Run by Former Genentech Employees, Bay Area's Denali Seeks $100M IPO

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Denali Therapeutics plans to make a $100 million initial public offering (IPO) under the symbol DNLI. The company launched in May 2015 by three former Genentech researchers—Ryan Watts, former director of Genentech’s Department of Neuroscience, Alexander Schuth, former director and head of Genentech’s Neuroscience Partnering, and Marc Tessier-Lavigne, president of The Rockefeller University.

The company focuses on developing drugs for neurodegenerative diseases like Alzheimer’s, Parkinson’s and Lou Gehrig’s disease. The company has raised a lot of equity funding, totaling around $350 million, with its largest shareholders being AKDL LP, ARCH Venture Partners, Flagship Ventures and F-Prime Capital Partners.

In August, Denali launched a Phase I clinical trial, simultaneously announcing it had raised $130 million in Series B financing. The trial is for its small molecule RIP1 inhibitor for Amyotrophic Lateral Sclerosis (ALS) and Alzheimer’s disease. It also announced a number of partnerships, including acquiring San Diego-based Incro Pharmaceuticals, a license deal with Genentech, a license deal with Washington University School of Medicine in St. Louis, a research collaboration and option deal with UK-based f-Star, and a research and option agreement with Blaze Bioscience.

The company also has strategic collaborations with ALS Therapy Development Institute, Aptuit, Evotec, Massachusetts General Hospital, The Michael J. Fox Foundation, PatientsLikeMe and the University of California San Diego School of Medicine.

John Carroll, writing for Endpoints News, notes, “In its laundry list of warnings to potential investors, Denali noted that its lead drug—the Phase I drug DNL201—is actually under a partial clinical hold by the FDA, as regulators want to limit the exposure of healthy volunteers to their therapy after seeing some severe reactions in animal models at extreme dosing. Their targets include RIP1, ApoE and LRRK2.”

The San Francisco Business Times writes, “The key to Denali’s mission is a platform designed to ferry antibodies and enzymes across the blood-brain barrier by latching them to transport receptors in brain capillaries. That membrane has been difficult for drugs to safely penetrate, but Denali said in mice testing of one of its antibodies, it showed a 20-times greater brain penetration than a standard antibody.”

The company’s DNL-201 blocks an enzyme linked to the gene LRRK2, which is a contributor to Parkinson’s disease. LRRK2 leads to Lewy body protein aggregates that are linked to neurodegeneration.

The company’s DNL-151 was accepted this month for a clinical trial in the Netherlands for Parkinson’s, and the company expects to file with the FDA early in 2018 to start a Phase I trial of DNL-747 for Alzheimer’s and ALS.

The money raised from the IPO would help pay for Phase I development of DNL-201 and DNL-151, help prepare them for Phase II trials, and push DNL-747 into a Phase II trial.

Carroll writes, “’This may sound like Drug 101,’ CMO (and Genentech vet) Carole Ho told me last year, but Denali’s success after so many failures will get down to its ability to engage the target, with the right kind of biomarkers in place to track their success. Developing biomarkers early, she adds, is critical. And the biology of these diseases is becoming more clear through the rapid advancement of genetics research.”

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