Denali Therapeutics Inc. Aktie

Good day, and thank you for standing by. Welcome to Denali Therapeutics Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Laura Hansen, VP, Investor Relations.

Good afternoon, everyone, and thank you for joining us to discuss Denali Therapeutics Third Quarter 2026 Financial Results and Business Highlights. Earlier today, we issued our press release and filed our quarterly report. The press release and today's presentation are available in the Investor Relations section of our website.

Before we begin, on Slide 2, I'd like to remind everyone that today's discussion includes forward-looking statements, including our expectations for fourth quarter AVLAYAH net product revenue and the timing and availability of clinical data and any regulatory submissions. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and to the cautionary language in today's release and presentation. Denali undertakes no obligation to update these statements, except as required by law.

Joining me today are Ryan Watts, our Chief Executive Officer; Katie Peng, our Chief Commercial Officer; Peter Chin, our Chief Medical Officer and Head of Development; and Alexander Schuth, our Chief Operating and Financial Officer. Ryan will open with our progress this quarter. Katie will cover the AVLAYAH launch. Peter will review the clinical programs, and Alex will discuss our financial results before Ryan opens the Q&A session. Ryan?

Slide 4. Thanks, Laura, and thank you all for joining us today. This was a defining quarter for Denali, and we are excited to share it with you. I want to start where we always do with our purpose: transforming life for people living with serious disease. We are focused on making a real difference for children, adults and families by delivering medicines across the blood-brain barrier and into the brain.

In recent weeks, we have spent time with Hunter syndrome families, hearing directly what this disease asks of their children and what families hope AVLAYAH can offer, brings our purpose into focus. Their trust is a responsibility we carry into the launch and into every program we advance.

Slide 5. It starts with AVLAYAH, but it is bigger than one medicine. For the Hunter syndrome community, AVLAYAH is the first new FDA-approved therapy in nearly 20 years. It is the first FDA-approved medicine of its kind designed to cross the blood-brain barrier through the transferrin receptor and the first to come from our TransportVehicle platform. That is a milestone for patients and a milestone for our field.

AVLAYAH gives Denali something we have worked toward for a long time, a commercial product that shows what our TransportVehicle platform can do. That same delivery capability underpins a broad pipeline across rare and common diseases. Our ambition now is to repeat what we have achieved in Hunter syndrome program after program.

Slide 6. You can see the breadth of that pipeline here. On the left are rare genetic diseases, including Hunter syndrome, Sanfilippo syndrome type A, FTD granulin and Pompe disease. Together, we estimate these diseases affect more than 30,000 people worldwide. On the right are Alzheimer's and Parkinson's disease, which we estimate affects more than 40 million. Different modalities, different diseases, one shared advantage: our ability to deliver medicines across the blood-brain barrier. Today, we will focus on our most advanced enzyme replacement therapies and our Alzheimer's disease programs.

Slide 7. Three things defined this quarter and each one moves us forward. First, AVLAYAH delivered $17.8 million in its second full commercial quarter, well ahead of our expectations. Katie will explain the adoption and access behind this result. Second, the Phase I/II study of zafinofusp alfa in Sanfilippo syndrome type A has completed the prespecified treatment duration for the primary endpoint. We are analyzing the data now and working toward a BLA submission in 2027 as we have planned. Third, both Alzheimer's programs are in the clinic with initial data expected in 2027. Together with readouts in Sanfilippo, FTD granulin and Pompe disease, those studies make next year a landmark year for the breadth of our platform.

Katie, over to you.

Thank you, Ryan. We are now 2 full quarters into the AVLAYAH launch. Patient interest, physician engagement and access are all moving faster than we expected. This has accelerated revenue growth. Let me walk you through what is driving that momentum and why we are so excited about the opportunity ahead.

Slide 9. Families, physicians and payers each have a role in getting a patient on to treatment. This quarter, we made substantial progress with all 3. AVLAYAH generated $17.8 million in net product revenue, up almost fivefold from $3.6 million in our first full quarter and well above the $10 million to $12 million we guided to in August. It is fantastic to hear from families and physicians who tell us that AVLAYAH is making a difference.

We are also seeing payer recognition of AVLAYAH's value, which has translated into an increase from 50% to 70% of commercial lives covered since last quarter. Looking ahead, we expect $30 million to $32 million in the fourth quarter, which would be more than 65% growth over this quarter. Behind those numbers is our priority: helping more eligible families reach treatment.

Slide 10. Let me start with families. We estimate about 500 people living with Hunter syndrome in the United States, of whom roughly 375 are eligible under the current pediatric label. Interest is broad from families of newly diagnosed children and those considering a transition from standard enzyme replacement therapy. One parent and advocate, Jeanette, described what she has seen in her son: I've seen meaningful changes in our everyday life, including more expressive language.

We have heard similar stories from multiple families about their positive experience with AVLAYAH. This reflects why families are seeking a therapy designed to reach the brain as well as the body. We believe that AVLAYAH is on its way to becoming the standard of care for Hunter syndrome. Our focus remains on supporting families through their treatment experience and ultimately reaching all eligible families.

Slide 11. Turning to physicians. We reached approximately 90% of our targeted health care organizations since launch. Before launch, in a survey of 35 physicians, 90% found the AVLAYAH data motivating to prescribe. What we've seen now is action, and treatment centers are leaning in. They are working through prior authorizations, appeals and infusion readiness alongside families, and that commitment reflects the value they see in treating neurologic manifestations.

Slide 12. Access is expanding fast. Commercial coverage increased from more than 50% to more than 70% of lives during this quarter. 20 state Medicaid programs now list AVLAYAH as covered, up from 14 last quarter and a permanent J-code took effect on October 1, making billing and reimbursement more straightforward for treatment centers. Having policies in place is an important step, and our team is there for every family along the path from start form to the first infusion and beyond. We work alongside physicians and families at each step. And as those steps become more familiar, we expect that path to get shorter and smoother.

Slide 13. Let me tell you why we are so optimistic about what comes next. The launch is ahead of our plan, and we see a long runway for continued growth. Families are engaged across the eligible pediatric population, physicians are activated and working with their treatment centers to move patients towards infusion, payer access continues to expand, and we now have a J-code to simplify reimbursement. Together, that progress took net product revenue from $3.6 million in the first full quarter to nearly $18 million in the second. This step-up was larger than we anticipated. Let me explain why.

Two factors contributed to our progress this quarter. First, payer coverage expanded rapidly. As I mentioned, AVLAYAH is now covered for more than 70% of commercial lives and 20 state Medicaid plans now list AVLAYAH as covered. Second, the majority of eligible patients from our Phase I/II study moved commercial treatment faster than anticipated. These patients had already reached their target dose, so they contributed meaningfully to revenue right away. That puts fourth quarter at $30 million to $32 million, and we expect the patient base to keep building from there as new patients start treatment, access processes improve and doses escalate.

I also want to put the broader launch dynamics into context as well. We've described our revenue launch trajectory as an S-shaped curve with the steep part coming in 2027. Based on what we're seeing today, that inflection is arriving sooner due to the strong launch execution. Some of the growth we expected later has been pulled forward, including the Phase I/II patient transitions. So the step-up between these 2 quarters shouldn't be read as a run rate.

Over the next several quarters, we expect revenue to keep growing at a steadier pace as we reach additional families one by one and help each patient through the steps to treatment. The upside of this patient-by-patient approach is persistence. MPS II is a lifelong condition and AVLAYAH is a chronic therapy. So each patient who starts treatment becomes part of that base that builds on itself.

Slide 14. Three drivers support continued U.S. growth: reaching more eligible patients currently on standard therapy, treating newly diagnosed children and reducing the time from start form to infusion. The patient interest, the physician commitment and access progress we are seeing gives us great confidence that AVLAYAH will become the leading treatment for Hunter syndrome in the United States. The capabilities we are building will also power our broader enzyme franchise. Our ambition extends well beyond the United States. We are working with distributor partners in Latin America, the GCC and select Asia Pacific markets, determining the right regulatory path for each.

COMPASS is expected to support broader approvals and European reimbursement. Over time, we want to reach approximately 2,000 people living with MPS II in commercially accessible geographies. Peter will now tell you how COMPASS moves that goal forward. Peter?

Thanks, Katie. Slide 15. The launch is built on the strength of clinical evidence and our ongoing studies are extending it. I'll cover COMPASS, zafinofusp alfa and our 2 Alzheimer's programs.

Slide 16. Our Phase I/II study of 47 participants supported U.S. accelerated approval of AVLAYAH. COMPASS is how we build on that foundation, and I'm delighted to report that we have completed enrollment in Cohort B for a total of 65 participants across cohorts A and B in this global randomized, double-blind, active controlled Phase II/III study. I want to thank every participant in family as well as the study investigators who made that possible.

COMPASS is designed to provide the evidence for conversion to full U.S. approval for potential expansion of the label to adults and for global regulatory and reimbursement decisions. COMPASS has co-primary endpoints, CSF heparan sulfate and adaptive behavior. As a reminder, CSF heparan sulfate is a CNS biomarker that serves as the basis for AVLAYAH's accelerated approval. And in our Phase I/II study, we observed skill gains in most participants on measures of adaptive behavior and cognition. We expect the study to complete around the end of 2027, and we look forward to sharing the data in the first half of 2028.

Slide 17. Turning to zafinofusp alfa. Sanfilippo syndrome type A is a devastating disease and families need treatment options that address the brain and body. In the third quarter, the Phase I/II study completed the prespecified treatment duration for the primary endpoint. We expect the resulting data package could support a BLA submission in 2027, seeking accelerated approval. The package includes CSF heparan sulfate reduction in the key efficacy cohorts, support of central and peripheral efficacy endpoints and up to about 2.5 years of safety follow-up.

As we have previously said, we reached alignment with the FDA that CSF HS may be considered a reasonably likely surrogate endpoint to predict clinical benefit and may therefore be used to support an accelerated approval path for zafinofusp alfa or MPS IIIA. We are analyzing the full data set and plan to present it at a medical congress in the first quarter of 2027. In parallel, we are moving quickly on manufacturing readiness and start-up of the Phase III confirmatory study designed with extensive input from FDA and EMA.

Slide 18. As a reminder, this slide shows preliminary results from the first 2 dose-finding cohorts presented at WORLDSymposium earlier this year, and they were encouraging. At week 49, mean CSF heparan sulfate was reduced by 80% with 3 of 7 assessed participants reaching the normal range. We believe these are the strongest biomarker data presented for MPS IIIA.

We also saw a 61% mean reduction in CSF GM3, an 83% mean reduction in urine heparan sulfate and normalization of liver volume in all participants assessed, reflecting zafinofusp alfa's potential to address disease manifestations in the brain and body. Infusion-related reactions were the most common adverse events, and the safety profile has been generally consistent with established enzyme replacement therapies. The next data set will include all 20 participants and a broader view of efficacy and safety.

Slide 19. Finally, Alzheimer's disease, where both of our programs are now in the clinic. DNL628 is an intravenously delivered antisense oligonucleotide targeting tau. Its Phase Ib study is randomized and placebo-controlled in people with biomarker-confirmed early Alzheimer's disease, and we expect initial clinical biomarker data in the first half of 2027.

DNL921 is our blood-brain barrier-enabled anti-amyloid antibody. Its Phase I/Ib study is ongoing, and we expect initial safety and clinical proof-of-concept data in 2027. The field has made real progress in understanding Alzheimer's biology and measuring it with biomarkers. We believe the next advances depend on delivering therapies safely and more effectively throughout the brain. And these 2 studies will give us our first clinical readouts on that approach.

In 2027, we expect data from 5 TransportVehicle programs: zafinofusp alfa in the first quarter; DNL593 in FTD granulin; and DNL628 in Alzheimer's in the first half; and initial data from DNL921 in Alzheimer's; and DNL952 in Pompe disease.

Alex, over to you.

Thank you, Peter. I will briefly review our portfolio strategy and pipeline priorities and then get to the financial results.

Slide 21. The TransportVehicle technology has broad potential for a wide range of indications where improved distribution of biologic medicines to the brain and other tissues can be beneficial. We are focusing on 2 main fields or franchises, which complement each other in our long-term growth strategy for Denali.

The first franchise are brain-penetrant enzymes with AVLAYAH as the commercial foundation, and we're excited about the strong recognition of the value for patients as seen in the successful launch. Beyond AVLAYAH, we are developing a portfolio of additional ERTs with zafinofusp alfa for MPS IIIA, the most advanced.

Enzyme replacement therapies are a sizable market opportunity as conventional enzyme replacement therapies, which generally don't reach the brain, currently represent a market of more than $9 billion. We believe that the next-generation products with TfR-enabled brain and tissue delivery can significantly expand this market.

In addition to market size, the ERT field is attractive as these programs historically have a high probability of success and relatively fast development time lines. We also expect that most of these indications would qualify for priority review vouchers.

Our second franchise is leveraging the TV platform for common neurodegenerative diseases, where each indication has a commercial potential of more than $5 billion. With our 2 Alzheimer's programs targeting Abeta and tau currently being tested in the clinic, we have the most advanced wholly owned set of BBB-enabled product candidates targeting the 2 key pathologies of Alzheimer's.

We are pursuing these 2 franchises in parallel with the enzyme business providing the near-term commercial growth and neurodegeneration creating substantial upside.

Slide 22. Zooming into the next 12 to 15 months, this slide highlights our 3 main priorities: first, building on AVLAYAH's strong launch, we are on track to become the U.S. market leader in Hunter syndrome; second, advancing zafinofusp alfa toward a planned BLA filing in 2027; and third, generating initial clinical data with our 2 Alzheimer's programs in 2027. In short, building commercial momentum while positioning the pipeline for important milestones next year.

Turning now to the financial results, Slide 23. AVLAYAH generated $17.8 million in net product revenue in Q3, and $21.4 million in 2026 year-to-date. Operating expenses in Q3 and year-to-date were essentially flat compared to the same period last year despite the commercial build for the launch of AVLAYAH and the progress on the pipeline. This reflects our effort for increased capital efficiency.

In Q3, we recognized net income of $70.1 million, which is primarily due to the onetime gross proceeds of $195 million from the sale of the PRV. We ended September with approximately $1.01 billion in cash, cash equivalents and marketable securities. With this strong balance sheet, we have the capital to execute on our 3-year goals, which Ryan will speak to next.

Ryan, back to you.

Slide 25. Thank you, Alex. The progress we discussed today gives us a foundation for our D3x3 goals through 2028. We aim to build 2 growing commercial brands, establish 5 clinical proof of concept and bring 4 to 6 additional programs into the clinic. AVLAYAH marks an important step in delivering on the promise of our TransportVehicle platform.

The work ahead is to build on that first launch, pursue clinical evidence across the pipeline and bring more medicines to patients. This goal gives us a clear way to measure our progress through 2028. We are deeply grateful to the patients, families and clinical trial investigators who make our work possible, and we are inspired by the dedication of the team that carries it forward.

Thank you again for joining us today. We are now ready to take your questions. Operator?

[Operator Instructions] Our first question comes from Jessica Fye from JPMorgan.

This is Adam on for Jess. I just wanted to know, with your guidance in 3Q, so now we have 4Q guidance, can you help us think of the trajectory and where the S-curve inflection point is being pulled forward on top of that with another quarter of data? Are you in a position to share maybe patients on drugs or cumulative start forms?

Great. Thanks for that question. This is Katie. Yes, we recognize that it's quite a jump from last quarter to this quarter. And of course, the rapidly expanding coverage really drove a big portion of that. So definitely, many more patients were able to get on treatment. And we were able to move in the Phase I/II patients on to commercial therapy much sooner than we expected, and they're already at the maintenance dose. So they contributed to the revenues.

In terms of going forward and what we're looking at, of course, we're looking at a compilation of different pieces of data. And one of the reasons that we guide with revenues is because we feel like that most represents how the business is evolving, whereas other metrics are still, this early in launch, moving. So we feel -- with the base of patients that we see today and the new patients that we hope to get on treatment over the next quarter, we feel like our guidance from a revenue perspective is the most accurate.

Our next question is from Salveen Richter of Goldman Sachs.

This is Tommie on for Salveen. And congratulations on the progress here. Just a follow-up on that. When we're thinking about the current J-code, can you dissect a little bit more how much that factors into the 4Q revenue step-up versus new patient adds? And just a quick one on 126. Maybe you could provide some color on your expectations for the additional Phase I/II data in first quarter next year and how you're thinking about differentiation versus the therapy now in the market.

Great. Thanks, Salveen (sic) [ Tommie ], for your question on the J-code. So the J-code is effective October 1. And certainly, with rare disease, having a J-code in place helps with the reimbursement processes. So it will help the access piece go much more smoothly than if the accounts were using the miscellaneous J. So of course, that's been incorporated in our thinking on the guidance.

And then your second piece on the question -- sorry, there was another piece.

Just on the additional 126 data and the differentiation here that you're expecting versus the therapy now in the market.

Yes. Thanks for the question. This is Peter. As you know, we presented preliminary data from dose-finding cohorts earlier in this year at WORLDSymposium. And for the final data cut, we'll have the full 20-patient cohort from the study with additional follow-up as well as patients treated with the final dose regimen. We're excited about the data. Even with the preliminary dose-finding cohorts, as we noted, we saw an 80% reduction -- mean reduction in CSF heparan sulfate with the ability to normalize as well as peripheral effects, as we covered in the presentation, on urine GAGs as well as normalizing liver volume.

And so we believe these are the strongest biomarker data that have ever been presented in MPS IIIA and that portends the potential for clinical benefit. We continue on the accelerated approval path with heparan sulfate as a reasonably likely surrogate endpoint.

Our next question is from Andrew Tsai of Jefferies.

Great execution. So I also wanted to ask more about the pipeline since you have a lot reading out in 2027. On the FTD progranulin program, when that data comes in first half, it sounds like you'll share a series of proximal biomarkers, but you'll also share NfL out to year 1. So on NfL, what kind of percentage reduction would you want to see for you to seek an accelerated approval? And then secondly, what would you want to see on the functional outcomes? Is that connected to the accelerated approval thinking as well?

Yes, Andrew, this is Ryan. Thank you for the question. Just a little bit of history here. As you know, we now have full control and ownership of the PTV progranulin program. And essentially, we made the decision in the middle of this year to extend the endpoint to 1 year to focus on NfL. And the reason for that is the proximal biomarkers, which are biomarkers of lysosomal dysfunction are very modestly elevated. That was what we had seen previously, but actually, I think importantly, this is probably what we expect to see in this ultimate cohort, specifically Cohort B3. And as a result, we shifted our focus primarily to NfL as the endpoint.

In terms of percent reduction in FTD granulin, you're looking at about fourfold to fivefold elevated NfL, not too dissimilar from what we're seeing actually in the lysosomal storage diseases like Hunter and Sanfilippo. And if you look at, historically, our data, it takes some time for NfL to reduce. But then when it does reduce, it's robust. We haven't set a point of what type of reduction, but believable reduction is going to be important for us to move forward.

I think one other sort of really relevant side note is that FTD is on a spectrum with ALS genetically and even within families that share the same mutation. And ALS has also used NfL as a surrogate endpoint of reasonably likely to predict clinical benefit. So obviously, we would be taking the first medicine forward using NfL as a potential surrogate. But fortunately, there's some history with ALS. So that would be the goal. But obviously, the key point now is getting that data in the first half of the year before we decide what the regulatory path would be.

Maybe just to add, Andrew, on the regulatory side of things, I'll just remind everyone that there are no approved therapies for FTD. And so this would be paving a path with positive data and trying to leverage precedent. I'll also note that -- as a reminder, that the DNL593 program received orphan drug designation earlier this year from the FDA, again, recognizing the unmet need.

Our next question is from Tazeen Ahmad of Bank of America.

Just a follow-up on Sanfilippo. I'm sorry if you already mentioned this, but what do you need to complete before your BLA submission happens next year? And are you still planning for an accelerated approval in calendar '27? And then one quick question on Hunter. When do you think you'd be in a position to feel comfortable providing sales guidance?

Okay. Tazeen, I'll take the first one on what we're going to see in the BLA package. Peter can add to that. And then in terms of sales guidance, obviously, we've provided guidance quarter-over-quarter. So we'll get -- Katie can add a little bit more detail there.

So basically, the data package that will be in the BLA filing will be the 20 patients. I think as already articulated by Peter, the first 8 patients we used to identify the right dose. So we actually changed the dose regimen and then we dose escalated. We went from every-other-week dosing to weekly dosing until we really identified the dose. And even in those patients where we were dose finding, we achieved greater than 80% reduction of CSF heparan sulfate with the ability to normalize on CSF heparan sulfate as well as some additional lysosomal biomarkers.

And so our plan is to take that data. Now all 20 patients have completed the 49-week portion. That data will be presented at WORLD, but also that will be the data that drives our BLA filing. The timing of filing and approval and, frankly, really the timing of filing is driven by Module 3, which is the manufacturing piece. And what we've guided to is essentially that we'll file in 2027. We're moving as quickly as possible.

Just a reminder that we are manufacturing that molecule ourselves. So we built our own facility. Ultimately, this will be the best in terms of COGS to be able to manufacture ourselves. We've transferred that already within the last several years. But this will be the first product that we're launching ourselves. So that's what's driving the timing of the filing.

And then subsequent to that, obviously, we would expect a priority review and look for approval. So we have less clarity on when we think we get approval as we experienced with AVLAYAH. But again, filing in '27. The data will be in hand and it will just come down to Module 3. It will all be based on manufacturing.

In terms of the second question, which is around sales guidance or revenue guidance, can you just add a little bit more clarity on what you're asking exactly because, of course, we're guiding...

Annual guidance.

Oh, okay. Yes, I missed that part. Do you want to comment?

Yes. At the moment, we haven't decided whether or not we're going to guide annually. So as the launch continues to evolve, we'll definitely look at all our metrics and have more information for you all.

And our next question comes from Paul Matteis from Stifel.

This is Matthew on for Paul. Congrats on all the progress and performance with AVLAYAH. So my questions are more on the pipeline. So for the Abeta program, maybe once we see the Phase I data, what are your thoughts on continuing to advance this yourself versus partnering this with another company? And then just another question on the Pompe. What biomarkers should we be looking for in the initial data that might help establish differentiation from standard ERTs with your delivery platform?

This is Alex here. Thanks for the question. I will address the partnering question. So at this point, what we guide towards is that we have the capabilities and the capital to advance the entire portfolio forward. We put it in the context of our D3x3 goals. And with $1 billion in cash, we're well financed through that.

Now in the long term, of course, the large neurodegenerative diseases are ideal partnering opportunities. We also have a track record of doing that in the past where we have earlier on signed collaboration agreements for Parkinson's and Alzheimer's disease. So this is something that we would consider in the future. But for now, the focus is very much on executing and generating the clinical proof-of-concept data.

And then on the question on biomarkers for Pompe, we're looking at urine Glc4 as well as serum creatine kinase. The idea here is looking at glucose-related metabolism as has been with other Pompe medicines and then, of course, muscle-related biomarkers. Obviously, our goal initially is working -- we're enrolling LOPD patients that are switching to ETV:GAA. And essentially, those are the biomarkers that we'll be looking at early on to show that we can maintain a robust biomarker response.

And our next question is from Sean Laaman of Morgan Stanley.

This is Mike on for Sean. Congrats on all the progress. Thinking about those 375 pediatric patients, where does, like, U.S. penetration top out before the COMPASS adult label and assuming, like, treatment of neurological manifestations matters to all those patients? But, like, could you just give us an understanding of the target profile for the new patients you're hoping to get next quarter? Any color there?

Yes. Thanks for that question. So in terms of market share, our belief is that all eligible patients should be on AVLAYAH. And we've shared historically that almost all patients have neurologic manifestations. So as we commented on earlier, our expectation is that we will become the market leader, and that's both in treating incident patients as well as prevalent patients that AVLAYAH would be the physician's choice for treating Hunter.

And our next question is from Michael Yee of UBS.

This is [ Madeleine ] on for Michael. Congrats on the quarter. I have a couple of questions maybe on Alzheimer's. So the first one is Biogen sharing some updated data from their tau Alzheimer's trial through some long-term extension data, subgroup and biomarker data, at CTAD. I guess what would you want to see from this data to gain more confidence on tau as a target? Or how should we -- things that you're looking for in the subgroup analyses?

And the second, on the Abeta program, just a question on how you position that asset in what's becoming an increasingly competitive space. You're obviously looking at the biomarker-positive patients, not necessarily with cognitive symptoms. So maybe how you think about the Lilly TRAILBLAZER-ALZ 3 trial, which is coming sometime between now and 2027.

Okay. Great question. I'll take this initially, this is Ryan, and then if Peter has anything to add. So in terms of the Biogen data, I cannot really predict what else they'll show. But what I can tell you would be helpful is just to understand a little bit more about the biomarkers. As you may recall, although there was a doubling and ultimately, quadrupling of dose, there wasn't a robust difference in the tau reduction across those doses. However, there was a difference, obviously, in the safety profile.

So a biomarker that would be quite interesting to look at would be NfL, and the question is, is the higher dose, is there some type of either inflammatory or some type of sort of biomarker that the higher doses are not as tolerated as the lower dose? And I think the confusion right now in the field is what is the target level of tau reduction that someone needs to achieve in order to drive maximal efficacy. And if you take the Biogen data at face value, you're not striving for super robust tau reduction. But I think that, that could be complicated by the fact that it's intrathecally delivered. And in our case, of course, we're delivering systemically and knocking down tau. So I think that's point number one on tau.

Do you want to add anything else on tau, Peter? Okay. So let me talk about the differentiation of the ATV:Abeta program. As you may recall, we published data in Science of last year around the unique properties of DNL921. So this is our ATV:Abeta program. And what's unique about that molecule is essentially the effector function on/ off switch. So when this antibody is bound to transferrin receptor, we don't engage Fc gamma receptors. And as a result, we would see little to no hematological findings with DNL921. However, when it's bound to amyloid plaque, you can engage the Fc gamma receptor and have robust plaque reduction.

And so the data that we've generated, we've compared against the competitors that use a traditional shuttle architecture. And what we see is more sustained brain exposure, higher brain exposure, better plaque reduction and better stability. Remember, the transferrin receptor binding is integrated into the Fc itself, which is separate from what you see with all the shuttle programs. So ultimately, we should expect a robust plaque reduction with a better tolerability and safety profile. Just one other note that there also is infusion-related reactions and some immunogenicity with those shuttle architectures that we expect hopefully not to see with DNL921.

So there are multiple areas in which we expect differentiation. The initial healthy volunteer data will actually be important to understand the hematological components of things. And then from there, obviously looking at plaque reduction. Ultimately, I think we're going to need larger patient numbers to look at the rates of ARIA.

Maybe a couple of things to add to what Ryan has just said about the 921 program. I think relating to the immunogenicity, there is a potential to differentiate on infusion-related reactions. Now we'll have to gather the data to determine that. But based on the architecture, that might be a possibility. The other thing is we are exploring the subcu administration, which could be a great convenience in the crowded marketplace that you've highlighted.

And our next question comes from Mayank Mamtani of B. Riley Securities.

Congrats on a strong commercial quarter. Sorry if I missed this, are you able to break down the de novo new patient adds versus the rollover from the Phase I/II? And just broadly thinking about the peak sales, how you're thinking about that for AVLAYAH? Is that really just moving -- the curves moving to the left or your broader view on penetration share is also evolving until the COMPASS data becomes available and folds in the adult opportunity and, of course, ex U.S.? And maybe just point to any similarities with zafinofusp alfa commercialization to AVLAYAH as you think about that 2 years out? And lastly, maybe a follow-up on tau MAPT. Just remind us why you are able to fast track into Alzheimer's patients, that program. I ask that in context of also the siRNA peer data we recently saw in healthy volunteers.

Thanks, Mayank. I'll start with the commercial questions, and then I'll turn it over to Ryan and others. In terms of patient numbers, we've always said that we share what we think is most reliable and helpful for you all to understand how the launch is progressing. So we feel like guidance on the actual revenues is the easiest way to look at to see how our launch is progressing.

In terms of the base of patients, what we've shared is that, of course, every quarter, we continue to get new patient starts and the speed in which we can get a patient from interest to infusion is really driven by reimbursement and coverage. And we've shared this quarter that we've seen another positive move in terms of that momentum getting faster. And in terms of the overall opportunity, we estimate 375 pediatric patients in the U.S. And our goal definitely is to capture all of those patients. We believe AVLAYAH is the best treatment for patients, which is why our expectation is that we would have leading market share over time.

In terms of the similarities between zafi and AVLAYAH, we're very pleased with the biomarker data because you could see, with the MPS II market, there's really great belief in the normalization of the disease biomarker. And this has translated to the tremendous conviction we've seen from physicians on getting patients on AVLAYAH. And we're very hopeful that these are the same physicians that will be -- or similar physicians that will be treating MPS IIIA is that they will also see the normalization of biomarkers that's been very meaningful in MPS IIIA as well.

And then on the question around going directly to Alzheimer's patients, I mean, Peter can add any additional details, but I'll just say that, that was our decision. And I think mainly because it's most important to understand the biomarker in the context of the disease.

I think the only thing I'd add is it just reflects the mindset that we take to development, recognizing the importance of generating benefit-risk data as quickly as possible, given the unmet need.

Our next question comes from Ananda Ghosh of H.C. Wainwright.

Congrats on the quarter. I have 2 questions. The first one with respect to Sanfilippo. As Sanfilippo moves towards BLA, what are the learnings from the AVLAYAH launch challenges? And how do you plan to integrate or streamline 2 products going forward? The second question is, Takeda guided to 9% decline at a constant currency for ELAPRASE. Does it reflect the switching dynamics you are seeing with AVLAYAH?

Okay. I'll start first on the synergies between AVLAYAH and zafi. I think we've shared before that the infrastructure -- commercial infrastructure that we've built today for AVLAYAH will actually be the same infrastructure that will launch zafi. And the reason is because the customer base is similar. So what we're building out today should help expedite how we think about launching our second product. And with the credibility that we have on launching our first brand, the engagement that we've had with the community and the trust that we've built with the stakeholders, we feel like this will accelerate our zafi launch as well.

And then in terms of the sales reported by Takeda, the decline in ELAPRASE, we have no comment on that.

Our next question comes from Joseph Thome of TD Cowen.

This is Jacob on the line for Joe. So this past quarter, we saw some data from a competitor using a more brain-penetrant approach at tau reduction and they reported some CSF tau lowering data. I was wondering if you had, like, any thoughts on that data and whether, like, we might expect similar sort of reductions using more brain-penetrant methods? And you had also said it's maybe difficult to compare some of these other methods versus IP injections and how those affect CSF. I'm just curious if you have any additional thoughts on that, now that we've seen these data.

Yes. I try not to make it a habit of commenting on others' data. I know we've already discussed briefly the intrathecal versus our approach using the TransportVehicle. But I think it's a very exciting time in the blood-brain barrier field. And it's great to see, of course, in any area where you're making progress, many others will use similar approaches. And in this case, I think the data you're referring to uses transferrin receptor to get an siRNA across the blood-brain barrier in healthy volunteers.

And so I think a question earlier in the call asked why do we go directly to patients. And I think our focus on patients just to understand the biomarker nature in patients is key. And I think what we've seen in our own labs is that any type of oligonucleotide, depending on if you engineer it, either an ASO or an [ SI ], we can successfully get it across the blood-brain barrier. So we're really excited to be in a highly competitive space. And I think the fundamental question is what level of reduction do you need to drive clinical benefit, and that's just going to take more data. And obviously, crossing the blood-brain barrier is very different than intrathecal delivery in terms of biodistribution. And I think that's -- other TfR approaches will have more similarity, but good to see others getting data, seeing safety, seeing pharmacodynamic response and what's becoming a competitive field.

Our next question is from Marc Goodman of Leerink.

Yes. Can you remind us of the pricing that you expected for AVLAYAH and whether 3Q is tracking to that level? I mean, gross to net or anything different from expectations? And have any of the patients discontinued? And if so, do you know why?

Thanks for the question. I think we've shared before that the current price is $5,200 per vial. We've not shared gross to net numbers. We said an average 30-kilogram patient is -- the cost would be about $811,000.

And your second part of your question, I'm sorry...

That was on discontinuation. I can take that. There's a very high level of patients remaining on drug. Remember, this is a lifelong disease with continuous weekly infusions. And so historically, you look, the numbers are really high in terms of patients staying on drug.

Yes. So when we look at ELAPRASE's persistence, it's very, very high. So it's a chronic therapy, and it's too early to tell now, but our expectations is that persistence would be high.

And just back on that pricing that you were talking about, I mean, if we just cut that into 1/4 of that number, I mean, is that generally how it was playing out in the third quarter as far as the 30 kilogram on average?

Yes. No, because there's dose escalation. So the patients start, for the first 8 weeks, they're on 3 milligrams per kilogram and then they go up to 7.5 milligrams. So there's dose escalation. And the number that I shared, the $811,000, that's based on the 30-kilogram patient, and we're going to have -- we're going to see a lot of variability in terms of weight. Given this is a pediatric indication, patients start very young all the way up to 16, 17 and older. So it's hard to say what is an average.

And I think, Marc, that's why we guide to revenue because there are so many variables that go into dose escalation, weight. And obviously, as these patients continue on drug, they will need more vials over time as well.

Our next question is from Myles Minter of William Blair.

Congrats on the quarter. One on safety related in the Sanfilippo program. I think at WORLDSymposium earlier this year, you presented some data, I think it was from 8 patients, and there was 1 patient that had an infusion-related reaction, mild to moderate, but it forced them on to a second infusion bag. Has that happened again at all to your knowledge? And then the second question is just with the gene therapy being approved earlier this year. I think they had some anti-SGSH immune responses that actually required some B-cell depletion in a couple of patients to get them back on track. Have you seen any sort of antidrug antibody reactions with your product? Just curious there.

Yes. I'll provide a top line and then Peter can provide a little bit more detail. Actually, infusion-related reactions are very common across all of these ERT patients, including in Sanfilippo, and immune tolerance protocols are very often used even for ERTs. It's seen often, like for example, in IOPD. And so these are the type of things that we would -- depending on how a patient reacts, we would consider these type of approaches.

A little bit different than gene therapy, which has a secondary sort of risk and a lifelong risk around the immunogenicity related to the AAV. But for enzyme replacement therapies, it's very common to see ITI. So I don't know exactly what you're referencing on the patient that needed another infusion bag, but we see the same rates of IRRs in Sanfilippo that we see in -- essentially in Hunter.

Do you want to add anything?

Yes. I'll just add that we don't have the details of additional patients at this time, but the team is actively analyzing the data comprehensively across the 20 patients and the full duration of exposure. And so we'll have more information at the time that we present the data.

And I'll just add one other point to answer your question specifically. ADAs are very common in ERTs as well. So I'd say, like, the vast majority of patients in all of these enzyme replacement therapies develop some type of antidrug antibody. And so that's why we've actually always pushed dose and we build tolerance at higher doses. And then as long as patients don't miss doses, they actually can tolerate it well. And that's what we saw and was published in New England Journal. And I think that's why a lot of ERTs are ultimately underdosed historically because they're not driving towards biomarker normalization and they have to develop basically tolerance over time with dosing.

Our next question is from Laura Chico of Wedbush.

I wanted to circle back on your comments on DNL921. And I guess the underlying hypothesis here, DNL921 generates less immunogenicity than perhaps other brain shuttles. What would be an acceptable degree of antidrug antibody incidence and neutralizing activity that you'd expect for 921? I guess, is there a maximum level that you want to avoid? And I guess I'm trying to better understand your thinking here on how antibodies might impact exposure and plaque clearance over time.

Thanks, Laura, for that question. This is Ryan again. It's not really a quantitative question. It's qualitative in terms of driving efficacy. So antidrug antibodies and infusion-related reactions are always in the context of efficacy. Obviously, it's a very different context in risk-benefit when it comes to Alzheimer's disease. And so what you'll see in the early days of trontinemab in particular was it's really about tolerability and how many patients basically dropped out of the study. And so they then, of course, shifted to pre-dosing with steroids, which is not necessarily ideal in the Alzheimer's population.

So our goal here is a drug that is tolerable to the point where we have a lot of persistence on drug and drive maximal efficacy. And I think the other side note around differentiation is just the hematological findings, which, of course, we hold a high bar on what we want to see in humans, especially in elderly that are taking this drug. So hopefully, that answers your question.

Our next question is from Michael DiFiore of Evercore.

Congrats on the impressive progress. Two for me. At this stage of the AVLAYAH launch, what are the average times to authorization and first infusion? And does this differ between commercial and Medicaid? And my follow-up question has to do with COMPASS. In a scenario where there's strong heparan sulfate normalization, but Vineland misses, could you provide any color in terms of what has been agreed upon with the agency regarding a favorable totality of evidence benefit?

Great. Thanks for your question on the time from start form to infusion. For ultra-rare disease, unfortunately, there's not a standard time measurement. It really depends on the patient's insurance plan as well as the logistics of the hospital institution that they're working out of. Of course, we shared that we got our J-code, which will speed up the reimbursement process, but there's not an average time per patient.

And you highlighted commercial versus Medicaid, even that varies. Generally, commercial is thought to be faster, but sometimes Medicaid can be fast as well. So it is very individualized, unfortunately.

And on the COMPASS question, the first thing I'd say is we're confident in the design. We leverage the data from the Phase I/II study to inform the design of the COMPASS study. And it covers a broad population with both CSF HS and Vineland, as you pointed out. Now we also, as you pointed out, have a totality of evidence that includes 47 patients from Phase I/II with an additional time of follow-up from the original accelerated approval. We'll have the COMPASS study itself, and we have open-label data following the COMPASS study.

And to your point, as is common in rare disease, we will be submitting a totality of evidence. And so I think, across the expanded clinical development program, we're confident that we'll be able to show both CSF heparan sulfate reductions as demonstrated in the Phase I/II, and we should be able to demonstrate clinical improvements as well.

Our next question is from David Hoang of Deutsche Bank.

Congrats on the quarter. I'd love to ask about the upcoming POC data for 921 and 628 programs in Alzheimer's. How should we think about the bar that you would use to justify moving these programs forward based on that data? And then once the data is in hand, could you talk about how you think about next steps for these programs? How quickly, for example, could you move into registrational-type programs?

Yes. As we're getting close on time, I'll just give a quick answer and then we can discuss more, David. But I mean, for us, believable and robust biomarker response is key. We avoid giving a percentage because it's all contextualized within dose, for example, and then moving forward. But our goal in the Phase I study is to identify a dose with a robust and safe profile -- robust biomarker profile.

And then in terms of the design of either a Phase II or a Phase III registrational trial, we have a lot of internal discussion and thoughts about that. We have not shared publicly what that design will look like. But speed is going to be key. And for both tau and for Abeta, especially for Abeta, there's precedent, right? So the key now is designing the differentiated study going forward. So I'll leave it at that, and say stay tuned, but a robust biomarker response with a safe and ideal dosing regimen is what we're looking for.

Our next question is from Charles Moore of Baird.

Congrats on the quarter. Just a couple on tau. I was just curious how you're handling background Abeta treatment and more generally, how you're thinking about combinability there. If you have any thoughts on what you expect the dosing frequency to be, and if you could just remind us if you're working on a subcu formulation for later-stage trials or the commercial setting.

Yes. So I'll take it in reverse. Subcu will be the ultimate goal with both tau and Abeta programs, and those will evolve as we see biomarker data. Our initial study is not designed to combine with amyloids, but that is certainly where the field is going to go. And I think the idea of targeting both Abeta and tau is going to be ideal. But in these early trials, we're looking for biomarkers, not in patients that are also on Abeta program -- on an anti-amyloid.

And our final question comes from Rudy Li of Wolfe Research.

Congrats on the strong quarter. Maybe just another quick follow-up question for DNL628 data in first half. Can you determine the dosing regimen based on CSF tau data? Or do you need to wait for additional biomarker imaging data to mature? Maybe just talk about the next step, what additional work is needed before moving to that pivotal trial?

Yes. Just the short answer is tau will be what drives our dose selection. So the short answer is we can determine dose frequency and dose level based on CSF tau. That is the primary proximal biomarker.

This concludes the question-and-answer session. I would like to turn it back to Ryan Watts for closing remarks.

Thank you for joining us today on the call. We appreciate the interest and obviously, very excited about this quarter and looking forward to the future.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good afternoon, everyone. I'm Sean Laaman, Head of U.S. SMID-Cap Biotech Equity Research here at Morgan Stanley, and welcome to our Global Healthcare Conference. Before we begin, make you aware of some important disclosures, and for those disclosures, visit our website at www.morganstanley.com/researchdisclosures. If you do have any questions, please reach out to your Morgan Stanley sales representative.

For this session, we have the pleasure to host from Denali Therapeutics, their CEO, Ryan Watts. Thank you, and pleasure to host you.

Great. Great to be here. Yes.

A couple of macro questions to begin with, Ryan. We were just debating it then, like how's the rise of China-originated innovation changing, if at all, your competitive positioning and your R&D and BD playbook?

Yes, I mean, I think that it's a great question, and it's a relevant question, and it's a question that we ask at really 2 levels. One is a biotech community, and specifically here in the U.S., how do we view China from a competitive perspective, and then, in our case, talking about it around invention and the blood-brain barrier specifically. And I think there's varying views, and I often refrain from talking too much about my general feelings about either politics or regional considerations, but I will say that my general impression is that competition is almost always considered, in my opinion, a good thing, because it will ultimately lead to the very best medicines for patients and the more competition there is, the more invention there is in order to either stay ahead or to find the next best medicine. And that's ultimately who wins in that category are the patients.

Now, as a company, you view it a little differently. You'd love to be on an island and have a technology that no one else in the world has. And that technology is essentially needed and no one else can access it. But that's not how biotech works. We all live in this biotech world and when something shows promise, almost everyone starts pursuing it, from Big Pharma to mid-sized biotech. Even academic labs will start going into it. And that's when I look back 20 years ago, when we started working on blood-brain barrier, there was essentially very few or no one working. There were a couple of academic labs and some obscure companies that were working on blood-brain barrier technologies.

And so we picked this up 20 years ago, this is prior to the founding of Denali, and just made everything that was in the patent literature and that had been published and asked do any of these technologies get medicines into the brain. And usually what happens is if there's not a lot of people working on it, what was first published doesn't really work. And people tried the same thing. They made it, it didn't work. That's not where we are today.

So with blood-brain barrier technologies, you're now seeing the first FDA-approved medicine in AVLAYAH, which we launched earlier this year. You're seeing exciting data in Alzheimer's disease where you can take a standard antibody and put a blood-brain barrier technology on it and get 3x faster plaque reduction.

And as a reality to that, everyone's going to start pursuing it, including in China. And the question is how to stay ahead, how to continue to invent. But I think importantly, when you're pioneering a field, it's important to really lay that solid foundation with great science, but recognize, you should feel the competition, but if you don't have competition, you're probably going in the wrong direction. My expectation is that China's competition is just going to heat up, including in the blood-brain barrier space, and I think ultimately it should be great for patients.

Moving on to another macro consideration, AI adoption. So how are you adopting or implementing AI in your business? And is there an example you can give us where it's changed a decision, a cost, a POS on a program?

Yes -- so, yes. I mean, it's a timely question as AI starts to take over the world, even in an unmonitored way. We, I think like many, have started to experience the absolute value and efficiency, and in some cases accuracy, but really efficiency of AI. And I think the most important thing is to take repetitive tasks or tasks that may be prone to bias and implement AI in that context. You can do that in the preclinical setting. You can do it in the clinical setting.

I know for me personally, I use it all the time in terms of my analysis. I actually sometimes like to compare or even compete with AI to see do I have the ability to still make those independent decisions that maybe my project in Claude couldn't make. And the reality is it's extraordinary. It really accelerates the mundane. I don't know yet if it's going to accelerate the actual fundamental discovery. And part of that is because you need the data to train it, and biology's complexity is such that I don't know if we have enough data to really train to have that independent thought.

But that doesn't matter. Like in our world, especially in the world now we have a proven platform and that platform we need to apply. So application with example is a great place to use AI. So we use it in all aspects of our business. In fact, we reward it, we accelerate it, we find any way we can use it. But I think there are areas where it's more advantageous than others and I think it's really those repetitive tasks where you're looking for consistency.

Sure, and I'm asking these questions across all our companies, but this last one is probably very interesting for you, particularly because Denali just crossed that threshold from being clinical to commercial stage. So which policy variable, is it FDA, Medicare negotiation, MFN, tariffs, or global pricing matters most to your economics? And what have you changed, if anything, because of it?

Yes, I think, in some ways, I want to say that we had the foresight to do this, but maybe we did, maybe we didn't. But we decided to onshore manufacturing in the U.S. And part of it is, if you look at the cycle of invention and application across biotech, it was the case that we -- everyone externalized manufacturing. I mean, why you build your own manufacturing? It's expensive, it takes time.

And what ended up happening is what used to be inexpensive and super efficient to outsource manufacturing has become extraordinarily expensive because when those are made available, what happens, those companies are trying to really maximize their margins in the way that they interact with biotech. And so we made the decision now 4 years ago to onshore manufacturing. And I think as a result, something like tariffs really matters because you're buying raw material and you want to do -- and so you're looking for obviously a paradigm in which you can reduce costs.

And it's been great for us. I think the flexibility, the speed, and what we manufacture, which are biologics, which -- there are many CDMOs that do this. Ours are actually fusion proteins that are unique. We end up having to build our own parallel teams for process development for AVLAYAH, our first product launch. It was just much easier for us to bring that in-house, and I think we're at a point where it's an advantage to do your own manufacturing, I think, here in the U.S.

Sure, thank you. And onto Denali-specific questions, but of AVLAYAH, a year ago it was pre-commercial, now it's been launched. And what can you tell investors about, it's the first TransportVehicle therapy for neurological symptoms in Hunter, but what can you tell us about the differentiation to the standard of care and why you think there will be ultimately a displacement of the standard of care with AVLAYAH?

Yes, so I think it's important first to describe briefly Hunter syndrome and what the standard of care is. So Hunter syndrome is one of many mucopolysaccharidoses or MPS diseases. It's a monogenic disease, a loss of enzyme function and what happens is lysosomes become dysfunctional. It's a lysosomal storage disease. And now I think 30 or plus years ago, it was discovered that you can take these lysosomal enzymes, you can manufacture them, and you can inject them systemically and a fraction of what you inject gets taken up into cells. And starts to restore lysosomal function. These are the enzyme replacement therapies. And it's been decades since that was discovered.

And this was a really important class of medicines. But the challenge with all of those enzyme replacement therapies is that they cannot access the brain. So of the totality of MPS patients, 70% of them have some type of neurologic dysfunction. It's probably greater if you include hearing. It might be as high as 95% have some neurologic manifestation. And so the standard of care does not cross the blood-brain barrier. These enzymes don't get into the brain and hence there's this big unmet need.

And I'll just give one example. So in Hunter syndrome, about 70% of patients upon diagnosis have neuronopathic disease. So they have complete enzyme loss of function. And those patients on standard of care will live on average to about age 15. So they'll initially learn how to walk and talk, and then by age 5, 6, 7, 8, they'll lose the ability to walk -- or sorry, lose the ability to talk, some will be able to walk and have other dysfunction, toileting, and that's on the standard of care. And the reason is that the nervous system is degenerating.

In the case of Sanfilippo, which is another disease we're working on, that degeneration is super rapid. It's like Alzheimer's of childhood. It's a very rapid neurodegenerative disease. And there, there's actually no standard of care because basically it's a neurologic disease and the standard enzymes don't get into the brain.

And so ultimately what AVLAYAH is engineered to do, it's hitching a ride with an iron transporter. It can treat the whole body, that's important, so we replace the standard of care, but it crosses the blood-brain barrier addressing the neurologic manifestations of disease. And I think the data that supports that was published earlier this year in The New England Journal, and obviously that went into the broader context of the filing with the approval in March and now the launch of AVLAYAH.

And maybe talk about when the neurological deficits start associated with Hunter and the optimal time for intervention. And you mentioned patients living to 50 (sic) [ 15, ] but I imagine that the earlier the intervention, the better the long-term outcomes. And that data will play out over time.

Yes, so I think that's -- you nailed it, which is earlier is better. I think our data shows that. In fact, we presented data recently that shows neurofilament, which is a marker of neurodegeneration. If you intervene early, the NfL goes down more rapidly. If you intervene later, you still get normalization, but there's a delay in the time before you actually halt the neurodegeneration, probably because there's a lot of neurodegeneration that's happening.

But I think, again, without newborn screening, which is really where we got, we have to go, we have to go as a country, newborn screening for all of these diseases, especially have medicines that can really impact. If you're getting diagnosed at age 2, usually it's ear infections, there's changes in like skin features and facial features. But the newborn screening is the way to go.

And when we think about the AVLAYAH launch, you know, most of our patients right now are switching from standard of care to AVLAYAH, but there are a percentage of patients that are newly diagnosed. And even better if they come out of newborn screening and can start taking this medicine in their really early life and hopefully have a normal life.

Sure. And as the, I guess, newborn screening proliferates, do you think estimates of the epidemiology may go up, or do you think that it's a fairly well-observed disease?

I think it's well-observed, and the reason for that is that eventually patients get diagnosed. Hunter is a very severe disease, and so you'll miss it, but by age 2, 3, and sometimes even 4, and maybe in the attenuated patients a little bit later, but -- it's diagnosed. And even on standard of care, just restate that at 15 years of age is the average lifespan of someone with severe disease. So that's happening. I don't think you're going to see the numbers go up, but we hope that the prevalence goes up because this medicine will have a big impact on life and other aspects, not just neurologic, which is a big piece of that.

And so far we've seen a Q2 revenue, I think, was about $3.6 million. You've guided to Q3 at $10 million to $12 million. Of that $10 million to $12 million, you know, are you able to tell us how many patients are new starts versus reimbursement conversions, if that question makes sense? And what particular rare disease, I imagine you have a pretty good hold on how the revenue is going to look for quarter-to-quarter as you get to the end of the quarter, if that makes sense.

Yes, let me just -- I'll ask a question just to make sure I get it exactly right. So new starts, meaning also including switches from ELAPRASE versus those that convert from the Phase I/II trial.

Correct.

Yes, okay. I mean, right now, the vast majority of our patients are all new starts. Our goal is by end of year to switch patients on the Phase I/II trial to commercial. So that's going to happen over time. But really out of the gates, it's new starts. And so I don't really have a percentage on that. And we did something a little bit unusual. We guided to revenue on a quarter basis. We thought of all the different metrics that are useful. And it's a little complicated in Hunter syndrome because there's, it's weight-based dosing. Obviously we have a dose escalation.

And the simplest thing is that we just, to take away that mystery, we guided towards what we think will be revenue in Q3. We'll likely do the same in Q4, and then we'll reassess what we're going to do for 2027, but obviously this is a great starting point for us. I think really importantly here is this is not a single product story. It's really the platform that has been validated by this product, AVLAYAH, and its now application across many disease areas.

And so we think that the commercial execution is critically important, and we can build an enzyme franchise that will create a lot of value for patients, and obviously for Denali, and hopefully for shareholders. But in reality, those these numbers don't really matter today, it's can we execute? And I think for us what's been really exciting is to see that commercial team execute. It doesn't have to be a big team. It's an ultra-rare disease. And certainly with the label the way that it is, we're in, I think, a really strong place in the initial launch of this medicine.

How should we think about the shape of the launch into 2027 without drawing on specific numbers? But do you think it's going to be kind of a rapid conversion of a prevalent pool or a sort of slower ramp over sort of 4 to 6 quarters?

Yes, we don't -- it's actually early innings, so we don't know how that's going to look. I'll tell you what our dream is. Our dream is to try to hit a plateau as fast as possible.

Sure.

We want to get as many patients in the U.S. on the medicine. We then want to work on the next 1/3 of patients outside the U.S. that can benefit from, I think, this transformative medicine. The final 1/3 is probably going to be unlocked with our COMPASS trial as we think about Europe in particular, and I think there that's as much about reimbursement as anything. And so our goal, the S-shaped launch in part is not the patient starts as much as it is dose escalation and growth and as you see a broader range of weights on drug.

And maybe thinking about some of the prescribing dynamics behind AVLAYAH, and I think there's more than 50% of commercial lives and 14 state Medicaid programs now have coverage. What's the typical time frame for from treatment to first infusion? And where does the access still break down, if at all?

Yes, so the short answer is it's variable, obviously from state to state and from clinic to clinic. And I think the 2 most -- I mean there's really 3 components. One is everything we can do to assess, but there's a limit to that. It's really the physician and the families that drive. And that's been probably the most inspiring thing to see in this community, is the drive to get these young patients, these young boys on medicine, driven by their families and the physicians. And so we don't like -- again, early innings, we don't have, and I don't even know if it's relevant, the revenue is ultimately what we calculate, but it's been exciting and inspiring to see that level of motivation to get access to medicine.

Sure. And I think you've mentioned 375 eligible U.S. pediatric patients, out of a potential of 500. So where's that other 25%? And what's the realistic addressability of the market?

I mean, the other 25% is essentially adult. And if you think about the prevalence of the 500 patients, the long-term, you start to see that shift from 70% neuronopathic to 30% attenuated to then about 50-50 because the attenuated patients live much longer. So that's where the other portion of patients and they're obviously -- they're not covered by label, a lot of interest from that community and there we hope to unlock that with the COMPASS trial data.

Sure, and maybe talk us through the conversion from ELAPRASE. How does that dialogue go?

Yes, so I think the conversion from ELAPRASE, I mean, number one, you go back into the clinic. That's the process as you go through the dose escalation process. The 47 patients that were on the Phase I/II trial, those patients eventually are now at home infused, and that's the goal, so you go back to the clinic. And that, we had assumed, would probably be a barrier, but the motivation, again, from families and physicians to see the benefit that AVLAYAH can offer, treating the neurologic manifestations.

And part of that is just making sure we get to the optimal dose. And we just haven't seen that as a big barrier. Now, there are probably going to be some patients that are less severe or families are not as motivated as they've kind of hit a comfortable position of where they are. And that's, I think, where there'll be work to be done.

Okay. And still thinking about some of the launch dynamics. How concentrated is the prescriber base, Ryan, and how many treatment centers are needed to reach most eligible patients?

It's pretty concentrated in sort of what we call centers of excellence in different parts of the United States. In fact, often families will relocate to be adjacent to those centers and, and so that's critical. Many of them were involved in the Phase I/II trial, have a lot of experience with AVLAYAH now. And then there are other areas where it's less so, and that's where work also needs to be done. It also comes down to how connected the families are with the MPS community. But I think we've estimated like 80 to 100 centers of excellence, of which we know many of them and engage with many of them. That includes also worldwide, but it's pretty concentrated.

Sure, and on worldwide, I think you've estimated 2,000 patients.

Right.

And what's the ex-U.S. filing sequence? And does COMPASS gate those assumptions?

Right. So again, if I look at the entire Hunter market, I think of the U.S., I think of Europe proper and then rest of world. And you can access most of rest of world now, and we're in that process of doing that with the data from the Phase I/II trial, with the accelerated approval, and with Europe it's going to be unlocked ultimately with COMPASS. And so really like 1/3, 1/3, 1/3. And why do we have that type of visibility? It's because there's a standard of care for the last 20 years, and we have an idea where that medicine is prescribed and where it's used.

Sure, I do have some AVLAYAH, more AVLAYAH questions, but I want to skip forward, giving said validation of the platform, I want to make sure we get to some of these other programs, given we've got 13 minutes. So on DNL126 in Sanfilippo. So TransportVehicle platform, you know, has its first validation. So how should investors view Denali now? Is this a single asset launch story or biologics delivery platform for new medicines with scale?

Yes, so this is zafinofusp alfa, or as what we call zafi, so we have its generic name. Simple, we have tivi, now we have zafi, tivi is now AVLAYAH in terms of its commercial name. So zafi is, you know, we've presented 8 patients worth of data at WORLD this year. Those 8 patients were really dose finding and it was really insightful because unlike Hunter, there's no standard of care. So this is the first time that we're really exploring and we can't really use a standard looking at what's out there.

We explored every-other-week dosing, frankly, to be optimized for patient families. And what we discovered is that actually weekly dosing is much better tolerated than every-other-week dosing, and that's because it's an enzyme, and these patients have no enzyme, and enzyme replacement therapies, you have to build tolerance, so you need drug on board. That was point #1. You can look at, like, the study design, the way that we presented it at WORLD, and this is some detail that wasn't really expressed at WORLD, but I think it's really interesting.

In addition to that, we can drive a better dose with that weekly dosing. What we're able to achieve is greater than 80% reduction in CSF heparan sulfate. Patients can achieve normalization. Those that don't have, like you see with most enzyme replacement therapies, anti-drug antibodies, and so modulating that is, I think, a key aspect. We also see that 6 out of 7 patients had normalized GM3, which is a downstream biomarker.

And so those are the 8 patients that allow us to really think about the dosing regimen and the dose. We then expanded to an additional 12 patients. Those patients are completing the 49-week now. And then we go through the -- and that was all pre-specified with the FDA, as we thought about how heparan sulfate as the biomarker to drive accelerated approval. So this program was selected for the START program. We engaged with the FDA quarterly in defining the path for approval for this medicine. And now we're in the process of like officially locking the database, going through that process, preparing for the BLA filing. And we look forward to sharing new data at WORLD next year, which is basically the additional patients on that trial.

We then also plan to launch this medicine from our own commercial manufacturing in Salt Lake City, so this is part of what we were talking about before, one of the biggest factors for us building our own commercial -- our own manufacturing, that will be the rate limiting step for the BLA filing, but we're looking forward to 2027 and filing on zafi.

Right, I think you've just answered my next question, but I'm going to ask it anyway just to make sure I got it. Produced an 80% -- on 126, produced an 80% reduction in HS in the CSF, but does AVLAYAH materially de-risk the accelerated approval process in Sanfilippo A, or must the FDA independently validate the surrogate in the disease?

Yes, so I think for the surrogate itself, heparan sulfate, and the belief that it's reasonably likely to predict clinical benefit, that's really solid. I think what the FDA does is it reviews every application independently, right? And so the precedent is very important. I think it substantially increases probability of success is using this biomarker, including in Sanfilippo. And the FDA got that. I mean, you can see what's happened over the last 1.5 years.

I mean, I love sitting on this stage today versus last year and all the uncertainty as we're thinking about the path to approval. But our review division has been fantastic. They're rigorous. We spent probably 3 years arguing why heparan sulfate and CSF actually would be reasonably likely to predict clinical benefit. And it was, frankly, the community that came around, and the community being the treating physicians, families and gathering with the FDA to say this is why heparan sulfate is the biomarker to predict clinical benefit.

So that foundation is laid. And so I think the future for zafi is just defining the clinical, the to-be-marketed dose, getting the data, showing that, and then designing it. Importantly, and now very soon beginning our Phase III trial to confirm efficacy. So that's going to be key. I think that's the bar that the FDA holds, and we understand why that's the case.

Sure. And just a question on the competitive positioning. So UX111 could establish a one-time gene therapy ahead of a potential launch of zafi. So how do you think about the competitive positioning of zafi?

Yes, so just to restate, there are gene therapy competitors in Hunter and in Sanfilippo. What's unique about this particular gene therapy is it's delivered systemically, not to the brain. And we just feel like there's going to be unmet need even on gene therapy, so there's probably room for multiple, and that's how we thought about it with Hunter as well. Part of it is heterogeneity, but also we have biomarkers, and the biomarkers can tell us are you really driving robust CSF reduction. And if you are, great, but if you're not, we have this medicine that can really drive that with zafi.

Okay. Great, thank you. Moving on to OTV:MAPT and ATV:Abeta programs, which are super exciting. But AVLAYAH validated the TfR-mediated transport for enzyme in a lysosomal disease? What does that generally de-risk for oligonucleotides and antibodies in neurodegeneration? And what remains target or modality specific?

Yes, so I think that the blood-brain barrier -- if you look at the history of blood-brain barrier discovery, it was 1989 when the first paper was published using a transferrin receptor technology to get a medicine in the brain. And now fast forward to 2026 to the FDA approval. I mean, it's -- I don't want to say it's embarrassing. I don't even know what I was doing in 1989, but that's not unusual for drug discovery and drug development. It's a long road where you're really defining the right properties to drive this.

And so I think in many ways, that FDA approval is, it very much just unlocks the field of BBB, back to our original question around competition. Everyone's going to start going after it. We already see that, we already know that. But specifically for the TransportVehicle, it's very important to now go after other targets. And we're, I mean, we have an endless number of exciting targets to use the TransportVehicle for. First, it's in enzymes, now it's in Alzheimer's, and there are many others that there's interest in, and we can do that in different ways. We can do it through partnerships, we can do it through small efforts within Denali. There are academic partnerships, and you'll see some of that, and you're seeing that really blossom throughout the field.

But in Alzheimer's disease in particular, we now have a validated approach and we can put it on the antibody. We can put it on oligonucleotide. So antibodies we already know, we've done 1 antibody already, we worked on TREM2 way back when. We saw fantastic biomarker data, like really robust activation at about 1/60th naked antibodies approach. So we know it's going to get in brain. We also know that from some of the Roche data. The oligonucleotides is just the untapped potential. Also highly competitive, because now we know transferrin receptor works and getting these oligonucleotides in the brain will be really exciting. So instead of having to do intrathecal delivery, which has its limitations with bio-distribution and everything that comes along with having to inject in the spinal cord, you can give systemically.

So these are the 2 approaches in Alzheimer's targeting A-beta. People have known about this target. I think 1991 was when APP was first sort of discovered as a gene in Alzheimer's disease. And tau, the other like histological hallmark of Alzheimer's, and those are the 2 targets that we're going after.

Sure, and on those programs, which would you have the high conviction of? And I do believe that we're going to see data for both programs next year.

That's right.

And what data would you be looking for to justify broader development? Development of either?

Yes, so these, the data next year is around dose. It's like what's the right dose to engage the target. So in one case we want to remove amyloid plaque, in the other case we want to reduce tau expression. And I mean, I think no one would argue with me that right now the clinical data points really strongly towards amyloid as being a positive target. Now, there are some people that still question. I think prevention is going to be key, early intervention, removing amyloid before you have cognitive decline is going to be key.

But the way that the data plays out right now is that it appears that plaque forms 20 years before we have cognitive decline. And then you start to see tau pathology rise and it rises several years and then its pathology correlates with cognitive decline. So it seems that A-beta is upstream and it in many ways accelerates tau spreading histologically.

And so they're both, I think, very promising targets. And I think much like a lot of disease areas that are complex, like cancer and otherwise, going after multiple targets. And the way I describe it is that A-beta is the trigger and tau is the executioner. And they both will be important targets. You need to get rid of the trigger. You need to get rid of the executioner. Then you have a set of accelerators or contributors, many of which are like immune modulators, but those are the 2 real hallmark targets.

Sure, wonderful. And moving on to FTD-GRN, which you're calling DNL593, data. Let's move to the first half of 2027 to allow for longer neurofilament follow-up. What would constitute a convincing package, progranulin restoration alone, or do you need NfL movement?

Yes, so we, I mean, I think in this particular program, I'd put in the category of high risk, but really high reward. And part of it is, it's a neurodegenerative disease, but it acts like a lysosomal storage disease from a biological perspective. It's very similar to what we're seeing with Hunter and Sanfilippo in the sense that the biology is a lysosomal biology. There's a set of lysosomal biomarkers. This is a hemizygous haploinsufficiency of loss of 1 copy of granulin, which codes for progranulin, a protein that produces like 7.5 granulins. And the idea is just like Hunter and Sanfilippo, we're restoring progranulin with a protein replacement. And it acts -- frankly, it acts a lot like an enzyme in terms of its lysosomal function.

So there I think the data and the science is pretty clear. The challenge is that it's frontotemporal dementia, which is not Hunter or Sanfilippo. They're a little bit more challenging to diagnose these patients, to say the least. And then it's a genetic subpopulation of FTD. And when we look at the biomarkers, we realize that unlike heparan sulfate that's 10-fold or 20-fold elevated in Hunter and Sanfilippo respectively, the biomarkers in a haploinsufficient disease are much more modest, so like 10%, 15%.

They're not big differences, but NfL is about 4-fold elevated. So this is a real biomarker of neurodegenerative disease. And then our experience with NfL is that it can take time. So you can restore the lysosome, but in 6 months, you're asking a lot to see NfL decline and so we just said, you know what, before we see any of the data, let's focus on a big signal to noise, a high-risk benefit sort of a paradigm. And we can do that. We wholly own the program now. Gives us the ability to make the decision and now we're focusing on NfL as the endpoint for that.

Awesome. So two Alzheimer's programs, one on FTD. What's your thoughts around ongoing internal development of those programs versus partnering with Big Pharma given that particularly Alzheimer's would be big studies?

Yes, and the other program that equally excited about, which we haven't mentioned yet, which is Pompe disease, right? I bring that up just because there is a set of enzymes that we can develop on our own. We now have a commercial team. We can hopefully launch multiple enzymes. I think with these Alzheimer's programs, they're definitely the programs that we've had the most incoming interest, not surprising. These are huge indications. A lot of rationale, a lot of competition, a lot of other cool approaches being taken around, like, you know, blood-brain barrier technologies, and that interest remains high.

I mean, I'd love a world where we're able to launch our enzymes, generate enough revenue, develop an Alzheimer's portfolio, launch in Alzheimer's, that would be brilliant. That would be brilliant for Denali, but I think realistically we will continue to be opportunistic about the right partner. And that partner would have to be someone who shares our vision for the right risk taking and has a set of resources that we don't have. Certainly global is one consideration.

Now, I do have time to circle back to this AVLAYAH question. You may have already answered it. But how does COMPASS support the adult label expansion? And would the current prior to advanced neurological impairment language apply to adults?

Yes, okay. Two separate questions very quickly. So COMPASS has cohort A and cohort B. Cohort A is ages 2 to 6, and it's really focused on the neurologic manifestations. The other cohort is up to age 26, and that's looking for comparability with ELAPRASE. What's certainly the case is that even adult patients that are attenuated have neurologic manifestations.

Hearing, absolutely. And that's some of the most robust data we've generated is looking at hearing benefit. But in addition to that, cognitive decline in those aspects, it's really an area of unmet need. And we're excited to see the data and move AVLAYAH forward.

Well, we're right at time. Is there anything I didn't ask that I should have, Ryan, or a message that you would like to leave the audience with?

Yes, I think I'll just end. For us, the story is our first product, which validates our platform, which drives our pipeline. And that platform is the TransportVehicle. We're very excited to be in this very competitive field and seeing a number of companies explore biologics for the brain, something that was started in the late 1980s, and now we can bring it forward.

Wonderful. Well, thanks for your time today, Ryan, and thanks, everyone, for listening. Thank you.

Josh Schimmer from the Cantor Equity Biotech Research team. On the main stage with Denali Therapeutics and for good reason, I'm joined by Ryan Watts, President and Chief Executive Officer. Congrats on the hard work that culminated in the approval of AVLAYAH, off to a good launch start.

Maybe just initially frame where Denali is and the evolution of the company and maybe some aspects of Denali that you think investors should be paying more attention to but aren't.

Yes. Okay. Great to be here. Thanks, Josh, and I appreciate the opportunity to take the stage with you and to discuss an exciting time at Denali. I think the best way to frame Denali right now is that there are really 4 major aspects. The first is that we have our first product in AVLAYAH. As you pointed out, it's been a very exciting year to launch our first medicine. That product ends up, for us, validating the platform. So we have product and then platform. And that platform has now led to a broad portfolio.

And we're going to get into some details. And I think the simplest way to view our portfolio is the enzyme replacement therapies, and then we have Alzheimer's as well and a number of key readouts coming in 2027. The fourth point, so we have product, platform, pipeline, and the fourth point is having the capital now to execute into 2029. So about $1.1 billion in cash. And obviously, we're spending a significant amount of our resources on the portfolio.

And we have, of course, early signs of a strong launch with AVLAYAH. But I think what's probably not appreciated as you pose that question is the fact that this platform has the ability to deliver now a number of products, and we have 5 additional clinical stage programs with a lot of data coming out in 2027. And so it's clearly an exciting time. Obviously, we launched this product ourselves as a company to go from discovery to development and now to delivering medicines to patients. And I think, Josh, as we were just commenting before the fireside chat, it's really rewarding to be part of the patient community and actually delivering a medicine.

Always a little awkward to turn patients into numbers, but that is kind of what we do and need to do. As we think about kind of the current indication and launch of AVLAYAH and the addressable patient population, the kind of revenue numbers that, that may support. Maybe you can help frame that for us.

Right. So if you look at the label, it's essentially pediatric patients. And the key term in the label, which really differentiates it, I think, from obviously, the standard of care is neurologic manifestations. So this doesn't mean neuronopathic and non-neuronopathic, it means that the medicine is really approved for neurologic manifestations, which represents essentially all Hunter patients. For example, even attenuated patients have hearing loss is, as I think, one of the probably more powerful pieces of data that was published in our New England Journal article earlier this year.

And so we're seeing benefit in hearing, obviously, cognition, behavior, and it's using cerebrospinal fluid heparan sulfate as the biomarker for this accelerated approval, but a lot of data supporting the fact that, that was predictive of clinical benefit. So if you look at the pediatric population, it's about 375 of the 500 patients. But importantly, every year, there's about 30 new Hunter patients. This is all just U.S. So worldwide, there's 2,000 worldwide, but we're just talking about U.S. numbers here with the U.S. accelerated approval.

And so you can think about what that spectrum looks like. There's the newly diagnosed. There's the patients that are eagerly awaiting. There are those that are just about to become adult. There are many patients that have been on, for example, intrathecal delivery and who have been also eagerly awaiting, there are older patients. And so that's how really to frame the total patient population, about 375 patients today, the prevalent population that are eligible for AVLAYAH.

I guess almost by definition, because they're pediatric patients, they will also be lower weight?

That's right. So there's a complexity, and I think this is where -- what we basically -- in our first quarter, we described, obviously, the revenue, and then we've given a revenue target for the next quarter and likely for the fourth quarter as well early on. And part of that is because it's really complex, right? It's weight-based dosing. You have very small, young pediatric newly diagnosed 10 kilogram, you have -- and then all the way up to like 16-year-olds. And so that's exactly right. And it's weight-based dosing and there's a pretty broad spectrum.

And the dose is also, I guess, ramped up to a steady state. But as we think about the performance in the second quarter, a very good start, $3.6 million, guiding to $10 million to $12 million and now in the third quarter. So is that primarily kind of the continuation of the patients to a higher dose in the full quarter? Or did you incorporate a meaningful number of new patients coming on to therapy?

Yes. So it's definitely a meaningful number of new patients coming on, but it's also the dose escalation. And it's exactly the reason why I think, sort of, we took the unusual step of just guiding towards a revenue because of that complexity, like in the question itself, sort of, highlights the complexity. I think, importantly, the patients -- the vast majority of patients who've started are not crossing over from our clinical trials. So that will -- by end of year, most of the patients that are in the Phase I/II will have crossed over to commercial product. But this first real set of revenue is coming majority from new patient starts. And most of those are switches. Most of those are patients who have been on ELAPRASE and are switching to AVLAYAH.

Right. So if you're targeting the 370-500 Hunter syndrome patients, are they essentially all on ELAPRASE? Would a patient not be on ELAPRASE for some reason come on to AVLAYAH?

So it's actually 90% to 95%. So almost all of them are on ELAPRASE. I think the exception is usually, sort of, end of life. So if you think of how this disease progresses, even with standard of care, you have different severities of mutations. And the mutations that are the most severe, even on standard of care, the average lifespan is between 15 and 20 years of age. And so there are some patients that are no longer on treatment because they're, sort of, palliative care at that point.

Okay. Got it. You mentioned clinical trial patients moving to commercial over time. How many in the U.S. would you anticipate that contribute?

Right. I don't think we've ever articulated exactly the split of the 47 patients that were in the Phase I/II, but there's a substantial U.S. as well as ex-U.S. I think, as we've gone to COMPASS, we've gone more global. So COMPASS is our Phase III study, but there's definitely a split between U.S. and ex-U.S. and even in the 47 patients as well.

Was there any contribution from Medicaid patients in the second quarter? How do you expect that to evolve over time?

Yes. So actually, yes. And I think if you look at what ultimately the payer coverage will look like, it's about half and half in terms of private versus Medicaid. And right now, we have payer policies for Medicaid in 14 states, which is great. So that's actually probably the most important part of the early momentum of the launch is the operations and getting payer coverage and managed Medicaid as well. And so I think ultimately, you'll see about a 50-50 split as this product evolves.

Okay. You've suggested that the prevalence pool may increase as patients live longer. What is typically the cause of premature mortality in this condition? And what gives you the confidence that AVLAYAH can actually address that?

Yes. So I mean, obviously, there's a severe neurologic component. But often, what you're seeing is cardiovascular or cardiac effects. And we published some of these data, but what we see is with AVLAYAH, one of the key factors is that we really push dose. So the Fc portion of AVLAYAH allows us to manufacture; our cost of goods is substantially lower, and we're pushing dose because we need better penetration throughout tissue.

And so one of the examples is we looked at, like, cochlear changes, bone changes in the ear, we thought that hearing is both processing in the brain, but also the structure itself. And in our animal studies, we saw a really robust effect as we sort of push dose with AVLAYAH. And so I think the key is that we're seeing benefits on peripheral endpoints in addition to CNS. So I think cardiac is one of the main reasons for death in these patients.

Okay. Now is that something you'd expect AVLAYAH to...

We hope so.

Benefit relative to ELAPRASE? Can you prove that with data? And if so, in what form?

Yes. So I think the data -- it's probably going to end up being mainly real-world data because you think of how you run that study. I mean, it's a very long multiyear study, but that would be -- the ultimate goal is to shift the prevalent population to 'this is a disease that you can live with.' And because you have a drug that treats both brain and is given at doses that have better effects in the periphery, you can live much longer.

Where do you anticipate perhaps seeing more stickiness for ELAPRASE in patients who may not necessarily want to move over to AVLAYAH?

Right. So I think one of the concerns around the launch has been that these patients go back into the clinic. And essentially, ELAPRASE was given at home. And AVLAYAH will also be given at home. There'll be at-home infusions over time. But to go back as you start on AVLAYAH and you go through the dose escalation protocol, it's 3 months to 6 months before you go back to at-home infusions. And so that's been the question mark is will patients want to go back in the clinic, especially those that are, I'd say, categorically attenuated that seem to be relatively well treated.

That's not what we're seeing right now. We're seeing interest across the spectrum. And part of that is, I think, just the fact that it's recognized that there are neurologic manifestations even in attenuated patients, if it's brain fog, if it's hearing, even visual. And as a result, there's motivation to go back and go to the clinic and get these infusions. So I think that's the dynamic. So if there were -- as this launch continues to evolve, the stickiness would be those that are probably the most attenuated.

You've kind of framed the market in a very helpful way around like 1/3 of the patients that -- global population that are unlocked now with the U.S. launch, then another 1/3 coming on in 2027, 2028. Is that -- when we're characterizing 1/3, is that patient number or dollar amount? And is that likely to be different as you expand to the next 1/3 of the global population?

Yes, it's a great question. I don't think I have the granularity to say -- I mean, it's really -- I think what's being asked is what do we expect the price of AVLAYAH to be outside of the U.S....

UK is incorporated?

Yes, and I think we just, let's say, stay tuned. But if you look -- I'll just give one -- I'll say one general comment in these ultra-rare diseases and enzyme replacement therapies, there isn't such a big difference across global prices.

And which are the primary countries contributing to that kind of next wave of...

I think the best way to look at it is the final 1/3 is the big European countries that are going to wait for the COMPASS readout essentially. And so everyone in between are, sort of, like, France and Germany and et cetera, would be the final 1/3 where we would file based on the COMPASS data.

Okay. Well, why don't we get to COMPASS then? Because that seems to be a very important clinical trial. Just remind us the design, the endpoints and the timing.

Right. So COMPASS is fully enrolled. There are about 65 patients, 44 of which are in Cohort A, which is, I think, sort of, categorically neuronopathic. So these would be patients that are younger ages 2 to 6 that have severe mutations sort of categorized by both mutation status, but also an external panel that will determine if they would be like neuronopathic. The others are put in, sort of, an attenuated bucket, less severe mutations up to age 26. I think one of the key points with COMPASS is our goal to expand the label to include adult as well.

And so really Cohort A is a 2-year endpoint co-primary endpoint based on 2 things: CSF heparan sulfate and the other is the Vineland, which we've shared data at various conferences, but basically a behavioral scale and then a key secondary endpoint will be Bayley, which is a cognitive scale. And our -- the study design is really based on our experience both with the Phase I/II, but also just looking at as much natural history data that we can get from, for example, the intrathecal trial, which ends up having a significant number of patients where you can kind of look at that rate of decline.

I think our confidence in this trial is knowing that between ages 2 and 6, it's where you see a real separation in patients, especially age 3, 4 and 5, where if you have neuronopathic disease, you start to see a significant separation in terms of cognitive and behavioral performance.

So it is a small cohort of neuronopathic, which means you're not powered to detect a subtle benefit; it really does need to be substantial.

That's right.

What gives you that confidence that across the trials, open-label type setting converting into a placebo-controlled setting that, that magnitude of effect will be seen?

I think it's a balance of what's a practical study design with what is an ideal study design. So as we engage with the FDA, I mean, obviously, for many of these, it would be great to power them with hundreds of patients. They don't even actually exist. And so you have to do partly what's practical. But I think what -- I'll go back to my original point, which is there is a point in time where you start to really see that separation.

And so enriching in 2- to 4-year-old, sort of, population is where you have the highest probability of seeing that separation over a 2-year period. And I think that combined with our Phase I/II data, I think what's been really compelling is to look at a number of our sibling pairs where you start treatment at age 2 versus age 6. And we shared this at, for example, our R&D Day. And it's pretty dramatic to see those patients treated over 2 years, 3 years, 4 years, the separation in the sibling pair. So I think that's -- we're confident in the efficacy, but you have a good point; it's a blinded study. We -- the readout will ultimately tell us.

Do we need to be flexible as we interpret the data, particularly on the p-value? It feels like it's so binary around p of 0.05, but that may not be the best way to approach the data set given how small the population is. And if you're not, if you've got a powerful trend, is that good enough?

Yes. I think the short answer is likely yes. I mean this is where regulators really see the totality of the data. It's the Phase I/II, it's the real-world data, it's the COMPASS study, the Phase III study. And it's -- there is what -- again, I'll go back to my point, what would ideally be done versus what's actually realistic in a small patient population.

In a scenario where you're not seeing meaningful separation on the Vineland score, what do you think the implications are?

Yes, it's a good question. I don't have a...

I hate to ask it...

No, it's a fair question. And I think, again, going back to the totality of the data is going to be key here.

Okay. As you think about the evolution of AVLAYAH globally, do you anticipate this product being a product that alone can drive Denali to profitability? Or do you see this more as an important driver of revenue to fund all the ambitious work you have and how much work there is to do across the portfolio?

Yes. It's also -- it's a good question. I think it's early innings on the launch. Very promising, I think, start. There's a real opportunity, a real market here, especially globally. But that's not the goal. I mean the goal for Denali is not a single product. And in fact, the way we think about the enzyme portfolio is that there's probably $7 billion to $9 billion of opportunity in terms of peak sales across multiple indications, including Sanfilippo, Pompe, Gaucher, Hurler; these are all products that we have, some more advanced than others with, for example, Sanfilippo with the BLA filing next year.

And so I think the way to look at this is that the enzymes have a high probability of success. We can drive towards profitability with the enzyme franchise in totality. And then of course, we have our Alzheimer's programs, which are much bigger binary and give us a lot of optionality also reading out in 2027.

So I guess another question that comes up often with investors is the MPS IIIA program, which I guess is even a smaller patient population than Hunter to the point that I think many wonder if it's more of a rounding error or not going to contribute meaningfully to top line and bottom line objectives. How do you address that?

I think the epidemiology is less clear with Sanfilippo. There is no standard of care. I mean the thing about Hunter is we know exactly it's $700 million in revenue for ELAPRASE, know worldwide patient numbers. We just don't know that as well for MPS IIIA. And it's interesting. It depends, like, regionally, it's as prevalent or more prevalent than Hunter, but in other regions, it's not. For example, in Asian populations, there's much less Sanfilippo IIIA as an example. And so obviously, we've seen a lot of interest in this product.

It's using the same transport vehicle technology. We -- the goal there is now that we have a path forward in Hunter to apply that to these other medicines. And in the case of Sanfilippo, it's the same biomarker. It's the same rationale. Sanfilippo, if anything, is even more neurologic than Hunter syndrome. So a stronger rationale around targeting the central nervous system. There are some peripheral effects in Sanfilippo, but it's largely neurological. So I think there -- we're -- I think that it's probably correct that it's slightly smaller than Hunter, but it remains to be seen with no standard of care.

Slightly smaller population, can you kind of even out the differential in revenue by pricing it at an even higher?

Yes. And it's a good question. Obviously, too early to discuss pricing, but hopefully, with BLA filing next year, that may be the goal.

What are the gating steps for the filing?

So at this point, we have 20 patients that are going into the BLA. We are -- we've completed that portion of the study, and we're locking the database. We plan to share data at WORLD in 2027 and then file basically in '27. The -- probably the rate-limiting step for us is that we're manufacturing Zafi on our own. And the reason we're doing that is that after having really launched AVLAYAH, we realized that we can bring many products forward.

And so we have to find ways to even further reduce cost of goods. And so we built our own manufacturing facility. And so this will be the first product launched out of our own facility. And so that will probably -- in our opinion, that is the rate-limiting step for filing and getting that locked down and ready to go. But I think the upside of that is that we'll have even better cost of goods for this product.

Now you need COMPASS to unlock part of the world for Hunter. Do you need an equivalent trial for MPS III to unlock that same fiber, is this a different...

Yes, that is a fantastic question. And in fact, we -- recently at SSIEM, which is a conference focused on inborn errors of metabolism, we highlighted some of our Phase III design, very different. There is -- for example, we -- it's not a placebo control. I mean I think it's really challenging and ethically to give a placebo in Sanfilippo, right? And so there's a delayed start for one of the arms and the other is just young patients younger than 28 months. And so it's a very different study design, and those study designs reflect both the U.S. FDA and EMA. And so I think there's open-mindedness. I mean we really think about like Europe and the U.S. And so I think the path is going to be different for Zafi than it was for Tivi for AVLAYAH.

When do we get the COMPASS data? When is that expected?

So the study will complete at end of '27. So I would say mid-'28 basically we get the data.

So I guess I'm wondering the extent to which the COMPASS data may read through to the MPS and kind of really informing maybe not that specific program, but the biology if there were any concerns that any of the regulators might have?

Yes. I would say that the design is very different. I mean, in some ways, the Phase III design for Zafi for MPS IIIA is a little bit like our Phase I/II for AVLAYAH, right? So it's open label. Even the number of patients is less than our Phase I/II for AVLAYAH. We had 47 patients in that Phase I/II in part because it was the very first transport vehicle program, and we just wanted a really robust data set. But frankly, when you think of return on investment, you can't invest enormous amounts of money in each one of these indications. First of all, they're very small patient populations, takes time to enroll these studies. But that's the dynamic. And the idea is that the Hunter program derisks the other programs essentially.

So as we went through the experience with AVLAYAH, I'm sure both remember quite clearly how the neurofilament levels weren't really changing, but then you got to a certain point in time and it really started to decline substantially. Let's come to 593 for FTD -- during that you -- the program you just got back and provided a little bit of color in terms of what you have been seeing, what you're hoping to see. Are there clear parallels in terms of the signal that you're -- you've generated thus far for 593 compared to AVLAYAH? Are there big differences that we don't quite understand in terms of, why is the neurofilament falling in one setting, but not in another?

Yes. So just for everyone here, 593 is our PTV progranulin program. So this is for FTD for frontotemporal dementia. And there's a subset of patients with FTD that have progranulin haploinsufficiency. So they have loss of one copy of progranulin that eventually leads to frontotemporal dementia. What we've discovered over the last decade is that progranulin is very similar to all these enzyme replacement therapies or all these lysosomal storage diseases. When you have a loss of progranulin function, you have lysosomal dysfunction.

So there's a set of lysosomal biomarkers. The difference is that the lysosomal biomarkers are modestly changed relative to, like, Hunter and Sanfilippo where you have 10- to 15-fold elevation in heparan sulfate; you see very modest changes because it's haploinsufficiency. It's just loss of 1 copy. But interestingly, NfL is about 4-fold elevated. So it's really substantial, as you'd expect for, like, FTD or ALS. And so when we received the full rights back, we stepped back and because of our experience with NfL, we asked ourselves the question, what's the highest probability and the fastest path for this to become a medicine.

And frankly, in some ways, it's, kind of, going for the home run, but if you have a believable and robust change on NfL, then we believe we have a medicine. And as you point out, with Hunter, 6 months, not much happened. And then after 6 months, there was a really robust and steady decline. It ended up being about a 75% reduction and normalization of NfL. That included patients who had probably had elevated NfL for a decade. So, like, a 10-year-old that then starts taking AVLAYAH, you will see it takes a bit of time and then this really robust reduction in NfL.

So using that mindset of 'this is a lysosomal storage disease.' And in the case of FTD granulin, it's a very, like, let's call it, a mild lysosomal storage disease, which, by the way, Parkinson's disease is similar. There's many similar genes in Parkinson's disease as are in lysosomal storage disease. So we wanted to give ourselves really the highest probability of seeing an effect on NfL because of our experience. So without looking -- without having any data in hand, where we said, okay, let's extend this. It's really go for a longer period of time and say, do we see a change? And then if so, engage with regulators and see if there's an accelerated path for FTD granulin.

How much follow-up for these patients do you have? Have you reached a point of follow-up where you would have expected to see something by now or not...

Yes. So interestingly, there was a study on NfL half-life, and it's, like, 260 days. So this is an in-human study done by WashU, where they were basically looking at like pulse-chase labeling and asking how long does NfL sort of exist? And we've always wondered in Hunter syndrome, why is it that you get such a robust heparan sulfate normalization? And then within 3 months, you get all these other lysosomal markers also normalized, but then it takes a year plus to see NfL normalization.

I think part of that may be the half-life of NfL. Now if that's true, now obviously, the kinetics are different, and you've done this analysis and we have as well, where you look across all these various diseases at NfL -- we just want to be in a position where we have enough data, enough patients that have reached beyond a year so that we can know the trajectory of NfL, like, are you actually having an effect? And the reality is either we will or we won't. The question is do we have a high enough dose or do we not? I mean these are the other dynamics, but a real accelerated path has to come down to some type of believable biomarker like NfL.

When do you expect to have more data on NfL, whether it's moving or not?

Yes. So I think we've guide towards mid-2027 is essentially where we'll read out. This is the highest dose, a year plus of data. That's the key.

Maybe quickly on the Pompe program, which I've been super enthusiastic for. Now that said, we recently had the update from Avidity's Novartis program where the transferrin approach to muscle did not translate into clinical benefit. Are there substantial differences that you see between that program and Pompe that still keep you very enthusiastic for a similar transferrin receptor targeting approach?

Yes. It's a great question. And I guess I haven't looked at it that way. Avidity is a very different architecture than the transport vehicle, right? We have monovalency. We have moderate affinity. We've done a lot of work in muscle. But all of our comparisons for Pompe have been against standard of care, right? So we're really looking at the other enzymes, GAA comparisons for, like, Nexviazyme and others where we compare in animal models. And we see a very robust difference in muscle uptake.

And I think what's believed in the field is that in Pompe, there's a limited amount of mannose-6-phosphate receptor that internalizes GAA in muscle, and that's what ultimately limits the amount of uptake and therefore, transferrin receptor should enhance that. I think DM1 is -- and I don't -- again, speaking -- I don't want to speak out of turn. I'm not an expert here, but the dynamic is different with splicing and siRNA and ASO. This is different than an enzyme replacement therapy where there's a proof of concept and now we're enhancing that for muscle delivery.

Got to talk about Alzheimer's, but we don't have time for a full discussion. So maybe just, kind of, give us some -- a sense of what we should be looking for from the Alzheimer's programs in '27 and beyond.

Yes. So as we're limited on time, we have 2 Alzheimer's medicines, one targeting amyloid beta, the other targeting tau. It's been obviously a very exciting and meaningful year in Alzheimer's as tau may be one of the next validated targets for Alzheimer's with some, obviously, complication. In our case, we're delivering the antibody and the oligonucleotide using the transport vehicle technology, and we have biomarker readouts in 2027 for both of those programs. So back to the original, sort of, thesis, we have an enzyme franchise that we can build, but these opportunities using the transport vehicle in Alzheimer's, which I think are also very important programs.

Excellent. Well, a lot of years of work put in. It must be super exciting to see the culmination of the efforts in terms of being able to deliver value to patients, and you're just getting started. So looking forward to...

Yes, definitely just getting started.

A lot more updates from Denali.

Yes, thank you, Josh.

Thank you so much, Ryan. Thanks, everyone.

Thank you.

Thank you. Good day and thank you for standing by. Welcome to the second quarter 2026 financial results and business highlights. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. a question during this session you will need to press star 1 1 on your telephone you will then hear an automated message advising your hand is raised to withdraw your question please press star 1 1 again Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laura Hansen. Please go ahead.

Good afternoon, everyone, and thank you for joining us today to discuss Denali Therapeutics second quarter 2026 financial results and business highlights. Earlier today we issued our earnings press release and filed our quarterly report. The press release, financial tables, and today's presentation are available in the investor relations section of our website. Before we begin, I would like to remind everyone that today's discussion will include forward-looking statements. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and the questionnaire language in today's press release and presentation for discussion of these rules. Finale undertakes no obligation to update these forward-listing statements, except as required by law.

Joining me today are Ryan Watts, our Chief Executive Officer, Katie Pang, our Chief Commercial Officer, Alexander Shuth, our Chief Operating and Financial Officer, and Peter Chin, our Chief Medical Officer in Health Development. Ryan will begin with opening remarks. Katie will then provide an update on the U.S. launch of Ablea. Ryan will return to discuss pipeline highlights, and Alex will review our financial results. Peter will join the team for the question and answer session.

Thanks, Laura, and thank you, everyone, for joining us today. We will begin on slide five. This was a transformative quarter for Denali. We completed the first full quarter of the Avalaya launch, advanced to transport vehicle enabled Alzheimer's disease programs into clinical development and further strengthened our financial position. Before I discuss those highlights, I want to begin with why we are here. At Denali, our purpose is to transform life for for people living with serious diseases. That includes children and adults with rare genetic diseases such as Hunter syndrome, San Felipe syndrome, FTD granulone, and Pompe disease, as well as the millions of people living with common neurodegenerative diseases such as Alzheimer's disease and Parkinson's disease.

Across both groups, our mission is the same, to bring the power of biologic medicine to the brain. Slide six, the common challenge across many of these diseases is the blood-brain barrier. For over a decade, we have built the transport vehicle platform to address that challenge by engineering biologic medicines to cross the blurring barrier through receptor media transport. Earlier this year, that work reached an important milestone. With FDA approval of Avalaya, Denali became a commercial company and began delivering our first medicine to patients. In the Hunter Syndrome community, Avalaya is the first new FDA approved therapy in nearly 20 years and a new treatment option designed to reach both the body and the brain. Importantly, Avalaya became the first approved medicine developed using our transport vehicle platform and the first FDA approved biologics specifically designed to cross the blood-brain barrier.

For Denali, Ablea is much more than a product. It is the first proof that our platform can progress from scientific concept to an approved medicine for patients. Slide eight. We believe Denali today represents a powerful and differentiated combination to create significant value for patients. system and investors in the near and long term. We have a commercial product in Avalaya and an encouraging early launch. We have a broad clinical pipeline spanning rare genetic diseases and common neurodegenerative diseases, each with substantial market potential. We have a validated and scalable transport vehicle platform and scientific leadership in the field of BBB transport. We have the operational capabilities and financial strength to execute from discovery through development, manufacturing, and commercialization.

Together, these attributes positions in OLLI to create near-term growth and sustainable long-term value. Slide nine, turning to the quarter Avalaya generated 3.6 million in net product revenue in its first full commercial quarter. The positive response from the Hunter Syndrome community and the physicians caring for these individuals reflects years of partnership with patients, families, advocacy organizations, and clinicians. We could not have achieved this milestone without their unwavering commitment to advancing new treatment options. I also want to recognize the outstanding execution by our commercial team in the early stages of this launch. In the pipeline, BNL628 targeting Tau and BNL921 targeting A-beta both advanced into clinical development for Alzheimer's disease, with initial clinical data expected in 2027. And following the sale of our priority review voucher in July, our pro forma cash, cash equivalents, and marketable securities exceeded 1.15.

Slide 10. A key focus of today's call will be the Avalaya launch. Katie will walk through the early commercial indicators, what we are learning, and how we are building the foundation for continued growth.

Thank you, Ryan. On slide 12, I'd like to start by reinforcing why we believe Avalaya is setting a new bar for the treatment of MPS II. For the first time, a therapy is designed to reach the whole body, including the brain, and can normalize key disease biomarkers, both in the CNS and peripherally. These data continue to reinforce physician confidence and resonance. with families, supporting the strong momentum we are seeing in the launch. Slide 12. Hunter syndrome represents one of the more prevalent mucopolysaccharide doses and affects a meaningful patient population within the rare disease community. The U.S. opportunity is highly concentrated with most eligible patients already identified and receiving conventional IDS enzyme replacement therapy at a relatively small number of specialized treatment centers. These are pediatric patients with pre-symptomatic or symptomatic neurologic manifestations who have not progressed to advanced neurologic impairment. We estimate that there are approximately 2,000 patients worldwide in the addressable market, including approximately 500 prevalent patients with Hunter syndrome in the United States.

Based on the FDA approved indication, approximately 75% of the US prevalent population, or roughly 375 patients, are currently eligible for Ablea. In addition, about 30 children are born each year with Hunter syndrome, providing an ongoing opportunity to initiate treatment early. Our ongoing face-free COMPASS study is an important next step in advancing Ablea, with the goal of supporting full approval and expansion of the label to include adults. Ultimately, our goal is to reach all eligible patients worldwide. Slide 13. Our launch is being executed against four core strategies. First, partnering closely with the Hunter Syndrome community through a high-touch, community-centered approach. In rare diseases, families often learn from and support one another.

We believe that positive experience with both Ablea and the Denali team helps build trust, increase awareness, and encourage additional families to seek treatment. Second, helping physicians evaluate Ablea and supporting treatment centers as they prepare to initiate therapy. strong clinical conviction is creating urgency amongst physicians to switch eligible patients and engage payers to accelerate access. Third, helping each patient and family navigate the steps from prescription through their first infusion. And fourth, driving fast label-aligned coverage decisions that help remove payer roadblocks. After our first full quarter of launch, what has been particularly encouraging is how these four strategies have reinforced one another. strong clinical conviction has driven physicians and patient demand. That demand has accelerated payer coverage, and together, these dynamics are enabling more patients to begin therapy. Slide 14. Beginning with physicians, we entered the launch with a strong foundation.

For approval, more than 80% of physicians surveyed were already aware of Ablea. 90% viewed the biomarker and clinical data as motivating to prescribe. Since approval, we have reached approximately 80% of targeted healthcare organizations with Ablea's launch information through our field engagements, scientific exchange, educational webinars and treatment center support. These activities have been highly impactful and are driving strong engagement across a significant number of treating physicians. Physicians constantly tell us that the ability to address neurologic manifestations is highly meaningful and that most patients experience neurologic symptoms at some point during the course of their disease. That belief is translating into action, as many treatment centers with eligible patients are working with families to navigate reimbursement and transition patients to Ablea. Slide 15. We have seen equally strong engagement from patients and caregivers. Through our launch webinars focused on clinical data and access, as well as with Denali Patient Services, we reached more than 100 families.

That represents greater than one quarter of the eligible U.S. patients. This high level of engagement reflects the impact of the reflects both unmet need in Hunter syndrome and the extent to which families have followed the development of Ablea. We are also seeing families share their experiences through advocacy networks and local media, helping other members of the community learn about the availability of a new treatment option. Slide 16. One of the most powerful aspects of LAUNCH has been hearing directly from families and advocates about their experience with Ablea and Denali. They have described the opportunity to begin Ablea as a source of hope and in some cases as the possibility of gaining more meaningful time with their children. They are careful not to draw clinical conclusions from individual experiences. However, these stories illustrate how much the approval of Avalaya means to this community and that has waited many years for a therapy designed to reach both the brain and the body.

We are also hearing very positive feedback about the way the Denali team is supporting families and healthcare organizations. For many patients, initiating a new therapy involves coordinating physicians, infusion centers, insurers, specialty distributors, and patient services. Our team works closely with each family and treatment center to help them navigate those steps. The feedback from families and advocacy organizations have consistently highlighted the responsiveness, compassion, and partnership of the Denali team. That experience matters. confidence in treatment, helps patients move through the access process, and supports continuity once treatment begins. Slide 17. Now turning to payer access. We have made exceptional progress during the first quarter of launch.

Commercial policies covering more than 50% of lives have already been established. As with many rare diseases, a significant portion of MPS II patients is covered by Medicaid. Recognizing that not every state will publish a product-specific specific policy, 14 state Medicaid programs publicly listed Ablea as covered. we are also seeing managed Medicaid policy align their coverage with commercial plans. These results compare favorably with early coverage achieved by analogous rare disease launches. Importantly, the absence of published policy does not mean a patient cannot obtain access. To date, physicians and families have successfully used prior authorizations, appeals, and medical exceptions while formal policies are being developed. The willingness of physicians to initiate these requests reflects their conviction in Ablea and our payer and patient access teams are working closely with them to move eligible patients towards treatment.

Slide 18. We are extremely pleased with the trajectory of the U.S. launch. In our first full commercial quarter, we generated $3.6 million in net product revenue and secured commercial coverage for more than 50% of covered lives. Before discussing the outlook, I want to briefly address our approach to communicating launch dynamics and metrics. We understand that visibility is important to our investors and we are committed to maintaining an open dialogue. There are many factors that influence the trajectory of Avalaya adoption, and every patient journey is unique, from the initial expression of interest through reimbursement approval and ultimately dosing. In addition, because Avalaya is weight-based, the number of vials used can vary meaningfully between a newly-diagnosed infant and a 16-year-old adult. adolescent. For the first two quarters of launch, we therefore plan to provide guidance on expected net product revenue for the following quarter.

We believe that this approach together with the prior quarters reported net product revenue will provide the clearest view of the launch trajectory during this early period. Before launch, we described an adoption curve that would build over time. We expected the earliest patients to be highly engaged families who are waiting for Ablea and were prepared to move quickly through the medical exceptions process. That initial demand has been stronger than we anticipated, reflecting both the high awareness of Ablea and the significant unmet need in the Hunter Syndrome community. While many patients have already started therapies, others continue to move through the reimbursement and treatment journey. As payer coverage expands and treatment centers gain experience with Ablea, we expect the patient journey from prescription to infusion to become increasingly efficient, enabling more eligible patients to begin treatment. Given the pace of adoption, expanding access, and continued strong execution, we expect Q3 net product revenue to be in the range of $10 to $12 million.

Most importantly, families continue to tell us that Ablea and the support they receive from the Denali team is making a meaningful difference in their lives. Slide 19. The Ablea launch also has significance beyond a single product. It establishes the first commercial foundation for our enzyme transport vehicle franchise across lysosomal storage disorders. The ETV platform is designed to reach the whole body, including the brain, and it provides opportunities across Hunter syndrome, San Felipe syndrome, FDL-1, PPD granulon, Pompe's disease, Gaucher's disease, and Hurla syndrome. The ERT market alone represents more than a $9 billion opportunity. Across these diseases, we expect to benefit from shared scientific expertise, establish relationships with treatment centers and advocacy organizations, and commercial capabilities that could be leveraged across future launches. Each patient we support and each treatment center we activate strengthens the infrastructure that can serve the broader ETV franchise.

Ablea is therefore both an important medicine for Hunter Syndrome community and an early demonstration of our ability to discover, develop, manufacture, and develop. and commercialize innovative therapies efficiently and successfully. We are proud of the start while recognizing that this is still the beginning of the launch. Our priorities remain expanding access, supporting a positive treatment experience, reaching additional eligible patients, and preparing for the international expansion. With that, I'll turn it back to you, Ryan, to discuss the broader pipeline.

Thanks, Katie. Slide 21. Earlier I described Avalaya as the commercial foundation for Denali and the first proof that the transport vehicle platform can enable medicines for patients. I would now like to provide an update on the broader pipeline and then spend most of my time on our Alzheimer's disease programs. strategy remains unchanged, deliver, develop, and discover. Over the 2026 to 2028 period, our goals are to build two growing commercial brands, generate five clinical proofs of concept, and advance four to six additional programs into the clinic through continued leadership and invention in blood-brain barrier technologies. Slide 22. Next, I would like to briefly update you on DNL593. DNL593 is a direct progranulin replacement therapy designed to deliver progranulin across the blood-brain barrier and restore the missing protein to key cell types in the brain, including the lysosome, where progranulin normally functions. Earlier this year, we regained full ownership and control of the program from Takeda. That provides us with greater flexibility over the development strategy and timing of the data analysis.

We have decided to allow for a longer period of observation in the open label extension portion of the ongoing phase one two study. We now expect data in first half 2027 updated from our prior expectation results by the end of the year. The additional follow-up will allow us to better characterize treatment effects across multiple biomarkers, including neurofilament light chain, or NFL, which may change gradually following treatment. Pending the totality of the data, we also plan to explore whether a biomarker-driven accelerated approval path may be appropriate. NFL has regulatory precedent in the related neurodegenerative disease, ALS, although any potential path for DL593 would require discussion and alignment with regulators. We are excited about DL593. because it directly addresses the genetic cause of FTD granuline by replacing progranuline. This week, the FDA granted orphan drug designation to DNL593 for FTD granuline, underscoring the significant unmet need facing individuals affected by this disease and the potentially promising rationale of our approach with PTV progranuline.

Progranulin. Earlier, healthy volunteer data demonstrated dose-dependent increases in cerebrospinal fluid progranulin following intravenous administration. providing evidence of brain delivery and further validation of the transport vehicle platform. I will now turn to what we believe is one of the most exciting areas of our pipeline, Alzheimer's disease. A few weeks ago, I had the privilege of delivering a plenary presentation at the Alzheimer's Association International Conference in London. After working in Alzheimer's disease for more than 20 years, I believe the field has entered a transformative period because of extraordinary progress in three historically challenging areas, biology, biomarkers, and the blood-brain barrier. in genetics and pharmacology are sharpening our understanding of the multifaceted biology of disease. Biogene and blood-based biomarkers are enabling earlier diagnosis and increasingly precise measurements of disease progression and treatment response. And brain transport technologies are creating the potential to deliver biologic medicines broadly throughout the brain. Together, these advances create new opportunities for the next generation of Alzheimer's therapies.

Slide 24. We believe the next advances in Alzheimer's disease may depend on delivering therapies more effectively throughout the brain. Amyloid plaque clearance is now clinically validated, but currently available antibodies are limited by modest efficacy and the risk of amyloid-related imaging abnormalities or RAF. Cout reduction has also shown encouraging clinical signals, but current antisense approaches rely on intrathecal administration and may not achieve uniform distribution throughout the brain and have other limitations. Our two clinical programs are designed to address these limitations through better brain delivery. DL921 is a potential best-in-class BBB-crossing anti-amyloid antibody designed to improve plaque engagement while reducing ARIA potential and peripheral immune activation. DL628 is a potential first-in-class BBB-crossing anti-amyloid antibody designed to improve plaque engagement while reducing aria potential and peripheral immune activation. crossing tau antisense oligonucleotide designed for intravenous administration and broad uniform distribution throughout the capillary network. Slide 25. Starting with DNL921, one of the important features of transport vehicle-enabled delivery is the route of entry into the brain.

When conventional anti-amyloid antibodies enter the brain, they concentrate around larger arteries and arterioles where a vascular amyloid is present. We believe that localization contributes to ARIA risk. By engaging the transfer receptor, antibody transfer vehicle enabled antibodies enter the brain through the extensive capillary network and distribute more evenly throughout the brain. In preclinical models, this route of entry was associated with substantially fewer MRI lesions than a conventional anti-amyloid antibody, including at dose levels that achieved strong target engagement. These data support our hypothesis that improved brain delivery and biodistribution may enhance plaque engagement while reducing ARIA potential. Slide 26. We've also engineered DL921 to address the broader attributes required for successful medicine. Unlike fusion approaches that append a transparent receptor binding arm to an antibody, our transport vehicle binding is embedded directly into the FC.

DL921 is designed to achieve robust brain concentrations while remaining intact and minimizing effects on immature reticulocytes. With the goal of preserving activity at amyloid plaques while reducing peripheral immune activation, DL921 incorporates conditional effector function through our CISLALA design. Turning to DLN 628, the central opportunity is to improve both distribution and convenience for antisense therapy. Intrathecally administered antisense oligonucleotides distribute from cerebral spinal fluid and can produce uneven exposure across brain regions with greater treatment burden for patients. By contrast, intravenous oligonucleotide transport vehicle, OTV delivery, uses the capillary network to distribute the antisense oligo broadly across the brain and spinal cord. This distribution includes key cell types involved in neurodegeneration, including neurons, astrocytes, and microglia. Slide 28. expressing human tau and the human transfer receptor, DNL628 produced robust reductions in MAP-T RNA and tau protein.

Importantly, tau protein reduction persisted for more than 12 weeks after dosing, supporting the potential for a practical dosing interval. These data support the design of the ongoing Phase 1B study where we are evaluating safety dose selection effects on tau levels and imaging measures in people with biomarker-confirmed early Alzheimer's disease. Slide 29. Both Alzheimer's disease programs are now in clinical development. DNO 628 Phase 1B study is ongoing and we expect initial clinical biomarker data in the first half of 2027. BNL921, the clinical trial application was submitted in the first half of this year, and we expect initial safety and clinical proof of concept data in 2027. These readouts will be important not only for individual programs, but also for the broad validation of our oligonucleotide and antibody transport vehicle platforms in common neurodegenerative disease. Taken together, our progress this quarter demonstrates the breadth of Denali, a growing commercial business, broad clinical pipeline, and a repeatable platform capable of supporting multiple therapeutic modalities. all focused on delivering meaningful medicines to patients and families.

Slide 30. With that, I will turn the call over to Alex to review our financial results.

Thank you, Ryan. Slide 31. I will close our prepared remarks today with a look at our portfolio, capital allocation priorities and second quarter financial results. We have built a broad portfolio based on the transport vehicle platform, which is now clinically and commercially validated through Avlea. This portfolio has the potential to create significant value in the near and long term with each program designed to offer first or best in class potential in its respective indication. And we are well capitalized to execute against it. Our portfolio has two key components. First, we have a pipeline of next generation enzyme and protein replacement therapies designed to treat the whole body, including the brain. Across these programs, we can apply the clinical and regulatory learnings from Eblea and leverage our existing capabilities in development, manufacturing, and commercialization.

We estimate that each program represents a potential market opportunity ranging from approximately 500 million to more than 1 billion, creating a multibillion dollar opportunity across the franchise. These programs benefit from a well established therapeutic modality, measurable biomarkers, and in certain diseases, the potential for biomarkers In addition, and shown on the right, is our portfolio targeting common neurodegenerative diseases. This includes two clinical stage blood-brain barrier-enabled molecules targeting tau and amyloid beta for Alzheimer's disease with first and or best-in-class potential. If successful, these programs could reach millions. of patients and represent substantial multi-billion dollar market opportunities. Slide 32, turning to the financials and capital allocation. We ended the second quarter with approximately $940 million in cash, cash equivalents and marketable securities. In July, we received $195 million in proceeds from the sale of the rare pediatric disease priority review voucher awarded following the approval of Ablea.

Together, this brings our pro forma cash, cash equivalents, and marketable security to more than $1.1 billion. gives us flexibility to pursue three priorities with discipline. First, it allows us to invest in the execution of our portfolio, including the commercial activities for AvLeia as outlined by Katie, preparations for the potential launch of DL-126 or Safinofasp Alpha in 2027, and clinical programs. Second, we can continue to build capabilities and infrastructure for efficiency. In particular, our internal manufacturing facility in Salt Lake City provides opportunities for speed and development and attractive COGS as we bring additional products forward. Third, our balance sheet provides strategic flexibility with respect to potential future partnerships diversified sources of capital. Slide 33. The complete details of our financial results are included in today's press release in Form 10Q, so I will focus only on the key items. Avleya generated 3.6 million in net product revenues during the first full quarter of commercial availability.

Research and development expenses were 97 million compared compared with 102.7 million for the same period in 2025. The decrease primarily reflected the timing of Adelaide commercial supply manufacturing in the prior year period and lower external spending on small molecule programs. Selling general and administrative expenses were $36.3 million compared to $32.3 million in the second quarter 2025. The increase primarily reflected investments to support the Ad Layer commercial launch. As noted, we ended the quarter with approximately 940 million in cash, cash equivalents and marketable securities before receipt of the 195 million in PRV proceeds in July. In closing, we believe Denali is entering this exciting next phase from a position of strength, with a commercial product, a broad pipeline, a validated platform, and the capabilities and capital to deliver value for patients and investors. With that, I will turn the call back to the operator to begin the Q&A session.

Thank you.

Thank you. We will now begin the question and answer session. If you wish to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We will take our first question and the question comes from the line of Jessica Fry from J.P. Morgan. Please go ahead, your line is open.

Hello, this is Adam on for Jess. Thanks for taking our question. I just was curious, what in the launch so far has helped you come up with the next quarter's guidance? Can we assume that growth trajectory to continue through the end of the year? And could we see maybe op-eds guidance in the future? Thank you.

Thanks, Adam. Thanks for your question. So, what's giving us confidence is all of the leading indicators are moving in a very positive direction. As you saw from the presentation, physician awareness is extremely high of the Ablea data, and they're highly motivated to switch patients. In addition, we've seen tremendous disengagement from families as well. And we've also had great success moving patients through reimbursement with the medical exceptions process. And as you can see, also we've had success with payer access and we have now greater than 50% of commercial lives covered as of the end of Q2. So given all the dynamics are moving in the right direction, we feel very confident that the momentum will continue.

I can take the second part of this, Alex. I can take the second part on OpEx. So capital efficiency is very important to us, and we are pleased that we're able to keep OpEx flat in Q2 of 26 versus Q2 of 25 and actually slightly lower on a six-month basis, while at the same time preparing for the launch and advancing important new programs into the cloud. with respect to an outlook we generally provide an outlook for the full year at the beginning of the year so please stay tuned for that.

Thank you. Thank you. We will take our next question. and the question comes from salveen richler from goldman sachs please go ahead your line is open.

GOOD AFTERNOON. THIS IS LYDIA ON FOR SALVEEN. CONGRATS ON THE PROGRESS AND ON YOUR FIRST EARNINGS CALL. just speak to the patient profile of the initial patients on therapy and kind of the breakdown between the newly diagnosed versus switched patients? Thanks so much.

Great, thanks for that question, Lydia. So as you know, with this patient population, majority of the patients are already treated on Idar cell phase. So we expect 90% of patients, prevalent patients would be then switching. So the majority of that, Of course, we are seeing as well newly diagnosed patients being put on Avalaya, but the majority will come from patients that are switching. In terms of patient profiles, we initially believe that patients may skew to the younger population because those are the families that were most engaged and have been following the development of Ablea. But we've been really pleased to see that what we can do what we can gather today is that it's very broad. In fact, patients across the different age groups within the pediatric population have demonstrated interest in being prescribed Avlea.

Thanks so much. Thank you. We will take our next question. And a question comes from Andrew Sy from Jefferies. Please go ahead. Your line is open.

hey good afternoon thanks for sharing all these positive updates so maybe one more on hunter you know your They're guiding to a strong sales number for Q3. And then I think in your prepared remarks, the original guidance for an S-shaped curve still seems to hold. So, to me, that would mean that come next year, could we be talking about a quarterly revenue number that's significantly larger than 10 million? Is that the right way to think about it? And then secondly, and Biogen just shared their phase two tau data set. So I'd be curious to gauge your thoughts on the degree of efficacy they're seeing. How much do you think that is attributed to too much tau lowering, or is it the mode of administration or something else nice to gauge your views on these possibilities or variables around efficacy thank you.

Thanks, Andrew. I'll start with the first part of your question. And yes, we still believe that this year is a foundational year. We talked about getting as many patients on therapy as possible. And we are definitely at the beginning stages of that S-curve. But of course, our goal is to tighten that S-shaped curve and bring in the inflection point as soon as possible. And that's why our focus on driving awareness, making sure the experience on Avalaya is very positive so that the community can further share that and drive the momentum. that will drive, as well as with payer access, that will drive that inflection point.

I'm happy to take the second question, Andrew. As you know, we spoke before the data was shared at AIC in London, and then, of course, a lot came out after the data presentation, and I think our response is that, in general, it's the first data set to show that tau lowering may lead to a clinical benefit. And I think what's probably the most compelling is you look across not just ADAS-COG, or sorry, CDR sum of boxes, but also ADAS-COG and MMSC, and you're seeing consistency in potential clinical benefit. I think the challenge is, as you have highlighted, is a question around why was there not a dose response? Why did the higher doses not lead to more efficacy? And I think just a couple of points without going into too much detail. You know, obviously there were more discontinuation and adverse events in the higher doses. I think it's well understood with intrathecal administration that this is not uncommonly seen, including transient confusion. So I think we, like others, look forward to seeing more details and the differences between the doses and that may this actually be masking some of the efficacy.

But in general, first data set showing power lowering and potential.

clinical benefit. Thank you. Thank you. We will take our next question, and the question comes from Tazim Ahmed from Bank of America. Please go ahead. Your line is open.

Hi, guys. Thanks so much for taking my questions. I wanted to just focus on 593 for a second. I'm sorry if I missed this in your prepared remarks, but can you share any color on what level of data you plan to share when you release it? And what, in your view, would be good data? And then can you just clarify why you want to wait for NFL data? I think in the past you mentioned the focus was going to be on lysosomal function.

Thanks. Yes, thanks, Zuzana. I'm happy to take that. I think the most important point here is that, you know, as we've regained full rights to this program, we're now in a position where we can essentially drive the strategy on this program. And I think in our experience, I think point number one is that longer-term data is often needed when looking at biomarkers like NFL. And I think what's unique about FTD granulon from, let's say, some of our other lysosomal storage disease programs, that this is a haploid insufficiency in terms of the underlying disease. And as a result, you know, as we look at some of the lysosomal biomarkers historically, there's elevation, but it's modest, not like what you see with heparin sulfate in Hunter syndrome. So what we've decided to do is we're trying to find an accelerated path. As you may have also noted, we received orphan disease designation for this program just recently as well.

And so we think we have the best chance of seeing robust data specifically on the distal biomarkers such as NFL and more broadly. just looking at the entire biomarker set, including lysosomal biomarkers as well. So I think the key here is just giving this program the best chance of a potential accelerated path. Obviously, with data in hand, then we'd have to address that with regulators.

Thank you. We will take our next question and the question comes from Michael Yee from UBS. Please go ahead, your line is open.

Hi, this is on from Michael. I just wanted to ask a couple more on the lunch. a strong number right out of the boat. Just wondering... Given your comments around stronger than expected early demand and the fact that we sort of there. Do we expect a sort of bolus effect in the US of these patients who are covered on the label now coming on? And then for these patients that are having to go through sort of medical exceptions and fire off, do you have any sense of what the time is from like getting the scripts to actually getting infused?.

Thank you for that question. So, in terms of what we expected, we definitely expected that pool of patients who've been following Ablaa's development very closely. And that pool of highly interested families is bigger than we initially had expected. But we are working through, with the early experience, with these early families, though, we are seeing expansion into the broader patient population, as I described earlier. And so we're very excited about the fact that it's going beyond just those early families, and we're going to expect to see continued growth. into the broader population. And as you stated, the total eligible population is around 375 that are considered pediatric patients in the U.S. In terms of, I think your question was starting the interest to infusion and what's the timeline for that. As you know with or this early in launch and without payer coverage initially of though of course that's expanding now there is huge variability in the time between patients expressing interest to when they actually get infused so it's really hard to comment on that this early in in in launch however with payer coverage improving over time, that timeline should get more straightforward, more efficient.

Thank you. We will take our next question. And the question comes from Sean Laman from Morgan Stanley. Please go ahead. Your line is open.

Hi, this is Mike Riad on for Sean. Thank you for taking our questions and congratulations on the strong start. Can you remind us how is progress going on for the adult confirmatory study? And given what you've learned so far, acknowledging it's only one quarter into the launch, is there anything that has changed your excitement or views as to how that adult study could influence launch trajectory or pricing?.

So, what we're hearing today, certainly there are adult patients that are very much interested in getting treated with Ablea. I think that's your question. I don't think launch price will change since we've already gone into market, even when we hopefully will get the label expansion. And I'll let Peter comment on the study. Yes, and in terms of the Compass Phase 2-3 study, we're excited about reading out the study, which is set to end.

the end of next year. It is going to be the basis for expanding the label both in the U.S. as a confirmatory study and for global, potential global launches.

Thank you. That's very helpful. And then just thinking about the 2Q to 3Q revenue guidance and RAMP, can you walk us through any key drivers of that acceleration? How much of it is coming from new patient starts versus patients converting to reimbursement?.

So I think it's a combination of all those factors. So we're seeing, as I stated earlier, all of the leading indicators, the high level of engagement from physicians and families, the conviction that physicians have in going for a medical exceptions process, and then the fact that our payer coverage is getting better every day. I think all of those things are going to be contributing to the growth over the next quarter.

Thank you. Bring out the gun. Thank you. We will take our next question. And a question comes from the line of Paul Matisse from Stifel. Please go ahead. Your line is open.

Great, thanks very much and congrats on the early launch progress. I guess taking a step back, given everything you kind of understand around this patient population, the degree to which families are plugged in and we're waiting for Avalaya, do you think you're seeing a bolus right now? And might we see some attenuation in the ad rate later this year? or do you feel like this is actually potentially sustainable? And then as it relates to tau and the upcoming data next year, Ryan, I think you've talked about CSF tau data being an interesting early biomarker, given that pet changes can take some time. I'm wondering, though, that do you think your CSF tau data for the shuttle will be comparable to the CSF tau data for an intrathecal drug, given that IT-administered drugs can maybe bias CSF biomarkers, given sort of the site of administration. Thanks so much.

Thanks. I will take the bolus question first. And certainly you're correct that we expected this bolus. The bolus is bigger than we expected. But I think the key thing that we're seeing is that this early experience from this initial patient population is translating to the broader population. And over time, especially as physicians gain more experience and the stories are shared more broadly through the patient community, we expect the growth to continue into the full eligible population.

Thanks, Katie. Paul, fantastic question. Obviously very mechanistic. You know, obviously my kind of question. I think you're exactly right. It's really difficult to compare CSF tau in an intrathecally delivered molecule versus one that's delivered through, you know, capillaries through transplants. the transport vehicle through transfer receptor. And the experience we have related to this is actually with, you know, early days of ETVIDS now Avalaya and its comparison with intrathecal delivery of Idaronate 2 sulfatase where you know there's a regional very high concentrations of enzyme in this case it would be high concentration of the antisense oligo and so I think it's really apples to oranges in terms of like percent reduction and what we would correlate ultimately with clinical benefit. But what we can say is that our biodistribution is even and robust. So when we look at different cell types throughout the brain and brain regions, we get basically roughly the same knockdown of gene expression across these various cell types. So when we measure... CSF levels of tau, we're confident that that's the level of knockdown we're getting throughout the brain.

And I think if you then relate that to maybe some disappointment in the maximal efficacy seen with intrathecal delivery, that may be simply because you're not penetrating deeper brain regions that may be impacted by TAS. Tau and Tau pathology. And then to the sort of first half of your question around CSF Tau and Tau PET, I think what's really remarkable, and I just, you know, we mentioned this at AAIC. intrathecal data has essentially proven that tau PET can be reversed. That was actually a fundamental question, and many mouse models actually had never really necessarily shown that. So in other words, if you reduce the expression of MAPT, which codes for tau, and then you reduce the expression of tau proteins. over time you start to see a reduction in the tau PET signal. And if you look at the totality of the data, including the new data that's been presented, it seems like the shortest window is about a year from when they see tau PET reduction. The early data set didn't really show much reduction at six months, and then they looked later. It was either 18 months or two months. two years, this data set shows that a year they're seeing, albeit variable from patient to patient.

And actually, if you look at the data sets carefully, they've been published. Some patients get no tau reduction by PET and others get robust. We think this is actually heterogeneity in intrathecal delivery. And so the take home is, you know, biodegradable. distribution is going to be, you know, critically important and different with the transport vehicle technology. And CSF Tau will still be very informative, just like heparin sulfate. CSF was informative for our Hunter program. But we're not comparing percent reductions because of exactly the point you made.

These are fundamentally different. different delivery approaches. Great. Thanks, Ryan. Thank you.

We will take our next question and the question comes from the line of Mayank Mamthani from B Riley Securities. Please go ahead, your line is open.

Good afternoon. Thanks for taking my questions and congrats on a strong launch. Maybe right on the prior point on the OTD map key, strategy, are there any genetic type of things you could potentially look at and just taking the logic that you're applying to the DRM program, you know, So there are FTD map things also that could be looked at. And then maybe just a higher level question, there's a lot still we need to see from a biomarker standpoint in the CREA study. But there are sort of the right things to kind of look out for as you obviously think about the biomarkers you want to look at in your six to eight cohort reading.

Thanks, Neil. Thanks, Neil. Again, great questions. You know, my... My take is I think with MAP-T, The key point here is really focusing on tau reduction, showing that the OTV works, that you can deliver medicine systemically and get tau reduction. We're definitely interested in these genetic cell populations, but our experience actually with FTD granulone is that initially it was very, very difficult to enroll these more rare cases. And the telepathies are not unlike FTD. And in fact, there are FTD sort of telepathies. So sort of rare, hard to diagnose initially, and then you have to genetically diagnose them. So we're interested in that. I just don't think that it's the fastest path. to really proving the platform and then subsequently driving for the first approval.

In terms of what to look for, we're essentially looking for tau reduction in CSF, not really hitting a target. The genetic data in mice suggests that the haploinsufficiency loss of one copy of tau is highly protective. in the Alzheimer's models. And so, you know, you could imagine somewhere between 25 and, you know, 70% reduction. But I think that fundamentally, what's actually very interesting about the data set that has recently been presented is that there was a non-dose proportional reduction in tau. So as you go up 2X in dose and 4X in dose, there's only really about a 20% difference in overall tau reduction in that range. And yet there is sort of a different, obviously, AE profile for those higher doses. And so we feel like the CSF data for intrathecal is apples to oranges, but we look at our own data and our own preclinical data and what's sort of been published to set the tone that, you know, we really need to see CSF tau reduction as really a proof of the platform.

I don't know, Peter, if you want to add anything there. No, I think you covered it well. I think we're really focused on executing the program, generating the data that Ryan alluded to, and I think other potential indications is something that we can consider in the future.

Thank you. Thank you. We will take our next question. The question comes from the line of Ananda Ghosh from H.C. Wayne Writing Co. Please go ahead, your line is open.

Hi, thanks guys and comrades on the great quarter. I have actually two questions. In 2025 CTAD, Biogen presented some data using this zirconium dye where they tried to show their intrathecal, the tau modality, how well they distribute throughout the CNS. And you would see that it's a very poor distribution. Now, the question is that despite such a poor distribution, they do see, as you rightly mentioned, that they can move the clinical endpoints at least in a trend way. Thank you. And so just wanted to get your thoughts on that aspect of it, that how did, even with such a poor distribution, how can they see some efficacy with respect to both as a biomarker as well as from clinical endpoints? The second question is, there are also these ideas that, and especially from the Donanemab trial that, in patients where you have low tau, there you can see those patients are much more amenable to either both anti-abeta therapy or anti-tau therapy. So as you are thinking about your phase 1b, is there a way.

to enrich patients with low tau in your phase 1, the trial population? Thanks. Yes, good questions. I'll try to be brief because we have a number of other questions. I think let's look at additional data that hopefully will be presented on BID-80 to really understand that dynamic. But you're right. There's enormous heterogeneity. There is. And we've published this already in Monkey. And so I think that the positive clinical signal across three different endpoints, ADAS, COG, CDR, sum of boxes, and MMSC is really encouraging. And there are some patients that get really decent biodistribution in the pancreatic. particular study that you're referencing.

And so I think that, you know, that's I think the the main point.

Great, thanks. Thank you. We will take our next question and the question comes from Joseph Thorne from TD Co. And please go ahead, your line is open.

Hi, this is Jacob on the line for Joe. Thanks for taking our question. Kind of going along with, you know, patient enrichment or kind of patient selection, I was curious how you're thinking about some of these co-pathologies that often come along with AD, like alpha-synuclein and TDP-43 and how those could be used to help with patient selection. play a role in patient selection or kind of pre-specified subgroup analyses. And then just additionally, looking farther ahead, how you're thinking about, you know, what a bar might look like given some of the currently approved amyloid beta therapies on things like CD-RSB. Thanks.

So I'll address the first one on the co-pathologies. And then, Peter, why don't you address the bar on – I'm assuming what you're asking is the bar for approval or for, like, clear differentiation with the anti-amyloids. Yes. Yes. So I think with copathologies, the two, obviously the most common copathology, which is actually in some ways defines Alzheimer's is A-beta plaque or amyloid plaque and tau neuroflag rate tangles. I think what you're referencing is also, it's been shown like, you see Lewy bodies and other sort of vascular pathologies. challenge with those type of co-pathologies there aren't imaging biomarkers yet that allow you to look at the level of let's say Lewy bodies that can also be observed with amyloid plaque or tau and so at this point our focus is on the two most common and prevalent. I'll add that there's by the way a fourth one TDP43 pathology, which I think represents roughly 30% of Alzheimer's. All of this being said, amyloid appears to be at the top of the cascade. So amyloid eventually drives the formation of tau pathology and then tau pathology correlates with cognitive decline.

And so we're keen on targeting both amyloid and tau. And I think as biomarkers improve, you'll be able to see hopefully we'll be able to identify patients that have other pathologies, which in some ways is probably complicating the clinical picture. With that in mind, I'll hand it to Peter to talk about what the bar might be for anti-amyloid approvals.

Yes, thank you, Ryan, and thanks for the question. I mean, I think I'll start by saying this is a very exciting time for Alzheimer's, and coming off the vast amount of data that was presented at AAIC, there's a lot that's being learned about Alzheimer's. different aspects of the patient populations. I think it's premature to say exactly where we're headed, but I do think that with all the data that's being generated and understanding both progression rates and response to different types of therapies, this is something that we'll definitely pay attention to both with targeting tau as well as with amyloid. I think from an analog perspective, we're very excited about the differentiating potential of DNL921. I think our goal is really to generate proof of concept with that first. Great. Thank you.

Thank you. We will take our next question. The question comes from the line of Laura Chico from Wedbush. Please go ahead. Your line is open.

Hey, thanks very much for taking the question. Congrats guys in the quarter. Maybe one for Katie. I'm wondering if you could expand a little bit further, what capacity do the centers have for switch patients? Just wondering if there's any additional considerations that the physicians need to work through for a switch patient versus perhaps somebody that's new to treatment. you indicated in the webinars that you encompassed or encountered over 100 families or about greater than 25% of the eligible patient pool. So I guess I'm just trying to understand if there's any capacity considerations that we should be making as you're progressing here. Thanks very much.

Thank you, Laura. That's a great question, and you're exactly right. There are definitely dynamics, both for the newly diagnosed patients and for the switchers. As you remember, the majority of the idesophores patients are treated at home. And so these are patients coming back to the clinic. And definitely infusion scheduling is one of the steps that families have to work through. And so with all the families coming back, there is a sequencing depending on the center, depending on if you're at a center that has specialized centers of care, they are going to have a little bit more capacity than other centers. So that is the dynamic that has significant variability that we're going to be working through.

But what we've seen is the sense of urgency and the motivation from families have been very strong.

Thanks very much. Thank you. We will take our next question. And the question comes from Mark Goodman from Near Ink Partners. Please go ahead. Your line is open.

Hi, good evening everyone. This is Alyssa on for Mark. Thank you for taking our question. I was wondering if you could help us think about the average price per patient for Avlyia given the weight based dosing and titration schedule. Since many patients will initially be up titrating over the course of the first few months, when should we expect pricing to reach a steady state? Okay. run rate and then secondly on the manufacturing facility in Salt Lake City, do you have any plans to use that facility to manufacture commercial batches of Avleya or will that be used only for clinical manufacturing? Thank you.

Great, thanks. I'll address the pricing question. So at maintenance for a 10-kilogram patient, it's roughly around $270,000 per year and up to a 30-kg patient, which is about $800,000 per year. And as you described, there is a dose escalation described in our label. And what's been provided to physicians, and this is ultimately a physician's decision on how quickly to do the escalation, is that we expected the escalation to be about four weeks at each step before they get to maintenance dose. And there may be variability as patients' dose escalate, depending, and it'll be very individualized and physician-cited.

And then I'll answer the second question. We do not have plans to manufacture in Salt Lake City for Avalaya. In fact, our plans are to go to larger scale. with Lonza and onshore to Portsmouth to go to 6,000 liter.

Okay, thank you very much. Thank you. We will take our next question. The question comes from Michael Dufour from Evercore ISI. Please go ahead. Your line is open.

Hi, guys. Thanks so much for taking my question and congrats on the so far to for me now that you have a full commercial quarter under your belt at this juncture could you give us the number of patients on drug as well as the number of cumulative start forms and if not when might you be able to share this information and the second question is as patients switch off of Ella praise have you seen any competitive response response from Takeda, either on contracting pricing or account level pushback for that matter.

Okay, let me see if I can address all the questions. So your first question was on start forms and patient numbers. So at this stage, we intentionally focused on communicating the overall trajectory rather than providing individual operational metrics. So I shared earlier why we have confidence is we're seeing all of the progress with the various stakeholders within the ecosystems with physicians being highly aware. and engage families highly engaged and driving towards switching, as well as centers working through reimbursement and payer access. With regard to start forms, we also feel that at this point, start forms are not predictive of revenue, and it's because Each individual patient journey is very unique. And the time, depending on what their insurance plan is, which centers they're getting treatment at, that is highly variable at this point. And we haven't provided guidance as to when in the future we may provide patient or start form information.

For now, we really want our investor to rely on the revenue guidance because we feel like it's the most clear quantitative indicator of how our launch is progressing.

I think those were, oh, did you have one more question? Yes, I did. Just regarding the switch off from LRAs. Any competitive response from Takeda that you've seen?.

Yes, so in terms of competitive response, you know, we've been very much focused on making sure that the clinical value and the biomarker data is well recognized. So I think we haven't seen a ton of pushback because it's very well recognized that L-apran does not address neurologic manifestations. And we haven't seen the other activities that you've described, which is contracting, and I think you've described another one, but we haven't seen any activity related to that.

Thank you. We will take our next question. The next question comes from Miles Minter from William Blair. Please go ahead. Your line is open.

Hey, team, this is John. I'm from IELTS. Congrats on a strong first launch quarter and thanks so much for taking our question. So for Avleya, wondering if any of your commercial patients have previously been clinical trial participants and wondering if you can give us any color on the cadence you expect for clinical trial participants to transition.

over to commercial therapy? Yes, so the majority of patients that have started today are not actually our clinical trial patients. We expect all of our clinical trial patients to be able to convert to commercial patients by the end of this year.

Thank you. We will take our next question. And the question comes from David Hong from Deutsche Bank. Please go ahead. Your line is open.

Hi, this is Rosemary on for David. Thank you so much for taking my question and congrats on the quarter I was just wondering how you might be thinking about the competitive landscape evolution for Avleya as There's some competitor resubmission happening this year and KCR farmers is cargo. Maybe having a global phase three readout next year. Thank you.

Yes, thanks for that question. Of course, we're always very encouraged to see continued innovation in Hunter syndrome, but we are very confident in our biomarker and clinical evidence. As you know, we've shown normalization for the first time in this disease area for key disease biomarkers, and our focus is on executing on our launch and driving the momentum that we're seeing today.

Thank you. Apologies for the delay. We will take our next question. Your next question comes from the line of Charles Moore from Baird. Please go ahead. Your line is open.

Hey guys, thanks for taking the question and congrats on the great quarter. Just kind of following up on the last question, I recall your analogous trial for Avleya included patients who had been treated with gene therapy. So looking toward the DNL126 trial, are there any patients there who have been treated with the gene therapy, previously, considering that there's the possibility for a Sanfilippo gene therapy to be approved ahead of DNL-126. Thank you.

Peter, maybe I'll have you take that. I'll just make one comment. We haven't gone into great detail on the 126 patient population, but, you know, obviously presented new data earlier this year at World and very excited about that program, but great question around the competitive landscape.

Peter, do you want to add anything to that? I just don't think we've gone into much detail on the nature of those patients. Yes, thanks, Ryan. Yes, I would just say we haven't presented the baseline characteristics of the full cohort yet, but we do intend to present the data early next year at the World Symposium.

And I'll just add, you know, great memory. We did have both gene therapy and cell therapy patients in the Hunter data set and where we saw, you know, robust normalization in those patients' data in terms of CSF heparin sulfate. But I think the key here is really focused on the sustained biomarker response. across our ETV franchise. Thanks for the question. Got it.

Thank you very much. Thank you. This concludes today's question and answer session. I'll now hand the call back to Ryan Watts for closing remarks.

We thank everyone for joining the call today. We're very excited about where we are and look forward to continued momentum. Thanks, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Great. Good morning, everyone. Thank you so much for joining us. It's a pleasure to have the Denali team here with us. We have Ryan Watts, CEO; and Alex Schuth, CFO.

To start here, the recent approval of AVLAYAH in Hunter syndrome serves as Denali's first commercial launch and the first from the transport vehicle platform. In this context, can you frame the outlook for your vertical specifically, the blood-brain barrier vertical, your key priorities and the catalyst outlook as we look to the next 12 to 18 months?

Yes. Maybe before I talk about the future, I'll just have a comment or two about the past. We've been working on blood-brain barrier technologies for almost exactly 20 years. And in fact, it was 20 years ago that the first medicine was approved for Hunter syndrome idursulfase and so for us, it's been a journey of inventing a platform, I think, really pioneering this space for over 2 decades. And the last 2 or 3 months have been extraordinary for us. It's really exciting to be able to launch our first medicine, have the first FDA-approved blood-brain barrier enabled technology with AVLAYAH, and it's been an exciting time.

And I think just -- I think an important point is this now becomes a new area of biotherapeutics where the competition is rising, which is great news. In biotech, whenever anything works, everyone jumps in. And so we're happy to be leading the way with transferrin receptor and with the TransportVehicle technology. Of course, this is just the beginning as well. And so talking about the next really 6 to 12 months, in addition to everything related to the launch, which is, of course, our focus of the commercial team, we also have the next enzyme replacement therapy, which is for Sanfilippo, where we'll complete the 49-week portion of that study in September, basically get the data ready, ideally present at world and then submit the BLA in 2027.

What's exciting about that product is we're actually going to do the commercial manufacturing ourselves. Our original with AVLAYAH, we've worked with CDMOs. Now we're going to be manufacturing for Sanfilippo, and we think this is the beginning of many enzyme replacement therapies. The next will be in Pompe, where we're enrolling that study now, also looking at data in 2027. And then at the end of this year, we have -- we've sort of categorically put our progranulin program into the enzyme replacement therapy because it's very similar to enzyme replacement therapies, but we'll have our first look at the Cohort B3, that's sort of the highest dose for that study. That's coming up soon.

Now I think what's happened for us is that we often get asked the question, why not just be an enzyme replacement therapy company. You know the technology works. You have your first launch, a lot of enthusiasm around that and in the community to bring forward other programs. But actually, we founded the company to ideally treat neurodegenerative diseases as well like Alzheimer's and Parkinson's. So we'll have our first 2 data readouts in Alzheimer's disease also in the next 12 to 18 months. One is an oligonucleotide that knocks down the gene that codes for tau and the other is an Abeta antibody, which we published last year in August 2025 in Science around our mechanism of basically removing amyloid plaque, which we hope safer and ideally subcu dosing. And so that's also what's on the horizon. And I know we'll go into each of those aspects, but a very exciting time at Denali.

Definitely. Perhaps we can just start on the Hunter syndrome program here. So given the first commercial patients have been treated and -- could you just speak to early launch dynamics to date, including the conversion rate from start forms to active patients and how the medical exemption process and reimbursement has evolved since approval?

I have to remind myself that it's been about 10 weeks or so since approval. And I think what happened first is let's get the drug in the channel. We were able to do that within 2 weeks, obviously, with the label. And then in 3.5 weeks, our first patient was dosed in the commercial setting. And this is not a patient that's switching over from trials. So it's really exciting. It actually wasn't at one of our trial sites.

And now we have multiple patients who have been dosed in the commercial product. And so it's very early days to understand the dynamic of conversion from start forms to approval and getting the first dose, first infusion. But what we can say is that it's exceeded our expectations in terms of the enthusiasm from the field, and we're seeing really positive trends on time from start form to infusion.

And what is the mix of treatment-naive to newly diagnosed patients and those on prior standard of care? And has there been any pushback on patients or physicians on the need to return to clinic to initiate treatment though?

The vast majority of patients, especially early on, are going to be switched. If you think about it, there's 500 patients in the U.S. I think almost all patients are on idursulfase or the vast majority unless it's sort of like end of life. And so that dynamic, what's happened in the field is there's just real enthusiasm about the possibility of treating neurologic manifestations in addition to the fundamental treatment of the disease.

We also saw our peripheral biomarkers were better than what has been shown for standard of care. And so we haven't seen really barriers to that. I think, again, the field is driving that enthusiasm. So most of the patients that are on drug now, our commercial patients have switched from idursulfase. A handful will be newly diagnosed, and that will just happen over time.

And the drug is priced at a premium to previous standard of care Elaprase. And so as you engage with payers, what has feedback been around pricing and weight-based dose -- the weight-based dose model?

I'll hand that to Alex.

Yes. I'll take that one. So the pricing does reflect the clinical profile. So what we've shown in the clinical studies is that we are able to normalize the key biomarkers, heparan sulfate and also neurofilament. And it is the one, the first and the only drug that treats the whole body, including the brain, and that is appreciated by payers. So we have not encountered pushback on the price by payers. It has not been a barrier to access at this point. The weight -- it is priced by weight. The weight-based model is very well understood. It's a very standard in enzyme replacement therapy, so we feel very good about the price.

And have your expectations for modest revenue this year changed as the payers come online and as you kind of watch the trends that are playing out, just given -- I think you've guided to kind of the whole year needed in order to get that payer dynamic settled before you see that inflection in revenue more in '27?

Yes. So this is -- as Ryan said, we're very pleased about how the launch is going. We're very pleased about the interest, about the engagements, about the enthusiasm in this product and also what's coming in the pipeline. What is expected in a rare disease launch, especially in a buy-and-bill setting, is that prescription activity will outpace revenues in the early stages of launch. And that's exactly what we're seeing right here. 2026 is the setup year.

This is why we guide towards the modest revenue, and this is why we use the illustration of the S-shaped curve, right? We think '26 is the setup year, '27 will be the inflection year. We think in '27, once patients are on drug for a number -- for a period of time, but especially once all the payer engagement, once the payer policies are in place. We have guided that -- or we have stated that it's about 50-50 with respect to the payer mix. And it will take about 6 months or so for commercial insurance, 9 to 12 months for Medicaid. So that's when we then expect that in '27.

And what is the status of the European filing?

Yes, I'll go on -- I mean, European filing, but also really international. So the international market is very important. About 2/3 of overall Hunter market is internationally. And ultimately, our goal is to capture that full market and make sure that every patient that can benefit from AVLAYAH will have the opportunity to do so. So we're very actively engaged internationally.

In some instances, we can work with accelerated or conditional approval settings. We can work with pharmaceutical product certification, which will allow us to capture part of the international market before COMPASS reads out, so that's with the current data set in hand. Now specifically with respect to Europe, we will need to wait until COMPASS reads out. So COMPASS was fully enrolled by the end of last year at a 2-year endpoint. So we expect it by then and then file in Europe.

On the confirmatory study, which includes patients up to 26 years of age, what is your current target for filing a supplemental BLA here to expand the label to include the adult Hunter syndrome patients?

I think there was two reactions to the approval of AVLAYAH. The first was enormous enthusiasm that there's finally a medicine that can treat the central nervous system, but the other was disappointment that the drug wasn't immediately made available to adults. And so obviously, that's one of the important focus for us. What's interesting is once you're on drug, you stay on drug. So it's not like as you transition to adult, you then come off AVLAYAH and go on idursulfase. And so that's important to note and clearly articulated in the label.

The COMPASS study is a little bit more than 60 patients split into 2 cohorts, Cohort A, which focuses mainly on neurologic manifestations and then Cohort B, which has a broader age range, including adult. And so the key there, that's more peripheral, and we're looking for equivalency and frankly, ultimately, we should see data that's superior to standard of care, but it's powered to show sort of equivalency on biomarkers, things like liver and spleen volume and 6-minute walk.

And so the goal is that totality of that data will put us in a position to go to Europe, which is the main focus of COMPASS, at least Germany, France, some of the countries that won't really recognize an accelerated path, but also to really focus on expanding the label.

Just maybe broadening out on the TransportVehicle platform here following the preliminary Phase I/II data that was presented from DNL126 in Sanfilippo syndrome at the WORLD Symposium. How is your dialogue with the FDA evolved here regarding the use of heparan sulfate as a surrogate endpoint for the BLA filing? And does the 2027 filing remain on track at this point?

I thought this might be the first fireside chat where we don't get a question about the FDA. It's been an incredible journey for the last 2 or 3 years. You'll recall 2 or 3 years ago, we were talking about the inconsistency between CBER and CDER. With CBER, I think, being much more aggressive on biomarkers as a potential path to accelerate approval. And then in some ways, obviously, that switched as everything panned out over the last 9 to 12 months.

And I think what's really been important for us is that the review team has been the same over that 3 years. And so the evolution of thinking about biomarkers has been with the same people who have seen, for example, the Reagan-Udall Foundation presentation now over 2 years or so ago that articulated why CSF heparan sulfate should be a surrogate endpoint reasonably likely to predict clinical benefit. And that was the foundation of that mindset shift. Those are all the same individuals.

So those that were briefly concerned about it were the ones who then understood, agreed and then understood that the approval of AVLAYAH is setting and so our engagement with the FDA on DNL126 has remained consistent, obviously, setting a high bar. We saw, on average, 80% reduction of CSF heparan sulfate in Sanfilippo with the ability to normalize. What's different about Sanfilippo is that all patients are treatment naive. And so basically, you have to build tolerance and when you do, you're able to see this robust reduction in heparan sulfate.

And the other thing that's like this very distinct about Sanfilippo over Hunter is it is a very aggressive degenerative disease. Patients will often have pretty significant volumetric loss even before we begin dosing. And so early is going to be really important. But our engagement with the FDA remains consistent. We've always, sort of, I would say the way we've approached it is around the review team. The review division is the most important relationship and interactions that we have for our medicine.

And given there's no standard of care therapy on the market for Sanfilippo here, how do you think the launch trajectory will pay out versus Hunters?

Yes. I think that's -- as I pointed out, no standard of care. It's not a switch dynamic. I think the other point is you need to find these patients and diagnose them. They often are diagnosed in the same center. So from a positive point of view, we -- it's the same physicians. We'll have the same commercial team. All the interactions are similar. The MPS society has been very involved with both Hunter, Sanfilippo, Hurler-Scheie. That part, I think that dynamic is going to be fantastic because we're -- you see the momentum of AVLAYAH, which will then feed into 126.

But there is no standard of care. So I think it's important to continue to push for newborn screening. As I mentioned before, because of the rapidity of how quickly this disease degenerates, finding patients really early is ultimately going to be key to have the most robust clinical benefit. So with similar patient numbers ultimately. So we see the combination of AVLAYAH and 126 is probably $1 billion-plus opportunity worldwide with just those two products. And that's just the beginning of the enzyme TransportVehicle franchise.

Can you just remind us what the rationale was for Takeda's decision to end the collaboration on 593 in the frontotemporal dementia program?

Yes, I'll take that one. So Takeda made a strategic portfolio prioritization decision in the broader context of their restructuring of the rare disease and neurology portfolio. Takeda has been a great partner for 9 years since we started the partnership, but now we take the program forward ourselves. It's very strong biology. It's a very direct mechanism substituting progranulin, which is missing or lacking in these patients with that form of frontotemporal dementia. The study is ongoing. It's fully enrolled now, and we expect the data by the end.

And what specific biomarker thresholds are we looking for with that data read?

Yes. So I think as Alex mentioned, this form of FTD is a mutation in granulin, these are heterozygous carriers so they have one copy loss of function. We published a paper in 2021 in Cell categorizing a set of biomarkers that we think may be relevant that are downstream of this loss of function. And so there are lysosomal-related biomarkers like glucosylsphingosine and a number of like BMP and other biomarkers.

Those are the proximal biomarkers. The distal biomarkers are the traditional degenerative biomarkers like NfL and GFAP. And so for us, we're interested in both proximal and distal. And our experience in Hunter syndrome and Sanfilippo is that you hit the proximal first, you establish dose and then over time, assuming that this is disease-modifying, you should expect the ability to reduce the distal biomarkers like NfL. And so that's what we're looking for early on here is early data trying to understand the proximal biomarker and dose that will then drive ultimately that what we believe will be the clinical benefit, which is then obviously looking at biomarkers like NfL.

I think one challenge you have here is because it's a single copy loss of function, the signal to noise in your biomarkers is not the same as what you see in Hunter and Sanfilippo, where those are complete loss of function. Heparan sulfate is elevated tenfold, where like glucosylsphingosine is elevated 25%, 30%, not even twofold.

And so that's a dynamic that we're -- we'll have to be prepared for and especially as we sort of select dose. And I think the ultimate goal would be to pin a decision on the distal biomarkers like NfL with longer-term data. And that's the other thing we've learned quite a bit from Hunter is that they have a fantastic medicine, but it took time to basically normalize NfL.

Following Biogen's recent data from its tau-targeted ASO in Alzheimer's, where we're going to see the full data, I guess, or whatever data we can midyear at the Alzheimer's conference in London. But they commented on demonstrating a slowing clinical decline in tau reductions, but they did not show a clear dose response. Maybe help us understand what you believe is the read-through to your own programs here.

I mean taken at face value, this could be historic. Why? There's really only one drug target in Alzheimer's that have shown clinical benefit, which is Abeta. This would be the second. So -- and if you look at the totality of the data, at least as articulated in the press release, what it tells you is reducing tau and slow cognitive decline. And that would then represent the second Alzheimer's target that has clinical validation.

I think it's, as usual, complicated to read into dose response. I think added complexity with their particular program is that intrathecal delivery introduces a significant amount of heterogeneity in brain biodistribution. And so it will be very interesting to look at the data and understand how many patients were in each of the dose cohorts. If I understood correctly, there are 3 dose cohorts. But it's possible, for example, that the lower dose had fewer patients and then maybe more subject to heterogeneity.

But I think the take-home message is reducing tau appears to result in a clinical benefit and a cognitive benefit. And I think that's historic actually because now it's like how do we improve Abeta, how do we improve tau. We have a real opportunity and I think then enter our approach, which is the transport vehicle that allows you to have much more consistency from patient to patient in terms of biodistribution.

We saw this in our nonhuman primate studies with an intrathecal delivery and compared it to the oligo TransportVehicle. And with intrathecal, our monkeys, some had decent brain exposure and some had very little. So you had always had great spinal cord exposure because these are lumbar delivery, but you had very significant heterogeneity and how much gets into the brain. With the oligo TransportVehicle where you're delivering across capillaries, you have an even distribution, and it was consistent from monkey to monkey.

And so I think that's just part of the dynamic. And I think we've seen it in the Abeta field as well is that as these new technologies, these brain shuttles and in our case, specifically the TransportVehicle they enter, you have now this ability to very rapidly reduce amyloid about 3x faster at maybe 1/5 the dose. And so I think it's very exciting. It's very exciting to see another target that may be clinically validated in Alzheimer's.

And remind us on the time lines for your program here?

Yes. So we're targeting 2027 for the first biomarker data. We're enrolling now rapidly the Alzheimer's patient study. It's a multiple dose out of the gates for OTV:MAPT. The key here is obviously to see tau reduction and understand the dose that drives tau reduction. And I think everything will follow the tau imaging PET and then ultimately running the study large enough to look at clinical benefit.

Again, timing of intervention matters, and we'll also be at AAIC, very excited to be there. We'll be presenting there. I think the thesis that I like to articulate is that amyloid is a trigger, tau is an executioner. And then you have all these other contributors to disease that are these microglial targets. They probably contribute the inability to remove amyloid. But if you look at the data, it's pretty consistent that amyloid is at the top of the cascade, but tau, I mean, I think ultimately is driving neuronal loss. And so I think they're both obviously very interesting targets.

You also have the beta-amyloid program that's moving forward. Can you just walk us through the learnings that have played out with the programs that are approved also in the clinic and how that translates to your program?

So both OTV:MAPT, which is our tau reducer and then ATV:Abeta as the rest of our portfolio uses the TransportVehicle, so it's transferrin receptor to get across the blood-brain barrier. And what we've learned about Abeta in particular, there's room for improvement. I mean, one, it used to be thought very simply, you remove amyloid, you cause vasogenic edema or what is now termed ARIA. But now that's disconnected. You can remove amyloid much more rapidly and have less ARIA. And it's probably around the biodistribution, similar to what we were just discussing with intrathecal for oligonucleotides.

In the case of antibodies for Abeta, when you deliver using the TransportVehicle technology, you don't have extraordinarily high concentrations in these perivascular spaces that cause breakdown the blood-brain barrier and vasogenic edema. Instead, you get this even distribution throughout brain. And we show that in our science publication in August of last year, how that is differentiated. The other important point is we can preserve the effector function. We can preserve the immunological function of the antibody when bound to amyloid plaque. But when bound to transferrin receptor, we can silence it. And that is through a unique engineering insight where we create a mutation on the Fc that makes it silent when bound to transferrin receptor. That is distinct and I think is unique to the architecture of the transport vehicle.

And so our expectation is a safer profile, the binding to transferrin receptor is integrated to less immunogenicity than what I think is being seen for other brain shuttles and then ultimately, subcu dosing where you have rapid plaque reduction and less ARIA.

And what are the key metrics from the initial Phase I trial in Pompe disease that we should look to understand how that's working out specifically as we look to understand the impact on muscle and bone.

Yes. So shifting gears now back to the enzyme TransportVehicle. Here, we're delivering GAA. There's a series of medicines in Pompe that are enzyme replacement therapies for Pompe. What we're seeing is that there's not fantastic delivery in particular to skeletal muscle. So even with standard of care, there's still a significant unmet need. I think major advances in cardiac, obviously, overall survival is better for IOPD, but a real unmet need. And the question is why. As we engage with -- by the way, the same investigators in Hunter and Sanfilippo are also made of these investigators seeing Pompe patients.

And the general thesis is that standard enzyme replacement therapy for Pompe relies on this mannose-6-phosphate receptor in muscle, which apparently is not highly expressed. And so there's not great distribution of muscle. And so what we see is a very substantial differentiation with any of the standard of care in Pompe when you use the TransportVehicle. This is now enhanced delivery to muscle. Obviously, we'll have delivery to the CNS, which standard enzymes don't have. So that's going to be important. That would be more in IOPD.

But what we're looking at in these early studies, so Pompe is enrolling now, 2027 data as well. And the goal there are these glycogen products to show that we've got the right dose target engagement and then rely on the biology where we have improvement in muscle delivery, which should ultimately lead to clinical differentiation.

Great. And just on the small molecule pipeline here. So following the announcement that the Phase IIb study in idiopathic Parkinson's did not meet its primary endpoint, were there any analyzable trends that you can talk to that played out in these LRRK2 patients?

Yes. I'll take LRRK2. And as you mentioned, the LRRK2 inhibitor was part of our legacy portfolio of small molecules, so completely separate from the TransportVehicle. As you mentioned [Technical Difficulty] which was time to confirm worsening [Technical Difficulty] Part 2 and 3 and importantly, in the idiopathic Parkinson's population. So essentially the all-comers Parkinson's population. The study was well designed. It was well executed. The molecule performed as expected. We saw very strong target engagement and acceptable safety. But I think we have to conclude that LRRK2 inhibition is not the path at least in idiopathic Parkinson's [Technical Difficulty].

Now importantly, we have another study ongoing in parallel of the BEACON study, which is purely focused on LRRK2 carriers. So that is 50 LRRK2 carriers, biomarker study, we expect to see those data by the end of the year. In LUMA, the number of LRRK2 carriers was too small to really look for a signal in the subset. There were only about 10 LRRK2 carriers out of the 650 patients. So that really does not give us any [Technical Difficulty].

Alex, another question for you here. You've been busy in terms all along since the genesis of this company with partnering and business development strategy. Maybe talk to the types of deals that make sense for you from here?

Yes, absolutely. Thank you for that question. I mean partnering business development is a key part of our strategy. We have a track record. We set up collaborations early in the phase of Denali until about half of our portfolio was partnered. Then there was a period when we prioritized wholly-owned programs and advancing those. And now we're at the stage where essentially our portfolio is almost entirely wholly-owned. So that opens up a lot of new partnering opportunity.

The blood-brain barrier field has been very active in the last 2 years. 10 years ago, we were essentially the only ones, but now we see a lot of activity. There's a lot of interest from large pharma. There are a number of smaller companies as well. We've been engaged in many of those conversations. But right now, we're very well financed. We ended Q1 with just over $1 billion in cash. So we have the ability to really advance the program to the right moment in time of when we would do a deal.

I think really to highlight, we are one of the few companies to have a wholly-owned Alzheimer's portfolio as we just discussed, right? There is Abeta, there is tau. There's a lot of preclinical expertise on additional mechanisms, which, at some point, will be a very obvious partnering opportunity. We can definitely generate clinical proof of concept, high-quality clinical proof of concept in patients, and that's probably the time when we would look for the partner.

Follow-on one of the points you made. The space has been really busy around blood-brain barriers and you have some of these larger companies working on their own programs. How do you think about yours, just given the validity here through the commercial assets that are coming out and the defensibility of kind of -- and differentiation of it versus what's playing out in the competitive landscape?

The idea of crossing the blood-brain barrier using transferrin receptor was first proposed in the late 1980s, so this is like the typical story of biotech and discovery and iteration, the industrialization from that academic proposal has been a journey. We started on that journey, as I mentioned, 20 years ago in 2006, that was prior to founding Denali. And what we did is we just made every existing platform that was out there to say, do any of these cross the blood-brain barrier in therapeutic concentrations. And 20 years ago, the answer to that was actually no. There was no existing platform that we had actually tried that was working. And so began the process of the industrialization. The question is what was wrong?

And I think the first challenge was that most of them -- most of the technologies were getting trapped in the blood vessel. You were not getting therapeutic concentrations across the BBB. So now I think of the 20-plus competitors that we count, there's probably 30 that have bonafide blood-brain barrier platforms. 97% of them, 95% of them or 90% of them are all using the original sort of conventional Fab approach. So it's an antibody approach. It's a Fab fusion. And when we founded Denali 11 years ago, we wanted to build a platform that was highly modular, that didn't give up an arm of the antibody or didn't have to, in an unnatural way, attach an arm of the antibody, but integrate the binding into the Fc similar to the FcRn or Fc gamma, and that began the engineering quest to build that in.

And we knew that because we'd already seen the first-generation brain shuttles that were out there. We had already 5, 10 years of experience, and we knew the limitations, which was stability, immunogenicity. That's the challenge with a lot of these Fab fusion, and that was actually in the original publications. And so we built the TransportVehicle in a way that we integrated the binding into the Fc. And it is now and still the only molecule that does that very distinct from all the conventional Fabs. And as you point out, it's now the only molecule that has -- is FDA approved. We will have commercial validation as well, and that allows us now to create an entire portfolio.

Now we had a decision 10 years ago, and as Alex mentioned the partnering strategy, our decision was not to create a technology to enable the world, but to create a technology to enable our medicines and then find a way to collaborate on medicines, not on the platform. But there are other BBB technologies and strategies where the strategy is to out-license the platform. But those, again, are the conventional Fab approaches. And so the transport vehicle is definitely distinct in the way that we engineered it, also have the advantage of a decade worth of experience before building it.

Great. Well with that, Ryan and Alex, thank you so much. We appreciate your time today.

Thank you.

We're going to get started on our next session. I'm Andrew Tsai, senior biotech analyst at Jefferies. Thanks for joining me. And it's my pleasure to have Ryan Watts, CEO of Denali, joining me today.

Welcome, Ryan.

Yes. Great to be here, Andrew.

Of course. So for those in the audience less familiar with the story or revisiting the story, can you maybe help us level set where Denali is, what programs you might be -- there's a lot, but what programs you're working on and the milestones over the next 12 to 18 months could be very helpful.

Yes. Thanks, Andrew. It's great to be here and definitely a lot has happened at Denali in the last year, in particular, especially with our recent approval of AVLAYAH a little more than 2 months ago. And so just as a little bit of a background, we set out to solve, I think, one of the bigger challenges in drug development, which is the blood-brain barrier, inventing medicines that readily cross the blood-brain barrier, especially biologic medicines. It's an area where 11 years ago in the founding of Denali, not many companies were working. And in fact, I think it was in the late 1980s when the first idea of engineering a molecule to cross the blood-brain barrier using some type of natural transporter was proposed, but it's taken from that point till now to actually get the first FDA-approved medicine.

So over the last 11 years, we've invented a platform, which we call the TransportVehicle platform. It's one of these broader categorically brain shuttle technologies using a natural transporter known as transferrin receptor to cross the blood-brain barrier. And looking back now just 11 years ago in the founding of Denali and 20 years ago when we first started working on blood-brain barrier technologies, it's amazing to see how this space has so rapidly evolved and is quickly becoming, I think, the next really hot area in biotherapeutics.

For us, the proof of concept was in enzyme replacement therapy. And I think the reason we chose that as the first place is that enzymes have had a very high success rate. There are a number of enzymes that have been approved, I think, about 85% success rate in developing enzymes for enzyme replacement therapy, but those enzymes do not treat the neurologic manifestation of disease. And Hunter syndrome was the first of now a number of areas that we're going to test this hypothesis that we can take an existing enzyme, engineer it to cross the blood-brain barrier and effectively treat neurologic manifestations, but also whole body. And that's going to be important as we talk about AVLAYAH and its differentiation from potential standard of care.

And so we set out to do that 11 years ago. And for me, it's been a 20-year journey working on blood-brain barrier technologies. And so the approval on March 24 was, I think, a really key step for us. But that approval is just the beginning, obviously, especially for the patient community. But within 2 weeks, we had filled the channel as we call it. And within 3.5 weeks, the first patient was dosed in the commercial setting. And so we are ready to go and have been very excited about the launch of AVLAYAH. I think the reaction from the patient community has been twofold. The first is great enthusiasm. It's the first medicine in 20 years. It's ironic. 20 years ago, we started working on blood-brain barrier. And then it took 20 years to get the first approved medicine that treats neurologic manifestations and the whole body. But also a little bit of disappointment because there is an adult segment in which the label does not cover.

And so a lot of enthusiasm broadly throughout the patient community. So what we've seen is a pretty significant engagement from prescribers and obviously, key opinion leaders and families, and it's been a really exciting time at Denali. So that's where we are today. So the question is what's next? And I think the next 6 to 12 months is also very data rich. We have -- we'll have our second BLA filing for Sanfilippo. We also have begun studies in Pompe disease. So this is another enzyme replacement therapy. And then we have a progranulin replacement therapy. So very similar to enzyme replacement therapy. So a number of medicines. Those are moving forward.

I'll put those categorically in the enzyme franchise. But also what we have to think about is the next big wave. And for us, it's Alzheimer's disease. We're now dosing patients with a MAPT oligonucleotide, which suppresses the expression of MAPT, which leads to reduction in tau protein expression. And we'll soon begin testing in the clinic our own Abeta antibody using the TransportVehicle technology.

And so if you think about the next 6 to 12 months, you're going to be seeing data across the enzyme platform, but also now in the broader neurodegenerative diseases and specifically Alzheimer's disease. And it's just -- worth mentioning that, that is the ultimate goal, I think, of Denali is to defeat degeneration to focus on the neurodegenerative diseases ultimately, but we also believe the enzyme franchise is a great foundation to begin building our commercial footprint.

Great. So again, congratulations on the approval. It's a huge milestone. And so you mentioned you're differentiated because you can cross the brain, BBB benefit clinical manifestation. So as we think about the standard of care starting with Hunter with this launch, ELAPRASE, I think they're doing $700 million worldwide sales. So how are you superior long story short to that product?

So we obviously have a head-to-head study ongoing now. That's the COMPASS study, which is the Phase III confirmatory study for accelerated approval. But I think it's worth noting, and this data was published in the New England Journal at the beginning of the year. The vast majority of patients in that Phase I/II study switched from ELAPRASE to AVLAYAH or tividenofusp alfa at the time. And basically, what we see is, obviously, the most striking is the normalization of cerebrospinal fluid heparan sulfate. That's evidence of crossing the blood-brain barrier. We subsequently see the normalization of neurofilament, which is a marker of neurodegeneration. So that's highly differentiated.

And so recall that most of these patients are on standard of care, but they have elevated heparan sulfate in CSF and in brain. But what's also striking to us is that we can also see a robust reduction in peripheral heparan sulfate. So I think that basically tells you that we're -- based on our dose and also biodistribution that the biomarkers of both the central nervous system, but also the periphery are enhanced with the medicine. And so this is important. And I think we had an important decision to make early on with AVLAYAH, which was around dose.

And part of it was, I think, most enzyme replacement therapies experience what are called antidrug antibodies that recognizes foreign -- this is well known. Infusion-related reactions are the most common adverse effect for all of these medicines and often, I think, are limiting for dose, but we made the decision, especially because of our architecture, which is an Fc fusion to really push dose. And the goal here was to get not just superior brain exposure, but also ideally superior reduction in peripheral biomarkers as well, which we believe will ultimately lead to a broader clinical benefit.

Great. And so you've launched dose the first patient in April, we're in June. I must ask how many -- to the extent you can share how many patients have you dosed, I guess, with AVLAYAH? And are they coming from ELAPRASE? Or are they naive patients?

Yes. So I was thinking about this particular question, which we get often. I mean, it's so early in the launch. It's like 9 weeks since approval, although it feels like a year ago now, immediately becoming a commercial company. What we can say is that we -- the interest has exceeded our expectations. So maybe that shouldn't be surprising. We are debating what are the right metrics to share at the right time to basically provide meaningful data to be able to predict the future of this medicine. I think for now, what we've seen is just great enthusiasm across all patient segments.

So there are those who are newly diagnosed, which come in, as you know, there are about 500 patients in the U.S. and 2,000 worldwide, but especially switch. So in many ways, this is a switch market. And all patients are, generally speaking, known, at least by age 3 or 4. And what we're seeing is a pretty significant interest in switching to AVLAYAH. But I'd say stay tuned on exact numbers. I think we're just -- we're gathering the information now and looking forward to hopefully a very successful launch.

Great. And you mentioned earlier in the community, there's a slight disappointment that the label does not cover all 500 patients in the U.S. So what does your -- what proportion of those 500 U.S. patients does your label cover?

Yes. So it covers 70% to 75% of the population today. So it's the pediatric population. And if you think about actually Hunter syndrome, it's about 70-plus percent that have severe mutations that invariably lead to severe neurologic impairment. But what's been interesting and I think very striking is that neurologic manifestations is seen throughout the entire spectrum of disease, even in what we call attenuated patients. A good example of that is hearing loss. And that's one of our most striking, I think, data points that was published in the New England Journal was improvement in hearing.

And so what the community is generally understands is that this in the label where it states neurologic manifestations, which is linked to the CSF heparan sulfate as the biomarker for accelerated approval that, that basically represents essentially all patients at some point in disease will have a neurologic manifestation if it's behavioral, sleep disturbances, hearing. And so -- but the label itself covers roughly 70% -- 75% of the existing population, so very significant.

And in the meantime, like you said, you're running a confirmatory study called COMPASS. I think the data reads out second half 2027. That's a head-to-head study versus ELAPRASE. That should also -- not only can you prove superiority, but I think -- can you confirm it opens the door to all 100% of the U.S. population.

That is the goal of COMPASS ultimately. And there really -- there are 2 cohorts. There are those that are sort of, I would say, categorically severe neurologic and then those that are -- have been categorized as attenuated, again, all of which experiencing neurologic manifestations. The attenuated patients are generally adult patients.

So in the Phase I/II, we did not enroll any adult patients, although now there are patients who are, by definition, adult that are on AVLAYAH because they began treatment at, let's say, age 14 or 15 and now they're 17 or beyond. So that is the goal of -- ultimately of COMPASS. But I think really where COMPASS has its greatest value is likely ex U.S. is in Europe and unlocking Europe, where it's not just biomarkers that drive approval, but also the correlated clinical benefit that's observed.

Right. And totally understood your sales reps cannot market superiority, but this -- any NEJM article is quite compelling. Is there any way some personnel on your team can flag that to people to convince physicians, patients that you have a differentiated product. I don't know how it works.

Yes. So I think the most important thing for us is when you look at the label is the fact that 9 out of 10 patients have normalized CSF heparan sulfate. I always worry about the tenth patient. In this case, they also have like 85% reduced CSF heparan sulfate. So it's just near normalization. That's a really important piece is that there's no other medicine that has shown that level of heparan sulfate reduction and clearly normalization in cerebrospinal fluid. And that also points to the broader validation of the TransportVehicle technology. So for us, we can just focus on really the data that we have, and it's a very distinct profile from standard of care.

And in terms of -- so there's one volume and then there's price as it relates to sales. So on the pricing side, can you give us a sense of just based on the average patient -- this is weight-based dosing. So the average patient on AVLAYAH, how much it could cost per year and how that would compare to the average price per year for ELAPRASE?

Yes. So the wholesale acquisition cost is $5,200 per 150 mg vial. So this is the vial. Most patients will need 2 to 3 vials per infusion depending on weight. So if you do the math, a 10-kilogram patient will be about $270,000 per year and a 30-kilogram patient will be roughly $800,000 per year. So that's -- obviously, that's the exact pricing dynamic. The medicine is priced at a premium, recognizing the invention and the fact that we're treating not just whole body, but also the brain, which is, I think, a key step here. It's also priced in line with more recent enzyme replacement therapies that have launched. And just if you're doing the math, the roughly 30-kilogram price for ELAPRASE is about $500,000 per year.

Okay. Very clear. And so -- gross to net, any color around that inventory build for Q2? Any color around that?

Yes. So again, I think we -- it's very early days. It depends on the payer, obviously, Medicaid versus private payers. We've -- we're just -- policies are being put in place now. Just reminding myself that we got approval 9 weeks or so ago. And so just stay tuned. But the math is the math. If you know the 340B institutions and the discount that's required, you can do that math. It depends on if it's pediatric only or adult, but you can start -- I mean that will make sense over time, definitely as we launch and you see more data. I would not over-index on 2026. This is a foundation building year for the launch. We're excited and we're enthusiastic certainly by the interest in the community, but it's going to take time, especially as you get payer policies in place.

Okay. Well, things seem to be in the right direction. So congratulations. So then shifting to Sanfilippo then the next leading program that you have, you're filing next year, that's contingent upon full 20 patient worth of data. And my understanding is all those patients should complete around September of this year. When would the data be released though?

Yes. So the data cut is not too dissimilar from when we had the data cut for the filing for AVLAYAH in the sense that we got data sometime in September, October. Obviously go through the database lock cut evaluation. We're aiming towards a WORLD presentation would be February of next year and then filing next year. Right now, the rate-limiting step for us is manufacturing. We made the decision to onshore this manufacturing. So AVLAYAH is manufactured by Lonza and DNL126 for Sanfilippo, we will manufacture ourselves, even commercial product here in the U.S., which we're very excited about. That's the key there.

The -- as we've reported previously, and we'll probably get into some detail, on average, we see about 80% reduction of heparan sulfate. We also can achieve normalization both in heparan sulfate, but also downstream biomarkers of lysosomal dysfunction. What's distinct about Sanfilippo is that it is largely a CNS disease more than Hunter syndrome. So there is components of peripheral disease, but it's mainly CNS. And it is a very rapidly and aggressive degenerative disease, especially with the complete loss of function mutations.

And so even like at the volumetric level, when you look at MRI, you already see patients before you begin dosing have pretty significant volumetric loss. And so I think with Sanfilippo, it's going to -- we need to get a drug approved and then it's going to be about newborn screening to just get there as early as possible to see a huge benefit in these patients. Hunter is -- doesn't have the same volumetric loss. The reason I just state that is that in addition, heparan sulfate is actually 2x higher in Sanfilippo in brain than it is in Hunter syndrome and probably is just where SGSH is expressed versus idursulfase. Interestingly, they're both -- we're both looking at heparan sulfate as this class of MPS diseases.

And so we're really enthusiastic about the initial data. The 20 patients will complete the 49-week point in September, and then we'll begin looking at that data and preparing for filing and presentation in 2027.

Okay. And we've discussed before the next batch of -- technically, the remaining 12 patients to be presented at WORLD are dosed at a higher dose, we should get better efficacy. So to me, the likelihood of success is very high to support an accelerated approval.

And I think just a point related to that, if you look at our presentation from this year, it's what we did with the first 8 patients, it was all about dose finding. It was dose frequency, dose finding, dose levels. And so we started with every other week dosing.

And I think what's really striking is that with enzyme replacement therapies, specifically with SGSH, the drug is better tolerated with weekly dosing. It tells you something about building tolerance. And so having more frequent dosing and having drug on board was an essential learning from that initial study. We then kind of went to what we thought would be the optimal dose to weekly dosing, but many of the patients weren't really at that dose when we took the data cut it and presented it. So at this point, obviously, with the 12 additional patients, we'll be using that optimized dose regimen.

Great. And help us frame the patient sample size in the U.S., the peak sales opportunity relative to Hunter?

Yes. I think it's similar to Hunter. The difference is there is no standard of care. And as a result, not all patients are identified like you have with Hunter syndrome. And so there's no existing enzyme replacement therapy in part because it's a largely neurologic disease. And so standard ERTs are not treating the sort of very rapidly progressing degeneration that is observed in Sanfilippo. But we think the numbers will be roughly similar, maybe a bit smaller. It depends on whose epidemiology you're reading, but obviously, having an approved medicine will be really important in this disease area.

And so because there's no approved medicine as we think about the confirmatory study that I believe you said you're going to start later this year. Is that still the plan?

That's right. So we're in start-up mode right now. We've been used -- using the word start, we were selected as -- for the START program by the FDA, which is quarterly engagement with the FDA around designing the Phase III. We think that's very important. Obviously, again, with no standard of care, the dynamic is different than what we've designed for COMPASS. And so I'd just say with that, stay tuned. We continue to engage with the FDA, but we're definitely in study start-up mode for the Phase III for Sanfilippo.

Yes. And so because of no standard of care, there is this potential maybe to be an open label rather than a placebo controlled, which maybe means you can enroll pretty fast and generate the data pretty fast. Is that the guide?

I think what's implied in that question is that patients are excited to join trials where they know they're going to get active drug. And that's generally true. And certainly, that's been the case with the Phase I/IIs for both of these studies for both of these medicines for both AVLAYAH and for 126.

Okay. Very good. And so I guess, later this year, you'll have a progranulin readout shifting gears in FTD dementia. And it's -- I would just like to know what exactly are you seeing with -- what do you want to see to move forward basically in the study?

So our sort of hypothesis with FTD granulin is that it's a progranulin replacement therapy. So take what we've just talked about with Hunter and Sanfilippo and now apply that to FTD where you have a loss of function, although it's a single copy loss of function. And so we published a paper in 2021 in cell describing the mechanism of progranulin in the lysosome and associated lysosomal biomarkers. And so here, we'll be looking at a panel of biomarkers around lysosomal function, both those are what I call the proximal biomarkers and then also distal biomarkers like NfL.

Our experience with NfL, you can see it in the New England Journal paper is that at least -- and actually for most likely lysosomal storage disease, it takes some time. So at 6 months, we didn't see a reduction, but by 12 months, we are clearly seeing a reduction. And then by 18 months, we're starting to see patients that normalize. So those are the distal biomarkers, both of which are going to be important also in FTD granulin. I think one -- if you look at that paper, the only cautionary note is that the signal to noise for biomarkers with a single loss of -- single copy loss of function is not as great as with the enzyme replacement therapies in some of these MPS diseases.

And so we don't have huge patient numbers, but we do have more than, let's say, like 8 patients or so, which we had in the original LSD studies. And so anyway, so that's -- those are the biomarkers that's what we'll be looking at end of year in Cohort B3.

Okay. Great. And so I do want to spend some time on tau. But before that, you recently had a LRRK2 update for Parkinson's oral LRRK2. Unfortunately, it failed to many people, maybe not too surprising because it did evaluate a broad Parkinson's population, not necessarily just LRRK2 specific. By chance, did you happen to see a signal though in that LRRK2 specific population? Or else, why continue on this other study that you have BEACON to completion, which is evaluating LRRK2 specifically?

So it's interesting. We talked about the last 20 years working on blood-brain barrier. We also in parallel for 20 years, have been working on LRRK2. It was first described in 2004, so I guess, 22 years ago. This is the first medicine to test LRRK2 in idiopathic Parkinson's disease. This is the like, let's call it, the home run study. What we saw is robust inhibition in periphery and brain. And I think it's important to look at the biomarkers that we use to assess that. So one is phospho-serine-1292 or, I guess, it's 935 or something.

We -- that particular biomarker, we saw greater than 90% inhibition in the periphery. In brain, we use phospho-RAB and the reason we use phospho-RAB is the same biomarkers you can't actually measure in CSF. And in a LRRK2 knockout, phospho-RAB is reduced 40%. So 100% inhibition of phospho-RAB is roughly a 40% inhibition. So we're achieving greater than 30% inhibition of phospho-RAB. So again, probably about 90% inhibition. So we think it's a good test of the LRRK2 hypothesis in idiopathic Parkinson's. The study itself only enrolled 11 LRRK2 carriers. So it's too few. In fact, really only 10 that have full data sets. One was from the original LIGHTHOUSE study.

And so we don't have enough data to be able to determine if there's a signal or not in LRRK2. So that's a very specific answer to your question. I think 5 placebo, 5 treated with data. The BEACON study is only LRRK2 carriers, 50 patients enrolled. But I think importantly there, it's focused on LRRK2 specific biomarkers. And so we want to read -- that data will read out by the end of the year, and we'll understand where we're at from really the target engagement perspective with the medicine. It is not designed to look at UPDRS, unlike this 650-patient study, the LUMA study, which was powered for clinical efficacy.

I see. And then finally, then shifting gears to your Alzheimer's portfolio of tau and Abeta like you said, starting with the tau, it's pretty interesting. Biogen just shared their own tau intrathecal, given intrathecally. I think you have an IV version. And so what is going to be the exact dosing frequency of your IV? And is there a possibility to even go to subcu over time with...

I mean we could have started here. There's so much to talk about in Alzheimer's disease. And certainly, if you look at our portfolio, the most competitive area is tau and Abeta not surprisingly using the transport vehicle technology. So DNL628 is what we call OTV MAPT, and OTV is Oligo Transport Vehicle. It's delivering an antisense oligo to MAPT, delivered IV and/or subcu. The ultimate goal will be subcu delivery for these medicines. We're obviously, again, optimizing dose. Therefore, IV is the best place to start. And our goal there is to see tau reduction with a systemic delivery of an oligonucleotide. And I think the recent data from Biogen is very encouraging.

I think it's like early days Abeta, where you're looking for a correlation between reduction in some pathological marker. In this case, it would be tau or tau imaging, leading to some correlation with clinical benefit. I think the numbers are small, so probably looking at all treated patients pooled. The biggest difference between the intrathecal delivery and the systemic delivery is the difference in biodistribution. So with intrathecal, this is our own data, but also data presented by Biogen and others, you have basically pretty significant heterogeneity from patient to patient, but also within the brain. So a lot of intrathecal delivery, you get great delivery around areas that are adjacent to cerebrospinal fluid, but not into deeper brain regions. When you deliver with TransportVehicle technologies, you can actually cross capillary beds, and we've shown this even distribution and even knockdown of expression.

So we think that will dramatically reduce the heterogeneity. And also, we don't -- like when we look at monkeys that are treated with OTV, we have even from monkey to monkey, the same distribution in the brain, whereas when we do intrathecal, some monkeys will get good brain distribution, some will get less, some will get none. And even when you're injecting it intrathecally, there's pretty significant variability.

I see. So aside from the dosing convenience, you saturate the brain better, I guess that could lead to better efficacy overall, more patients response...

Yes. When you think of where tau pathology exists in entorhinal cortex, hippocampus, ultimately cortex, there is an unevenness about the adjacency to cerebrospinal fluid. And so it's better to have a technology that gives you that even distribution.

Yes. I guess there's a debate in the community, does -- is it your view stronger tau reduction leads to greater cognitive benefit? Is there too much tau...

Well, I mean, if anything, what you saw from the Biogen data is that, again, taking it at face value, the lowest dose had the greatest benefit. That's probably because the lowest dose had the fewest number of patients and subject to the most heterogeneity would be kind of my explanation, but let's wait until we see the totality of the data. But the reality is that there doesn't seem to be a dose response. So if the higher dose is giving you more tau reduction, it's not necessarily leading to better cognitive benefit. So I just think it's too early.

We'll just wait for the data in July...

Yes and probably need more data to...

And so then Abeta also starting Phase I, this is interesting. So the tau, I think you're starting -- you're doing Phase I in actual patients. And then the Abeta, I think you're starting SAD doses in healthy volunteers first, then MAD dosing in actual patients. Data -- all the data is in 2027. But in healthy, what exactly do you want to see? Why is that important?

Yes. So I think we published a paper in science last year in August that describes our approach to Abeta. And there are 2 major differentiators. One is, again, the biodistribution that leads to even plaque reduction and less ARIA-like effects in mice and hopefully in humans, so less vasogenic edema, which is one of the limiting factors, right? The other is we engineered the molecule to be immune silent when bound to transferrin receptor.

And as a result, it preserves any reticulocytes that express very high levels of transferrin receptor. So the advantage of doing a healthy volunteer study is we can very rapidly test that first hypothesis or the second hypothesis around [ RTIX ] in particular, in hematology, and then we can rapidly move to patient studies and look at plaque reduction. So the ultimate goal for differentiation is a safer, ultimately subcu delivery with robust plaque reduction. That's what we're trying to achieve with ATV-Abeta DNL921.

Right. Okay. I think that's all the time we have, but I look forward to connecting with you in a few months, and then we'll talk again. But thank you, everyone, for listening.

My pleasure to have our next presenting company, Denali Therapeutics. Sitting up here on stage with me is Alex Schuth, who is, of course, Chief Operating Officer as well as CFO, double duty. Alex, thank you for making the, hopefully, short trip over to see us in the desert today.

All right. Well, again, thank you, Tazeen, for inviting us for a fantastic conference. But really also thank you for following us for many years now and the always very thoughtful commentary. So much appreciated. So great to be here today. It's a special time for us at Denali.

As you know, we just had our first drug approved in March, big transition for us. Big moment for Denali, but also a big moment for the Hunter syndrome community. And I think importantly, also a really big moment for the whole field of blood-brain barrier transport. So looking forward to the conversation and going deeper on all of those topics.

Yes. So maybe let's start off with your first commercial launch. How is that going so far? And I've been asking everybody to pronounce the name of their drug so that we're saying it correctly.

So this one here, if you think about Star Wars, it's [ Avlaya]. So once you think about Star Wars, you can get -- you also think about the Himalayas and then you can also remember. So the drug's name is AVLAYAH. And it is, of course, indicated for the treatment of Hunter syndrome, a rare pediatric disease, which has a severe neurodegenerative component. And our technology, as you know, is designed to treat the whole body, including the brain. So a major unmet medical need in all of lysosomal storage disease, and especially in Hunter, is that traditional enzyme replacement therapy, doesn't cross through the blood-brain barrier.

So we have shown in our clinical trials that we can very effectively deliver the drug to the brain, normalized all biomarkers, showed stabilization and improvement in measures of function. So with that, we achieved accelerated approval. So the drug was approved on March 24. We're very excited about the early days of that launch.

Yes. So can you share a little bit about how that's looking?

Yes, very much so. So we're excited about the level of engagement. We're excited about the level of interest and importantly, across all patient segments. So while at some point, we thought the first patients to be engaged might be the ones that are on the earlier diagnosis or younger, but in fact, we see that across all age groups and across all levels of severity.

So we have indicated at our quarterly report that we now have the first patients that are actually on drug in the commercial setting. These are not patients that came up from our clinical studies, but that actually were not associated with that. In one case, it was a very quick transition. It took 3.5 weeks after approval to go through the medical exception process.

We're also quite encouraged with respect to the number of start forms that we're seeing. We're not sharing that number yet. I know you may ask. But the reason why we don't share this, we want to have more confidence in what the start forms actually mean. We want to have 1 quarter of experience, how long does it take us to get in this sort of buy-and-build setting to get through the multistep process to actually turn start forms into revenues. But from an engagement and an interest perspective, I think we're safe to say that we're ahead of expectations.

Okay. So it's exciting in that you have your first opportunity for a commercial launch. But to level set expectations, this is still an ultra-rare disease. So what is your expectation for patient finding efforts? And what clip of uptake would be a good launch in your definition?

Yes, great question. So first, with respect to the patient, so it is ultra-rare, but it's unique because there has been a standard of care on the market for 20 years. And essentially, every patient with Hunter syndrome is identified. So this is not as much of a finding and identifying the patient setting, but about a switch setting, right? And switching very much depends on the level of enthusiasm in the patient community and in the physician community. So from that level, from that perspective, we're very encouraged about the early indications that we see.

With respect to the market opportunity, it is ultra-rare, but ELAPRASE is a good -- is the standard of care. It is a good guidepost. It sells about $700 million a year. We believe that we have a drug that shows definitely some aspect that ELAPRASE cannot do. It can get into the brain. It can treat the whole body.

With respect to pricing, right, there is a premium that was justified based on the clinical profile. So we see that this can be a very substantial market opportunity. What we guide to is typically, we look at our first 2 enzymes together. So that's AVLAYAH and then DNL126 for Sanfilippo, that those together are a $1 billion market opportunity, but it's -- I would say that that's on quite conservative assumptions.

Okay. So what do you think is going to be the criteria for patients who want to switch?

We actually see -- I mean, from the early interactions, we see a lot of interest in switching. And as I mentioned, across the patient segments, right? The way the label is written right now, it is indicated for the treatment of neurologic manifestations in pediatric patients, and also has a subset about -- in symptomatic and presymptomatic but symptomatic and presymptomatic is essentially everyone, right? So it's in pediatric patients, which is about 70% of the patient population. And our commercial efforts are focused on that entire segment. So that's what we look at.

Okay. I think some have thought that the label was a little bit more limited than was expected when it first came out. Like, is that a right interpretation?

Yes, we don't see it that way. I mean, I will give you -- it does read a bit clunky at first when you read it. But at the same time, that gives our field team a really good opportunity to educate physicians on it. If you really look at it, it is really all pediatric patients and again, with -- for the treatment of neurologic manifestations. But it is pretty well established that in Hunter syndrome, essentially all patients either have or will develop neurologic manifestations.

So if you really talk about it, the treatment of neurologic manifestations is not a limitation. In fact, it actually highlights the key attribute of our drug that it actually gets into the brain what the standard of care is not able to do. There is also a limitation on less -- not less than 5 kilograms, which is essentially a 3-month old child, which was linked to -- that this was the patient population that we studied and it was important to the FDA to mirror the label as closely to the study population as possible.

Okay. Do you foresee that label changing over time?

We do. We do expect that with the readout of the confirmatory study, that's the Phase II/III COMPASS study, which we expect data by the end of next year, so a little over 1.5 years [ ago ], that the label would be expanded. In the COMPASS study, we have adult patients. We have patients up to 26 years of age. So we would expect that the limitation to pediatrics would be lifted.

What would you say is the level of undermet need for the adult population, relative to the pediatric population?

Yes. There is a very strong understanding that the current standard of care is not optimal. And when you speak with even older patients that are designated as non-neuronopathic -- and by the way, that old distinction between neuronopathic and non-neuronopathic is really sort of fading away in clinical practice, and it's much an understanding that it's more of a continuum. And essentially, all patients have neurologic manifestations.

So if you speak, for example, with some of the older patients, they will talk about hearing loss, that they have reduced hearing. We have shown very definitively an improvement in hearing. We have anecdotal evidence that some of our children don't need hearing aids anymore. Older patients will talk about brain fog. They will talk about even irritability, right? Those are neurocognitive and behavioral symptoms that a drug that can actually cross through the blood-brain barrier can address.

Okay. So what are you hearing on feedback about the dose escalation aspect of the drug? How are doctors adjusting to that?

Yes. It's going very smooth, right? So the context here is that we instituted a 3-step dose escalation or a 2-step until you get to the final dose. And the context here was really with respect to the patient experience, right? Enzyme replacement therapy -- all enzyme replacement therapy is associated with infusion-related reactions. And we want to make sure that the early dosing happens in a medical setting where infusion-related reactions can be managed.

So what that does require is that patients for the first, about, 12 doses or so for the first 3 to 4 months come back into the hospital setting. But -- I mean it's early into the launch, but we do not see that as a barrier.

Okay. In terms of the ex U.S. rollout, how should we be thinking about that?

Yes. So our focus right now is definitely on the U.S., but much of the market opportunity is global. So what we have set in place is distribution agreements covering actually most parts of the world, so in LatAm, in the Middle East, in Asia Pacific, actually a separate one in Israel. We have many connections through the clinical trial in Europe as well, where we're working on a named patient sale.

So we are establishing those relationships with the physicians and with the families. And we do work, wherever possible and however possible, to bring those patients on to commercial drug. But with respect to our guidance, our focus, it's very much a U.S. launch at this point.

Okay. Great. So as you think about how this launch is going to mature, how do we set expectation? Because investors always want to get a sense of what the peak sales opportunity is going to be and how long is it going to take to get there, and how strong is your pricing power, so maybe if we wanted to think about it in totality, what advice would you give us?

I mean, again, there's ELAPRASE, $700 million. We have a drug that is superior to ELAPRASE. We have a significant premium on the price to ELAPRASE. Also remember, it is weight-based dosing, right? So what we see in our trials or what we would expect is that as children live longer, as they grow older, as they grow heavier, right, the price per patient would also increase. So $700 million is, I think, a conservative guidepost of what we can achieve.

Now what the slope looks like, right? I think we will have to wait for some time as we really understand what does it take between the start form, how -- what does it take to actually turn that into revenues. We're gathering experience right now on that. What does it take -- as the reimbursement policies are not in place yet, neither with the commercial insurers nor with Medicaid, of course, we're gathering that experience.

We are getting the question, when do you show more metrics, right? And you may ask it as well. And just to preempt that, we will show metrics. We just want to make sure that we have confidence in those -- what those metrics actually mean, right? And that's why we don't want to speak about start forms too soon without really, with confidence, being able to say, once we have a start form on average, it takes us this long to translate that person into a commercial person, but we'll get there.

Is there any reason to think that some doctors might wait until you get a full approval before embracing this drug?

We have not heard that, right? We have not heard that at all. It was -- we -- and I think part of that is the very close engagement of the physician community in the clinical trial. It was a relatively large clinical trial program, 110 patients, right, between the Phase I/II and the Phase II/III out of a -- in an ultra-rare disease. It is -- almost all centers of excellence, in one way or another are, if not direct, right, at least in one separation, involved in this trial.

So if you had to find all the Hunter's patients in the U.S., how long do you think it would take you to do that, just given what you had said a few minutes ago about this being a rare disease, but a treatment already being available before?

Yes. So we actually know all of the patients in the U.S. already. I mean you can through prescription data, right? This is very well documented. So we know where they are treated. And our field team has already been in touch with every single treating physician. So the identification of the patients will not be an obstacle.

Right. So would you say that insurance coverage is going to be the main rate limiting factor here?

So we don't think so. So we have engaged with all major payer systems, the national ones, the regional ones. We have a very strong payer team in-house that is working on that. Many of the -- or the patients that came early on, the prior authorization process, the medical acceptance process has gone smooth. We have had some denials, but that is also as expected. Some of these denials are just the normal routine if the reimbursement policy is not established. So we're quite encouraged about the reimbursement.

Okay. Maybe let's talk about Sanfilippo now. Just remind us where you are with that indication, and sizing-wise, how it would compare to Hunter.

Yes. So -- and thanks for asking this because we are very excited about AVLAYAH, but what we're also tremendously excited about is, of course, the proof of concept for blood-brain barrier transport more broadly, right? And we have a broad portfolio enabled by the TransportVehicle. On one hand, a whole what we call the franchise of enzyme replacement therapy, and then beyond that is other neurodegenerative diseases, right? We have the tau program and the Abeta program. The enzymes we feel is the commercial foundation of the company. And then neurodegeneration is sort of the upside potential.

Now the first back -- the first next on deck on the enzyme replacement therapy franchise is DNL126 for Sanfilippo. So here, that's MPS IIIA. At the WORLD conference in San Diego in February, we showed very encouraging data from the first -- from the Phase I/II study, where we have a mean 80% reduction of heparan sulfate.

Heparan sulfate is the biomarker -- measured in CSF is the biomarker that is qualified by the FDA as being reasonably likely to predict clinical benefit and therefore, the basis of accelerated approval. So 80% mean reduction in heparan sulfate normalization in some patients. So that gives us confidence that we have the data package to submit the BLA next year and potentially achieve approval by the end of next year.

What do you think of FDA's actual interpretation of HS because there's been some controversy around that?

In our conversations, the FDA -- so there was -- 2 years ago, there was the Reagan-Udall Foundation meeting, which brought together regulators, academics, industry and patient groups and the role of heparan sulfate was discussed and that marker was qualified. I think some discussion was around the extent of reduction of heparan sulfate. I mean we don't know where the FDA's bar is, but we normalize heparan sulfate for Hunter syndrome. And in Sanfilippo, we have 80% with some patients already normalizing, right? So we feel very good about the extent of that.

I didn't answer your question on the size of Sanfilippo. Generally, we think Sanfilippo is about the same market size as Hunter syndrome. Epidemiology is not as well understood because there is no standard of care. But we feel that they -- it's maybe a tad bit smaller, but it's about the same.

And are the doctors who treat Sanfilippo the same as those who treat Hunter?

There is almost perfect overlap between the 2 of them, very similar treatment centers, treating physicians. The communities are often together as well. So you'd have -- we were just in Napa on a community event, you have the MPS Society and then you will have patients with MPS II and patients with MPS IIIA. They have a lot of cross interactions as well. So a lot of synergy there.

Okay. And then I'm sorry if you mentioned it, but when is the plan for the BLA filing here?

BLA filing in 2027 and potentially approval, depending on when the BLA filing happens, also in '27.

Okay. So that could be next year, which is right about [ Hunter ]?

That's right.

And in terms of the infrastructure that you've built, would you just be able to leverage that for this [indiscernible] trial?

Almost perfect synergy on the infrastructure. We do not expect to expand the team. Obviously, some marketing material has to be made, et cetera. But other than that, it's -- we can slot the next program right in, which is also true for several of the other enzymes that we have, right?

So the next one then is for Pompe disease, where we're about to start our first clinical study. That is for the first time then testing the benefit of transferrin receptor in the periphery, right? So more improved muscle distribution, bone distribution. So that will be an exciting expansion of our ETV portfolio.

And Pompe is, relatively speaking, crowded, right? Because you do have Amicus and Sanofi there already, so what would you say is the added advantage?

It is -- so if you speak with KOLs and with families, patients are weak. They don't do really well. And mostly, that is about the imperfect muscle distribution. So standard enzyme replacement therapy relies on mannose-6 phosphate receptor. Mannose-6 phosphate receptor is not very highly expressed on the muscle, but what is highly expressed is transferrin receptor because muscle need lots of iron.

So if you want to drive something into muscle and bone, transferrin receptor is the way to go. So what we expect, and we see this preclinically -- but we expect that we could probably really have a significant impact on the musculoskeletal system.

Okay. I should actually say not Amicus, but BioMarin. That switch rate from Sanofi to the now BioMarin asset was a little bit slower than what people anticipated. Do you think that it's because those are not particularly differentiated assets from each other and your focus on transferrin could be much more notable and thus be potentially much more appealing?

That's our hypothesis, right, that just like with Hunter syndrome, it's not -- AVLAYAH is not an incremental but a stepwise benefit over the standard of care, and we would expect the same, hopefully, with Pompe.

Okay. All right. So let's move on to Parkinson's as we move up away from enzyme replacement type diseases, more into neurodegenerative diseases. So you've got this 151 BIIB122 partnership. So can you talk to us about what's going to be presented? And what would be the data?

Yes. Happy to do that. So for context, this is our last remaining product, which is a small molecule. So when we started Denali 10 years ago, we had large molecules and small molecules. Once we had confidence in the TransportVehicle, we spun out all of our preclinical small molecules as a separate company right now. The one remaining is the LRRK2 inhibitor in collaboration with Biogen for Parkinson's.

So this is very compelling biology, right? So mutations in LRRK2 are one of the strongest genetic risk factors for Parkinson's disease. LRRK2 is a kinase. The mutations are gain-of-function mutations. And when this kinase is overactive, the lysosome coalesces. And then when the lysosome coalesces, it doesn't process protein very well. Most of the neurodegenerative diseases are protein misfolding, protein accumulation diseases.

So the effect here would be inhibit LRRK2, improve lysosomal function, therefore, improve neuronal health and improve outcome in Parkinson's, right? So that's the biology, very compelling biology. We also know that we have a good compound. We tested it in a large Phase I, Phase Ib study, where we showed a dose-dependent improvement in lysosomal function.

The study that will read out, which is led by Biogen, so also the timing is determined by Biogen, is a 650-patient study with a clinical endpoint. It's UPDRS, the Unified Parkinson's Disease Rating Scale, Part 2 and 3. And it's a study that measures the rate of the progression of decline. So what we look for is for a clinically meaningful slowing in the rate of the progression of decline.

And would this be designed to be used instead of levodopa or with?

So it is a disease-modifying -- is actually the -- it would be the only and the first disease-modifying treatment in Parkinson's disease, while levodopa is a symptomatic. And ultimately, you would probably expect a -- those are 2 very different approaches that would be used in combination there. The study, by the way, includes both treatment-naive patients and patients on levodopa.

Okay. But do you have a sense of where it would work better?

I think we have to wait for it. I think we have to wait for the data. Yes.

So LRRK2 -- a few companies are looking at LRRK2 as a target. So on the one hand, it's good because several people want to pursue it. But how do you think about differentiation if that's the case?

Yes. So we have a very direct mechanism, right? It's a kinase. We have a kinase inhibitor. We know that overactive LRRK2 leads to dysfunctional lysosomes. We have shown that we can improve lysosomal function. Other approaches are a bit more indirect, either as protein degraders or other approaches. But honestly, we can hypothesize preclinically, but we would have to -- I think, here, the right thing to do is wait for the clinical data, wait for it to read out and then take it from there.

The one point that I do want to make on this program is that there are 2 studies ongoing right now, right? There is one that is -- that we just talked about, which is reading out with Biogen, which is in idiopathic Parkinson's disease. And there is a second study called BEACON, which is only in LRRK2 carriers. The strongest biologic rationale is in LRRK2 carriers. So the real decision about the future of this program would have to be made in the context of the readout of both of those studies, which would be by the end of this year.

And what percent, just remind us, of Parkinson's patients are LRRK2 carriers?

Yes. It's about 2% to 3% of Parkinson's. So there are about 1 million Parkinson's patients, so there's about 20,000 to 30,000 patients in the U.S.

Okay. In the few minutes we have, I did want to talk about Biogen's read-through for their tau program to yours. So is there a scenario where their readout does not bode well for Denali?

It's a good question. I mean we think the readouts are skewed in our favor, right? So Biogen is testing the tau hypothesis, but with a severe limitation on biodistribution, right? So Biogen's ASO in collaboration with Ionis is intrathecally administered. which has liabilities in itself, but the real limitation is that you do not have perfect distribution throughout the CNS, while the big advantage of going through the bloodstream with transferrin receptor, 300 miles of blood vessels in the brain, every neuron has its adjacent capillary, we have like perfect access to that.

So if Biogen sees some link between tau reduction and cognition and improvement in cognition, that's fantastic, right? If they don't see anything, it might be the issue on just imperfect biodistribution. I'll give you an example. An analogy is, back to Hunter syndrome, Takeda, a long time ago, ran an intrathecal ELAPRASE trial, and it didn't work, right? Intrathecal administration does not distribute the brain -- does not distribute drug very well in the brain.

Okay. And so basically, what you're saying is unless it doesn't show anything at all, it's good for Denali.

I think there is an outsized scenario where patients might actually get worse, but it's probably unlikely, and that would not be good for the whole field.

How should we be thinking about differences in the safety profile between a brain shuttler like Denali's versus the approach that Biogen is using?

Yes. I mean it is the safety profile. Again, we've -- this is the great -- one of the great things about having a drug approved with Hunter syndrome, AVLAYAH, this very strong support for the safety profile. We have patients on drug for over 5 years now dosed weekly, 15 milligrams per kilogram, a high dose. So we know it is safe.

Intrathecal administration is not perfect. It's not ideal at all, right, in -- the number of puncture with all the associated liability. So there is definitely a safety and convenience improvement, but really what we hope for is an efficacy benefit.

Okay. And then maybe last question is going to be on your 593 asset for FTD. Just talk to us about where you are in development there and when we should expect to see the next data set.

Yes. So 593 is what we call PTV, protein transport vehicle-enabled progranulin. So this is in FTD, frontotemporal dementia. A subset of those patients lacks progranulin. Progranulin again, is a lysosomal protein. It is important for lysosomal function. We substitute progranulin. So it's a very direct mechanism. You can almost think about enzyme replacement therapy. This is like protein replacement therapy.

So it is a mechanism that very directly addresses the lack of protein in these patients. We have shown in a Phase I that we can deliver safely large quantities of progranulin up to 27-fold the physiological levels. Now in this Phase Ib, what we look at in 40 patients with frontotemporal dementia granulin, if we can actually improve lysosomal function.

So by the end of this year, the study will read out, and we will look at proximal and distal markers of lysosomal function and then neuronal health. So markers of lysosomal function, GM2, GM3, Glucosylsphingosine, is what we primarily look for. There is an outsized scenario where we also look at neurofilament, right? So neurofilament would be the ultimate determinant that we can actually improve neuronal health. But remember, it's only a 6-month study. So in that short period of time, there is -- it's not impossible, but really what we focus on here is improvement in lysosomal markers.

And what about the view that for neurofilament, you need at least a year's worth of data because it seems like, with other programs from other companies, it's been kind of a noisy results?

That's probably right. We saw in Hunter syndrome, it took 2 years to normalize. On the other hand, you have, in some genetic forms of ALS, it took only 6 months. Tofersen was 6 months to really reduce. So there is a lot of variability on neurofilament.

Yes. So what would you, longer term, want to see to feel confident in this program then?

Well, early on, improvement in lysosomal markers, longer-term reduction in neurofilament, and that will give us the confidence to then actually go into an efficacy study next.

Okay. Perfect. With that, we are out of time. So thank you, Alex, for [ staying ] with me for the last 30 minutes, and thanks, everybody, for joining us.

Thank you.

Thank you for standing by, and welcome to the AVLAYAH FDA Approval Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Laura Hansen, Vice President of Investor Relations. Please go ahead.

Thank you Jonathan, and good day, everyone. Thank you for joining us today for our AVLAYAH FDA approval conference call. I'm Laura Hansen, Vice President of Investor Relations at Denali Therapeutics. Joining me on the call today are Ryan Watts, Chief Executive Officer; Alexander Schuth, Chief Financial and Operating Officer; Peter Chin, Chief Medical Officer; and Katie Peng, Chief Commercial Officer. Earlier today, we issued a press release announcing the FDA approval of AVLAYAH. The press release and the slide presentation to accompany today's call are available in the Investor Relations section of our website at denalitherapeutics.com.

Before we begin, I'd like to remind you that today's call will contain forward-looking statements within the meaning of the federal securities laws, including statements related to the approval, commercial launch and potential therapeutic impact of AVLAYAH tividenofusp alfa-eknm, our expectations regarding patient access and uptake, the potential addressable patient population and our plans and objectives for commercialization and future operations. These statements are based on information available to us as of today and are subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation to update these statements, except as required by law.

For a discussion of factors that could affect our results, please refer to our recent SEC filings, including our annual report on Form 10-K and its risk factor discussion. On today's call, we will discuss the U.S. Food and Drug Administration's approval of AVLAYAH, the first enzyme replacement therapy designed to cross the blood-brain barrier using our transport vehicle platform for the treatment of Hunter syndrome, and we will outline plans for commercial launch. Following our prepared remarks, we will open the call for your questions.

And with that, I will turn the call over to Ryan.

Thank you, Laura, and thank you all for joining us on short notice. Many of you have followed our progress over the years, and this is a significant moment for Denali. We're excited to share what this approval represents. To begin, I want to recognize the Hunter syndrome or MPS II community that made this milestone possible.

As shown on Slide 4, each of these photos represents just a few of the individuals and families who have been so instrumental in reaching this moment. We are deeply grateful to this community for their partnership, their courage and for continually challenging all of us to move faster and do better. At the same time, this approval reflects the collective efforts of many, including clinicians, researchers, advocacy partners and especially the entire Denali team, all working with a shared sense of urgency to address a devastating rare disease. We also want to recognize the FDA for a rigorous, thoughtful and highly constructive review process. This approval under the accelerated approval pathway based on a surrogate biomarker represents an important scientific and regulatory advancement. It underscores both the strength of the data and the shared commitment to bringing meaningful therapies to patients as efficiently as possible while continuing to build the evidence base.

Hunter syndrome is a progressive life-limiting condition that affects children from a very young age. While some aspects of the disease have been managed historically, the neurological manifestations have remained largely out of reach. What has always stood out to us is the clarity of what this community has been asking for, therapies that reach the brain. That input has shaped how we think, how we design our studies and how we move with urgency and purpose. We view this moment as a shared achievement and also as a responsibility to continue delivering for this community. And importantly, we believe this regulatory path may help open the door for future programs targeting similar diseases.

With that foundation, let me highlight why this approval represents such an important inflection point, both for the MPS II community and for Denali on Slide 5. First, this is a historic FDA approval. AVLAYAH is the first and only therapy for Hunter syndrome designed to address the whole body, including the brain, directly targeting one of the most critical unmet needs in this disease. Second, this marks the first meaningful therapeutic advance for MPS II community in nearly 2 decades. Importantly, AVLAYAH demonstrated significant reduction and normalization of cerebrospinal fluid heparan sulfate, a key disease biomarker, supporting activity in the central nervous system and forming the basis for this accelerated approval. Third, this approval validates our transport vehicle platform. This is the first FDA-approved biologic and a new class of medicines engineered to cross the blood-brain barrier, one of the most persistent challenges in medicine. Fourth, this milestone has broader implications beyond MPS II. It provides a regulatory and scientific framework that may inform the development of other programs, including DNL126 for Sanfilippo syndrome and additional lysosomal storage disorders. Finally, this establishes the foundation for Denali's lysosomal storage disease franchise. We are entering commercialization prepared. And we see this as the beginning of a broader opportunity to address diseases across the MPS spectrum.

Stepping back, as we noted in our announcement, this milestone validates our platform and its potential to overcome the long-standing challenge of delivering biologic medicines across the blood-brain barrier with the aim of transforming treatment for a wide range of serious diseases. Taken together, this is not just a single product approval, it represents a meaningful step forward for patients and an important advancement in how therapies can be developed and approved and a defining moment for Denali.

So building on what I just outlined, both the significance of this approval for MPS II community and what it represents for Denali, let me walk you through how we will spend our time today on Slide 6. I've just framed the key messages coming out of this approval and what we believe matters most from a clinical, scientific and strategic perspective. Next, Peter Chin will take you deeper into Hunter syndrome, the disease burden, the long-standing unmet need and why reaching the brain has been such a critical challenge for this community. Peter will also review the clinical data and the FDA label for AVLAYAH, including the biomarker evidence supporting approval and how we're continuing to build the data set through our ongoing COMPASS study. Katie Peng will then present our launch readiness and commercialization strategy, including how we're working closely with the community to enable access. I'll come back at the end to connect this approval to the broader Denali story. particularly how it advances our transport vehicle platform and expands the opportunity across our pipeline. And then we'll open it up for questions.

I will now turn the call over to Peter.

Thank you, Ryan. Turning to Slide 8. Mucopolysaccharidosis type 2 or Hunter syndrome is a rare inherited lysosomal storage disorder caused by deficiency of the iduronate 2-sulfatase or IDS enzyme. IDS deficiency leads to accumulation of glycosaminoglycans or GAGs throughout the body. The disease course can vary across patients, but progression begins early in childhood and life expectancy in severe forms often extends only into the teenage years. Cardiac and respiratory failure are the leading cause of premature mortality.

On Slide 9, MPS II is a multisystem disorder with manifestations that can affect nearly every organ system as depicted on the figure on the left. The most prominent neurologic manifestations are progressive cognitive decline and behavioral changes, but can also include motor impairment and hearing loss. At the same time, patients develop significant peripheral disease burden, including cardiac, respiratory, skeletal and gastrointestinal complications. Because of this, it is important to address both the peripheral manifestations and the disease in the brain with a whole body treatment approach.

Turning to Slide 10. The current standard of care for MPS II is intravenous enzyme replacement therapy, which does not cross the blood-brain barrier. There remains a significant unmet need for therapies that can address the neurologic manifestations and better address full body disease. As a result, neurologic manifestations, including cognitive decline, behavioral symptoms and hearing loss remain inadequately addressed. Moreover, patients may continue to experience peripheral symptoms and show abnormal urine GAG levels even after treatment with IV ERT, and cardiac, skeletal and other manifestations may persist or progress despite treatment. Thus, new therapies in MPS II should aim to address both the neurologic and peripheral manifestations of disease. This is exactly the challenge AVLAYAH was designed to address. With today's approval, we now have a therapy engineered to reach both the periphery and the brain, enabled by our transport vehicle platform.

Let's go to Slide 12 to discuss further how that works. AVLAYAH uses Denali's transport vehicle technology, which is designed to optimize delivery of biotherapeutics across the blood-brain barrier. The approach leverages the transferrin receptor, which is naturally expressed on cells of the blood-brain barrier and throughout other tissues. AVLAYAH is designed to deliver IDS to both the brain and the body.

On Slide 13, the clinical data supporting AVLAYAH were recently published in the New England Journal of Medicine, describing results from the Phase I/II study of tividenofusp alfa in pediatric patients with Hunter syndrome. Treatment with tividenofusp alfa produced large and sustained reductions in biomarkers of disease activity in both the CNS and the periphery. CSF heparan sulfate, a biomarker of primary substrate accumulation in the CNS and the basis of this accelerated approval was substantially reduced to levels seen in unaffected children. Neurofilament light, an established marker of neuronal injury was also reduced to normal levels. urine heparan sulfate normalized to levels in unaffected children, reflecting clearance of peripheral substrate in both previously treated and ERT-naive participants.

On Slide 14, overall mean change in Vineland adaptive behavioral raw score functional composite demonstrated continued skill gains over time. Bayley Scales cognitive raw scores similarly demonstrated improvement with continued cognitive skill gains. Improvements in hearing threshold as assessed by pure tone average were maintained throughout the period of follow-up. These data show the potential for treated patients to improve or stabilize meaningfully.

On Slide 15, with respect to safety, infusion-related reactions, a known risk of ERTs were the most common adverse event, decreasing in incidence and severity over time. Hemoglobin levels remain generally stable during treatment following an initial decrease. Overall, the safety results were consistent with ERTs and manageable for chronic therapy. Taken together, these data represent the culmination of years of work to address the full spectrum of peripheral and neurologic manifestations of Hunter syndrome, applying our understanding of the disease and leveraging the transport vehicle platform to deliver therapy to the whole body, including the brain. Importantly, this body of evidence has now translated into regulatory recognition in the United States, marking a meaningful step forward for patients.

With that context, I'll turn to Slide 16 to highlight key elements of the AVLAYAH U.S. prescribing information. Here are select highlights of the U.S. label. AVLAYAH is now approved under U.S. accelerated approval for the treatment of MPS II based on CSF heparan sulfate as a surrogate biomarker reasonably likely to predict clinical benefit. AVLAYAH is indicated for the treatment of neurologic manifestations in patients with Hunter syndrome when initiated in presymptomatic or symptomatic pediatric patients weighing at least 5 kilograms prior to advanced neurologic impairment. AVLAYAH is not recommended for use in combination with other enzyme replacement therapies. The recommended AVLAYAH maintenance dosage is 15 milligrams per kilogram administered once weekly as an intravenous infusion over approximately 4 hours. Treatment should be initiated with a dose escalation regimen. The prescribing information reflects the robust effects on the primary substrate of IDS in both CNS and periphery.

With respect to CSF heparan sulfate, treatment with AVLAYAH resulted in a significant 91% mean reduction of CSF HS from baseline with 93% of patients having CSF HS levels below the upper limit of normal at week 24. For urine GAG at baseline, 4% of patients had total urine GAG levels below the upper limit of normal. After treatment with AVLAYAH, 68% of patients had total urine GAG levels below the upper limit of normal at week 24. With respect to safety, the prescribing information includes the following: a box warning regarding hypersensitivity, including anaphylaxis consistent with other approved ERTs guidance on management of infusion-associated reactions, anemia typically occurring early with guidance to assess hemoglobin prior to treatment initiation 3 months after initiation and as clinically indicated thereafter. and membranous nephropathy related to immune complex deposition in reported case. General guidance is to monitor serum creatinine and urine protein to creatinine ratio at a frequency to be determined by the prescriber.

On Slide 17, AVLAYAH's clinical development continues with a clear path from U.S. accelerated approval to full approval. The Phase I/II study with 47 participants supported U.S. accelerated approval and will continue to support select country approvals. The COMPASS Phase II/III confirmatory study in approximately 63 participants is ongoing. The design is a head-to-head randomized controlled trial versus standard of care ERT across disease phenotypes and a broad age range. This study is designed to evaluate both neurologic and somatic clinical outcomes. COMPASS includes adults living with Hunter syndrome and represents an important evidence package to potentially broaden future access in the United States and internationally.

And now I'll turn it over to Katie Peng.

Thank you, Peter. Good afternoon, and thank you for joining us on this milestone day for Denali and the MPS II community. Today, I'll briefly cover what this approval means and how we are positioned to execute on a successful launch.

On Slide 19, as Peter outlined, MPS II is a progressive and multisystem condition. What is most compelling to physicians about the AVLAYAH data is that patients achieved normalization of CSF HS in 9 of 10 patients as early as 6 months with sustained normalization at 12 months. None of the patients in the study had normal CSF HS at base line. AVLAYAH also achieved normalization of urine GAG, a key biomarker of disease progression in 9 of 10 patients by 12 months. Only 2 patients had normal urine GAG at base. Importantly, a majority of patients in this study were previously receiving standard of care enzyme replacement therapy, reflecting a real-world transition as more than 90% of patients today are on treatment. No other therapies to date have demonstrated this level of normalization across key disease biomarkers. This is setting a new bar. For the first time, we are seeing data that support addressing both systemic and neurologic disease burden in a single therapy.

Slide 20. Now let's step back and take a look at the broader landscape. In the United States, approximately 30 new patients are diagnosed each year. There are roughly 500 patients living with MPS II in the U.S. and 2,000 worldwide. With this approval, the opportunity is to capture approximately 75% of the treated U.S. prevalent population. With a positive COMPASS study, we should be able to address the entire MPS II population. Today's prevalent population reflects the reality that individuals born with severe disease often experience shortened lifespan. With AVLAYAH, we believe there is the potential to alter that trajectory over time. Early treatment may improve neurologic outcomes and longer survival could gradually expand the prevalent population. While this evolution will occur over time, it represents the potential for meaningful long-term impact for families and a durable opportunity for Denali to continue advancing therapies in rare disease.

Slide 21. Our commercial confidence is grounded in stakeholder insights gathered prelaunch. 90% of physicians view AVLAYAH's data as highly motivating to prescribe. 80% are aware of new treatments in development and are excited to try AVLAYAH. We have also engaged with payers that cover approximately 90% of commercial lives. The feedback has been constructive. Payers recognize the unmet need and have indicated that they will likely manage to the FDA-approved label. We have seen similar excitement from the patient and advocacy community and have been engaging with them frequently as they were critical in helping to shape our launch. This is not a market where awareness needs to be created from scratch. It is a community that is informed, organized and ready for change.

On Slide 22, the structure of the MPS market is an advantage for our launch. Of the 500 U.S. patients currently treated with enzyme replacement therapy, the majority are managed by clinical genetics in about 100 centers of excellence. The concentration enables a small and focused field team. We have already established relationships with all major MPS II centers. Our sales team have profiled and segmented all accounts with MPS II patients to optimize execution from day 1.

Slide 23. I could not be more excited or confident in the team we have in place. Our leadership team brings experience across product strategy, U.S. and global marketing, market access, analytics and medical affairs. We have marketed oral products, injectables and IV-infused products. Collectively, the team has launched 19 products or indications, including global blockbusters and rare disease therapy. Across our field organization in the U.S., 96% of our teams have lysosomal storage or rare disease experience. The depth of that experience is on average 12 years.

Slide 24. As the first TfR-enabled enzyme replacement therapy designed to cross the blood-brain barrier, AVLAYAH addresses progressive neurologic decline in MPS II, a critical unmet need not targeted by existing therapies. The innovation meaningfully differentiates AVLAYAH within the current MPS II treatment paradigm. The degree of biomarker normalization and CNS engagement is unprecedented and reflects the differentiated value of the therapy. AVLAYAH's pricing balances our 4 core principles: access, affordability, sustained R&D investment and the therapeutic innovation of our medicines. Our wholesale acquisition price is $5,200 per 150-milligram single-use vial. AVLAYAH is dosed weekly at 15 milligrams per kilogram. Most pediatric patients will require 2 to 3 vials per week depending on weight. The annual cost of maintenance dosing for a 10-kilogram infant is about $270,000. The annual cost of maintenance dosing a 30-kilogram child is about $811,000. We are deeply committed to broad and equitable access for eligible patients. Our teams have engaged with payers prelaunch and we will continue those discussions to support coverage for eligible patients at launch and beyond. Importantly, this launch establishes a sustainable revenue stream that supports expansion of our TfR-enabled platform across additional neurodegenerative diseases. We believe AVLAYAH is well positioned for long-term success, driven by the significant unmet need it addresses and the strength of our commercial execution. We are confident in this price supports a successful launch while balancing innovation, access and sustainable value creation.

Slide 25. Market access execution is critical in rare disease, so we invested heavily here. Through our Denali Care Program, we will provide personalized support throughout the treatment journey. Our comprehensive patient support services include benefit investigation, prior authorization and assistance navigating insurance coverage. In addition, the team will support treatment coordination, provide information and educational resources and financial assistance support where appropriate. Our objective is simple: reduce the time from prescription to first infusion and minimize friction for families.

Slide 26. Looking ahead, our road map is structured across stakeholders. For physicians, we are supporting in-service education, infusion training and robust scientific exchange to instill confidence in clinical use. For payers, we are securing commercial coverage policies, advancing Medicaid access and operationalizing prior authorizations and acceptance processes. For patients and caregivers, we are activating with the advocacy community, driving awareness and consideration and focusing on reducing the time to therapy initiation. AVLAYAH is expected to be available in the United States 2 weeks from tomorrow. We are prepared operationally for that time line. Rare disease launches follow a predictable uptake curve. In 2026, the focus is activation and access. In 2027, we expect adoption acceleration when we will see coverage policies in place and revenue inflection as workflows stabilize and confidence in AVLAYAH matures.

Slide 27. Let me briefly walk you through how we think about global access following our U.S. approval. The U.S. decision really serves as the anchor for our ex-U.S. regulatory strategy. In many markets, we can leverage that approval through a mechanism like the Certificate of Pharmaceutical Product, or CPP, and other conditional approval pathways to begin the registration process. Of course, registration is just the first step. After approval in each country, we will still need to go through local reimbursement processes to ensure patients can access the therapy. We expect global access to occur in phases. Roughly 1/3 of the market could become available in the near term with additional markets opening in the mid and longer term as both regulatory and reimbursement processes are completed. To support that expansion, we have already established distributor partnerships across select markets in Lat Am and MENA regions.

Slide 28. Let me leave you with a few key takeaways. AVLAYAH represents the first meaningful advancement in MPS II treatment in 20 years. Second, we have built a fully staffed and experienced rare disease commercial organization. Third, the competitive landscape is favorable and no direct CNS penetrant therapies are currently approved. And fourth, the community is ready and waiting. Our priorities are super clear: drive patient starts, ensure smooth reimbursement, deliver a consistent high-quality patient experience and build a durable franchise starting with MPS II. We look forward to updating you as we move through the first phases of launch.

Now I'll turn it back to Ryan.

Thank you, Katie. Slide 30. Established by today's approval of AVLAYAH, I'd like to discuss the broader strategic context, which is the ETV franchise we are building in lysosomal storage disorders. What this slide shows is that we are not pursuing a single indication, but a platform-driven opportunity across multiple diseases with meaningful patient populations, including MPS II, MPS IIIA, Pompe, Gaucher and others. Collectively, this represents a substantial addressable market. What differentiates our approach is that the ETV platform is designed to address both systemic and neurologic disease.

Historically, enzyme replacement therapies have been limited to peripheral tissues, leaving the brain untreated. We believe AVLAYAH demonstrates that this paradigm can change. From a commercial standpoint, this is also a highly leverageable model. We can build on existing infrastructure, apply a consistent development and launch approach across indications and drive efficiencies as we scale. Importantly, we are entering a large, well-established ERT market with significant precedent for adoption, reimbursement and long-term value creation. So when we talk about AVLAYAH, we see it not just as a product but as the foundation of a durable multi-program franchise in lysosomal storage disorders.

Slide 31. Let me close by putting this moment into perspective. With AVLAYAH, we believe we have reached an important first summit, one that reflects years of scientific invention, disciplined execution and deep partnership with patient community. First, this is proof. AVLAYAH is the first FDA-approved biologic design to cross the blood-brain barrier, demonstrating that we can deliver medicines to the brain in a meaningful way. Second, this validates our platform. The transport vehicle is now proven in humans, opening the door to an entirely new class of biologic medicines. Third, this fuels our pipeline. What we've established here creates a clear path to expand into additional lysosomal storage disorders, including DNL126 for Sanfilippo syndrome, which we plan to advance towards launch next year as well as into broader neurodegenerative diseases such as Alzheimer's disease. where we expect to have 2 programs in clinical development this year. And most importantly, this is about our patients. While we are starting in rare diseases, our ambition is much larger to transform treatment for millions of people affected by serious diseases. So while today marks a major milestone, we see it as the beginning of what this platform can deliver. We remain steadfast in our purpose to transform life for patients. We look forward to continuing this journey with all of you. And now we will take your questions.

Operator, could you please open the lines for questions?

[Operator Instructions] And our first question for today comes from the line of Andrew Tsai from Jefferies.

Congratulations on approval. It's exciting. I know you guys have mentioned to think about an S-type trajectory acceleration later in 2027. Is there a low-hanging fruit though right now, maybe within naive or switch patients? And maybe asked another way, what exactly would it take for this S curve to look more linear or parabolic instead?

Thank you, Andrew. I'll hand back to Katie to answer that question.

Thanks for the question. Yes, I mean, certainly, the patient population is very excited. We've already gotten a lot of outreach since the announcement from the community, excited to start. And I think as we've spoken before, a lot of it has to do with the mechanics of getting reimbursement, and it will take time for, of course, the product to get into the channel, which will take about 2 weeks. and then for the reimbursement process to start. And that's why we're guiding to an SJ curve more because of the mechanics of launch and not for the lack of excitement from the community.

Makes sense. And as you guys mentioned, you clearly have data showing clear benefits on functional outcomes violin Bayley. The label technically doesn't have that right now. So can your sales reps technically go out and message the functional data you're seeing? It was published in the NEJM paper or do we have to technically wait for COMPASS data in order for you to promote that?

That's a great question. Our sales team will focus on promoting what is within the label and consistent with label. In terms of the clinical data that's available through the NEJM article, our medical affairs team will be able to speak to that in engaging on scientific exchange with the physicians. So it's a dual approach essentially with our field team very much focused on the biomarkers and the safety data that's in the label, but med affairs will certainly be able to talk to the data set that is in New England Journal of Medicine.

And our next question comes from the line of Salveen Richter from Goldman Sachs.

This is Lydia on for Salveen. Congrats on the approval. I guess just given the language in the label, do you anticipate any payer pushback for the non-neuronopathic or attenuated patients? And then if you could just talk about your plans to monetize the PRV.

Great. Thank you, Lydia. Great to hear from you. Katie will answer your first question around payers and the details on label, and then Alex will answer your second question on the PRB.

Yes. So that's a great question. No, we don't expect there will be any limitations from the payers because the label indicates that it's for presymptomatic and symptomatic patients. So attenuated less severe patients also have neurologic manifestations. So our expectation is that the payers would cover to the label indication.

Yes, Lydia, we are, of course, pleased that the FDA has granted the rare pediatric disease priority review voucher, the PRB for the approval of AVLAYAH. As you know, this PRV can be transferred or sold, and we intend to do so in support of our operating expense in support of our long-term goal. So stay tuned on that.

And our next question comes from the line of Michael Yee from UBS.

Congrats on the approval. Two questions. I guess just thinking about the ramp, how do you technically determine if someone is neuropathic or has neurological disease? Is there a specific or requirement to determine the eligibility for that? And then secondly, how does this approval and your regulatory discussions you just went through read through to Sanfilippo and the process there and how that's going?

Thanks, Mike. I'll have maybe both Katie and Peter comment on neurologic manifestations. And as you sort of define that, maybe we'll start with Katie. And then the read-through on this for Sanfilippo will have Peter comment on that.

Thanks, Mike, for that question. In terms of how you think about the treatment landscape, the disease is really a spectrum disease. So in practice, we don't really think about neuronopathic versus non-neuronopathic. And if you look at the label today, it's really covering all of the pediatric patients, they should be able to gain access and specifically address in thinking about neurologic manifestations, which is different than neuronopathic. If you look at the literature as well as our claims data, about 90-plus percent of patients actually have neurologic manifestations. So that is not necessarily only relegated to neuronopathic patients. So that's why we're thinking in terms of the opportunity, it is really the pediatric population in the prevalent population in the U.S. So hopefully, that addresses your question.

And maybe I can add to what Katie has just shared. I do think it's important to note the distinction in the labeling language between neurologic manifestations versus neuronopathic. There's no mention of neuronopathic or non-neuronopathic or attenuated phenotypes. And really, the focus is on neurologic manifestations, recognizing that CSF HS is the basis of approval as a surrogate marker.

On the question of Sanfilippo, I think what this precedent sets is that CSF HS is an approvable surrogate marker for -- as a reasonably likely to predict clinical benefit. And in our discussions with the agency through the START program, we have frequent interactions and anticipate and have already had discussions that CSF HS could lead to an approvable path. Each disease is different. I think that's an important thing to consider as well. And I also note that at this time, Sanfilippo has no standard of care. And so we'll have specific discussions in that disease state.

And our next question comes from the line of Sean Laaman from Morgan Stanley.

This is Mike Riad on for Sean. Congratulations on AVLAYAH's approval. Could you just maybe comment more generally on like neurological manifestations? Is this like restrictive or advantageous in terms of the positioning versus Elaprase? Like how does that influence early age uptake and commercial positioning over the long run?

I'll hand that to Katie to comment.

Yes. So in terms of commercial positioning, it really doesn't change. The only difference compared to the current standard of care has to do with the separation between pediatric and adults. But we feel with the current label, it is holistically being able to treat all different manifestations of the disease, whether it's symptomatic or presymptomatic. So if a physician deems that a patient even presymptomatic has the likelihood to show neurologic manifestations, they are able to treat. So I feel like this label is very holistic and able to help us address the pediatric population with MPS II.

Perfect. And just a quick follow-up. So you noted that like with the expansion of a prevalent patient population with disease burden reduction over time that, that would grow the patient population. Is this more of a result of just early intervention? Or like post COMPASS, would there be additional label expansions to help grow the addressable population?

Yes. So I think it's threefold. Newborn screening is now increasing in the United States. So we'll be able to identify patients earlier on. And certainly, with this disease, earlier treatment will result in better benefit. And as you know, with the severe population today, lifespan is shortened, right? It's late teens. And so we believe with early treatment, newborn screening, we will be able to address the disease more holistically. And over time, we expect with the COMPASS data set, we would then be able to unlock adult patients as well. So given these 3 things over time, we believe the prevalent population should grow with MPS II.

And maybe just 2 comments. One is I want our resident neurologist, our lead neurologist, Peter, to make a comment on neurologic manifestations and just to restate what we stated before about the breadth. The second is that this is -- I think it's important to understand that on initiation of treatment, it's in the pediatric time period, but patients will stay on drug throughout life. So they will continue as adults on AVLAYAH. Maybe a comment on neurologic manifestations.

Yes. Thanks, Ryan. I think echoing what Katie has said, neurologic manifestations are prevalent across the spectrum of MPS II. Importantly, the indication includes presymptomatic and symptomatic stages of the disease prior to advanced neurologic impairment. And I think that's important from a clinical perspective because it allows the patients and the families to make the assessment of the most appropriate treatment. And so even in the presymptomatic stage, one can anticipate that patients will develop or may develop neurologic symptoms.

Congratulations on AE approval.

And our next question comes from the line of Tazeen Ahmad from Bank of America.

This is Daniel on for Tazeen. Congratulations on the approval. Just 2 on our side. We're just wondering what kind of metrics you plan to provide to help us track the launch once you get this product on the market? And then in terms of coverage, do you expect there to be differences between patients switching versus newly diagnosed patients? Do you expect any sort of step edit requirements before patients can start on AVLAYAH?

I'll hand that to Katie.

Okay. I'll answer your second question first, which is, no, we do not expect there would be any differences in how payer would handle naive patients versus switch patients given the strong label that we have. In terms of updates on the progression of the launch, I think for the first year, we're not going to be providing a lot of details other than to give qualitative updates on the mechanics of what with the launch. And as the data and our launch evolves, we will then share additional information.

And our next question comes from the line of Paul Matteis from Stifel.

Let us offer our congratulations. This is Julian on for Paul. I guess I think a lot of people are wondering whether you guys think there's a bolus of patients that may be lined up waiting to switch from Elaprase. Anything that you could say about that? And I guess, just thinking about what types of patients you think may be interested, again, that are in line with the label.

And then one other follow-up question is FDA mentioned in its press release that you're 95% enrolled for the confirmatory Phase III. Just wanted to get your thoughts on how far along you think you need to be enrolled for the Sanfilippo study in order to file a BLA there? And if any specific considerations for that indication we should think about with respect to regulatory?

I'll hand it to Katie on the first one and then myself and Peter will comment on the Sanfilippo enrollment.

Great. In terms of bolus, I would not think of it as a bolus. Usually, you think about that when there's no treatment available in a current disease area. What I will say is the bottleneck will be access and reimbursement, right? We won't have coverage from payers from day 1. And so there will be a medical acceptance process in order to get reimbursement for patients. And as you know, with rare disease being expensive, patients will not have access until reimbursement can be assessed for each of the patients.

In addition, there is logistics of getting back into the clinic for infusion. So those are the sort of mechanistic bottlenecks. In terms of patients that are excited and waiting, certainly, the newly diagnosed patients, the younger patients that have been identified as having more severe disease. We have already heard a lot of excitement from the community on getting these patients on treatment as soon as possible. And we always think about time is neurons, so we need to get these patients on. But it's more about logistical hurdles that we'll have to work through and launch and not about excitement. There's not a lack of that in the community.

I'll add a couple of points to the second question around Sanippolics maybe just make a general comment the standard of care. But obviously, getting the Phase III off the ground is a priority as we will file for accelerated approval next year. Any other thoughts on that, Peter?

Yes. Just one additional thought. I think that it's important to note that the COMPASS study started years ago with the intent for a robust Phase II/III design to enable global approval, not just confirmation for the accelerated approval today. So while the FDA noted the 95% enrollment, I don't think that is a regulatory expectation per se. It's that the confirmatory study is underway.

And our next question comes from the line of Mayank Mamtani from B. Riley Securities.

Huge congrats on getting the brain shuttle field its first FDA approved product. Sorry if I missed this. As you mentioned, the initial focus is on the early symptom pediatric subjects. And there's some dose escalation monitoring period up to, I think, 8 weeks for a variety of things, infusion reactions, anemia, et cetera. Could you sharpen the split between the Elaprase naive newly diagnosed versus the switch patients that you intend to get on drug in sort of the next 2, 3 quarters? And also, I wonder in your physician research, how important some of the attributes that you have in your data like hearing improvement and even NfL improvement how does that kind of weigh in versus some of the other things that may come later like the 6-minute walk test or other neurological endpoints, which are obviously not in the label. If you could maybe give some more color there, that would be great.

Okay. I'll hand it to Katie and Peter will sort of tag team on this question.

I'll start with that. So in terms of the dose escalation, so 2 things. The patients -- the switch patients as well as the new patients, naive patients will need to come into the centers of excellence to get their infusion. And the dose escalation schedule is 3, 7 and 15. And so there are some logistics around getting patients set up for infusion. This is why we have guided to the S shape uptake curve because of the -- getting the patients back into the clinic. That is very common for new ERTs approved. With a new safety profile, physicians will need to gain experience infusing the product in the clinic before patients can be sent home. But we do very much expect all patients to be able to go home for home infusion for those that would like to get their infusions at home.

And maybe just to add, the dose escalation was scheduled to support positive patient experience by reducing infusion-related reactions early on. Remember that the data suggests that the incidence was highest early upon initiating treatment. And so the dose escalation really is designed to support a positive patient experience. We want patients to get to the maintenance dose as rapidly and as predictably as possible.

I think the second part of the question had to do with NfL and other outcomes. The label -- I want to emphasize the label is based on the Phase I/II study design, and that design had a primary study period of 24 weeks. And so the label outcomes are based on that primary study period. Now that said, as we've talked about before, we're highly encouraged by the NfL results and the large proportion of participants who normalized on NfL. And we think that also is highly meaningful. COMPASS is our confirmatory trial, and we will be analyzing a large number of outcomes, both peripheral and CNS across a very broad population from age 6 to 26. So that will -- that is intended to provide a very definitive and comprehensive efficacy.

I think I'll just add one other point, which I think you asked about hearing and some of these other endpoints. I think very much meaningful. within the community. And I think the great thing we have here is we have a rigorous FDA that based a label on the 24-week endpoint from the Phase I/II. And then we have the New England Journal publication that shows really longer-term data and what this medicine can actually do. I think it's a great combination. And then, of course, what Peter already mentioned, which is the COMPASS study as follow-up, but definitely viewed as meaningful, obviously, behavior cognition, and I think we hear a lot about hearing in particular.

And our next question comes from the line of Ananda Ghosh from H.C. Wainwright & Company.

On the data and of course, on this very fulfilling journey since inception. I have 2 questions. The first one, given the concentrated prescriber base, what does your survey work kind of tell about the percentage of docs willing to prescribe now versus those willing to see or wishing to see results from the head-to-head ERT study -- the study in the ERT?

Go ahead, Katie.

So our market research suggests that once they see and understand our biomarker data, they do see it as unprecedented given that no one has shown normalization in this treatment paradigm. Of course, with all launches, there will be a segment of physicians who have the wait-and-see approach, but there are much fewer of those because as I stated earlier, 100 -- 100 centers of excellence are managing these patients, and they have the level of depth and understanding of what is not being addressed with the current standard of care. And given that this is a progressive disease, we do see the level of excitement and willingness to prescribe. And I would say there may be a segment of physicians that's not as familiar with our data today that, of course, we're going to need to get to as part of this.

And maybe...

I just -- you have a second question, A. Go ahead.

Yes. So the second question is, I think, extension of what others have already asked, and that is based on some of the regulatory interactions you had over the past several months now, what are some of the -- what's the regulatory ramification with respect to some of the other assets in the platform beyond Sanfilippo? So what have you learned from this process? And how do you see a path forward for other programs?

Yes. I'll comment on that. Just to restate what we've stated before. I think it's obviously positive read-through, especially for Sanfilippo, which is a very aggressive neurologic disease where there is no standard of care, patients advance very rapidly. And I think importantly, it's precedent setting that heparan sulfate is used as a surrogate biomarker reasonably likely to predict clinical benefit.

Now we think about the broader pipeline. So that's, I think, clear for Sanfilippo, but our broader pipeline, each one of our medicines and each one of our desired therapeutic areas will have its own nuances. Pompe, for example, Gaucher, Alzheimer's. But I think most importantly, these data and this approval validates that the transport vehicle works. We can get biologics into the brain, but we'll approach each of those separately. We, of course, are looking for indications where biomarkers can allow for an accelerated approval. That's obviously advantageous.

And our next question comes from the line of Laura Chico from Wedbush.

Just a couple of follow-ups on my side here. Great color from Katie on the launch setup. Just wondering if you could expand a little bit more on the expectations around the payer mix within the U.S. And then this is more of a logistical clarification. Will there be patients converting from the trial to paid status? I know you're not looking for a bolus of switches or anything like that coming through. But just trying to understand if there's a conversion that has to happen here for AVLAYAH patients already on drug.

I'll hand back to Katie for those questions.

Thanks, Laura, for your question. In terms of the payer mix, our expectation is that 50% will be -- roughly 50% are commercial payers who have MPS II today and then the other 50% is likely Medicaid with very little Medicare. And maybe I'll address maybe part of your question, Peter can add in terms of the study. Now of course, with the U.S. approval, patients could drop out of study to get on to commercial therapy. But we haven't made any decisions or announcements in terms of our E2 program. So there will be more to come on that.

Yes. I'll just add that the study remains ongoing at this time.

And our next question comes from the line of Peyton Bonsek from TD Cowen.

This is [indiscernible] on for Peyton. I guess the first one is, when you look at the label and you finish the confirmatory trial, do you think that you could broaden it and get rid of the manifestations as part of the label? And the second thing is if you have any dose interruptions, do you imagine that you will have to go through a reauthorization step?

Okay. We'll have Peter talk about broadening the label, and then Katie will talk about if there needs to be reauthorization. Go ahead, Peter.

Yes. So thank you for the question. The question about the neurologic manifestations, that is a reflection of the accelerated approval based on the CSF surrogate. I think with the confirmatory study and the way that we have designed this with Cohort A with neurologic manifestations and Cohort B, which is an attenuated population and the totality of endpoints that we anticipate showing efficacy on we should be able to remove the neurologic manifestations because the study -- the confirmatory study is designed to assess comprehensive efficacy across a broad population.

In terms of reauthorization, what we understand from the standard of care today is that the reauthorizations and payers are usually at 6 months or at 1 year. And that's our assumptions to date.

I'm just going to add one other point around neurologic manifestations that Peter made earlier in the call. Again, linking it to CSF heparan sulfate is key, and that was, I think, a key for the FDA. But importantly, the majority -- the vast majority of patients experienced neurologic manifestations, both neuronopathic and attenuated. So I think what we think more about is would we initiate treatment in adult, which of course is a smaller fraction of the overall patient as we think about the expansion of the label. But we're very happy with the label. We think it does reflect the Phase I/II data, and it's a great place for us to start.

And our next question comes from the line of Myles Minter from William Blair.

This is John on for Myles. Congrats on the approval. So maybe just one final one on the neurological manifestations. Can you just talk a little bit more about how clinicians are defining these? And then maybe could you just provide us some clarity on what percentage of the attenuated population would not have those manifestations and therefore, would not be eligible as indicated?

Yes. Okay. We'll start with Peter on defining neurologic manifestations and then we'll hand it to Katie around the percentages.

Yes. Thank you. Thank you for the question. I think the first thing to reiterate from my perspective is the indication is for neurologic manifestations in the presymptomatic and symptomatic stages. And remember that approximately 2/3 to 70% of MPS II patients are -- have a more severe phenotype with neurological involvement. And as Katie noted earlier, a large proportion of patients who are attenuated or classified as attenuated will also develop neurologic manifestations. So it's hard to put a specific number to it, but it's the majority of patients are expected to have neurologic manifestations.

The other thing I would say is important in the indication statement, there is a note that AVLAYAH is not recommended for use in combination with other therapies. And that is an implicit acknowledgment that AVLAYAH does address peripheral manifestations as well. And the urinary GAG normalization is also labeled in the pharmacodynamic results.

And maybe I'll just add a little bit of color because what the data that we have, there is a paper published that shows that actually before the age of 10, attenuated patients will develop neurologic manifestations. And based on our claims data set, when we looked at the list of what is considered neurologic manifestations, about 94% of patients have codes that cope to neurologic manifestations. So that's why we believe it is the majority of the population of the pediatric population.

I think we have time for at least one more question. I know we're at time, but we want to be able to get more questions. I think as we start repeating some questions, we realize we've kind of hit that limit. So let's take another question.

Our next question comes from the line of Jay Olson from Oppenheimer.

Congratulations on this landmark approval. We have a few questions. Can you talk about any educational support that you'll provide for patients to transition from Elaprase to AVLAYAH in clinical practice? And then second, can you share any color on the potential launch timing and strategy for countries outside the U.S. that also might provide approval based on your Phase I/II study results? And then finally, can you talk about whether there could be a platform technology designation granted by the FDA along with this AVLAYAH approval? And if so, how important would that be for future programs?

I'll hand it to Katie.

Great. Thanks, Dave, for your question. So our Denali CRE program or the care team, they will absolutely be supporting every patient and family with educational resources on how to transition from the current standard of care to AVLAYAH. And so our team is ready and waiting to be able to do that.

In terms of the global expansion, yes, and Peter mentioned this as well, we will be seeking regulatory approval with the U.S. approval now in hand, we can leverage the CPP or CMA process to be able to access other markets. But as you know, other markets will also require reimbursement unlike the U.S. market where we can go on day 1. So we'll have to be able to obtain reimbursement in those countries. And it will be local country by country as we go forward with registration in these various countries.

Yes, I'll end and we'll end the call after this comment. So great question around the platform designation. It's something that we've contemplated multiple times. And as you know, we have 3 different platform franchises, the enzyme transport vehicle, the oligonucleotide transport vehicle and the antibody transport vehicle. In our assessment, of the 3, the one probably most likely to qualify for platform designation may actually be the oligo transport vehicle because the core can be similar across medicines. With the enzyme, each enzyme actually behaves pretty differently. For example, SGSH and IDS behave differently. That being said, it's something that we're -- we would pursue that path if we believe it would be the fastest way to get more medicines to patients. And I think with that, we'll close questions. Those that we didn't get to, we apologize, we'll be following up with you directly.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Great. Thanks, everybody, for continuing on here. It's my pleasure to be moderating a chat with Ryan Watts, Founder and CEO of Denali. I'm sure most folks know the story decently well. But maybe, Ryan, you can just give us a couple of minutes to sort of set the stage on 2026 is a big year for Denali with Hunter and the pipeline, and then we'll do Q&A. So thanks again.

Sounds great, Paul. Great to be here again. I was trying to count how many CNS days this is for me, but probably...

6 or 7. Do you know the first one was not on video. Well, no, I've done 7. The first one for you was probably 6 years ago, audio-only 5 days into COVID.

Yes. I remember that.

Crazy. So thank you. Appreciate it.

It's good to be back. And I think that might have even been a panel, if I recall, back...

Yes, that was interesting. We can talk about that another time. That was interesting.

I mean, 2026 is set up to be a very important year for Denali. I mean, obviously, we're at the very final stages of our first approval for tividenofusp alfa in Hunter syndrome. I think not only does this program have its own opportunity in a very significant area where there hasn't been an approved medicine for 20 years. And of course, in our case, engineering brain delivery has allowed us to take the next step and treat the brain for these patients.

But also, we kicked off the year with new data on our Sanfilippo program, very similar to the Hunter program. We'll have new data on our PTV: Progranulin program, which is another transport vehicle-enabled medicine. We're going to read out our LRRK2 program. And then we've started three new clinical trials. Well, two are starting and one we're just about to file. So one in Alzheimer's, another in Pompe and then another in Alzheimer's. So obviously, a very exciting year.

I think last year, I think as we shared in the last time we spoke a month or so ago, was the year of harvesting a lot of science for Denali. We had a couple of basic biology papers on Alzheimer's. We had a science paper on our ATV:Abeta approach, but we ended the year and began this year with our New England Journal publication on the Tivi program, on the Hunter program. And so what we've seen is a shift at Denali. Starting 2 years ago, we've harvested the fruits of our scientific efforts, but now we're applying the transport vehicle to many other programs. The goal is to accelerate and to expand the portfolio using the transport vehicle also at a time where TfR-enabled programs are highly competitive. So it's an exciting time in the field for sure and looking forward to diving into details, Paul.

Yes. Awesome. Well, I think just to start, I mean, everyone wants to know how you feel ahead of the PDUFA, right? We're in probably one of the weirdest years for the FDA that I can remember. And you're right in the center of rare disease, an area where I think people are debating to what degree have some of these negative decisions been product-specific versus a changing of the goalpost. You've expressed confidence, talked about being in labeling discussions. Like anything else you can kind of convey to us here about the 310 PDUFA?

Yes. I agree that the last year has been unusual, especially in rare disease, accelerated approval, biomarkers that are reasonably likely to predict clinical benefit. And I think we're confident. We have had a fantastic engagement with the FDA over the last 9 months or so. And I think our confidence comes from the robustness of our data, our clinical data, our biomarker data that we believe it will translate and is translating to clinical benefit for patients. And so I think having a rigorous bar has been important. Obviously, it's -- and we're going to get into, I'm sure, more details, it's definitely a complicated time with the FDA.

Yes. Yes. Okay. I mean I think you said in November, you were in labeling discussions, which was a while ago. I hear labeling discussions, and I think that's super bullish, but it's also been quite a long time. Like how should I make sense of that from the outside looking in?

I think it's important to set the context of our review cycle. So basically, what happened for us is that our original PDUFA date was January 5, as you know. And leading into this sort of late cycle meeting, we were made aware and engaged with the FDA on a miscalculation of a molecular weight of Tivi, which is so unusual, solved it very quickly. But I think by statute alone, it resulted in a major amendment and a shift of the PDUFA date to April 5. So I think what the FDA did is they did their best to stay on track to the January 5. But inevitably, there isn't the time pressure that you have of January 5. And so I think we've been really in serious label discussions in the last month. Those early days, we basically took a bit longer for the CMC review, which is now completed. And basically, the right timeline kind of moved into 2026 is the best way to describe it. Maybe not as quick a turnaround on the back and forth, but we're -- now it's -- like you said, we're here. We're at the final stage.

Right. So I mean, the value proposition of this drug, as I see it, is, hey, you can maintain the same peripheral disease control you have in Elaprase, but treat the neurological part of the disease. Do you envision a label where it sort of indicates this for all Hunter as an Elaprase alternative? Or is it going to be like more neuro-centric?

Yes, it's a good question. I think we're too close to the finish line to go into detail on anything related to the label. And I think your -- the way you articulate it is right that what this medicine does is it does essentially what Elaprase or standard of care has done historically, but crosses the blood-brain barrier. And one of the things that we've done is we've really pushed dose. We want to maximize efficacy. We want to maximize efficacy in the periphery and in the brain. And I think inevitably, these patients, even if they're like attenuated, which at sort of diagnosis represents maybe 30% of the patients, they eventually develop neurological disease like hearing deficits and other challenges. So obviously, our ultimate goal is to treat all patients, but let's stay tuned. We're at the end here. I should say we're at the beginning, hopefully.

Okay. Yes, yes. Okay. All right. And then assuming you do get approval, like how are you setting expectations and what a good outcome would be for the first year of the launch?

I think that realistically, this is a switch market. Obviously, newly diagnosed patients is going to be key. The challenge is, in general, as you know, is reimbursement in the rare disease. So the way that we're setting expectation is sort of the S-shaped curve. We expect minimal revenue this year, but our focus isn't on that. Our focus is really patient starts, like how many patients can we get on drug out of the gates. That's going to be key.

Any thoughts on pricing and premium pricing potentially to Elaprase?

Right. I mean, again, it's too close to the beginning to discuss pricing in detail. But I think in general, we see this as not just an incremental leap from Elaprase, but a very significant leap of being able to cross the blood-brain barrier and access the central nervous system while not only adequately but maybe really robustly treating the periphery.

When you talk to clinicians in this space, do they think all patients have some element of neurological disease, whether it's a lot or even just a little? Or is it really a view that this is two different diseases peripheral-only in peripheral-plus-CNS.

Yes. I think that there's a spectrum of the disease, and there's a spectrum of how physicians view this. But in general, I think no one will argue with you that even like really attenuated patients will develop, for example, hearing loss and hearing deficiency, which is neurological, I think, by definition, there's both peripheral and central roles in hearing, but in general, believed to be behind the blood-brain-barrier. And so I think it's just a matter of time. So when I say spectrum, those individuals that carry severe mutations will experience neurological symptoms early on, age 2, 3, 4. Again, that represents 70% of patients. What's interesting, if you look at those that are on drug, attenuate patients obviously live much longer, but they eventually develop some type of neurological disease.

Yes. Okay. Okay. So I guess, does that argue for switching that is like a little bit slower?

Yes, it's a good question. I mean I think there -- obviously, the patients that are eagerly awaiting are those with neurologic disease. There's no question about that. And I think beyond that, it's really educating the community and asking what else is there, what represents some type of deficit that could benefit from Tivi.

Yes. Okay. So if Tivi gets accelerated approval, how fast can you then run with Sanfilippo?

Yes. So Sanfilippo for us, we just presented data for the first 8 patients. I think what's most interesting about the Sanfilippo data is that those 8 patients, we really explored the dosing regimen, both dose level and dose frequency. And I think actually, the last time you and I met, we were a day or 2 away from presenting that data at World. But now that it's presented, I can go into some detail. And I think it's actually -- was really, really insightful.

So I think one of the things we learned is that weekly dosing is much better tolerated than every-other-week dosing. And part of that is infusion-related reactions are all related to tolerance, right? And invariably, essentially almost every patient developed antidrug, antibodies to enzyme replacement therapies, some higher than others. But in general, these proteins are viewed as foreign.

And what we learned in that particular study is that as we shifted even at the high dose from every other week back to weekly, weekly was much better tolerated. And so we had a dose escalation. And now we've nailed down the -- what we call key efficacy cohorts, which are fully enrolled. That data will -- that data cut will be September of this year. And the planned BLA filing will be 2027 with approval in 2027.

Actually, the rate-limiting step for filing that medicine, part of it will be the data, but the real rate-limiting step is that we plan to manufacture that ourselves in our own facility. And I think as a result, we got to nail that down. We hope to be part of the FDA precheck effort where we can really engage with the FDA on the facility as it's a new facility, that could help us accelerate. But I think the timing will be driven largely by manufacturing for that medicine.

Okay. But I guess the thought is you file early in '27 then, just given the timelines you outlined?

Yes. I think probably the safest thing to say is first half of '27, second half approval, something along those lines.

I see. Okay. And we'll move on to the pipeline in a second. But with Hunter, I mean, I think it's pretty easy to size the global market just given the maturity of Elaprase. With Sanfilippo, like maybe talk about what the thought is on the likely prevalence and subsequently, the likely diagnosis rate or pool of diagnosed patients right now?

I think as you appreciate with Sanfilippo, there's no standard of care. So you're exactly right. It's much easier to size the market, understand the regionality of Hunter, where the primary cells, 1/3 in the U.S., 1/3 in Europe and 1/3 elsewhere. With Sanfilippo, there's less known. We think it's similar in size with similar distribution is probably the best way to look at it, but obviously, no standard of care.

Yes. Okay. And then you're doing Pompe, right? So what are sort of the similarities and differences between these programs in Pompe, like I guess you're targeting muscle there, so that is different. Like to what degree does your work here derisk that? To what degree is that kind of testing a new avenue for this technology?

That's a great -- that's a fantastic question. So Pompe also similar to Hunter and many of these genetic diseases comes in multiple forms based on the genetic -- the underlying genetic lesion or the mutation. In Pompe, you have IOPD and LOPD. Our ultimate goal is to compete in LOPD. And as you point out, the transferrin receptor has -- can enhance delivery to muscle just like it can to brain. What's unique about GAA in Pompe is that you're using this mannose-6-phosphate receptor for biodistribution. That appears to be limited in skeletal muscles. But by using transferrin receptor, we can pretty significantly enhance that delivery.

So the ultimate goal is really head-to-head. So it's a different dynamic here with LOPD. But I'd say sort of the other consideration is IOPD, which has a central nervous system component to it, which is not treated by any of the standard of care. And so we'll pursue those, obviously, in parallel. And so it's unique. I think the way to like summarize Hunter, cross the blood-brain barrier, almost everyone has some form of neurological disease. Obviously, there are those who are eagerly awaiting. Sanfilippo is largely a neurodegeneration in fact. It does have -- we saw normalization in liver volume, which was interesting. You never think about the peripheral effects of Sanfilippo. And then Pompe, largely muscle. So it is that new dynamic of what the transferrin receptor can do, but there's still the CNS component in the more severe cases.

Yes. Okay. Great. And Pompe, first proof-of-concept timing?

Yes. So I think if we look at the three programs that we're starting clinical studies this year, the Pompe and two Alzheimer's programs, just in general, we're stating 2027. We have a lot on our plate in 2026 with the potential launch, obviously, the new data in Sanfilippo, progranulin and LRRK2. But in general, we're stating 2027 for these three programs. That being said, we got to move as quickly as we can on all three. And they all have some type of biomarker data, if it's some type of glucose metabolite, if it's Hex3 or muscle-specific biomarker, that's what we look at in Pompe. For Alzheimer's disease, if it's an Abeta molecule, it's targeting plaque. If it's tau, it's targeting tau protein and tau PET. And so in general, I'd just state that those programs are 2027 readouts, and that represents the real expansion for vehicle platform.

Yes. Yes, makes sense. Maybe for the Abeta brain shuttle, we've got the data from trontinemab that looks great. What do you see as the one to two key points of differentiation for what you're doing?

Yes. I think you're right that -- if you look at all of transferrin receptor-enabled programs, you have those that are categorically muscle and then you have those that are CNS. And the two data sets that convince me that this is going to be a new class of medicines are our Hunter data, obviously, recently published and waiting for the first approval with a transferrin receptor molecule in accessing the brain and the trontinemab data.

And what you see with trontinemab, which is really fascinating is basically about 1/5 the dose, you have 3x faster plaque reduction. and it's obviously very robust. Now we don't know if speed of plaque reduction will correlate to enhanced clinical benefit. Probably the strongest driver of clinical benefit for Alzheimer's, in my opinion, is timing of intervention. So getting there as early as possible because you have two decades of plaque that cause synaptic loss and cell loss.

So I don't know. I mean that's obviously one thing that the brain shuttle and trontinemab has enabled is a faster plaque progression. And number two, significantly lower ARIA rates. That being said, there is definitely room for improvement. I think tolerability, I think one of the challenges that is obviously monitorable and reversible is any hematological findings. That was part of our engineering with the -- what we call the cisLALA mutation that allows us to engage transferrin receptor, get across the blood-brain barrier, but not engage transferrin receptor and the immune system on, let's say, reticulocytes.

And then I think the other component is that if you look at all of these brain shuttles, they're fusion proteins. They're essentially fusing Fabs or single chain Fvs to these full-length IgGs, and they struggle with stability. So if you look at 24 hours or 48 hours after dosing, you don't maintain the brain uptake, but also we think that also results in some risk around immunogenicity. And that's where we think the room for improvement is, is really tolerability around immunogenicity and potentially hematological outcomes.

Yes. Okay. How are you thinking about the right amyloid subtype or subtypes to target to maximize efficacy?

Yes. I think for us, we'd rather not reinvent what's already been discovered clinically. We're already inventing with the transport vehicle. So the goal is to look at all the profiles of successes and failures. And I think what you can determine is that those molecules that bound monomeric Abeta and did not bind aggregated Abeta failed in clinical studies, but those that found aggregated Abeta. And what I mean by aggregated, I mean plaque. I mean oligomers. I mean, basically, the challenge you have is if you're picking a single aggregate or single form of oligomer and you're not eliminating plaque, you're basically at very high risk because only correlation today that is plaque reduction and clinical benefit. So our Abeta arms target aggregated Abeta, both plaque and oligomeric and are less preferring to monomeric Abeta.

Yes. Okay. Okay. Makes a lot of sense. And the first study there from a proof-of-concept perspective, like you'll be able to answer some of the questions on amyloid anemia and ARIA, you think all in that first readout?

Well, it's a great question because if you think of the, let's call them like the 7th generation Abeta molecules, it's taken a long time for naked Abeta molecules to show some clinical readouts, right? And part of that is just the time it takes to see plaque reduction with standard antibodies. Now with trontinemab, that happens more rapidly. And so we hope to be able to get a quicker signal. But I think the order of assessment is essentially hematological plaque reduction and then you need larger patient numbers to look at rates of ARIA. I mean the ARIA, it's about statistics, right? It's about how many patients you treat that are APOE4 positive, which have higher risk of ARIA. And so these data will come in sort of in tranches as we first test the hypothesis around the cisLALA on tolerability and then go into plaque and then ultimately to ARIA.

Yes. Okay. You're also doing a tau conjugate as well. From a technical like feasibility perspective, I guess we haven't seen someone use transferrin to deliver an oligo into neurons yet, but we've seen it in muscle. Does the muscle space kind of derisk this along with your preclinical data? Or like how would you characterize the risk profile of this program translating from like preclinical animals to humans?

Yes. I mean this was -- to me, it was one of the most interesting technologies and surprising in the last decade is the ability to get oligonucleotides across the blood-brain barrier. Because think of your -- the path to a neuron or an astrocyte or microglia for an oligonucleotide, not only does that have to get across the blood vessel, but it's then got to get into those cells and knock down gene expression. So our preclinical data, we have a humanized mouse model that has a humanized apical domain of transferrin receptor has been pretty accurate at predicting clinical dose and clinical efficacy for the enzymes and for the antibodies. We expect the same for the oligonucleotides. I wouldn't say that the muscle delivery derisks it in any way because a lot of the muscle delivery technologies are using either bivalent or high affinity Fabs. So you obviously are testing this idea of getting the oligonucleotide into the brain, but the animal data are very convincing that this is doable.

Okay. Makes sense. Do you have a view on the BIIB080 study coming up and the probability of success of that trial?

So I think the most interesting thing about BIIB080 is it taught us that not only can you remove, you can lower tau in cerebrospinal fluid, but you also by tau PET, can see a reduction in the PET signal. What that actually means is that neurofibrillary tangles are in some equilibrium, which is not a known factor. I mean the plaque, we get it that microglia will engulf the plaque, but what we don't really know is can you remove existing neuropathology in this case, neurofibrillary tangles. And that's what the original data showed. This new data set, you -- I would read your note on what your opinion is, but 416 patients, I think it is actually 4 arms, 1 placebo and 3 dose arms. The lowest dose, I think, has enrolled fewer patients than the 2 higher doses. And I'm guessing they're going to do some type of pooled analysis. The great outcome would be directionally positive clinical benefit, some type of cognitive benefit. I think my only cautionary note is that those are not huge numbers when you're looking at things like CDR sum of boxes, and we just have to make sure that we take that with a grain of salt.

Yes. Yes. Okay. Okay. Makes sense. Maybe in the last couple of minutes here, I don't know if the stat is true, Ryan, but someone from another company told me that there are 16 brain shuttles in development in biotech. That obviously includes a lot that are probably named preclinical, early preclinical. But on the one hand, that's extraordinarily validating to what you're doing. On the other hand, right, there kind of becomes this whole question of like, is this technology going to become commoditized? Is it going to become like GalNAc in the liver? Like what would you say to that? Like why does a company like Denali deserve like a real premium for its transferrin technology over everybody else?

No, I agree that it's gratifying. I remember running the first experiments on transferrin receptor prior to founding Denali. But the idea of using transferrin receptor to get medicines in the brain was proposed in the 1980s. It's just taken a long time to industrialize it. And the question is why? Why did it take like multiple decades to get the first clinical data in Hunter syndrome or in Alzheimer's disease? And what -- and the reason for that is it's not just intuitive. It's not like you just take an antibody and it works or you take a Fab and it works. And so I think the winner will come down to those that really understand the engineering and how that engineering translates to the best outcome.

I'll just give an example. I think most enzymes, you cannot deliver with just a Fab fusion. The Fc is a huge differentiator relative to a Fab for iduronate-2-sulfatase or SGSH or GAA, and it brings a whole another area of benefit in biology and around building tolerance and PK. And so that's ultimately what's going to win. I don't know if there are 60 companies. I have no doubt that there are 60 medicines using transferrin receptor, but that's what happens. In biotech, it's really simple. If something works, everyone starts doing it. And then the question is, can you get there first? Or can you be the best?

Yes. Okay. Great. Anything else you'd like to highlight in the last couple of minutes here?

I think it's -- again, it's an exciting year. We obviously are waiting for our first approval. Waiting is probably -- that's a passive term, but we're very actively and constructive with the FDA and fully prepared to launch. We have the teams hired and ready to go. Looking forward to filing the next molecule. And then we want to lead the area of blood-brain barrier engineering. And I think it's a very exciting time, and it is gratifying to see everyone latching on to these transferrin receptor approaches.

Right. Okay. And the new PDUFA is what date? The 5th?

April 5.

April 5. Okay. That's Easter.

I know it's Easter Sunday.

And Good Friday is the Friday before. Okay. We'll see when you get the notice. Okay. Best of luck. Thank you, Ryan. Appreciate it.

Okay. Thanks for joining us, everybody. I'm Marc Goodman, one of the biopharma analysts at Leerink Partners, and we are lucky to have Denali Therapeutics. We have Ryan Watts, who's the CEO of the company; and we have Katie Peng, who is the Chief Commercial Officer, who I was just joking around with her, but I'm very serious as we all are, we need her to be very busy with an approved drug very, very soon.

And we probably should start right there and just give us a sense of -- I don't even know where to start, Ryan, just what's going on with the back and the forth and this and that and where are we?

Thanks for having us here. Great to be in Miami. It's an extraordinarily exciting time for us at Denali. We have a PDUFA date coming up April 5. Obviously, it's been something we've been looking forward to since the founding of the company over a decade ago with the goal of obviously delivering medicines to the brain using these novel technologies, using the transferrin receptor-enabled technologies, in this case, of transport vehicle. So the question you're really asking is on tividenofusp alfa, which is our lead program for Hunter syndrome. A little bit of back story behind tivi.

We started developing tivi in 2020. And really the first 5 patients of data, we saw that 4 out of those 5 patients had normalized heparan sulfate. This is just after 4 doses. And that was sort of unprecedented in the field and heparan sulfate is a biomarker of the enzyme, and we're measuring it in brain through, I guess, through a surrogate through cerebrospinal fluid. And at the time, we were, of course, that data told us that our platform is working in 2020. And now the question is, how could we expand that platform and at the same time, accelerate the Hunter program to some form of approval.

And I think as people appreciate, it's been a long story of imagining a surrogate endpoint of a biomarker that's reasonably likely to predict clinical benefit as the category in these monogenic diseases where the FDA has given us single enzyme guidance on sort of the simplicity of this. That being said, in MPS diseases, there is no precedent yet of using a biomarker as a surrogate endpoint. And so we began this long journey. Obviously, there are others on this journey as well in gene therapy and in our case, it's an enzyme replacement therapy, as I mentioned, engineered to cross the blood-brain barrier.

We submitted our BLA last year and have had, frankly, the way you describe it is really constructive, very engaging interaction with the FDA. As anyone who has gone through this process, a lot of back and forth, a lot of back and forth on the CMC as we sort of nail down this biologic [indiscernible], it's the first medicine using transferrin receptor as a mechanism for delivery to be reviewed at the FDA. So setting the precedent there as well. And at this point, we're weeks away from a decision, but moving in a positive direction.

So it was delayed by a short amount of time...

Right.

Do we have any idea what that delay was?

Yes, we know exactly what that delay was about. As we were nearing the late cycle review, it was identified that there was a miscalculation on a molecular weight from a public database that actually someone, a third party used to calculate our population PK. That was corrected in like 4 days. And the FDA, in general, sort of stayed on track with the review. And as I mentioned, like that longer period of time, probably going mainly through CMC.

But now let's put all of this in the context of the complexity of the regulatory environment right now. And I think a lot of has been said about accelerated approval in rare disease and providing medicines in these patients, especially in patients where you have these neurological deficits. And what I would say is that our experience with our review division has been generally positive and constructive. So that was completed. There's been actually no more questions around that particular piece. And now it's just the final stages, label discussions, post-marketing commitments, everything you'd expect at this timing of the review.

But you've been in labeling discussions, right, for a while? Or is that not a fair statement?

I think we have -- I would say that in the last month or 2, we're like really in it.

Okay.

Right. So it's like we began that process. We had a late cycle meeting towards the end of last year, but now this is -- we're really in the thick of it now.

Right. And then ReGenX gets a CRL. And I think everybody says, did something change here for Denali as well. So I guess I'll let you kind of answer that question.

I think the best way for me to answer that is rather than comment on [ ReGenX ] and their data set, specifically, what I can tell you is sort of the totality of our data set, right? So 47 patients worth of data. Patients have now been treated up to 4 to 5 years. We have a confirmatory trial, the COMPASS trial that has a significant number of patients as well, both neuronopathic as well as attenuated. And what we see is a normalization of heparan sulfate, and we'll just call it total heparan sulfate. So the 4 major dextrans as measured.

So no specific -- not measuring just one specific dextran and looking at effect, but there, we're seeing normalization. I think importantly, we also see NfL normalization, which is a biomarker of neurodegeneration. And so I think we, obviously, like others, have looked very carefully at what the FDA has said in that CRL. We feel like we're in a strong position with our data and our engagement with the FDA.

Not to keep harping on this, but they didn't have 4 major dextrans, right, in their data...

That's right.

They were kind of focused on.

Yes. I think historically, they did, but then they focused in on a single dextrans.

Do you think that's a potential reason?

Well, I think the issue you have and sort of cited in the CRL, again, without going into too much detail, is the great debate with biomarkers, and you've seen this in the last month or 2 is what level of biomarker correction is needed to drive a clinical benefit, right? And until you know what that level is, the best case scenario is you normalize, and therefore, it puts you in the highest probability of confirming that, that biomarker is leading to clinical benefit. And I think this is where the FDA is in my -- the way I would state it is holding a high bar. It's holding a high bar. And obviously, we were behind our competitors, both ReGenX and JCR, and our goal has been to develop a platform broadly to prove it with Hunter syndrome, but to hold ourselves also to a high bar in terms of the quality of the data we generate and the path towards approval.

So let's talk about what is the standard of care for Hunter today? And is there any way to make a comparison of your product versus that product?

Yes. So I'll answer that. And then as we get into more, Katie will add to it. But the standard of care today is it's now been almost 20 years since idursulfase was approved, which is an enzyme replacement therapy, and it's delivered systemically. And what I can just say generally is that if you look at our data, specifically looking at like peripheral urine heparan sulfate, we see even normalization in that as well when patients switch from standard of care to tivi. And part of that is probably around dose, the dose that we selected.

But in reality, that particular medicine is not engineered to cross the blood-brain barrier. 70% of patients on diagnosis are determined to be neuronopathic will have severe neurological deficits. And the idea is that those patients, in particular, will greatly benefit from a medicine that can also cross the blood-brain barrier. But we replace standard of care. So we -- we're not dosed on top of any other medicine, but we're dosed to treat both the entire body and the brain.

Right, right, right. So Katie, why don't you talk about commercial now? What's the plan?

Yes. So we're very excited to be here at this stage. And we've actually built our field team at the end of last year, getting ready originally for a January approval. So our payer field team, our sales team, our medical science liaison team are all out now. We've had great engagements with payers so far to share our data and to get an understanding of how they see pricing and coverage for patients. In addition, we've also engaged with all of the centers of excellence because our MSL team is very familiar with the investigators, but also we've been sharing our data along the way for a few years now.

There's tremendous excitement in the community. There's high awareness of the tivi data, but not just with physicians, but with the patient community as well. So there's general excitement. In addition, this year, now we finished setting up our distribution model as well as our patient services because we know that's really important to get patients reimbursed and supported as we launch this medicine. So we expect to see a very strong uptake in the patients who are just recently diagnosed and also patients that are diagnosed with the severe neurologic manifestations.

Do you think patients will switch?

Yes. So today, about 95% of patients are on Elaprase. So it is absolutely a switch strategy. And as Ryan mentioned earlier on the data, our Phase I/II data showed, right, patients who were on Elaprase switching to tivi and doing much better on all the biomarkers. So it is actually the most compelling point because physicians monitor patient progression today using urinary GAGs, and we see that tivi does much, much better. And so for all the market research we've done and the advisory boards we've done, this data is what's going to compel physicians to make the switch.

And the doctors are saying, even though the patient -- it seems to be working, this works even better, so we should switch.

Yes. One interesting fact that we've learned is that because there's been no innovation for 20 years, there was nothing to switch to. But as we get into these deeper conversations, almost all patients are still progressing on the standard of care. So it could be neurologically, it could be in the periphery. So what we have learned is that standard of care, even in the periphery, I think there's still unmet need.

Yes. What about genetic testing? How does that fit in?

Yes. So in order to get an official Hunter syndrome or MPS II diagnosis, patients do have to be genetically tested. And so once they get tested, then they confirm they have an ICD9 code and they can start billing for having Hunter syndrome. Are you asking maybe about newborn screening?

Yes, I was about ask, that's where I was...

Yes. So in the U.S. now, about 13 states have adopted newborn screening, which is great because we know in this disease, the earlier you can impact the treatment and treat the disease, the better it will be for patients. And so 13 states have now adopted it. But as you can imagine, with medicines now being approved in this space, there will be more incentive to push newborn screening more holistically across the U.S.

Yes. Interesting. And lastly, just on the subject, the Royalty Pharma deal, what was the purpose of that?

Yes. So I think for us, if we step back a little bit and look at the entire portfolio, our goal, which we've set now a while back was to commercialize our own medicines, specifically in the enzyme replacement therapies, right? And so we set out to figure out how would we do that as really leaving it ourselves. And the Royalty Pharma deal puts us in a very strong position. That with also an equity financing brings in another year of capital, really takes us to the end of 2028.

But I think also is reflective of the deep diligence on the platform in order to say, okay, there's real promise here. And there's real promise in Hunter as a commercial opportunity, right? We wanted to be able to finance ourselves through our 3-year goals. And we've laid those out at the end of last year, which was to have 2 growing brands, one with tivi in Hunter syndrome, another with DNL126 in Sanfilippo, 5 clinical proof of concepts and bringing an additional 5 medicines into the clinic using the transport vehicle. At this point, we have 5 [ tivi-enabled ] programs. So the royalty financing with the equity financing at the end of last year lays that foundation for the next 3 years.

Yes. Interesting. So let's flip gears to Sanfilippo 126. So where are we with that program? And what do we have to show? Because there seems to be some derisking that's already occurred, I would think.

Yes. I'll start on where we are with the program and then Katie, you can add to that. So we just presented data at WORLD. This is the first data, the most robust data set, I think, yet presented in Sanfilippo. We have a robust reduction in CSF heparan sulfate, again, our familiar biomarker as well as GM2 and other lysosomal biomarkers. We also see reduction in urine heparan sulfate, normalization of liver volume. And basically, we're in a strong position.

What's interesting about that data set is that it was essentially 2 cohorts that were dose finding, and we really need to figure out the dose frequency and the dose levels. And if you look closely at the data, you can see how that plays out in the biomarker over time as well, especially the urinary GAGs. You can really see that as we shifted to weekly dosing at the high dose, we drove a really robust effect. And we also improved tolerance going to weekly from every other week dosing. And part of that is in these enzyme replacement therapies, having drug on board allows you to build tolerance. So a lot of really important insight in that data set.

We now have what we call the key efficacy cohorts, which are fully enrolled. We'll complete -- we'll have a data cut in September, and that will be the data that goes into our BLA filing for accelerated approval, again, using CSF heparan sulfate as a surrogate biomarker reasonably likely to predict clinical benefit. So a lot of similarities with Hunter, but also some significant differences. There's no standard of care in this disease. It is a very aggressive neurodegenerative disease. I'd say even more so than Hunter. Hunter is, of course, whole body and brain. Sanfilippo tends to really impact the central nervous system. Even the heparan sulfate is elevated about twofold above what you see in Hunter. And so I think timing of intervention is really going to matter with Sanfilippo and more so than some of these other diseases.

So in terms of the commercial opportunity, it is exciting because the infrastructure today that we're building for tivi is going to be the same infrastructure that we'll be launching DNL126 as well. So we will not have to add additional headcount. Same call point, same customers. And so you can imagine that with our ETB portfolio, we can get very, very high brand margins because our spend will be limited.

Interesting. And just lastly, before we move on, the number of patients in each one of these populations.?

Yes. So we're -- it's hard to because there's no treatment, getting the right epi is hard, but we're roughly estimating that it's about 75% of the MPS II market, so around 1,500 patients worldwide versus for MPS -- sorry, MPS II. MPS IIIA is 1,500, MPS II is 2,000 worldwide.

Yes. Okay. Terrific. I want to step back just for a second. One of the -- well, actually, before we do that, let's talk about any other lysosomal storage disorder pipeline products that we can talk about...

Yes. We just received clearance, and we'll soon begin dosing with our Pompe program using the transport vehicle technology. This is ETV:GAA. What we've shown there, which is a little unique from Hunter and Sanfilippo is the ability for transferrin receptor-enabled technology to improve muscle biodistribution. So that's well known. There are other companies that are using TFR platforms to deliver, for example, oligonucleotides to muscle. And what we've seen compared to the standard of care is more robust benefit in muscle endpoints in Pompe. So LOPD obviously, is the primary goal here.

Now fortunately, there's also a rare population that has more severe mutations, IOPD, where we also believe ETV:GAA can be differentiated because we can deliver across the blood-brain barrier. So improve muscle delivery, improve brain delivery. That program will begin dosing and really expecting data for this next set of transport vehicles that includes GA MAPT for Alzheimer's, Abeta for Alzheimer's in 2027, but it all comes down to our ability to enroll and dose escalate in each of these studies. So a very exciting time expanding the portfolio at the same time that Katie and her team are preparing for our first commercial launch.

So 5, 6 years ago, I feel like you were the blood-based barrier buster, right? I mean you were the one. And now it feels like I don't know everybody seems to want to have one. How is yours different? Like as you hear about each one of these, I'm sure you get questions like what do you think of this? What do you think -- how do you differentiate?

I mean it's very good news that everyone else is wanting to do it. If you're in a field and you're the only one doing it, it probably means that what you're doing is not working. And I think in biotech, like once something starts to work, everyone jumps on board with a variation. And frankly, that's actually what's best for patients because then they'll have many options and people will use their deep expertise to invent in whatever part of this technology, if it's the protein engineering, if it's the cargo that you're delivering. And so obviously, you're right, we probably had a decade head start in this area. It's something that I've worked on now for 20 years and started working on blood-brain barrier in actually 2006.

And I remember first working on this is prior to founding of Denali, we looked at everything that existed in the patent literature and everything that existed in the publication literature and just made them and said, is there something that already works and that's where we started to invent and really understand the dynamics of trafficking at the blood-brain barrier, first with transferrin receptor, then with CD98 and then we've now combined them. And what we learned when we founded Denali now over a decade ago is that we wanted really something that was modular that allowed us to make fusion proteins that allowed us to make antibodies.

And then eventually, we were the first to show that you could actually get an oligonucleotide into the brain. That had never been shown. And frankly, I didn't think it was possible because think of what has to happen. You deliver this thing either subcu or IV. It has to cross the blood-brain barrier, get into a cell, release the oligonucleotide and then modulate gene expression in the neuron. I mean that's a journey. That's multiple cells that you're crossing to this -- to get to this spot.

So when we saw that for the first time, and we actually published that in 2024, but saw it for the first time in 2021, we thought this is really like this can really change things. And I actually feel like that presentation of that data in '21 and [indiscernible] that's become one of the most competitive areas in blood-brain barrier is delivery of oligonucleotides because now you can regulate gene expression in the brain. And so of course, we want to win. We're competitive. That's great. But also, if it's working, you should expect a lot of people to do it, which was my original point.

Now to answer the question, what is differentiated. And I think the fact that we built receptor binding into the Fc is unique. We haven't seen that with any other competitors. Part of that is we have a very strong IP landscape. The fab approach is what most people are taking. There's some variation of fab and they make fab fusions, fusions with oligos, fusions with antibodies. I think stability can be a challenge there. And we've done a lot of work on differentiation. In some cases, directly against the exact architecture of a competitor in other cases, like theoretical differences. Some of that has been published. Others we presented at the end of last year in an extensive R&D Day.

So I think that those areas of differentiation are important. But all of them may work to some extent. The question is who will get there first and who will ultimately be better and let's see how -- I mean, I would love to look back 10 years from now and have like 20 or 30 approved transferrin receptor programs. Now great if a lot of them are ours, but also okay if the field is now really growing and can actually deliver medicines that way.

Yes. You mentioned the MAPT and the Abeta. Talk about those products a little bit. Obviously, there's 2 drugs for Alzheimer's on the market. Obviously, Roche is working very hard with tronti to kind of get there as well. Where do these fit in?

Yes. We're on the -- as we're on the eve of our first approval, I think it's important to step back and say a decade ago, we founded Denali because we wanted to defeat degeneration. Our goal was to make medicines for Alzheimer's and Parkinson's. But as almost always the case in biotech, you follow the science, and it was actually much more compelling for us to start with Hunter and Sanfilippo, where it's a monogenic disease. There's approved enzymes, they don't get in the brain. So there's a linearity, like you know there's a high probability of success.

What's changed for us is that I didn't never imagine working on childhood diseases. It's profoundly impactful, like beyond measure as you engage with these families and you engage with the community, and that ended up being very foundational for Denali is working in the enzyme replacement therapies. But we never forgot that we wanted to solve, at least be part of solving Alzheimer's and Parkinson's and these other areas. And so it's very exciting that our first real oligonucleotide program, MAPT, is now entering the clinic it's going to silence the expression of the gene MAPT that codes for tau.

And the idea is right now, there's intrathecal delivery, but can we replace that with IV delivery and subcu delivery and knockdown expression of tau. And in addition to that, there's now a class of molecules. I mean, let's all face it, everyone either believed in Abeta or tau, and now you can hopefully believe in both. I mean we're still waiting to see if tau knockdown will lead to clinical benefit. But there are now -- like now we need a best-in-class Abeta molecule, and that's where our ATV:Abeta program comes. And so that's -- I think it's an exciting time to go back to our origin and make neurodegeneration medicines using the transport vehicle technology to create this best-in-class, certainly in the Abeta field.

So just to be clear, the Abeta, this is your own Abeta...

Yes. So -- what we've done, and I think it's probably best described in a paper we published in science last year in August is we've engineered this antibody to be immune silent when bound to transferrin receptor. But when bound to amyloid plaque, we can remove amyloid plaque through the Fc gamma receptor interaction. It's called a cisLALA mutation. I think it's very clever. Our engineers proposed this idea and then determined it sort of empirically.

And so the goal is to have the robustness of plaque removal that you have with any standard full effector function antibody, but have that molecule be silent when bound to transferrin receptor. Then in terms of the Abeta arms, we're selecting arms that bind aggregated Abeta preferentially, not monomeric, and that's essentially the approach we're taking with that program.

Interesting. And where is that program?

We'll be filing it very soon. So we'll be starting clinical studies this year. I think with both MAPT, Abeta and our GAA program for Pompe, we're just generally seeing data in 2027, but full speed ahead. The faster we can go, the better with any of those 3 programs. Obviously, the Pompe program expands the ETV franchise to a larger market, including muscle, but let's face it like tau and Abeta are really important targets, one of which has at least been clinically validated.

So we're all watching Biogen, I guess, is probably the next tau oligo, right? So we'll know what if it doesn't work? What if it does work? What does it mean?

So I think what we can say already and probably the most interesting thing we can say is that with the Biogen ASO program, they were able to reduce tau, but they're also able to reduce tau pathology by PET. And that actually is not intuitive. Now we think of amyloid plaque, you have these microglial cells. They're the -- since we're here in Miami Beach, they're the beach comers of the brain. So microglia goes around and cleans everything up. You have antibody tag the amyloid plaque and basically engulf the amyloid plaque. That's what the Abeta antibodies do.

With tau, those neurofibrillary tangles are inside a cell. And it's uncertain that reducing tau protein alone would actually reverse tau pathology, but that's what the initial data has already taught us from Biogen. So now there's one really important question, which is, does reducing tau pathology lead to a clinical benefit. The distinction of the OTV, which is an oligo transport vehicle and the way that Biogen approach it, which is an intrathecal delivery of an ASO, so injecting the spinal cord is it's a very different biodistribution profile. Our medicine will cross capillaries and give you even distribution throughout the brain, where intrathecal delivered medicines don't penetrate deeper brain regions. We've shown this in nonhuman primates. And of course, humans are -- at least our brain or central nervous system is about 18x larger than a nonhuman primate. And there, you're just relying on browny and motion for these ASOs to diffuse.

So I think there's a real chance for differentiation in biodistribution. Now does the traditional intrathecal approach, is it going to actually test the tau hypothesis? I guess it remains -- this is a type 2 experiment. In other words, if there's clinical data looks great, then we know and then we can replace that with either a subcu or an IV injection. If it doesn't look great, it could be around biodistribution, right? So there's really one outcome that's informative, which would be a clinical benefit. If not, there are multiple reasons why it may have failed.

Yes. Interesting, very interesting. Another data readout this year is LRRK2, right? So give us a quick update on LRRK2.

Yes. This is an exciting year, waiting for an approval. We just had our first data on Sanfilippo, we'll complete that. We have a LRRK2 readout midyear. That's being run by Biogen. LRRK2 is a kinase that when mutated is hyperactive and is one of the 2 major genetic risk factors in Parkinson's. GBA is the other. We're approaching that with a GCase enzyme replacement therapy. But in the case of LRRK2, it's really compelling genetics, and we've developed a LRRK2 inhibitor. This is one of few medicines that aren't using the transport vehicle in our portfolio. This is one of our very first programs way back 11 years ago that we started engineering small molecules that were blood-brain barrier penetrant. This will be a really big test of the LRRK2 hypothesis because it's 650 patients, UPDRS, real clinical endpoint.

This is a registrational sized study being run by Biogen. But I think the reason to believe is that the genetics is very compelling. The question in neurodegeneration is always timing of intervention. right? You can have a genetic cause, but even Abeta, it took time for us to understand selecting the right patients, intervening at the right time to provide a clinical benefit. So we hope we've learned from that. And in the case of LRRK2, we're actually testing idiopathic, but we also have a separate study with just LRRK2 carriers where we're looking at biomarkers. So I think it's obviously an exciting target.

Were we able to find those patients? I know it was...

We -- actually, we are. And the difference between LIGHTHOUSE, which was a 400-patient study and BEACON, which is a 50-patient study, is that we actually focus more on the biomarker aspects of BEACON and therefore, changed the enrollment criteria to allow us to quickly find those patients. And that study, we're nearing completion and enrollment in that study, much faster than we had for LIGHTHOUSE.

Yes. And then just lastly, in the last few seconds, the other program that you were mentioning...

Yes. So progranulin, this is the -- so progranulin is PTV progranulin. And the idea here is a protein replacement therapy, enzyme replacement therapy for progranulin. And here, this year, we're looking at the proximal biomarkers, the biomarkers of lysosomal function in FTD granulin.

Excellent. There's a lot going on.

It's exciting time.

Hopefully, you'll be very busy.

Yes.

Thank you very much for joining us.

Thank you.

Thank you.

Hi, everyone. Thank you for joining us in the room and online for the third day of TD Cowen's 46th Annual Healthcare Conference. I'm Joe Thome, one of the Senior Biotech Analysts here on the team at TD Cowen. And it's my pleasure to have with me today Denali Therapeutics. And up here with me, we have Co-Founder, CFO and COO, Alex Schuth. So thank you very much for being here.

Maybe before we dive into the individual programs, if you want to just give a brief kind of high-level overview of kind of where the company is at and what we should expect for the rest of 2026.

Absolutely. I mean, first of all, Joe, thanks so much for the invitation to the conference and for the great coverage, always. I do want to highlight the title of your last note, which I really enjoyed, must-see TV ready for prime time. So thanks for that.

So 2026, we're very excited. It's a big year for us. It's actually -- we founded the company back in 2015 with the premise with the idea that the blood-brain barrier is breaking open, that we can pioneer a technology that can deliver large molecules through the blood-brain barrier and open up the brain for treatments that were not possible before. So 2026, first and foremost, eagerly awaiting our PDUFA date for our first drug for Tividenofusp alfa for Hunter syndrome. That is April 5. We feel very good about the ongoing dialogue with the FDA, and I'm sure we can talk more about that.

On the heels of 310, there is DNL126, which is Sanfilippo syndrome, which is also enzyme replacement therapy, follows a very similar trajectory as 310 does. Here, we just presented data at the WORLD meeting in San Diego, and we feel that those data support the accelerated approval path, and we plan to file early next year and then launch next year. So together, these two programs has about a $1 billion market opportunity and will be the foundation for the company, the commercial foundation for the company.

Beyond those two, there are two key clinical data readouts. First, there is the LRRK2 inhibitor study, which is in Parkinson's disease, that's midyear. And then there is the progranulin program in FTD later in the year. And then we'll start 3 more clinical studies, first-in-human studies, expanding the transport vehicle into more common neurodegenerative diseases with two Alzheimer's programs, targeting Abeta, one targeting tau. And then there is another enzyme program for Pompe, which is our first entry into peripheral muscle disease, where also transferrin receptor enables higher uptake into muscle, and we're excited about that.

So big year ahead. We did raise capital at the end of last year. So we're well financed with just under $1 billion at the end of the year. And with approval, there would be another $200 million coming in from the Royalty Pharma deal that we entered into in December. So yes, big year ahead.

Great. Maybe we'll start with Tivi. Can you, yes, just highlight a little bit where you're at with the FDA now, maybe your confidence in a positive decision? And maybe what led to the 3-month delay and your confidence that you've addressed that?

Yes. So as I said, we do feel very good about the ongoing dialogue with the FDA. It's productive. It's collaborative. We're in frequent conversations. We have stated before that we're in label discussions. We're discussing the post-marketing commitments.

In our conversations, the FDA has actually always been very consistent. Since that meeting 2 years ago, the Reagan-Udall meeting where the FDA essentially validated heparan sulfate -- CSF heparan sulfate as the surrogate biomarker that is reasonably likely to predict clinical outcome. Since then, we've had a very straightforward conversation with the FDA.

We did have the hiccup with a 3-month delay, which was caused by an error in the chemical structure in the public database, which then led to a miscalculation on the molecular weight by one of our collaborators.

And we caught that. We fixed that. It had no impact on efficacy or safety. But molecular weight is an important calculation and everything from dose to exposure. So it had to be fixed and that led to the major amendment, which led to the 3-month delay, which was frustrating, but we're beyond that, and now we look at April 5.