On the heels of layoffs, Denali Therapeutics has entered into a securities purchase agreement with existing accredited investors as it spins off preclinical small molecule portfolio.
Pictured: Denali headquarters building in San Francisco /iStock, hapabapa
Some existing investors are pumping $500 million into Denali Therapeutics to help support ongoing research and development activities, including its blood-brain barrier crossing therapeutics. The biotech announced the sale of more of its shares through a private investment in public equity financing Tuesday.
The raise will bring Denali’s cash balances to around $1.5 billion, which the company expects to last into 2028. Denali’s stock has dropped 45% over the past 12 months.
Funds are earmarked for the company’s proprietary blood-brain barrier (BBB) crossing Transport Vehicle (TV) technology for large molecules. The current pipeline has late clinical assets for lysosomal disorders like MPSII (Hunter Syndrome) and Parkinson’s disease as well as amyotrophic lateral sclerosis and multiple sclerosis candidates.
Hunter syndrome is a rare, inherited disorder in which a child’s body doesn’t properly break sown sugar molecules. There is currently no cure for the disorder. Denali is working with the FDA to determine the fastest path to approval.
Tuesday’s fundraising announcement follows news last week that Denali’s partner Sanofi suffered a Phase II fail in its investigational amyotrophic lateral sclerosis (ALS). SAR443820/DNL788 did not meet the primary endpoint of change in ALS Functional Rating Scale-Revised. However, the candidate is still in clinical trials for multiple sclerosis, where it’s believed to have first-class potential.
The asset is a small molecule, which is a focus area Denali is moving away from. Some of its staff will be moving into a spinout company to advance its preclinical molecule portfolio, while Denali focuses on its BBB-crossing large molecule therapeutics. The spinoff plans were announced at this year’s J.P. Morgan Healthcare Conference, held last month in San Francisco.
In addition to the staff moving to the spin off company, Denali is also laying off an undisclosed number of employees.
In January 2024, Denali received $12.5 million upfront from Biogen in a $75 million funding deal for a Phase II study of BIIB122/DNL151. Biogen is conducting a Phase IIb study in early-stage Parkinson’s disease. If successful, the drug will be co-commercialized by the partners.
Kate Goodwin is a freelance life science writer based in Des Moines, Iowa. She can be reached at kate.goodwin@biospace.com and on LinkedIn.
