DNLI 10-K & 10-Q changes, risk factors and insider trading
Denali Therapeutics Inc. · Nasdaq · Biological Products, (No Diagnostic Substances) · CIK 1714899 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.”
Removed heading “Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have never generated any revenue from product sales, and we may never generate product revenue or be profitable.”
Removed heading “We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products.”
Largest changes
Our business activities may be subject to the Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), and similar anti-bribery or anti-corruption laws, regulations, or rules of other countries in which we operate, including the U.K. Bribery Act. The FCPA generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect certain transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA.see in full comparisonRecently the Securities and Exchange Commission (the "SEC"), and Department of Justice have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical companies. There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down of our facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition.
“We are increasing our use of artificial intelligence (AI) systems to enhance productivity and efficiency; however, the use of AI presents operational, legal, regulatory, cybersecurity, and reputational risks. Many AI systems generate probabilistic outputs based on patterns in training data rather than deterministic rules, and they may produce results that are inaccurate, incomplete, misleading, biased, or not explainable, including “hallucinations,” and their performance may vary based on inputs, updates, or changes in underlying data. …”see in full comparison
“There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down of our facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. …”see in full comparison
“Furthermore, if we receive commercial approval in the United States and intend to seek approval in other countries, we may rely on third-party distributors and other commercial partners outside the United States, such as local agents, wholesalers, importers and logistics providers, to market, distribute and support any potential commercial products, and our ability to enter and compete in non-U.S. markets may depend on the performance of these third parties. …”see in full comparison
“If any of our small molecule product candidates obtain regulatory approval, competitors may file abbreviated new drug applications under the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act") seeking approval of generic versions, or submit 505(b)(2) new drug applications referencing our approved products. …”see in full comparison
“If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.”see in full comparison
Full comparison: every changed paragraph (144)
•A pandemic, epidemic, or outbreak of an infectious disease, or the perception of its effects, may materially and adversely affect our business, operations, and financial condition.
•Our reliance on third parties for the manufacture of the significant majority of the materials for our research programs, preclinical studies,studies and clinical trials. This reliance on third parties may increase the risk that we will not have sufficient quantities of such materials or product candidates.
We are in the clinical stages of drug developmentdevelopment, have no approved products, and have a limited operating history and no products approved for commercial sale, which may makenever itbecome difficult to evaluate our business and predict our future success and viability.profitable.
We are a clinical-stage biopharmaceutical company with a limited operating history, focused on developing therapeutics for neurodegenerative diseases, including Alzheimer’s disease, Parkinson’s disease and ALS,Parkinson’s disease, and lysosomal storage diseases, including Hunter syndrome and Sanfilippo syndrome. We commenced operations in May 2015, have no products approved for commercial sale and have not generated any revenue from product sales. Drug development is a highly uncertain undertaking and involves a substantial degree of risk. Our clinical-stage programs are in various phases ranging from Phase 1 through Phase 3. To date, we have not completed a pivotal clinical trial, obtained marketing approval for any product candidates, or manufactured a commercial scale product or arranged for a third party to do so on our behalf, or conducted sales and marketing activities necessary for successful product commercialization.product. Our limited operating history makes any assessment of our future success and viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by clinical-stage biopharmaceutical companies, and we have not yet demonstrated an ability to successfully overcome such risks and difficulties. If we do not address these risks and difficulties successfully, our business will suffer.
We have incurred significant net losses since our inception. Our net losses were $422.8 million, $145.2 million, and $326.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $1.54 billion.
We expect to continue to incur significant expenses and increasingly higher operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:
•continue our research and discovery activities;
•progress our current and any future product candidates through preclinical and clinical development;
•manufacture product candidates at our manufacturing facility and with our contract manufacturers;
•change or add additional contract manufacturers or suppliers;
•seek regulatory approvals and marketing authorizations for our product candidates;
•establish sales, marketing and distribution infrastructure to commercialize any products for which we obtain approval;
•acquire or in-license product candidates, intellectual property and technologies;
•make milestone, royalty or other payments due under any license or collaboration agreements;
•obtain, maintain, protect, and enforce our intellectual property portfolio, including intellectual property obtained through license agreements;
•attract, hire, and retain qualified personnel and incur increased stock-based compensation, especially in light of a competitive compensation environment;
•provide additional internal infrastructure to support our continued research and development operations and any planned commercialization efforts in the future;
•implement additional internal systems and infrastructure related to cybersecurity;
•experience any delays or encounter other issues related to our operations;
•meet the requirements and demands of being a public company; and
•defend against any product liability claims or other lawsuits related to our products.
Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.
Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have never generated any revenue from product sales, and we may never generate product revenue or be profitable.
We have no products approved for commercial sale and have not generated any revenue from product sales. To obtain revenue from the sales of our product candidates that are significant or large enough to achieve profitability, we must succeed, either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing, and marketing therapies with significant commercial success.
•addressing any delays in our clinical trials or other impacts from a pandemic or other global health emergency.
We have incurred significant net losses since our inception. Our net losses were $512.5 million, $422.8 million, and $145.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $2.05 billion.
We expect to continue to incur significant expenses and increasingly higher operating losses for the foreseeable future. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.
Our operations have required substantial amounts of cash since inception. We currently fund our operations primarily with the proceeds from our follow-on offeringofferings completed in October 2022,2022 and December 2025, payments received from our collaboration agreements with Biogen, Sanofi, Takeda, and a strategic private offering transaction completed in February 2024. We have a diversified portfolio with numerous programs at various stages of research, discovery, preclinical and clinical development. Developing our product candidates is expensive, and we expect to continue to spend substantial amounts as we fund our early-stage research projects,projects and advance our programs through preclinical and clinical development, and prepare for potential commercialization.development.
As of December 31, 2024,2025, we had $1.19$966.2 billionmillion in cash, cash equivalents and marketable securities. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our projected operations through at least the next twelve months. Our estimate as to how long we expect our existing cash, cash equivalents and marketable securities to be available to fund our operations is based on assumptions that may be proven inaccurate, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, such as recent bank failures, geopolitical uncertainty, rising inflation or interest rates, the imposition of tariffs, risks associated with transactions denominated in foreign currency, or a perceived or actual economic downturn, may cause us to increase our spending significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned. We may also need to raise additional funds sooner than we anticipate if we choose to expand more rapidly than we presently anticipate.
Due to the significant resources required for the development of our programs, we must focus our programs on specific diseases and disease pathways and decide which product candidates to pursue and advance and the amount of resources to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate, divest, or collaborate with third parties in respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misread trends in the biopharmaceutical industry, in particular for neurodegenerative and lysosomal storage diseases, our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
One of our strategies is to identify and pursue clinical development of additional product candidates. We currently have several programs in the research, discovery, and preclinical stages of development. Identifying, developing, obtaining regulatory approval for, and commercializing additional product candidates for the treatment of neurodegenerative and lysosomal storage diseases will require substantial additional funding and is prone to the risks of failure inherent in drug development. We cannot provide you with any assurance that we will be able to successfully identify or acquire additional product candidates, advance any of these additional product candidates through the development process, successfully commercialize any such additional product candidates, if approved, or assemble sufficient resources to identify, acquire, develop, or, if approved, commercialize additional product candidates. If we make incorrect determinations regarding the viability, indication size, or market potential of any of our programs or product candidates or misread trends in the biopharmaceutical industry, our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
Investment in biopharmaceutical product development involves significant risk that any product candidate will fail to demonstrate adequate efficacy or potency, or an acceptable safety profile, gain regulatory approval, andor become commercially viable. To date, we have invested substantially all of our efforts and financial resources to identify, acquire intellectual property for, and develop our TV platform and our programs, including conducting preclinical studies and clinical trials, and providing general and administrative support for these operations. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates, and we may fail to do so for manyany reasons, includingof the following:reasons set forth in these Risk Factors. In that event, we may be forced to abandon our development efforts for a program or programs, which could have a material adverse effect on our business.
•our product candidates may not successfully complete preclinical studies or clinical trials;
•our drug delivery platform technology may not be clinically viable;
•a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
•our competitors may develop therapeutics or platform technologies that render our product candidates or platform obsolete or less attractive;
•the product candidates and TV platform that we develop may not be sufficiently covered by intellectual property for which we hold exclusive rights;
•the product candidates and TV platform that we develop may be covered by third parties’ patents or other intellectual property or exclusive rights;
•the market for a product candidate may change so that the continued development of that product candidate is no longer reasonable or commercially attractive;
•a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;
•if a product candidate obtains regulatory approval, we may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate; and
•a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable.
If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which could have a material adverse effect on our business.
We have previously discontinued the development of certain molecules prior to completion of preclinical development because we did not believe they met our criteria for potential clinical success. Further, we cannot be certain that any of our product candidates will be successful in clinical trials. For instance, in August 2023, together with our collaboration partner Takeda, we discontinued development of TAK-920/DNL919 (ATV:TREM2) in Alzheimer’s disease, based on data from the Phase 1 study and the rapidly evolving treatment landscape, and, in January 2025, we announced that the Phase 2/3 HEALEY ALS Platform Trial evaluating DNL343 for ALS did not meet primary and key secondary endpoints. We may in the future advance product candidates into clinical trials and terminate such trials prior to their completion.
We cannot provide any assurance that we will be able to successfully advance any of our product candidates through the development process or, if approved, successfully commercialize any of our product candidates.
We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products.
One of our strategies is to identify and pursue clinical development of additional product candidates. We currently have several programs in the research, discovery and preclinical stages of development. Identifying, developing, obtaining regulatory approval for, and commercializing additional product candidates for the treatment of neurodegenerative and lysosomal storage diseases will require substantial additional funding and is prone to the risks of failure inherent in drug development. We cannot provide you any assurance that we will be able to successfully identify or acquire additional product candidates, advance any of these additional product candidates through the development process, successfully commercialize any such additional product candidates, if approved, or assemble sufficient resources to identify, acquire, develop or, if approved, commercialize additional product candidates.
We have focused our research and development efforts on addressing neurodegenerative and lysosomal storage diseases. Collectively, efforts by biopharmaceutical companies in the fields of neurodegenerative and lysosomal storage diseases have seen limited success in drug development. There are few effective therapeutic options available for patients with neurodegenerative diseases, such as Alzheimer’s disease,disease and Parkinson’s disease, and ALS, and lysosomal storage diseases, such as Hunter syndrome and Sanfilippo syndrome. Our future success is highly dependent on the successful development of our TV platform and our product candidates for treating neurodegenerative and lysosomal storage diseases. Developing and, if approved, commercializing our product candidates for treatment of neurodegenerative and lysosomal storage diseases subjects us to a number of challenges, including engineering product candidates to cross the BBB to enable optimal concentration of the therapeutic in the brain and obtaining regulatory approval from the FDA and other regulatory authorities who have only a limited set of precedents to rely on.
Our approach to the treatment of neurodegenerative and lysosomal storage diseases aims to identify and select targets with a genetic link to neurodegenerative and lysosomal storage diseases, as applicable,diseases; identify and develop molecules that engage the intended target,target; identify and develop biomarkers, which are biological molecules found in blood, other bodily fluidsfluids, or tissues that are signs of a normal or abnormal process or of a condition or disease, to select the right patient population and demonstrate target engagement, pathway engagementengagement, and impact on disease progression of our molecules,molecules; and engineer our molecules to cross the BBB and act directly in the brain. This strategy may not prove to be successful. We may not be able to discover, develop, and utilize biomarkers to demonstrate target engagement, pathway engagement, and the impact on disease progression of our molecules. We cannot be sure that our approach will yield satisfactory therapeutic products that are safe and effective, scalable, or profitable. Moreover, public perception of drug safety issues, including adoption of new therapeutics or novel approaches to treatment, may adversely influence the willingness of subjects to participate in clinical trials, or if approved, of physicians to subscribe to novel treatments.
We may encounter substantial delays in our clinical trials,trials or difficulties enrolling patients, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.
•delays involving our clinical trial sites, including delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, thedelays termsin ofidentifying, which can be subject to extensive negotiationrecruiting and maytraining varysuitable significantlyclinical among different CROsinvestigators, and delays in obtaining required IRB approval at each clinical trial sitessite;
•delays in identifying, recruiting and training suitable clinical investigators;
•delays in obtaining required IRB approval at each clinical trial site;
•delays in identifying, recruiting, and enrolling suitable patients to participate in our clinical trials, and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up;
•delays due to changes in the approvalstaffing, policiespriorities, or regulationsleadership of the FDA or other regulatory authoritiesauthorities, or changes to regulatory approval policies or regulations;
We could also encounter delays if a clinical trial is suspended or terminated by us or our collaborators, by the data safety monitoring board for such trial, or by any regulatory authority, or if the IRBs of the institutions in which such trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions, developments onin trials conducted by us or our competitors for related technology that raisesraise regulatory concerns about risk to patients of the technology broadly, or lack of adequate funding to continue the clinical trial.
Our product candidates have been subject to clinical holds in the past and we cannot assure you that others will not be subject to new, partial, or full clinical holds in the future. For example, in August 2023, following imposition of a clinical hold by the FDA, we announced that we and Takeda would discontinue clinical development of TAK-920/DNL919 in Alzheimer’s disease. Additionally, in December 2025, we announced that DNL952 was placed on clinical hold. Although protocol amendments were implemented for DNL952 and the program resumed, there could be safety findings or concerns that result in additional pauses, protocol modifications, or permanent discontinuation of development. Any clinical holds by the FDA, if not timely lifted, could impact our development plans.
For example, in January 2022, we announced that the TAK-920/DNL919 (ATV:TREM2) IND application had been placed on clinical hold by the FDA. In August 2023 we announced that, in agreement with Takeda, we would discontinue clinical development of TAK-920/DNL919 in Alzheimer’s disease. We cannot assure you that we will ever resume the clinical program for TAK-920/DNL919, nor can we assure you that our other product candidates will not be subject to new, partial, or full clinical holds in the future, which may impact development plans. We may also pause the advancement of lead molecules in favor of a backup molecule with a superior safety or efficacy profile, such as we did in our RIPK1 program, switching our focus from DNL747 to SAR443820/DNL788.
•the size and nature of the patient population, the proximity of patients to trial sites, and the size of the study population required for analysis of the trial's primary endpoints;
•public health crises;
Management's Discussion & Analysis (MD&A)
New heading “•DNL 628 (OTV:MAPT)”
New heading “Royalty Pharma Funding Agreement”
New heading “Comparison of the years ended December 31, 2025 and 2024”
Removed heading “•DNL343 (eIF2B)”
Removed heading “Comparison of the years ended December 31, 2023 and 2022”
Largest changes
“◦In February 2024, we announced that we executed a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize, to evaluate safety and biomarkers associated with BIIB122 (DNL151) in participants with LRRK2-associated Parkinson’s disease (LRRK2-PD). …”see in full comparison
◦In Februarysee in full comparison2024,2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 program on February 26, 2025, as per the terms of the Takeda Collaboration Agreement. The ATV:TREM2 program termination became effective in April 2025; and ◦In December 2025, weannouncedsoldthat we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,6899,142,857 shares ofourcommon stock through an underwritten public offering at a price of $17.50 per share, and issued pre-funded warrants to purchase 2,285,714 shares of common stock at a price of$17.07$17.49,per share and pre-funded warrants to purchase anfor aggregateof 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting innet proceeds ofapproximately $499.3$189.2 million. The pre-funded warrants have an exercise price of $0.01 per share ofCommoncommonStock,stock, and are immediately exercisable and will remain exercisable until exercised in full.TheInprivateJanuaryplacement2026,closedtheonunderwritersFebruarypartially29,exercised2024;their option to purchase additional shares, and we issued 746,468 shares of common shares for net proceeds of $12.4 million.
Full comparison: every changed paragraph (82)
1)Discover: and developInvent a new class of barrier-crossing therapeutics by leveraging our TV platforms and deep expertise in BBBblood-brain barrier biology to enhance the delivery of biotherapeutics to the brain and throughout the body.
2)Develop: Accelerate and expand a broad portfolio of TV-based product candidates to fully unlock the potential of barrier-crossing therapeutics, applying patient-informed development and driving biomarker-guided regulatory approvals.
3)Deliver: Launch initial products targeting rare lysosomal storage diseases as a strategic foundation for expansion into common neurodegenerative conditions and other serious diseases, while building integrated capabilities for long-term growth and profitability.
•Tividenofusp alfa (DNL310, ETV:IDS), composed of IDS fused to TV, is designed to deliver IDS into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II (Hunter syndrome);
•DNL126 (ETV:SGSH), composed of SGSH fused to TV, is designed to deliver SGSH into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of treating MPS IIIA (Sanfilippo syndrome type A);
•DNL952 (ETV:GAA), composed of acid alpha-glucosidase ("GAA") fused to TV and engineered to replace GAA in all tissues, with the goal of treating Pompe disease;
•DNL628 (OTV:MAPT), composed of an antisense oligonucleotide ("ASO") against MAPT fused to TV, designed to suppress gene expression of MAPT encoding the tau protein with the goal of treating Alzheimer's disease;
•BIIB122/DNL151, oura small molecule LRRK2 inhibitor program,inhibitor, is being developed in collaboration with Biogen,Biogen tofor addressthe PDpotential treatment of Parkinson's disease; and
•DNL343, our small molecule eIF2B activator program, is under evaluation in ALS; and
•Eclitasertib (SAR443122/DNL758), a peripheral and non-CNS penetrant small molecule RIPK1 inhibitor, is being developed by Sanofi, to address peripheral inflammatory diseases such as UC.ulcerative colitis ("UC").
______________________________________________________________________________
*Regulatory application to begin clinical testing has been approved by Health Authorities.
◦In January 2025, we announced that the U.S. Food and Drug Administration ("FDA") granted Breakthrough Therapy Designation for tividenofusp alfa (DNL310) for the treatment of individuals with MPS II.
◦In February 2025, at the WORLD Symposium conference, we presented the primary analysis of the Phase 1/2 study in 47 participants with Hunter syndrome in the 24-week treatment period and additional long-term follow-up.
◦In May 2025, we completed a rolling submission of a Biologics License Application ("BLA") for tividenofusp alfa under the accelerated approval pathway;
◦In July 2025, we announced that the FDA accepted our BLA for tividenofusp alfa for priority review, assigning a Prescription Drug User Fee Act (PDUFA) target action date of January 5, 2026; In October 2025, we announced that the FDA extended its review timeline of the BLA seeking accelerated approval of tividenofusp alfa from January 5, 2026, to April 5, 2026;
◦In December 2025, we entered into a synthetic royalty funding agreement with Royalty Pharma plc (“Royalty Pharma”), pursuant to which Royalty Pharma has agreed to provide us with up to $275.0 million in funding in exchange for a 9.25% royalty on future worldwide net sales of tividenofusp alfa, which will cease upon reaching a multiple of 3.0x, or 2.5x if achieved by the first quarter of 2039. The agreement is subject to various closing conditions, including Denali achieving U.S. FDA accelerated approval of tividenofusp alfa on or before June 30, 2026. At the closing, Royalty Pharma will make an initial payment of $200.0 million. Denali will be receive an additional payment of $75.0 million upon approval of tividenofusp alfa by the EMA on or before December 31, 2029. Denali will retain all worldwide development and commercialization rights to tividenofusp alfa;
◦In December 2025, we announced that we are in ongoing dialogue with the FDA related to the eligibility of tividenofusp alfa to receive a Rare Pediatric Disease Priority Review Voucher (“PRV”) upon approval. Because we submitted a filing of our intent to request a PRV after the initial BLA submission, based on discussions with the FDA, we may not be eligible to receive the PRV. Therefore, we are not including any potential future proceeds from the sale of a PRV in our financial planning. We continue to work with the FDA and the FDA will determine whether to award a PRV upon approval of tividenofusp alfa. We also announced that a Late Cycle Meeting with the FDA was completed and labeling discussions were underway;
◦In December 2025, we announced that The New England Journal of Medicine published the Phase 1/2 study results; and ◦In January 2026, we announced that we are is preparing for commercial launch in anticipation of a regulatory decision on the BLA for tividenofusp alfa under the FDA accelerated approval pathway with a PDUFA target action date of April 5, 2026, and that enrollment in Cohort A (neuronopathic participants) was completed in the ongoing global Phase 2/3 COMPASS study in December 2025.
◦In February 2024, we presented new positive data from the ongoing Phase 1/2 study of tividenofusp alfa in MPS II at the 20th Annual WORLDSymposiumTM demonstrating sustained normalization of heparan sulfate in cerebrospinal fluid ("CSF HS"), robust and sustained reductions in biomarkers of lysosomal dysfunction and neuronal damage (neurofilament light; "NfL"), and improvements and stabilization of multiple clinical outcomes measures over two years of treatment. Also in February, we participated in the Reagan-Udall Foundation for the FDA workshop on CSF heparan sulfate as a potential surrogate biomarker to support accelerated approval in MPS.
◦In April 2024, we completed enrollment of 47 participants with MPS II in the Phase 1/2 open-label study. Following the Reagan-Udall Foundation workshop, we received written communication from the Center for Drug Evaluation and Research ("CDER") division of the FDA indicating openness to discussing an accelerated approval pathway for tividenofusp alfa in MPS II with CSF heparan sulfate as a surrogate biomarker;
◦In September 2024, we announced that we plan to file a biologics license application ("BLA") for accelerated approval for tividenofusp alpha (DNL310) for the treatment of MPS II, based on the outcome of a recent successful meeting with the Center for Drug Evaluation and Research ("CDER") division of the FDA. In addition, the meeting also provides a path for conversion to full approval based on the totality of the tividenofusp clinical development plan. Based on discussions with CDER, we will include preclinical and clinical data on biomarkers (CSF HS and NfL) and safety in the BLA for tividenofusp alfa as a treatment of MPS II and intend to submit the BLA under the accelerated approval pathway in early 2025. We are preparing for the U.S. launch of tividenofusp alfa for the treatment of MPS II in late 2025 or early 2026;
◦In January 2025, we announced that the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation for tividenofusp alfa (DNL310) for the treatment of individuals with MPS II; and ◦In February 2025, we announced that in our global Phase 2/3 COMPASS study of tividenofusp alfa in participants with MPS II, target enrollment of the planned 33 participants with neuronopathic MPS II in Cohort A has been completed; we increased the sample size of Cohort A by nine participants, bringing the total to 42 participants. Cohort B continues to enroll participants with non-neuronopathic MPS II.
◦In April 2025, we announced productive collaboration and discussions with the FDA under the START program (“Support for clinical Trials Advancing Rare Disease Therapeutics”) around the potential for an accelerated development and approval path for DNL126 in the treatment of Sanfilippo syndrome;
◦In August 2025, we announced we reached alignment with the FDA that cerebrospinal fluid heparan sulfate (CSF HS) may be considered a reasonably likely surrogate endpoint to predict clinical benefit and may therefore be used to support accelerated approval of DNL126 for MPS IIIA. We also announced that additional 49-week data from the ongoing open-label Phase 1/2 study were consistent with previously announced 25-week data, demonstrating a significant reduction in CSF HS from baseline, including normalization, and a safety profile that supports continued development; and ◦In September 2025, we completed enrollment in the ongoing Phase 1/2 study, and in December 2025 we announced that the Phase 1/2 study remains on track for completion in 2026, supporting a potential accelerated approval pathway and commercial launch by the second half of 2027, with planning for a global Phase 3 confirmatory study underway; and ◦In February 2026, we presented preliminary open-label Phase 1/2 data at the 2026 WORLD Symposium demonstrating substantial reductions in CSF HS, including normalization from baseline, and in urine HS with a safety profile consistent with other enzyme replacement therapies.
◦In February 2024, we announced that dosing had been initiated in the Phase 1/2 study of DNL126 in MPS IIIA. Further, in February 2024, we presented supportive preclinical data at WORLDSymposiumTM demonstrating that DNL126 improves lysosomal and microglial morphology, degeneration, and cognitive behavior in MPS IIIA mice; and ◦In June 2024, DNL126 was selected for the FDA's Support for clinical Trials Advancing Rare disease Therapeutics ("START") program to accelerate the development of rare disease therapeutics. In November 2024, we announced that preliminary data from up to 25 weeks of dosing in the ongoing open-label Phase 1/2 study in MPS IIIA participants demonstrated a significant reduction in CSF HS levels from baseline, including normalization. The safety profile supports continued development. The most frequent treatment emergent adverse events were infusion related reactions of mild and moderate severity in all participants. There was one serious adverse event considered by the investigator not related to drug. Based on the preliminary Phase 1/2 results and a positive regulatory environment, we recently expanded the study and continue to assess the development plans including an accelerated approval path.
•TAK-594/DNL593DNL 952 (PTVETV:PGRNGAA)
◦In October 2025, we submitted an Investigational New Drug ("IND") application for DNL952 (ETV:GAA) to initiate a Phase 1 study, and in December 2025 we announced that the IND had been placed on clinical hold. In January 2026 we announced that the FDA has lifted the clinical hold on the IND application for DNL952, and we are proceeding with the Phase 1 study.
•DNL 628 (OTV:MAPT)
◦In January 2026, we announced that the Clinical Trial Application ("CTA") for DNL628 (OTV:MAPT) to initiate a Phase 1b study in Alzheimer’s disease was approved and study start-up activities are underway.
◦In January 2024, we announced that Part B in the TAK-594/DNL593 Phase 1/2 study in participants with FTD-GRN had been voluntarily paused to implement protocol modifications. In the second quarter of 2024, we finalized the protocol amendment and dosing in the Phase 1/2 study is ongoing.
◦In May 2025, Biogen announced completion of enrollment in the Phase 2b LUMA study for early-stage Parkinson's disease with a readout expected in 2026.
◦In February 2024, we announced that we executed a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize, to evaluate safety and biomarkers associated with BIIB122 (DNL151) in participants with LRRK2-associated Parkinson’s disease (LRRK2-PD). This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024 and $12.5 million was received in July 2024, with the remainder to be triggered based on operational milestones in the study. The third party will be eligible to receive low single-digit royalties from Denali on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease, with royalty amounts varying based on the scope of the label. Denali has initiated screening of participants for the global Phase 2a study to evaluate safety and biomarkers associated with BIIB122/DNL151 in participants with LRRK2-PD. Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease; enrollment is expected to be completed in 2025. Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval; and ◦In December 2024, we announced initiation of dosing in the global Phase 2a clinical study, BEACON, BIIB122 (DNL151) in participants with LRRK2-PD.
•DNL343 (eIF2B)
◦In May 2024, the Sean M. Healey & AMG Center for ALS at Massachusetts General Hospital ("MGH") in collaboration with the Northeast ALS Consortium ("NEALS") announced that enrollment is complete in Regimen G (DNL343) of the Phase 2/3 HEALEY ALS Platform Trial; and in January 2025, we announced topline results that the primary and key secondary endpoints were not met. Further analyses are anticipated later in 2025.
◦In January 2025, we announced topline results that the primary endpoint was not met in Regimen G of the Phase 2/3 HEALEY ALS Platform Trial evaluating DNL343 in the treatment of ALS. In March 2025, we provided an update that additional analyses did not demonstrate a treatment effect on neurofilament light ("NfL"), a biomarker of neuronal damage, over the 24-week, double-blind period and in a subset of participants that completed an additional 28 weeks in the open-label active treatment extension. Based on these outcomes, the active treatment extension in Regimen G was discontinued. Overall, DNL343 was found to be generally well tolerated;
◦In February 2025, we and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788;
◦In January 2024, we announced our intention to divest our preclinical small molecule portfolio, which was completed effective March 1, 2024. We maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs, in collaboration with our partners. The decision was made based on clinical validation and prioritization of our TV-enabled platforms for brain delivery of large molecules;
◦In February 2024, we announced that the Phase 2 HIMALAYA study evaluating SAR443820/DNL788 in participants with ALS did not meet the primary endpoint of change in ALS Functional Rating Scale-Revised ("ALSFRS-R");
◦In February 2024,2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 program on February 26, 2025, as per the terms of the Takeda Collaboration Agreement. The ATV:TREM2 program termination became effective in April 2025; and ◦In December 2025, we announcedsold that we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,6899,142,857 shares of ourcommon stock through an underwritten public offering at a price of $17.50 per share, and issued pre-funded warrants to purchase 2,285,714 shares of common stock at a price of $17.07$17.49, per share and pre-funded warrants to purchase anfor aggregate of 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting in net proceeds of approximately $499.3$189.2 million. The pre-funded warrants have an exercise price of $0.01 per share of Commoncommon Stock,stock, and are immediately exercisable and will remain exercisable until exercised in full. TheIn privateJanuary placement2026, closedthe onunderwriters Februarypartially 29,exercised 2024;their option to purchase additional shares, and we issued 746,468 shares of common shares for net proceeds of $12.4 million.
◦In July 2024, Biogen terminated its license to the ATV:Abeta program enabled by our TfR-targeting technology against amyloid beta for the potential treatment of Alzheimer's disease and granted us rights to data generated during the collaboration. As a result of the termination, all rights to develop, manufacture, perform medical affairs activities, and commercialize new TfR-targeting ATV:Abeta therapeutics reverted to us. Biogen licensed our TfR-targeting ATV:Abeta program in April 2023 having exercised an option that was part of the 2020 collaboration agreement between the two companies. Biogen’s decision was not related to any efficacy or safety concerns with the TV platform;
◦In October 2024, we were informed by Sanofi that the K2 Phase 2 study evaluating the safety and efficacy of SAR443820/DNL788 on serum neurofilament light chain levels in participants with multiple sclerosis was discontinued based on not meeting the primary and key secondary endpoints, and on February 24, 2025, we and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788; and ◦In February 2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 program on February 26, 2025, as per the terms of the Takeda Collaboration Agreement. The ATV:TREM2 program termination will become effective 60 days following the notice date.
We have incurred significant operating losses to date and expect to continue to incur operating losses for the foreseeable future. We had net losses of $512.5 million, $422.8 million, and $145.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $2.05 billion. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. We had net losses of $422.8 million, $145.2 million, and $326.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $1.54 billion. We expect to continue to incur significant expenses and operating losses as we advance our current clinical stage programs through healthy volunteer and patient trials; broaden and improve our TV platform; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.
WeThrough have2024, we relied entirely on third-party contract manufacturers to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates through 2024. WeIn areearly 2025, we opened our clinical biomanufacturing facility in the final stages of building out our Salt Lake CityCity, ("SLC")Utah, expanding U.S. manufacturing facility,capabilities and beginningstrengthening insupply earlychain 2025control planand tooperational commence manufacturing operations.efficiency. Going forward, we plan to use both our SLC facility and third-party contract manufacturers to supply our preclinical and clinical materials. If tividenofusp alfa is approved for the treatment of Hunter syndrome, we expect to use third-party contract manufacturers to supply commercial product.
We did not recognize any collaboration revenue under the Biogen Collaboration Agreement in the yearyears ended December 31, 2025 and 2024, and we recognized related party collaboration revenue of $295.5 million, and $3.1 million in the yearsyear ended December 31, 2023 and 2022, respectively.2023. Further, we recognized research and development expense of $16.7$15.8 million, $17.7$16.7 million and $8.2$17.7 million related to cost sharing payments we made to Biogen in the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We have recorded cost sharing payables of $2.5$2.8 million and $3.2$2.5 million on the Consolidated Balance SheetSheets as of December 31, 20242025 and 2023,2024, respectively. Through December 31, 2024,2025, we have earned $5.0 million in option fee payments but have not recorded any milestone revenue or product sales under the Biogen Collaboration Agreement.
We recognized no collaboration revenue associated with the Sanofi Collaboration Agreement in the yearyears ended December 31, 2025 and 2024, and we recognized collaboration revenue of $25.0 million and $53.4 million in the yearsyear ended December 31, 2023 and 2022, respectively.2023. No receivable from Sanofi was recorded on the Consolidated Balance Sheets as of December 31, 20242025 and 2023.2024. Through December 31, 2024,2025, we had received milestone payments of $100.0 million and we have not recorded any product sales under the Sanofi Collaboration Agreement. Subsequent to the February 24, 2025 side letter, we expect to receive no future milestone or royalty payments from Sanofi related to the CNS Products program.
In November 2021 and December 2021, Takeda exercised its options for the PTV:PGRN and ATV:TREM2 programs, respectively, subsequent to which we have shared equally in the development costs for the programs. In February 2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 programprogram, on February 26, 2025, as perand the terms of the Takeda Collaboration Agreement. The ATV:TREM2 program termination will becomebecame effective 60 days following the notice date. Further details regarding the terms of the agreement between us and Takeda, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations."
We did not recognize collaboration revenue under the Takeda Collaboration Agreement in the yearyears ended December 31, 2025 and 2024, and we recognized collaboration revenue of $10.0 million and $51.9 million in the yearsyear ended December 31, 2023 and 2022, respectively.2023. Further, we offset research and development expense due to cost sharing reimbursements received from Takeda of $5.9$6.6 million, $12.2$5.9 million and $18.2$12.2 million in the years ended December 31, 2025, 2024, 2023, and 2022,2023, respectively. We recorded receivables of $1.5$1.6 million and $2.7$1.5 million from Takeda on the Consolidated Balance Sheets as of December 31, 20242025 and 2023,2024, respectively. Through December 31, 2024,2025, we have received $65.0 million in milestone payments and $10.0 million of option exercise fees from Takeda, and we have not recorded any product sales under the Takeda Collaboration Agreement.
We have made a total of $25.0 million in consideration payments under the Genentech agreement, includingand $12.5 million in the year ended December 31, 2022 related to two clinical milestones. Wewe have recognized $18.8 million of associated research and development expense, net of cost sharing reimbursements from Biogen, including $6.3 million in the year ended December 31, 2022.Biogen. We did not recognize expenses under this agreement in the years ended December 31, 2025, 2024 and 2023.
Royalty Pharma Funding Agreement
In December 2025, we entered into a synthetic royalty funding agreement (the “Royalty Agreement”) with Royalty Pharma plc (“Royalty Pharma”). Pursuant to the Royalty Agreement, Royalty Pharma has agreed to provide us with up to $275.0 million in funding in exchange for a 9.25% royalty on future net sales of tividenofusp alfa. The transaction is subject to various closing conditions, including our achieving U.S. Food and Drug and Administration (FDA) accelerated approval of tividenofusp alfa on or before June 30, 2026. At the closing, Royalty Pharma will make an initial payment of $200.0 million. We will receive an additional payment of $75.0 million upon approval of tividenofusp alfa by the European Medicines Agency (EMA) on or before December 31, 2029. The royalty payments to Royalty Pharma will cease upon reaching a multiple of 3.0x, or 2.5x if achieved by the first quarter of 2039. We will retain all worldwide development and commercialization rights to tividenofusp alfa.
Program expenses include expenses associated with our most advanced product candidates and the discovery and development of backup or next-generation molecules. We also track external expenses associated with our TV platform. These expenses include external expenses incurred by us relating to our Takeda Collaboration Agreement, Biogen Collaboration Agreement and SanofiBiogen Collaboration Agreement. All external costs associated with earlier stage programs, or that benefit the entire portfolio, are tracked as a group. We also incur personnel and other operating expenses for our research and development programs which are presented in aggregate. These expenses primarily relate to salaries and benefits, stock-based compensation, facility expenses including rent and depreciation, and lab consumables. Where we share costs with our collaboration partners, such as in our Biogen Collaboration Agreement and Takeda Collaboration Agreement, research and development expenses may include cost sharing reimbursements from, or payments to, our collaboration partners. Further, where we receive R&D funding from third parties, this may be recognized as a reduction to research and development expenses.
General and administrative expenses include personnel related expenses, such as salaries, benefits, travel and stock-based compensation expense, expenses for outside professional services, pre-commercial preparatorypre-commercialization activities, and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent, depreciation and other expenses related to our office and research and development facility not otherwise included in research and development expenses. We expect to increase our administrative headcount as we prepare for commercialization of Tividenofusp alfa (DNL310, ETV:IDS) and advance our other product candidates through clinical development, which will increase our general and administrative expenses.
Interest and other income, net, consists primarily of interest income andincome, investment income earned on our cash, cash equivalents and marketable securities, and sublease income, as well as sublease income, and an offset fromfor interest expense on our finance lease liability.
Comparison of the years ended December 31, 2025 and 2024
__________________________________________________
Research and development expenses. Research and development expenses were $418.8 million for the year ended December 31, 2025 compared to $396.4 million for the year ended December 31, 2024.
_________________________________________________ (1)Personnel-related expenses include stock-based compensation expense of $59.5 million and $59.1 million for the years ended December 31, 2025 and 2024, respectively, reflecting an increase of $0.4 million.
The increase in research and development expenses of $22.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily attributable to the following:
•an increase of $16.6 million in external research and development expenses for our TV programs driven by increased spend on multiple preclinical and clinical programs including DNL126, DNL628 and DNL952, partially offset by a decrease in expenses related to our DNL310 program;
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, as updated and supplemented by Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the SEC on May 7, 2026, which are incorporated herein by reference. There have been no material changes to the risk factors previously disclosed in such filings.
Removed heading “Risk Factor Summary”
Removed heading “Risks Related to Our Business, Financial Condition and Capital Requirements”
Removed heading “Risks Related to the Discovery, Development and Commercialization of Our Product and Product Candidates”
Removed heading “Risks Related to Regulatory Approval and Other Legal Compliance Matters”
Removed heading “Risks Related to Our Reliance on Third Parties”
Removed heading “Risks Related to Our Intellectual Property”
Removed heading “Risks Related to Our Operations”
Removed heading “Risks Related to Ownership of Our Common Stock”
Removed heading “Risks Related to Our Business, Financial Condition and Capital Requirements”
Removed heading “We are a commercial-stage biopharmaceutical company in the initial stages of commercializing our product AVLAYAHTM, which may make it difficult for investors to evaluate our current business and likelihood of success and viability.”
Removed heading “We have incurred significant net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.”
Removed heading “Our near-term revenues are highly dependent on the successful commercialization of AVLAYAH, which received marketing approval in March 2026 from the FDA. To the extent that AVLAYAH is not commercially successful, our business, financial condition and results of operations would be materially and adversely affected and the price of our common stock would decline.”
Removed heading “Due to the ongoing commercialization of AVLAYAH and continued development of our product candidates, our capital requirements are difficult to predict and may change. We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital if or when needed on acceptable terms, or at all, could harm our business.”
Removed heading “We may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.”
Removed heading “Risks Related to the Discovery, Development, and Commercialization of Our Product and Product Candidates”
Removed heading “Our estimated market opportunities are subject to numerous uncertainties and may prove to be inaccurate. If we have overestimated the size of our market opportunities, our future growth may be limited.”
Removed heading “We may encounter substantial delays in our clinical trials or difficulties enrolling patients, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.”
Removed heading “We may be unable to obtain regulatory approval for an expansion of our product labels or approval of our product candidates under applicable regulatory requirements. The denial or delay of any such approval would prevent or delay commercialization of additional indications of our product candidates and adversely impact our business.”
Removed heading “Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of AVLAYAH or our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.”
Removed heading “Interim, topline, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.”
Removed heading “We face significant competition in an environment of rapid technological and scientific change, and our operating results may suffer if we fail to compete effectively.”
Removed heading “We may fail to successfully manufacture our product candidates, operate our own manufacturing facility, or obtain regulatory approval to utilize or commercialize from our manufacturing facility, which could adversely affect our clinical trials and the commercial viability of our product candidates.”
Removed heading “AVLAYAH and our other product candidates may not achieve adequate market acceptance among physicians, healthcare professionals, patients or their families, healthcare payors and others in the medical community necessary for commercial success.”
Removed heading “AVLAYAH and any other product candidates for which we receive approval may become subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives, which would harm our business.”
Removed heading “Our biologic, or large molecule, product candidates for which we intend to seek approval may face competition sooner than anticipated.”
Removed heading “If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.”
Removed heading “If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.”
Removed heading “Risks Related to Regulatory Approval and Other Legal Compliance Matters”
Removed heading “The regulatory approval processes of the FDA, EMA, and comparable foreign regulatory authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for additional product candidates, we will be unable to generate sufficient product revenue and our business will be substantially harmed.”
Removed heading “We currently and may in the future conduct clinical trials for our product candidates outside the United States, and the FDA, EMA, and applicable foreign regulatory authorities may not accept data from such trials.”
Removed heading “A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.”
Removed heading “Even if we obtain regulatory approval for a product candidate, our products will remain subject to extensive regulatory scrutiny.”
Removed heading “To the extent we seek orphan drug designation for any of our product candidates, we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause our revenue, if any, to be reduced.”
Removed heading “Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.”
Removed heading “If we or our employees, independent contractors, consultants, commercial partners, and vendors fail to comply with healthcare laws or regulatory requirements, we could face substantial penalties and our business, operations, and financial conditions could be adversely affected.”
Removed heading “Our business is subject to complex and evolving U.S. and foreign laws and regulations, information security policies, and contractual obligations relating to privacy and data protection and security, including the use, processing, and cross-border transfer of personal information. These laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, or monetary penalties, and otherwise may harm our business.”
Removed heading “If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.”
Removed heading “Our business activities may be subject to the Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations.”
Removed heading “Inadequate funding for the FDA, USPTO, SEC, and other government agencies could hinder or result in the suspension of their operations, which could negatively impact our business.”
Removed heading “Risks Related to Our Reliance on Third Parties”
Removed heading “We depend on collaborations with third parties for the research, development, and commercialization of certain product candidates. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates.”
Removed heading “We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research, or testing.”
Removed heading “Our reliance on third parties for the manufacture of the majority of the materials for our research programs, preclinical studies, and clinical trials may increase the risk that we will not have sufficient quantities of such materials, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.”
Removed heading “We depend on third-party suppliers for key raw materials used in our manufacturing processes, and the loss of these third-party suppliers or their inability to supply us with adequate raw materials could harm our business.”
Removed heading “Risks Related to Our Intellectual Property”
Removed heading “If we are unable to obtain and maintain patent protection for any product candidates we develop or for our TV platform, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected.”
Removed heading “If any of our owned or in-licensed patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively.”
Removed heading “If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and product candidates would be adversely affected.”
Removed heading “Our rights to develop and commercialize our TV platform and product candidates are subject, in part, to the terms and conditions of licenses granted to us by others or licenses granted by us to others.”
Removed heading “If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.”
Removed heading “We may not be able to protect our intellectual property and proprietary rights throughout the world.”
Removed heading “Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.”
Removed heading “Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.”
Removed heading “Issued patents covering our TV platform, product candidates and other technologies could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad.”
Removed heading “Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.”
Removed heading “We may be subject to claims challenging the inventorship of our patents and other intellectual property.”
Removed heading “If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.”
Removed heading “We may not be successful in obtaining, through acquisitions, in-licenses or otherwise, necessary rights to our TV platform, product candidates or other technologies.”
Removed heading “We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.”
Removed heading “Third-party claims of intellectual property infringement, misappropriation, or other violation against us, our licensors, or our collaborators may prevent or delay the development and commercialization of our TV platform, product candidates, and other technologies.”
Removed heading “We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming, and unsuccessful.”
Removed heading “If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.”
Removed heading “Risks Related to Our Operations”
Removed heading “We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.”
Removed heading “We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.”
Removed heading “We have engaged in and may in the future engage in acquisitions or strategic partnerships, which may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.”
Removed heading “Our internal computer systems, or those used by our third-party research institution collaborators, CROs, or other contractors or consultants, may fail or suffer other breakdowns, cyberattacks, or information security breaches or incidents that could compromise the confidentiality, integrity, and availability of such systems and data, expose us to liability, and affect our reputation.”
Removed heading “Business disruptions, including as a result of geopolitical events and global pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.”
Removed heading “Our business is subject to economic, political, regulatory, and other risks associated with international operations.”
Removed heading “Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.”
Removed heading “Risks Related to Ownership of Our Common Stock”
Removed heading “The market price of our common stock has been and may continue to be volatile, which could result in substantial losses for investors.”
Removed heading “If securities analysts publish negative evaluations of our stock, or if they do not publish research or reports about our business, the price of our stock and trading volume could decline.”
Removed heading “Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could cause the market price of our common stock to decline significantly, even if our business is doing well.”
Removed heading “Raising additional capital may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates.”
Removed heading “Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.”
Removed heading “If we are unable to maintain effective internal controls, our business, financial position and results of operations and growth prospects could be adversely affected.”
Removed heading “We do not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment.”
Removed heading “Delaware law and provisions in our charter documents might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.”
Removed heading “Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.”
Largest changes
“Third-party manufacturers may not be able to comply with U.S. export control regulations, cGMP regulations, or similar regulatory requirements outside the United States. …”see in full comparison
“We are increasing our use of artificial intelligence (AI) systems to enhance productivity and efficiency; however, the use of AI presents operational, legal, regulatory, cybersecurity, and reputational risks. Many AI systems generate probabilistic outputs based on patterns in training data rather than deterministic rules, and they may produce results that are inaccurate, incomplete, misleading, biased, or not explainable, including “hallucinations,” and their performance may vary based on inputs, updates, or changes in underlying data. …”see in full comparison
“Further, various states, such as California, Massachusetts, and Washington have implemented privacy laws and regulations that impose restrictive requirements regulating the use and disclosure of health information and other personal information. Where state laws are more protective than HIPAA, we must comply with the stricter provisions. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused. …”see in full comparison
“In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably. …”see in full comparison
“Our internal computer systems, or those used by our third-party research institution collaborators, CROs, or other contractors or consultants, may fail or suffer other breakdowns, cyberattacks, or information security breaches or incidents that could compromise the confidentiality, integrity, and availability of such systems and data, expose us to liability, and affect our reputation.”see in full comparison
“If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.”see in full comparison
Full comparison: every changed paragraph (474)
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, as updated and supplemented by Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the SEC on May 7, 2026, which are incorporated herein by reference. There have been no material changes to the risk factors previously disclosed in such filings.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this Quarterly Report on Form 10-Q, including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our common stock.
Risk Factor Summary
This summary of risks provides an overview of the principal risks we are exposed to. These risks are more fully described below.
Risks Related to Our Business, Financial Condition and Capital Requirements
•We are a commercial-stage biopharmaceutical company in the initial stages of commercializing our product AVLAYAH, which may make it difficult for investors to evaluate our business and prospects.
•We have incurred significant net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.
•To the extent that AVLAYAH is not commercially successful, our business, financial condition and results of operations would be materially and adversely affected and the price of our common stock would decline.
•We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital if or when needed on acceptable terms, or at all, could harm our business.
•We may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Risks Related to the Discovery, Development and Commercialization of Our Product and Product Candidates
•We are heavily dependent on the successful development of our TV platform and the programs currently in our pipeline. If we are unable to successfully and timely commercialize AVLAYAH or our other product candidates, our business could be harmed.
•Our estimated market opportunities are subject to numerous uncertainties and may prove to be inaccurate. If we have overestimated the size of our market opportunities, our future growth may be limited.
•We may encounter substantial delays in our clinical trials or difficulties enrolling patients, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.
•Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of AVLAYAH or our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.
•Interim, topline, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.
•We face significant competition in an environment of rapid technological and scientific change, and our operating results may suffer if we fail to compete effectively.
•We may fail to successfully manufacture our product candidates, operate our own manufacturing facility, or obtain regulatory approval to utilize or commercialize from our manufacturing facility.
•AVLAYAH and our other product candidates may not achieve adequate market acceptance necessary for commercial success.
•AVLAYAH and any other product candidates for which we receive approval may become subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives.
•Our biologic, or large molecule, product candidates for which we intend to seek approval may face competition sooner than anticipated.
•If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.
•If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.
Risks Related to Regulatory Approval and Other Legal Compliance Matters
•The regulatory approval processes of the FDA, European Medicines Agency ("EMA") and comparable foreign regulatory authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue.
•We currently conduct clinical trials outside the United States, and the FDA, EMA and applicable foreign regulatory authorities may not accept data from such trials.
•A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.
•Even if we obtain regulatory approval for a product candidate, our products will remain subject to extensive regulatory scrutiny.
•To the extent we seek orphan drug designation for any of our product candidates, we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status.
•Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.
•If we or our employees, contractors, partners, and vendors fail to comply with healthcare laws or regulatory requirements, we could face substantial penalties and our business could be adversely affected.
•Our business is subject to complex and evolving U.S. and foreign laws and regulations, information security policies, and contractual obligations relating to privacy, data protection, and data security.
•If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs.
•Our business activities may be subject to the Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations.
•Inadequate funding for the FDA, USPTO, SEC, and other government agencies could hinder or result in the suspension of their operations, which could negatively impact our business.
Risks Related to Our Reliance on Third Parties
•We depend on collaborations with third parties for the research, development and commercialization of certain product candidates. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates.
•We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily.
•Our reliance on third parties for the manufacture of the significant majority of the materials for our research programs, preclinical studies, and clinical trials may increase the risk that we will not have sufficient quantities of such materials or product candidates.
•We depend on third-party suppliers for key raw materials used in our manufacturing, and the loss of these suppliers or their inability to supply us with adequate raw materials could harm our business.
Risks Related to Our Intellectual Property
•If we are unable to obtain and maintain patent protection for our product candidates or our TV technology, our competitors could develop and commercialize products or technology similar or identical to ours, and adversely affect our ability to commercialize any product candidates.
•If any of our owned or in-licensed patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively.
•If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and product candidates would be adversely affected.
•Our rights to develop and commercialize our TV technology and product candidates are subject, in part, to the terms of licenses granted to us by others or licenses granted by us to others.
•If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
•We may not be able to protect our intellectual property and proprietary rights throughout the world.
•Our patent protection could be reduced or eliminated if we are unable to comply with requirements imposed by government patent agencies.
•Changes in U.S. patent law could impair our ability to protect our products.
•Issued patents covering our TV technology, product candidates and other technologies could be found invalid or unenforceable if challenged.
•Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
•We may be subject to claims challenging the inventorship of our intellectual property.
•If we are unable to protect the confidentiality of our trade secrets, our business would be harmed.
•We may not be successful in obtaining, through acquisitions, in-licenses, or otherwise, necessary rights to our TV platform, product candidates or other technologies.
•We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers.
•Third-party intellectual property claims against us, our licensors or our collaborators may prevent or delay the development of our TV platform, product candidates and other technologies.
•We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming, and unsuccessful.
•If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Risks Related to Our Operations
•If we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Management's Discussion & Analysis (MD&A)
New heading “•the commercial success of AVLAYAH and any other products for which we obtain marketing approval;”
New heading “Commercial Product: AVLAYAHTM”
New heading “Product Revenue”
New heading “Cost of Goods Sold”
New heading “Intangible Asset Amortization”
New heading “Product revenue, net”
New heading “Cost of goods sold”
New heading “Research and development expenses”
New heading “Selling general and administrative expenses”
New heading “Intangible Asset Amortization”
New heading “Interest and other income, net”
Removed heading “•our ability to successfully market, manufacture, and commercialize AVLAYAH and any other products for which we obtain marketing approval;”
Largest changes
“•our ability to successfully market, manufacture, and commercialize AVLAYAH and any other products for which we obtain marketing approval;”see in full comparison
“•the commercial success of AVLAYAH and any other products for which we obtain marketing approval;”see in full comparison
Full comparison: every changed paragraph (95)
•the commercial success of AVLAYAH and any other products for which we obtain marketing approval;
•our ability to successfully market, manufacture, and commercialize AVLAYAH and any other products for which we obtain marketing approval;
Commercial Product: AVLAYAHTM
We currently have one approved product. Our commercial product, AVLAYAHTM (tividenofusp alfa-eknm) received accelerated approval from the U.S. Food and Drug Administration ("FDA") approval on March 24, 2026 and is approved for the treatment of neurologic manifestations in patients with Hunter syndrome or mucopolysaccharidoses II (MPS II) when initiated in presymptomatic or symptomatic pediatric patients weighing at least 5 kg prior to advanced neurologic impairment. ContinuedAVLAYAH's accelerated approval forwas thisbased indicationon maya besurrogate endpoint (reduction in CSF HS), and continued approval is contingent upon verificationconfirmation of clinical benefit in athe confirmatoryongoing trial.global WePhase began2/3 commercialCOMPASS distributiontrial, ofas AVLAYAHfurther indescribed Aprilunder 2026."Clinical-Stage Programs" below.
We began commercial distribution of AVLAYAH in April 2026. Since launch, our commercial activities have focused on executing our commercialization strategy, including supporting product availability through market access, specialty distribution and patient support services.
The approval of AVLAYAH is based on the reduction of a key disease biomarker, cerebrospinal fluid heparan sulfate (CSF HS), as a surrogate endpoint reasonably likely to predict clinical benefit in the treatment of neurologic manifestations of Hunter syndrome. In a Phase 1/2 clinical trial, AVLAYAH demonstrated a 91% (95% CI: 89%, 92%) reduction in CSF HS levels from baseline by week 24 of treatment. At week 24, 93% (41 of 44) of AVLAYAH-treated patients had CSF HS levels within the range of individuals without Hunter syndrome. The most common adverse reaction in the study was infusion-related reactions. The ongoing global Phase 2/3 COMPASS study is designed to generate confirmatory evidence and support global regulatory submissions for AVLAYAH. This study includes young adults living with Hunter syndrome.
In connection with the approval of AVLAYAH, the FDA granted us a Rare Pediatric Disease Priority Review Voucher ("PRV"). ThisIn voucherJune may2026, bewe usedentered into an agreement to obtainsell prioritythe reviewPRV for agross futureproceeds marketingof application$195.0 ormillion. transferredThe totransaction anotherclosed sponsor.and proceeds were received in July 2026.
OurClinical-Stage clinical-stage programs are as follows:Programs
•Tividenofusp alfa-eknm (ETV:IDS), is an ETV-enabled enzyme replacement therapy designed to systemically deliver iduronate 2-sulfatase (IDS) throughout the body, including the brain for the treatment of neurologic manifestations of Hunter syndrome (MPS II). The ongoing global Phase 2/3 COMPASS study is intended to support generation of confirmatory evidence, expansion of the U.S. label to adult patients and future global regulatory submissions;
•DNL126Zafinofusp alfa (DNL126; ETV:SGSH), composedis ofan investigational ETV-enabled enzyme replacement therapy designed to systemically deliver N-sulfoglucosamine sulfohydrolase ("SGSH") fused to TV, is designed to deliver SGSH into cells and tissues throughout the body, including the brain, by crossingfor the BBB, with the goaltreatment of treating MPS IIIA (Sanfilippo syndrome type A (MPS IIIA);
•DNL593 (PTV:PGRN) is an investigational Protein TransportVehicle (PTV)-enabled protein replacement therapy designed to systemically deliver progranulin (PGRN) across the blood-brain barrier for the treatment of granulin (GRN)-related frontotemporal dementia (FTD-GRN);
•DNL952 (ETV:GAA) is an investigational ETV-enabled enzyme replacement therapy designed to systemically deliver acid alpha-glucosidase (GAA) to muscle tissue and the brain by crossing the blood-brain barrier for the treatment of Pompe disease;
•DNL628 (OTV:MAPT) is an investigational Oligonucleotide TransportVehicle (OTV)-enabled antisense oligonucleotide designed for systemic delivery across the blood-brain barrier to reduce tau by targeting the MAPT gene for the treatment of Alzheimer's disease ("AD");
•DNL921 (ATV:Abeta) is an investigational Antibody TransportVehicle (ATV)-enabled antibody designed for systemic delivery across the blood-brain barrier to target amyloid plaques for the treatment of Alzheimer's disease. In the first half of 2026, we submitted a clinical trial application ("CTA") to initiate a Phase 1/1b study of DNL921;
•DNL151 is an investigational small molecule inhibitor of leucine-rich repeat kinase 2 (LRRK2) for the treatment of Parkinson's disease. Denali conducts the Phase 2a BEACON study evaluating DNL151 in individuals with Parkinson's disease who are confirmed by genetic testing to be carriers of a pathogenic LRRK2 variant; and
•DNL593 (PTV:PGRN), composed of PGRN fused to TV, is designed to restore PGRN levels in the brain with the goal of treating frontotemporal dementia ("FTD") associated with a mutation in the granulin ("GRN") gene.
•DNL952 (ETV:GAA), composed of acid alpha-glucosidase ("GAA") fused to TV and engineered to replace GAA in all tissues, with the goal of treating Pompe disease;
•DNL628 (OTV:MAPT), composed of an antisense oligonucleotide ("ASO") against MAPT fused to TV, is designed to suppress gene expression of MAPT encoding the tau protein with the goal of treating Alzheimer's disease ("AD");
•BIIB122/DNL151, a small molecule LRRK2 inhibitor, is being developed in collaboration with Biogen for the potential treatment of Parkinson's disease ("PD"); and
•Eclitasertib (SAR443122/DNL758), a peripheral and non-central nervous system ("CNS") penetrant small molecule RIPK1 inhibitor, is being developed by Sanofi to address peripheral inflammatory diseases such as ulcerative colitis ("UC");.
______________________________________________________________________________
*Regulatory application to begin clinical testing has been approved by Health Authorities.
______________________________________________________________________________ Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our TV platform, assembling our core capabilities in understanding key neurodegenerative and lysosomal storage disease pathways, operationalizing clinical trials, building manufacturing capabilities and establishing commercial capabilities.
•In January 2026, we announced that the FDA has lifted the clinical hold on the IND application for DNL952,DNL952 (ETV:GAA), and we are proceeding withenrolling the Phase 1 study;
•In January 2026, we announced that the Clinical Trial Application ("CTA") for DNL628 (OTV:MAPT) to initiate a Phase 1b study in Alzheimer’s disease was approved. In March 2026, the first patient was dosed in the Phase 1b study of DNL628, which is an investigational therapy enabled by Denali’s Oligonucleotide TransportVehicle™ (OTV)DNL628;
•In February 2026, we presented preliminary open-label Phase 1/2 data for DNL126our zafinofusp alfa study at the 2026 WORLD SymposiumWORLDSymposium demonstrating that treatment with zafinofusp alfa resulted in substantial reductions in both cerebrospinal fluid (CSF) HS,and urine heparan sulfate (HS), including normalization fromof baseline,CSF and in urine HSHS, with a safety profile generally consistent with otherestablished enzyme replacement therapies. The Phase 1/2 study remains on track for completion in 2026, supporting a potential accelerated approval pathway and commercial launch by the second half of 2027, with planning for a global Phase 3 confirmatory study underwaytherapies;
•In March 2026, we received $200.0 million in gross proceeds in connection with the closing of the synthetic royalty funding agreement with Royalty Pharma Investments 2023 ICAV (“Royalty Pharma”); and
•In April 2026, we announced we received notification from Takeda of its decision to terminate the collaboration agreement to co-develop and co-commercialize DNL593 (PTV:PGRN) for Frontotemporal Dementia (FTD-GRN).FTD-GRN. The termination will becomebecame effective 60in daysJune following the notice date,2026, at which time all rights in the DNL593 program will revertreverted to Denali. Takeda’s decision to terminate the collaboration agreement for DNL593 was driven by strategic considerations and not related to efficacy or safety data. DataWe fromcontinue to conduct the ongoing Phase 1/2 study of DNL593,DNL593 includingfor biomarker results, are expected by the end of 2026.FTD-GRN;
•In May 2026, we and Biogen announced topline results from the Phase 2b LUMA study of BIIB122/DNL151 in individuals with early-stage Parkinson's disease. The LUMA study did not meet its primary or secondary endpoints, and we and Biogen decided to discontinue further development of BIIB122/DNL151 in idiopathic Parkinson's disease. We continue to independently conduct the Phase 2a BEACON study evaluating DNL151 in individuals with Parkinson's disease who carry a pathogenic LRRK2 variant;
•In June 2026, we entered into a definitive agreement to sell our Rare Pediatric Disease Priority Review Voucher for gross proceeds of $195.0 million. The transaction closed and proceeds were received in July 2026; and
•In the first half of 2026, we submitted a clinical trial application to initiate a Phase 1/1b study of DNL921 (ATV:Abeta) in healthy volunteers and participants with Alzheimer's disease, and we are conducting the study;
Until March 2026, we had no clinical products approved for commercial sale and thus had not generated any revenue from product candidates that are or were under development. Subsequent to receiving FDA approval for AVLAYAH, we began commercial distribution in April 2026. We expect it to take time to generate sufficient revenue to offset our expenses, and we can provide no assurance as to when, if ever, this will occur. Through MarchJune 31,30, 2026, we have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock and pre-funded warrants to purchase shares of our common stock in public offerings and private placements, and payments received from our collaboration, synthetic royalty and other funding agreements with Takeda, Sanofi, Biogen, Royalty Pharma and other third parties.
We have incurred significant operating losses to date and expect to continue to incur operating losses for the foreseeable future. We had net losses of $128.4$127.6 million and $133.0$256.0 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and $124.1 million and $257.1 for the three and six months ended June 30, 2025, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $2.18$2.31 billion. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. We expect to continue to incur significant expenses and operating losses as we advance our approved product AVLAYAH to full US and broader global approval; advance our current clinical stage programs through healthy volunteer and patient trials; broaden and improve our TV platform; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.
Product Revenue
Following FDA approval of AVLAYAH in March 2026, we commenced commercial distribution in the United States during the second quarter of 2026. Product revenue consists of sales of AVLAYAH, our only commercial product, and is recognized at the net selling price. Product revenue is reduced by estimates of variable consideration, including distributor service fees, government rebates, product returns and other fees and incentives. Product revenue may fluctuate based on patient demand, reimbursement, payer mix and distributor ordering patterns.
Cost of Goods Sold
Cost of goods sold consists primarily of direct and indirect costs related to the manufacture of AVLAYAH for commercial distribution, including third-party manufacturing costs, raw material and component costs, packaging services, freight, and storage costs.
It is challenging to predict the nature, timing and estimated long-range costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. This is made more challenging by events outside of our control, such as increased geopolitical uncertainty. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of AVLAYAH or any of our other product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:
Selling, General and Administrative
GeneralSelling, general and administrative expenses include personnel related expenses, such as salaries, benefits, travel and stock-based compensation expense, expenses for outside professional services, pre-commercializationcommercialization activities, and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees, including those associated with our commercial organization. Allocated expenses consist of rent, depreciation and other expenses related to our office and research and development facility not otherwise included in research and development expenses. We have increased our administrative headcount to support the commercialization of AVLAYAH and may continue to increase headcount to support our commercial and research and development activities, which we expect will increase selling, general and administrative expenses.
Intangible Asset Amortization
Intangible asset amortization consists of amortization of our intangible asset, which represents the developed technology recognized in connection with the FDA approval of AVLAYAH in March 2026. We amortize this asset on a straight-line basis over its estimated useful life. We began recognizing intangible asset amortization in the second quarter of 2026 and did not record any such expense prior to that period.
Interest and other income, net, consists primarily of interest income, investment income earned on our cash, cash equivalents and marketable securities, and sublease income, as well as an offset for non-cash interest expense related to the revenue participation right liability and interest expense on our finance lease liability.
Comparison of the three and six months ended MarchJune 31,30, 2026 and 2025
__________________________________________________
Product revenue, net
Product revenue was $3.6 million for the three and six months ended June 30, 2026, compared to no product revenue in the prior-year periods. The increase was due to the FDA approval of AVLAYAH in March 2026 and commencement of commercial sales in the United States during the second quarter of 2026. Product revenue reflects sales of AVLAYAH, net of estimates for variable consideration, including distributor service fees, government rebates, product returns and other fees and incentives.
Cost of goods sold
Cost of goods sold was $0.1 million for the three and six months ended June 30, 2026, compared to no cost of goods sold in the prior-year periods. Because manufacturing costs incurred prior to FDA approval of AVLAYAH were expensed to research and development, cost of goods sold during the initial commercialization period reflects a lower average per-unit cost of materials as previously expensed inventory is sold.
Research and development expenses
Research and development expenses. Research and development expenses were $103.8$97.0 million and $116.2$102.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $200.9 million and $218.9 million for the six months ended June 30, 2026 and 2025, respectively.
__________________________________________________ (1)Personnel related expenses include stock-based compensation expense of $13.6$13.5 million and $15.1$15.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, reflecting a decrease of $1.5$1.7 million.
The decrease in research and development expenses of approximately $12.4$5.7 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, was primarily attributable to the following:
•a decrease of $3.5$8.4 million in TV program externalother research and development expenses is driven by decreasedlower manufacturingcost costsfor relatedBIIB122/DNL151 toand our tividenofusp alfa program,DNL343; partially offset by increased spendingpurchasing of raw materials at our large molecule manufacturing facility in clinicalSalt programsLake includingCity, DNL126, and multiple preclinical programsUtah;
•an increase of $2.8 million in TV programs external research and development expenses is driven by manufacturing expenses and clinical expenses for zafinofusp alfa; partially offset by lower manufacturing expenses for DNL628, and lower clinical expense for tividenofusp alfa.
(1)Personnel related expenses include stock-based compensation expense of $27.0 million and $30.3 million for the six months ended June 30, 2026 and 2025 respectively, reflecting a decrease of $3.3 million.
The decrease in research and development expenses of approximately $18.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, was primarily attributable to the following:
•a decrease of $14.3 million in other research and development expenses is driven by lower clinical expenses for BIIB122/DNL151 and DNL343; partially offset by increased purchasing of raw material at our large molecule manufacturing facility in Salt Lake City, Utah;
•a decrease of $5.2 million in external TV research and development expenses driven by lower external manufacturing expense partially offset by higher clinical expenses for zafinofusp alfa, DNL952 and DNL628, and higher pre-clinical expenses;
•a decrease of $10.4 million in other research and development expenses, comprising external costs related to small molecule programs, lab and internal manufacturing consumables, general facilities costs, and consultant costs. The decrease was primarily due to the wind-down of activities related to our DNL343 program subsequent to the first quarter of 2025, and due to lower consultant costs related to preparation of the tividenofusp alfa regulatory filing in the prior-year period, partially offset by increased manufacturing consumables for our large molecule manufacturing facility in Salt Lake City, Utah.
DNLI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 4 filings (3 insiders, 4 trade dates, 18,718 shares, about $435.3K; 2 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -18,718 (purchases minus sales); net value about -$435.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-04 | Chin Peter Scott |
Open-market sale | 1,654 | $22.29 | $36.9K |
| 2026-09-02 | Thornberry Nancy |
Open-market sale |
10,824 | $22.85 | $247.3K |
| 2026-09-02 | Thornberry Nancy |
Open-market sale |
615 | $23.74 | $14.6K |
| 2026-09-01 | Schuth Alexander O. |
Open-market sale |
2,768 | $23.44 | $64.9K |
| 2026-08-12 | Watts Ryan J. |
Gift | 32,220 | — | — |
| 2026-08-11 | Schuth Alexander O. |
Open-market sale | 2,857 | $25.07 | $71.6K |
| 2026-06-03 | Flatley Jay T |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Klein Peter S |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Krognes Steve E. |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Schenkein David P |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Thornberry Nancy |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Van Hauwermeiren Timothy |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Cook Jennifer E. |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Baker Brothers Life Sciences Lp |
Grant/award | 6,408 | — | — |
| 2026-06-03 | Baker Brothers Life Sciences Lp |
Grant/award | 6,408 | — | — |
Well-known investors holding DNLI (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Baillie Gifford | 2026-06-30 | 11,960,230 | $307.6M | 0.28% | Reduced 1% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,125,748 | $29.0M | 0.02% | Reduced 11% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 388,469 | $10.0M | 0.0% | Added 279% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 66,971 | $1.7M | 0.0% | Reduced 63% |
| Polen Capital Management | 2026-06-30 | 65,301 | $1.3M | — | Sold out |