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Denali's Hunter Syndrome Candidate Gets Orphan Drug Status

Zacks Equity Research

Denali Therapeutics Inc. DNLI announced that the FDA has granted an orphan drug status and a rare pediatric disease designation to its pipeline candidate, DNL310. The pre-clinical candidate is being evaluated for the treatment of patients with mucopolysaccharidosis II (MPS II), also known as Hunter Syndrome, which is a lysosomal storage disease caused by the IDS enzyme deficiency.

Denali plans to begin a phase I/II study on DNL310 for treating Hunter Syndrome in 2020.

In earlier pre-clinical studies, DNL310 demonstrated an increased brain uptake in a relevant disease model and robust reduction of downstream markers of disease in the central nervous system compared with the standard enzyme replacement therapy (ERT).

Notably, the orphan drug designation is granted to drugs capable of treating rare diseases that affect less than 200,000 people in the United States. This designation also makes the company entitled to certain other benefits including tax credits related to clinical trial expenses and an exemption from the FDA user fee. On winning a nod from the regulatory agency, the status will also make DNL310 eligible for seven years of marketing exclusivity in the United States.

Additionally, the rare pediatric disease designation granted to DNL310 provides Denali with an opportunity to obtain a pediatric disease Priority Review Voucher from the FDA after the candidate’s qualifying new drug application (NDA) is approved for the treatment of any rare pediatric disease. The company may use the voucher to procure a priority review for an NDA submitted later.

Shares of Denali were up almost 1.5% following the announcement of this news on Tuesday. However, the stock has lost 8.4% so far this year against the industry’s increase of 1.7%.

DNL310, which is administered intravenously, is being developed to improve the clinical indication of Hunter Syndrome including neurological symptoms, which cannot be treated properly with the currently approved therapies. The candidate uses Denali’s proprietary blood-brain barrier crossing enzyme transport vehicle (ETV) technology to address Hunter Syndrome.

Moreover, with the aid of its TV technology, Denali is developing a broad portfolio of biologic drug candidates. Based on pre-clinical proof of concept with DNL310, the company commenced two additional ERT programs that are enabled by the TV technology.

We would like to remind investors that many other companies are developing therapies for treating MPS II. One such company is Sangamo Therapeutics SGMO, which is developing its zinc finger nuclease (ZFN) in-vivo genome editing candidate, SB-913, in a phase I/II study for the treatment of MPS II.

Zacks Rank & Stocks to Consider

Denali currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Acorda Therapeutics, Inc. ACOR and Repligen Corporation RGEN, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Acorda’s loss per share estimates have been narrowed 6.5% for 2019 and 6.9% for 2020 over the past 60 days.

Repligen’s earnings estimates have been revised 12% upward for 2019 and 12% for 2020 over the past 60 days. The stock has surged 41.5% year to date.

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