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Why Denali Therapeutics Stock Is Sinking This Week

What happened

Shares of Denali Therapeutics (NASDAQ: DNLI) were down by 18.3% for the week as of the market close on Thursday, based on data from S&P Global Market Intelligence. Much of the decline came after the company announced Thursday that the Food and Drug Administration had placed the Investigational New Drug (IND) application for its drug candidate DNL919 on clinical hold.

The IND application filed by Denali sought a regulatory green light to begin an early-stage clinical study evaluating DNL919 as a treatment for Alzheimer's disease. On Monday, Denali announced that Japanese drugmaker Takeda had exercised its option to co-develop and co-market the experimental therapy.

Image source: Getty Images.

So what

Denali didn't reveal any details about the FDA's clinical hold on the DNL919 program. The company only said that it was "informed via email communication" by the regulatory agency about the hold after the close of business on Wednesday.

The company had hoped to begin an early-stage clinical trial of DNL919 in the first half of 2022. Had Denali been able to do so, it expected to have safety and biomarker data for the experimental drug available in the second half of the year. It remains to be seen how much the FDA's clinical hold will push this schedule back.

Now what

According to Denali, the FDA's email indicated that an official clinical hold letter would be forthcoming within around 30 days. The company said that it would provide additional updates after talking with the FDA.

In the meantime, there are other potential catalysts for the biotech stock. Denali is scheduled to present additional data from its ongoing phase 1/2 study of DNL310 in treating Hunter syndrome next month. The company also expects that results from its phase 1b study of DNL343 in treating amyotrophic lateral sclerosis will be available in mid-2022.

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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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