Denali Therapeutics and Takeda Pharmaceutical have agreed to work together to develop up to three drugs for neurodegenerative diseases, including a compound that could treat Alzheimer’s disease.
The deal announced Friday calls for Takeda to pay Denali (NASDAQ: DNLI) $155 million, a combination of cash and stock purchases. If South San Francisco, CA-based Denali successfully advances the compounds to human testing, the company could win $90 million more in payments. Takeda gains the option to work with Denali on clinical testing of the drugs, and if successful, co-commercialize them.
Denali already has full coffers to finance its work advancing its drug pipeline. Last month, the company raised $250 million in the biggest biotech IPO of 2017. But the Takeda deal gives Denali a partner with the scale to commercialize those drugs globally.
Denali has developed a technology platform that it says can deliver drugs across the blood brain barrier. The company has already used that technology to advance its lead drug, a potential Parkinson’s disease treatment, into early-stage clinical testing. That drug, DNL201, is not part of the Takeda deal. The three Denali drugs in the partnership are all in preclinical development as treatments for neurodegenerative diseases. Aside from Alzheimer’s, Denali has not disclosed which diseases the drugs in the partnership could target.
Takeda’s option for each compound lasts until the drug is ready to seek the FDA go-ahead to start clinical trials, or five years after a disease target is selected, whichever comes first, according to a Denali securities filing. If Takeda decides to pick up an option, it must pay a $5 million fee for each disease target. From then on, the deal calls for both companies to equally share the development and commercialization costs, if the drugs make it that far. The companies will jointly commercialize drugs from the partnership in the United States and China. The deal gives Takeda exclusive commercialization rights in all other markets, though global profits will be split equally.
Once the deal becomes effective, Takeda will pay Denali $40 million, according to the filing. At that point, the company will also pay a $5 million milestone payment, as well as purchase 4.21 million shares of Denali stock for $110 million, for a total of $155 million up front.