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Why Denali Therapeutics Stock Is Sinking Today

By Keith Speights – Jul 26, 2021 at 12:35PM

Key Points

  • Denali presented interim results over the weekend from a phase 1/2 study of DNL310 in treating Hunter syndrome.
  • Those results would probably best be described as a mix of good and bad news.
  • The company plans to accelerate efforts to advance DNL310 into a pivotal clinical study.

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The company reported interim results from a phase 1/2 study of its experimental Hunter syndrome drug.

What happened

Shares of Denali Therapeutics (DNLI -3.80%) had sunk 11.2% as of 12:02 p.m. EDT on Monday. The decline came after the company presented interim results on Sunday from a phase 1/2 study evaluating experimental enzyme replacement therapy DNL310 in treating the rare neurodegenerative disorder Hunter syndrome.  

So what

You'd probably expect that Denali's phase 1/2 interim results would be bad considering how the biotech stock fell. But the company touted the interim data as "positive." The reality is that there was both good and bad news with the latest results.

Two scientists in a lab with one looking through a microscope.

Image source: Getty Images.

The good news was that DNL310 was able to quickly reduce and normalize heparan sulfate in cerebrospinal fluid (CSF). This suggests that the blood-brain barrier crossing that Denali uses worked well. The company also reported results from two standardized assessment scales that indicated clinical improvement in patients who received DNL310.

The bad news was that levels of neurofilament light (Nf-L), which is a potential biomarker of neuronal damage, increased. Denali had hoped the Nf-L levels would decrease. However, the interim results were only from five patients after six months of treatment with DNL310. It's possible that is too early to see a significant impact on Nf-L.

Now what

Denali now plans to accelerate its efforts to begin a pivotal phase 2/3 clinical study evaluating DNL310. This study could kick off in the first half of 2022. The company also intends to begin enrollment in a third cohort in the phase 1/2 study "to further investigate clinical endpoints."

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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