Denali hints at early data for rare disease enzyme therapy

Denali announced new topline results for its early-stage program, DNL126, which is part of the FDA's Operation Warp Speed for rare diseases. DNL126 is an enzyme replacement therapy targeting Sanfilippo syndrome type A (MPS IIIA) and is currently undergoing a Phase 1/2 clinical trial. After 25 weeks of treatment, participants experienced a statistically significant reduction in heparan sulfate (HS) in their cerebrospinal fluids. Although Denali did not provide exact numbers, they indicated that more detailed data would be shared at an upcoming medical conference.

Heparan sulfate is under evaluation as a surrogate biomarker by several companies working on treatments for the MPS family of rare neurodegenerative diseases. While the FDA has not yet validated HS as a biomarker, several programs aim to secure accelerated approvals based on HS reduction. These programs include efforts by Regenxbio, Ultragenyx, and Denali's leading drug, DNL310.

Regenxbio has initiated a rolling submission this quarter, and Ultragenyx plans to file its submission by the end of the year. Denali intends to move forward with DNL310 in early 2025. On the same day as the DNL126 update, Denali also reported its third-quarter earnings, resulting in a roughly 7% increase in its stock price ($DNLI).

Analyst Paul Matteis from Stifel commented that the DNL126 results strengthen Denali’s position. He noted that positive developments in DNL126 could pave the way for success in other pipeline projects, including DNL310, which targets Hunter syndrome (MPS II). Analyst Michael Yee from Jefferies added that, considering favorable progress, DNL126 could receive approval by 2027, with peak sales potentially reaching $500 million.