Denali Therapeutics Inc. (NASDAQ: NASDAQ:DNLI) has received a favorable response from the US Food and Drug Administration (FDA) regarding the accelerated approval pathway for its drug candidate DNL310.
B. Riley has maintained a Buy rating and a $33.00 price target on the company's shares following the announcement.
The FDA's Center for Drug Evaluation and Research (CDER) division and Denali reached an agreement on a registration path that includes a Biologics License Application (BLA) submission planned for early 2025.
The BLA will be under the accelerated approval pathway, with full approval contingent on the results of the Phase II/III COMPASS trial, which is expected to complete enrollment by the end of 2024.
Denali's DNL310, a treatment for MPS-II (Hunter Syndrome), has shown promising results, with cerebrospinal fluid heparan sulfate (CSF HS) normalization in 100% of participants by week 24.
CDER has agreed to allow CSF HS to be used as a surrogate endpoint, as it is considered likely to predict clinical benefit. The decision follows constructive regulatory dialogue and support from recent workshops and peer-reviewed publications advocating for the acceptance of CSF HS as a surrogate in MPS-II.
In preparation for the BLA submission, Denali plans to include preclinical and clinical data focusing on biomarkers such as CSF HS and neurofilament light (NfL), along with safety data.
There is also a possibility that the Chemistry, Manufacturing, and Controls (CMC) module could be included in the initial submission, reflecting the company's efforts in building out manufacturing capabilities in anticipation of a 2025 launch.
The positive outcome for DNL310 also has implications for Denali's second enzyme replacement therapy, DNL126, which is indicated for MPS-III. Expected biomarker and safety data for DNL126 are due by the end of 2024.
DNL126 is part of the FDA's Support for Clinical Trials Advancing Rare Disease Therapeutics (START) Pilot Program, an initiative to expedite the development of medicines for rare diseases.
In other recent news, Denali Therapeutics has seen significant progress in its drug development programs. The company's investigational treatment for MPS II, known as Hunter syndrome, tividenofusp alfa, is on an accelerated approval pathway with the FDA, with plans to submit a Biologics License Application in early 2025.
The FDA has agreed that cerebrospinal fluid heparan sulfate can serve as a surrogate endpoint to support this accelerated approval. Goldman Sachs (NYSE:GS) and H.C. Wainwright have maintained a Buy rating on Denali's stock, while Stifel has maintained a Hold rating.
Denali's enzyme replacement therapy portfolio is also under review, with initial Phase 1/2 biomarker data for DNL126 in Sanfilippo syndrome Type A expected soon.
Additionally, the FDA has selected DNL126 for its Support for clinical Trials Advancing Rare disease Therapeutics Pilot Program, which could expedite the drug's development.
Denali's Oligonucleotide Transport Vehicle platform has also shown potential in delivering antisense oligonucleotides to the central nervous system and muscle tissues.
InvestingPro Insights
Denali Therapeutics Inc. (NASDAQ:DNLI) is navigating a crucial phase with its drug candidate DNL310, and the financial landscape of the company offers insights that could be valuable for investors. According to InvestingPro data, Denali holds a market cap of approximately $3.59 billion, reflecting investor confidence despite the company not being profitable over the last twelve months. The anticipation of sales decline in the current year aligns with the company's strategic focus on the development and approval of DNL310.
InvestingPro Tips suggest that Denali's balance sheet is solid, with cash reserves exceeding debt, which is a positive sign for the company's financial health. Additionally, liquid assets surpass short-term obligations, providing the company with a cushion to manage its operations and invest in its pipeline. While analysts have revised their earnings upwards for the upcoming period, they do not anticipate the company will be profitable this year, highlighting the importance of the FDA's decision on the accelerated approval pathway for DNL310's potential market impact.
For investors looking for more in-depth analysis, there are over 11 additional InvestingPro Tips available, providing a comprehensive understanding of Denali's financials and market position. These insights could be instrumental in making informed decisions as the company progresses towards its BLA submission and potential commercial launch in 2025.
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