June 2024

Denali: can drug treatments defeat the blood-brain barrier?

Claire Shaw – Portfolio Director

  • Denali is engineering drugs to cross the blood-brain barrier to treat Alzheimer’s and other neurodegenerative diseases
  • It uses transferrin receptors to bypass the blood-brain barrier's security measures
  • If successful, it could have a wide-reaching impact on patients and investors

As with any investment, your capital is at risk.

About 98 per cent of small molecule drugs can’t cross the blood-brain barrier (BBB), which is a network of blood vessels and tissues designed to keep toxins out of the brain.

Denali Therapeutics is dedicated to defeating neurodegenerative diseases. It's developing drugs to cross the barrier and target 'degenogenes', or genes that, when they mutate, cause brain diseases like Alzheimer's.

Neurological drug trials have historically been the graveyard of drug development. Most drugs can’t cross the blood-brain barrier, a layer of cells that acts as a filter, keeping harmful things out and beneficial things within the brain. That has made it very difficult to treat diseases such as Alzheimer’s and Parkinson’s.

Fortunately, new developments offer hope. This graphic from Scottish Mortgage shows how one of its portfolio companies, Denali Therapeutics, is engineering drugs that can potentially reach the brain.

What is the blood-brain barrier?

The body has a special shield of blood vessels and tissues known as the blood-brain barrier. You can think of it as a strong wall with tiny security guards that only allow certain things to go from your blood into your brain. It’s very picky about what it lets in to keep out germs and toxins.

However, the blood-brain barrier makes it very challenging to treat brain diseases. Drugs have historically been unable to cross the barrier.


Engineering brain delivery

To tackle this problem, Denali Therapeutics is developing drugs better positioned to cross the blood-brain barrier. Here’s how it works:

  • Transferrin is a naturally occurring protein that carries molecules such as iron into the brain by binding to transferrin receptors. The receptors are like a VIP pass that allows the molecules to pass through the barrier’s security guards.
  • Denali’s small molecule drugs bind to these transferrin receptors using transport vehicles, such as antibodies or enzymes.
  • By binding to these receptors, Denali hopes its drugs can sneak through the blood-brain barrier and into the brain.

To hear more about how Denali is revolutionising treatment of neurogenerative diseases, check out our podcast episode with CEO and Founder Ryan Watts.

Listen on Spotify →

Listen on Apple Podcasts →


The company has several drug candidates in various clinical trial stages. Through studying ‘degenogenes’ – genes that cause neurodegeneration when they mutate – Denali can develop drugs that target a future where degenerative diseases are defeated.


An opportunity for investors

If Denali develops effective treatments for neurodegenerative diseases by getting drugs through the blood-brain barrier, it will give humanity hope of creating a future where degenerative diseases can no longer rob people of their dignity in their last years of life.

Alongside this meaningful purpose, Scottish Mortgage believes the company has numerous qualities that position it for growth:

  • Scale of opportunity: One in three people aged 65 or over in the US dies with Alzheimer’s or another form of dementia
  • Expertise: Denali’s leadership has deep scientific expertise, particularly in neurodegenerative diseases
  • Broad portfolio: With 10 drugs currently in development, this reduces the risk caused by any one drug failing during clinical trials
  • Initial success: Denali’s most advanced trial for Hunter’s disease has shown promising results
  • Strategic partnerships: Working with companies such as Sanofi has led to $1.3bn in upfront payments that cover programme costs while allowing Denali to maintain significant control

If Denali succeeds in tackling one of the most significant medical challenges of our time, it could have a far-reaching impact on patients and investors.

About the author - Claire Shaw

Portfolio Director

Claire Shaw is a portfolio director and plays a prominent role in servicing Scottish Mortgage’s UK shareholder base. Before joining in 2019, she spent over a decade as a fund manager with a focus on managing European equity portfolios for a global client base. With a background in analysing companies and communicating investment ideas, Claire is also responsible for creating engaging content that makes the Scottish Mortgage portfolio accessible to all its shareholders. Beyond that, she works closely with the managers, meeting with portfolio companies and conducting in-depth portfolio discussions with shareholders.

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