March 25 (Reuters) - The U.S. Food and Drug

Administration has approved Denali Therapeutics' ( DNLI )

therapy to treat children with a rare genetic disorder, marking

the first regulatory green light for the drugmaker in the

country.

However, continued approval for the treatment may be contingent

upon verification of clinical benefit in a confirmatory trial,

the company said on Wednesday, adding that the therapy will be

available in the U.S. shortly.

Denali shares were up 6.9% at $22.41.

Marketed as Avlayah, the enzyme replacement therapy is aimed at

treating Hunter syndrome, a rare genetic disorder that affects

about 500 people in the U.S., almost exclusively males, and

leads to the buildup of certain sugar molecules in the brain and

body.

Caused by a deficiency of the enzyme iduronate-2-sulfatase,

the disorder prevents the body from breaking down large sugar

molecules called glycosaminoglycans.

Symptoms include developmental delays, cognitive decline and

behavioral abnormalities.

Given as a once-weekly infusion, Avlayah has been approved

to treat the neurologic symptoms in presymptomatic or

symptomatic pediatric patients.

The FDA's approval was based on a surrogate endpoint, or a

substitute measure, that tracked the reduction of heparan

sulfate, a sugar molecule linked to organ damage that

accumulates due to the disorder.

The endpoint was reasonably likely to predict Avlayah's

clinical benefit, the regulator's review team said.

Denali is now conducting a trial to evaluate the clinical

benefit of the treatment, said Tracy Beth Hoeg, acting director

of FDA's drug evaluation center.

Avlayah's approval includes a boxed warning, the agency's

most serious kind, for severe allergic reactions associated with

the drug.

Takeda Pharmaceuticals' Elaprase has been the only

FDA-approved enzyme replacement therapy for the condition in the

U.S. since 2006, but it addressed only physical symptoms such as

walking ability and spleen size.