Denali Rises With $217M and Genentech Alumni to Fight Brain Diseases

Xconomy San Francisco — 

A group of investors is betting $217 million that a new drug company led by three Genentech alumni can break the frustrations of what, to now, has been a Sisyphean task: Finding treatments for the world’s most vexing neurodegenerative diseases, including Alzheimer’s and Parkinson’s.

The new startup, Denali Therapeutics, is debuting today with Marc Tessier-Lavigne as the chairman and Ryan Watts as CEO. Tessier-Lavigne is the president of Rockefeller University, where he runs a neuroscience lab, and a former chief scientific officer at Genentech. Watts, who is leaving Genentech for Denali, was the drugmaker’s director of neuroscience. Alex Schuth, who was Genentech’s top neuroscience dealmaker, is the third co-founder. Schuth and Watts left Genentech in February. Denali will be based in South San Francisco, which is also home to Genentech.

The pile of cash these ex-Genentechers are sitting on matches, at least rhetorically, the company’s namesake, which is the tallest mountain in North America. Several investors of various sizes have committed the $217 million, “and there’s additional funding beyond that,” says Bob Nelsen of Arch Venture Partners in Seattle.

Bob Nelsen

Bob Nelsen

Nelsen is a Denali board member, and he is getting together again with some of the bankrollers who launched Seattle’s Juno Therapeutics (NASDAQ: JUNO), the audacious venture that gathered several clinical cancer immunotherapy programs under one roof and raised $310 million in private funding before a record-setting $265 million IPO last December.

Other Denali investors include the State of Alaska’s Permanent Fund, which is also a Juno investor, Flagship Ventures, and Fidelity Biosciences. Unnamed pension funds, sovereign wealth funds, and family foundations are also on board.

Watts and others aren’t talking specifically about the science Denali is pursuing, although Watts says the company won’t chase the same targets many others have been, or continue to chase: amyloid beta, tau, and (for Parkinson’s) alpha-synuclein. Those are all proteins that go haywire in the brains of people with neurodegenerative disease, but it’s been difficult for scientists to establish whether the clumps and tangles they form are a cause or effect of these diseases.

Watts did say that Denali will go after new targets: genes that are implicated in disease (Watts calls them “degenogenes”) as well as biological processes that those genes trigger. From “the top of the cascade” to the “downstream effectors, we have a clear vision of where we want to go,” Watts says.

One of those downstream targets for exploration is the degeneration of axons, the part of a neuron that transmits electrical signals. Watts has studied axon degeneration for 15 years, he says, but no studies have reached the clinic. Another general target is inflammation, which is the immune system’s response to injury or infection, and can often make disease worse, not better.

Denali will do research from scratch, but it will also … Next Page »

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