agreements (including without limitation the failure
to timely obtain requisite regulatory approvals); risks related to
the effect of the announcement of the Biogen transaction on
Denali's business relationships, operating results, stock price and
business generally; Denali’s early stages of clinical drug
development; Denali’s and its partners’ ability to complete the
development and, if approved, commercialization of its product
candidates; Denali’s and its partners’ ability to enroll patients
in its ongoing and future clinical trials; Denali’s reliance on
third parties for the manufacture and supply of its product
candidates for clinical trials; Denali’s dependence on successful
development of its blood-brain barrier platform technology and
product candidates currently in its core program; Denali’s and it’s
partners’ ability to conduct or complete clinical trials on
expected timelines; the risk that preclinical profiles of Denali’s
product candidates, such as DNL151, DNL310, DNL788 and DNL758, may
not translate in clinical trials; the uncertainty that product
candidates will receive regulatory approval necessary to be
commercialized; Denali’s ability to continue to create a pipeline
of product candidates or develop commercially successful products;
Denali’s ability to obtain, maintain, or protect intellectual
property rights related to its product candidates; implementation
of Denali’s strategic plans for its business, product candidates
and blood-brain barrier platform technology; and other risks,
including those described in Denali’s most recent Annual Report on
Form 10-K, most recent Quarterly Report on Form 10-Q and Denali’s
future reports to be filed with the SEC. The forward-looking
statements in this press release are based on information available
to Denali as of the date hereof. Denali disclaims any obligation to
update any forward-looking statements, except as required by
law.
Denali Therapeutics Inc.Condensed
Consolidated Statements of
Operations(Unaudited)(In thousands,
except share and per share amounts)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Collaboration revenue: |
|
|
|
|
|
|
|
Collaboration revenue from customers |
$ |
5,811 |
|
|
$ |
4,098 |
|
|
$ |
9,363 |
|
|
$ |
8,209 |
|
Other collaboration revenue |
36 |
|
|
99 |
|
|
88 |
|
|
193 |
|
Total collaboration revenue |
5,847 |
|
|
4,197 |
|
|
9,451 |
|
|
8,402 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
53,152 |
|
|
51,884 |
|
|
104,168 |
|
|
89,287 |
|
General and administrative |
13,972 |
|
|
15,076 |
|
|
26,527 |
|
|
24,386 |
|
Total operating expenses |
67,124 |
|
|
66,960 |
|
|
130,695 |
|
|
113,673 |
|
Loss from operations |
(61,277 |
) |
|
(62,763 |
) |
|
(121,244 |
) |
|
(105,271 |
) |
Interest and other income,
net |
2,598 |
|
|
4,113 |
|
|
5,667 |
|
|
7,629 |
|
Loss before income taxes |
(58,679 |
) |
|
(58,650 |
) |
|
(115,577 |
) |
|
(97,642 |
) |
Income tax benefit
(provision) |
(79 |
) |
|
313 |
|
|
56 |
|
|
313 |
|
Net loss |
$ |
(58,758 |
) |
|
$ |
(58,337 |
) |
|
$ |
(115,521 |
) |
|
$ |
(97,329 |
) |
Net loss per share, basic and
diluted |
$ |
(0.56 |
) |
|
$ |
(0.61 |
) |
|
$ |
(1.11 |
) |
|
$ |
(1.02 |
) |
Weighted average number of
shares outstanding, basic and diluted |
105,717,912 |
|
|
95,495,497 |
|
|
104,068,815 |
|
|
95,241,412 |
|
Denali Therapeutics Inc.Condensed
Consolidated Balance Sheets(Unaudited)(In
thousands)
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
137,184 |
|
|
$ |
79,449 |
|
Short-term marketable securities |
412,397 |
|
|
335,907 |
|
Prepaid expenses and other current assets |
9,828 |
|
|
14,675 |
|
Total current assets |
559,409 |
|
|
430,031 |
|
Long-term marketable
securities |
7,229 |
|
|
39,886 |
|
Property and equipment,
net |
43,622 |
|
|
46,732 |
|
Operating lease right-of-use
asset |
33,312 |
|
|
33,923 |
|
Other non-current assets |
3,765 |
|
|
2,659 |
|
Total assets |
$ |
647,337 |
|
|
$ |
553,231 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,866 |
|
|
$ |
2,590 |
|
Accrued compensation |
5,531 |
|
|
8,739 |
|
Accrued clinical costs |
4,179 |
|
|
5,042 |
|
Other accruals and other current liabilities |
8,424 |
|
|
6,569 |
|
Operating lease liability, current |
4,330 |
|
|
3,665 |
|
Contract liabilities |
34,134 |
|
|
18,739 |
|
Total current liabilities |
58,464 |
|
|
45,344 |
|
Contract liabilities, less
current portion |
19,715 |
|
|
43,753 |
|
Operating lease liability,
less current portion |
66,612 |
|
|
68,865 |
|
Other non-current
liabilities |
379 |
|
|
379 |
|
Total liabilities |
145,170 |
|
|
158,341 |
|
Total stockholders’
equity |
502,167 |
|
|
394,890 |
|
Total liabilities and
stockholders’ equity |
$ |
647,337 |
|
|
$ |
553,231 |
|
Contacts:
Lizzie Hyland(646)
495-2706lhyland@gpg.com
or
Morgan Warners(202)
295-0124mwarners@gpg.com
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