Denali Enters $275 Million Funding Agreement with Royalty Pharma

Rare Daily Staff

Denali Therapeutics said it entered into a $275 million synthetic royalty funding agreement with Royalty Pharma based on future net sales of tividenofusp alfa, its enzyme replacement therapy for the rare lysosomal storage disorder Hunter syndrome.

The transaction is subject to various closing conditions, including Denali achieving U.S. Food and Drug Administration accelerated approval of tividenofusp alfa.

Under the agreement, Royalty Pharma will make an initial payment of $200 million and will be obligated to make an additional payment of $75 million upon achieving European Medicines Agency approval of the therapy by Dec. 31, 2029. In exchange, Royalty Pharma will receive a 9.25 percent royalty on worldwide net sales of tividenofusp alfa from Denali. The royalty payments to Royalty Pharma will cease upon reaching a multiple of 3x, or 2.5x if achieved by the first quarter of 2039.

Hunter syndrome, also known as MPS II, is a genetic disease that leads to behavioral, cognitive, and physical symptoms that ultimately result in a shortened lifespan. It is caused by mutations in the iduronate-2-sulfatase (IDS) gene, leading to a deficiency of the IDS enzyme. Symptoms often begin emerging around age 2 and include physical complications such as organ dysfunction, joint stiffness, hearing loss, and impaired growth, as well as neurocognitive symptoms that impair development. The disease is characterized by a buildup of glycosaminoglycans (GAGs) in lysosomes—the part of the cell that breaks down materials including GAGs.

The current standard-of-care enzyme replacement therapy partially treats the physical symptoms but does not cross the blood-brain barrier. As a result, the cognitive and behavioral symptoms experienced by most patients with MPS II are not addressed.

Tividenofusp alfa is an experimental fusion protein composed of IDS fused to Denali’s proprietary enzyme transport vehicle, which is engineered to cross the blood-brain barrier via receptor-mediated transcytosis into the brain. Preclinical studies have demonstrated that tividenofusp delivers IDS to lysosomes, where it is needed to break down GAGs. DNL310 is engineered for broad delivery of IDS into cells and tissues throughout the body, including the brain, with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II.

The FDA is reviewing the company’s application for accelerated approval of tividenofusp alfa and is expected to act by April 5, 2026.

“With these additional funds, we are well positioned to advance our development programs as we prepare for the launch of tividenofusp alfa, unlocking broad opportunities across serious diseases,” said Ryan Watts, CEO of Denali Therapeutics.

Photo: Ryan Watts, CEO of Denali Therapeutics