Denali Therapeutics (DNLI) sold 13.9 million shares to the public this morning, making it the largest biotech of the year. The offering priced at $18/share, in-line with the $17-19 expected range. However, the size of the deal was increased from 8.3 million shares, indicating strong demand. At $18, the company has a fully diluted market capitalization of ~$1.6 billion.
Denali is a biotech company focused on neurodegenerative diseases. Those include Alzheimer's disease, Parkinson's disease, amyotrophic lateral sclerosis, or ALS. The brain is the most complex organ in the human body and tacking neurodegenerative diseases has proven very difficult in the medical field. Alzheimers is sort of a ‘holy grail' in biotech because there aren't any therapies on the market that slow the debilitating disease. Alzheimer's is the most expensive disease in America, costing more than cancer and heart disease, according to the Alzheimer's Association.
Denali's pipeline consists of six core and five seed programs. The company's most advanced program targets LRRK2 for the treatment of Parkinson's disease and has a product candidate (DNL201) currently in Phase 1 development. However, FDA placed DNL201 on a partial clinical hold in order to impose an exposure cap in the Phase 1 study based on preclinical toxicity study findings (safety concerns). The company believes the current dose level cap will be sufficient to inhibit LRRK2 50% on average over the dosing period and should effectively normalize LRRK2 kinase activity. Data from the study is expected in the first half of 2018.
Its next most advanced program targets RIPK1 for the treatment of Alzheimer's disease and ALS and currently has a product candidate in IND-enabling studies with a CTA filing planned for early 2018. The company's lead RIPK1 product candidate, DNL747, is a potent, selective and brain penetrant small molecule inhibitor of RIPK1 for Alzheimer's disease and ALS. Denali plans to submit a CTA for DNL747 in early 2018 and initiate a Phase 1 clinical trial in healthy volunteers in the first half of 2018. In addition, the company has four core programs in preclinical development that use proprietary BBB platform technology.
Co-Founder and Chief Executive Officer, Ryan Watts, Ph.D., is a world-leading drug developer and neuroscientist, with particular expertise in BBB therapeutic delivery. Dr. Watts most recently led the neuroscience research team at Roche's Genentech and has led multiple discovery teams, including programs in Alzheimer's disease, Parkinson's disease and ALS. The company's Co-Founder and Chief Operating Officer, Alexander Schuth, M.D., held various operational and leadership roles at Genentech for nearly ten years, including leading the partnering groups for neuroscience as well as technology innovation and diagnostics.
Denali said the offering would fund the company through 2019. This company is an early-stage biotech so more offerings are very likely in the future. Still, one would expect a strong performance in the stock today given the company's potential in a relatively untapped neurodegenerative market.