Investors tracking Denali Therapeutics’ Hunter syndrome therapy were left unimpressed after results from an exploratory endpoint showed ongoing brain cell death even with treatment.
Shares of the South San Francisco, California-based biotech fell 13% to $55.34 as the markets opened Monday.
Looking at the data drop, Denali got the safety data it was looking for, plus a few secondary outcomes were positive. But digging through the weeds a bit, investors found something they didn’t like.
According to Evercore ISI, investors were hoping to see a 20% reduction in neurofilament, an exploratory biomarker that suggests the health of brain cells. But instead, the treatment, dubbed DNL310, increased levels of the biomarker 35% over six months.
The results were “not what we were looking for,” Evercore said. Investors had been expecting a strong decline based on preclinical data.
Hunter syndrome is a rare, inherited disorder where the body does not break down sugar molecules, causing them to build up in the organs and tissue. The condition, which primarily affects boys and is often fatal in the first two decades of life, can lead to physical and mental developmental delays.
DNL310 works as a potential brain-penetrant enzyme replacement therapy for treating both central nervous system and peripheral manifestations of Hunter syndrome. Denali was looking at safety as the main goal of the trial, with other secondary outcomes including changes in cerebrospinal fluid and levels of heparan sulfate, which can signal the build up of sugars.
In an interim analysis of the phase 1/2 study, DNL310 demonstrated a durable effect with central nervous system impact, meaning the drug appears to have breached the blood-brain barrier as intended. The therapy also demonstrated improved peripheral activity after switching from standard of care enzyme replacement therapy and a safety profile consistent with the standard of care. The data came from five patients in cohort A and 12 in cohort B, and patients had a median age of 6.
Denali said the safety data points are strong enough to initiate a phase 2/3 study, which it expects to initiate in the first half of 2022. The company will also enroll a third group in the phase 1/2 to explore clinical endpoints.
“DNL310 is our lead program enabled by our blood-brain barrier Transport Vehicle platform, and these data continue to validate the platform’s potential as we advance additional TV-enabled programs toward the clinic,” said Denali CEO Ryan Watts, Ph.D. The company’s focus is on developing therapies that can cross the blood-brain barrier and using biomarkers to inform development.
But Evercore foresees a challenge in designing the late-stage trial given a lack of clarity over how the therapy impacts neurofilament levels. While Denali said the new trial will have a follow-up time of about one to two years, Evercore isn’t sure that will be enough time to parse out the neurofilament effect.
“This is going to be a risky study,” the firm said.
But Denali could benefit from the window cracked open by the FDA when it controversially approved Biogen’s Aduhelm in June, Evercore noted. Aduhelm was not found to improve cognitive symptoms of Alzheimer’s disease during clinical trials but was granted approval based on the therapy’s ability to affect a biomarker related to the disease. Industry watchers have wondered if the FDA could now be more willing to approve therapies based on biomarker data for difficult neurological conditions.
The FDA “may be very lenient (Aduhelm-lenient?) in its assessment of this product,” Evercore said.