Denali Therapeutics Inc. is seeking to surmount challenges where other biopharmas have failed by scaling the rugged terrain of neurodegenerative disease. The company, which is still unpacking boxes in its South San Francisco office and lab space, will begin its ascent with $217 million in hand from A-list investors and a management team led by neuroscience veterans from Genentech Inc. Its dazzling initial commitment topped the $120 million round that went in 2013 to Seattle-based Juno Therapeutics Inc. – described, at the time, as perhaps the biggest biotech launch ever – and also surpassed the combined total of U.S. IPO filings Thursday by Biotie Therapies Oyj, Catabasis Pharmaceuticals Inc. and Nivalis Therapeutics Inc. (See BioWorld Today, Dec. 5, 2013.)

Beyond the mountain of money, Denali was short on details, though officials emphasized that the effort resulted from a convergence of compelling factors. They maintained that recent scientific insights into the genetic causes and biological processes underlying neurodegenerative disease, combined with emerging translational medicine tools, offered an unparalleled opportunity to discover and develop disease-modifying drugs.

"This is a great combination of timing on the science and the financing," said Ryan Watts, Denali's co-founder, acting CEO and chief scientific officer and former director of the department of neuroscience at Genentech, where his tenure spanned more than a decade.

Watts was joined in Denali's leadership team by Alexander Schuth, former director and head of neuroscience partnering at Genentech, as chief operating officer, and Marc Tessier-Lavigne, president of the Rockefeller University, as chairman.

Fidelity Biosciences Research Initiative, an under-the-radar, "mission-driven" division of Fidelity Biosciences that supports basic research in neurodegenerative diseases in academia and provides seed funding to early stage start-ups, took the lead on assembling the syndicate, joined by the larger resources of its affiliate.

"This was a great collaboration between the venture group, which is expert at investing and building companies, and the research initiative, which carries a great deal of domain expertise as well as connections and depth in the field," explained Stacie Weninger, executive director of Fidelity Biosciences Research Initiative.

"Our motivation at Fidelity Biosciences Research Initiative is to develop therapeutics for these diseases in whatever way we think is best to move the field forward," she added. "We believed that the time was right to be successful in developing game-changing therapeutics. The stars are aligned."

Weninger pointed to advances in understanding the science of neurodegenerative diseases, from genetics to basic biology, coupled with technological advances that allow researchers to identify the right patients to test for a particular compound at a particular point in the disease process and to monitor progress over time.

"We understand so much more about these diseases now, which has given us so many more targets to go after," she told BioWorld Today, adding that Denali plans to pursue a variety of targets. "We're not picking one," Weninger said.

After attracting Watts and Schuth to lead the company, it didn't take long to persuade other investors – notably Arch Venture Partners and board member Robert Nelsen, also a Juno co-founder – to join the syndicate.

"We were not alone in our thinking about this," Weninger said. "Several of us were like-minded in our vision, and it made so much more sense to combine efforts and do this in a really big way than for everyone to try to do their own separate little venture."

Other founding investors include Flagship Ventures and the Alaska Permanent Fund, represented by Crestline Investors. Additional investors included undisclosed wealth funds, public mutual funds and private family offices, and Denali acknowledged "significant reserves" for additional future financing.

"A funding of this size allows the team to think more broadly and to be able to test multiple hypotheses, multiple targets and multiple approaches," Weninger pointed out. "We do not expect everything we work on to succeed, but if we are able to try many different approaches and have a runway with both the width and the length to sustain what it's going to take to solve neurodegenerative diseases, that will help us to be successful."

TARGETS REQUIRE 'A HUGE COLLABORATIVE EFFORT'

Although the concept for Denali – named, Watts said, for the "inspiring challenges" evoked by the highest peak in North America – was originally floated several years ago, the pieces came together at the beginning of the year. Although the company isn't disclosing specific targets for the time being, Denali broadly intends to pursue concepts such as cellular trafficking, inflammation and axon degeneration across indications that include Alzheimer's disease (AD), Parkinson's disease (PD) and amyotrophic lateral sclerosis (ALS), among others, according to Watts. Most of the pathways the company intends to interrogate have never been tested in drug development, he said.

Denali already has programs in house and plans to build a portfolio through a combination of in-licensing, partnering and internal development, Schuth added. The financing puts the company "in a great position" to look broadly across potential collaborators at academic institutions, biopharmas and not-for-profit organizations.

Watts and Schuth declined to comment on the milestones that Denali expects to achieve this year or on its operational ramp-up except to confirm that the company plans to "grow rapidly."

Watts also acknowledged that both execs were "heavily influenced" by their time at Genentech, both in terms of scientific development and partnering. He hinted that Denali will take a dramatically different approach to attacking neurodegenerative disease than conventional one-off deals and drugs. To avoid the types of failures that have riddled the space in the past, the company will pursue a model that marries scientific discovery with "rigorous" translational research, focusing early on pharmacokinetic and pharmacodynamic outcomes and using animal models to prove a thesis and "test driving" those findings in early clinical studies before reaching conclusions on efficacy.

Denali also is committed to biomarker development in tandem with therapeutic discovery to help define patient populations and increase the probability of clinical success.

Denali enters a space that is in desperate need of a success story. Nearly one-fifth of the approximately 2,500 abstracts presented last month at the 67th American Academy of Neurology annual meeting in Washington addressed either AD, PD or ALS. The indications have been riddled with failure, although recent findings by companies such as Biogen Inc. and Acorda Therapeutics Inc. are providing renewed optimism. (See BioWorld Today, April 20, 2015, and BioWorld Insight, March 16, 2015, and April 27, 2015.)

And thanks to the market opportunity – an estimated $100 billion commercial market for AD, alone – the neurodegenerative space doesn't lack for new entrants.

Denali will stay flexible on its business strategy, ultimately looking both to in- and out-license its assets, according to Schuth. Although the indications Denali plans to target will generally require partners with even deeper pockets than the well-capitalized start-up, "certain subpopulations could be pursued on our own as a good business proposition," Schuth said.

"We have a willingness and a desire to collaborate very broadly in the field," Weninger added. "We really hope to work with all of the best minds out there. Neurodegenerative disease is a huge problem for society, and it requires a huge collaborative effort."