Biogen to Pay Denali $1B to Partner on Parkinson’s Drug & Other Neuro Meds
Denali Therapeutics has selected a brain-penetrating Parkinson’s disease drug candidate to advance to late-stage testing, and Biogen is paying $1 billion to kick off a partnership on that compound and potentially others.
According to terms of the deal announced Thursday, the companies will co-develop the small molecule, dubbed DNL151. Biogen (NASDAQ: BIIB) also gains options to develop two additional programs, and the right of first negotiation on two others—all of them for neurodegenerative diseases. Those compounds use Denali’s proprietary technology for delivering drugs across the blood-brain barrier.
Biogen has agreed to pay Denali (NASDAQ: DNLI) $560 million cash up front. The Cambridge, MA-based drug maker is also making a $465 million equity investment in its new partner—a purchase of 13.3 million Denali shares for about $34.94 each. That price is a more than 50 percent premium to the South San Francisco company’s closing stock price on Wednesday. The investment will give Biogen an approximately 11 percent stake in Denali. Depending on the progress of the programs covered by the pact, Denali could earn up to $1.125 billion from milestone payments.
Shares of Denali opened Thursday at $30.43 per share, more than 30 percent higher than Wednesday’s closing stock price. Biogen’s shares opened at $275.56, down 41 cents from Wednesday’s closing price.
The drug at the heart of the deal is part of a Denali research program focused on blocking leucine-rich repeat kinase 2 (LRRK2). This protein is involved in regulating lysosomal function, which is impaired in Parkinson’s patients. By blocking LRRK2, Denali says these drugs may restore lysosomal function and, in doing so, slow the progression of the disease.
The LLRK2 program has produced two drug candidates, DNL201 and DNL151, both of which have completed Phase 1 testing. According to Denali, both met the company’s requirements for advancing to late-stage development. Denali says it selected DNL151 to advance to Phase 2/3 testing due to properties that offer more dosing flexibility.
So far, DNL151 has been evaluated in 162 healthy volunteers and 25 Parkinson’s patients. The company says it is completing additional dose-escalation tests in an expanded Phase 1 study and evaluating the drug in an additional group in a Phase 1b study in order to define the full therapeutic window—the range of doses that can effectively treat the disease without causing toxic effects.
Going forward, the partners will share in the costs of developing DNL151, with Biogen shouldering 60 percent and Denali 40 percent. If the drug reaches the market, the partners will share equally in the commercialization costs and profits of the drug in the US. In China, that split is 60 percent to Biogen, 40 percent to Denali. Biogen is responsible for commercializing the drug in the rest of the world, and it will owe Denali royalties from sales.
The Biogen drug pipeline already includes Parkinson’s disease compounds. The most advanced of the lot, cinpanemab, was acquired from Neurimmune a decade ago. The antibody, designed to target alpha-synuclein, a protein associated with the destruction of nerve cells, is currently in mid-stage clinical development.
Biogen also has an LRRK2-targeting drug candidate for Parkinson’s, an antisense oligonucleotide code-named BIIB094. This drug is designed to bind to the messenger RNA of LRRK2 and degrade it, potentially reducing levels of the protein. That program is in Phase 1 testing under a partnership with Ionis Pharmaceuticals (NASDAQ: IONS). In a prepared statement, Biogen CEO Michel Vounatsos said that Denali’s LRRK2 research complements that of his company and offers the potential to enhance the neuroscience drug maker’s portfolio.
Denali was founded in 2015 by Marc Tessier-Lavigne, Ryan Watts, and Alex Schuth, former executives of Roche subsidiary Genentech, where the LRRK2 research originates. In 2016, Denali licensed global rights to the LRRK2 research for applications in Parkinson’s disease. Denali will owe Genentech milestone payments pegged to DNL151’s development and regulatory progress, plus royalties from sales if it reaches the market, according to Denali’s securities filings.
Denali has other neuroscience R&D partnerships. In 2018, Takeda Pharmaceutical (NYSE: TAK) agreed to pay $155 million up front to start an alliance with the Northern California company developing drugs for Alzheimer’s disease.
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