French drugmaker Sanofi and Denali Therapeutics of the US plan to cooperate on developing molecules discovered by Denali that have the potential to treat multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), Alzheimer's disease and systemic inflammatory diseases. The plans will be officially sealed in the coming months, following customary regulatory approvals.

The US company’s candidate molecules DNL747 and DNL758 target a critical signaling protein known as the receptor-interacting serine/threonine-protein kinase 1 (RIPK1) in the TNF receptor pathway, which regulates inflammation and cell death in tissues throughout the body.

Under the terms of the agreement, Sanofi will make an upfront cash payment to Denali of $125 million, with future development and commercial milestone payments from the two candidates potentially exceeding $1 billion. The two firms will share commercial profits and losses from DNL747 in the US and China equally, while Denali will receive a royalty from Sanofi for other territories for DNL747 and worldwide for DNL758.

Sanofi has agreed to fund phase 1b and 2 clinical development costs for DNL747 in the indications MS, ALS and other neurological indications, except in Alzheimer's disease, which will be funded by Denali. Phase 3 trials for all neurological indications will be jointly funded by Sanofi (70%) and Denali (30%), while Sanofi will fully fund the clinical development costs for DNL758 in systemic inflammatory diseases.

DNL747, a brain-penetrant small molecule, is currently in phase 1 trials. Phase 1b studies for this drug candidate in the indications Alzheimer's and ALS are to begin in the near-term, the companies said. Clinical trials with DNL758, a small molecule that does not penetrate the brain, are expected to begin in 2019. The collaboration also includes additional pre-clinical RIPK1 inhibitor molecules.