IPOs

Neurodegeneration upstart Denali outlines $100M IPO for its growing clinical work

Can a team of neurodegeneration specialists and at least one early-stage drug asset out of Roche’s world-famous Genentech group succeed where so many have failed before it?

I don’t know, but Denali Therapeutics is in the process of trying to raise roughly $100 million through an IPO to find out — which is just a fraction of the $350 million it gathered from some A list investors in its venture megarounds.

Carole Ho

Housed in one of the gleaming new biotech buildings in South San Francisco’s booming Oyster Point, Denali on Monday laid out its game plan with the SEC, looking to rely on a mix of new and old targets, what they claim is a better platform tech for crossing the blood-brain barrier and better biomarkers to give them an edge in pursuing some of the Holy Grails in drug R&D: Alzheimer’s, Parkinson’s, ALS among them.

Denali plans to list as $DNLI.

In its laundry list of warnings to potential investors, Denali noted that its lead drug — the Phase I drug DNL201 — is actually under a partial clinical hold by the FDA, as regulators want to limit the exposure of healthy volunteers to their therapy after seeing some severe reactions in animal models at extreme dosing.

Their targets include RIP1, ApoE and LRRK2.

That’s not all we found out in the S-1. Aside from its top team and co-founder Marc Trevor Tessier-Lavigne, the president at Stanford, Genentech provided the inhibitor to LRRK for Parkinson’s, handing it over for $10 million in an upfront and fee, with another $361 million in milestones.

The same kind of economics were involved when Denali signed on with F-star, starting in the singe digits and rising into the hundreds of millions for a successful bird-dogging discovery operation.

Ryan Watts

“They bring aspects of the Genentech culture that everyone has respected for years,” F-Star CEO John Haurum told me about Denali in 2016.

“This may sound like Drug 101,” CMO (and Genentech vet) Carole Ho told me last year, but Denali’s success after so many failures will get down to its ability to engage the target, with the right kind of biomarkers in place to track their success. Developing biomarkers early, she adds, is critical. And the biology of these diseases is becoming more clear through the rapid advance of genetics research.

Denali is run by 41-year-old Ryan Watts. His salary comes with a 50% bonus and a 3.9% stake in the equity that could well prove to be worth a fortune after a successful IPO.

Other top investors include AKDL LP, with 28.1%, followed by ARCH at 15.3% and Flagship at 12.3%.


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