Denali Therapeutics Inc. [DNLI] Filings

10-Q 1 dnli-20240630.htm 10-Q dnli-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38311

Denali Therapeutics Inc.

(Exact name of registrant as specified in its charter)


Delaware						46-3872213
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

161 Oyster Point Blvd. South San Francisco, CA, 94080
(Address of principal executive offices and zip code)

(650) 866-8548

(Registrant’s telephone number, including area code)

_______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	DNLI	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock as of July 25, 2024 was 143,165,264. This number does not include 26,046,065 shares of common stock issuable upon the exercise of pre-funded warrants outstanding as of July 25, 2024 (which are immediately exercisable at an exercise price of $0.01 per share of common stock, subject to beneficial ownership limitations) sold in the registrant’s private placement in February 2024. See Note 7 — Common Stock to the registrant’s condensed consolidated financial statements.

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	PART I. FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105
Item 3.	Defaults Upon Senior Securities	106
Item 4.	Mine Safety Disclosures	106
Item 5.	Other Information	106
Item 6.	Exhibits	107
	Signatures	108

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Denali Therapeutics Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	74,679	$	127,106
Short-term marketable securities	821,365		907,405
Prepaid expenses and other current assets	32,339		29,626
Total current assets	928,383		1,064,137
Long-term marketable securities	450,994		—
Property and equipment, net	48,077		45,589
Operating lease right-of-use asset	24,533		26,048
Other non-current assets	50,578		18,143
Total assets	$	1,502,565	$	1,153,917
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	13,936	$	9,483
Accrued clinical and other research & development costs	19,915		19,035
Accrued manufacturing costs	7,111		15,462
Other accrued costs and current liabilities	6,013		5,152
Accrued compensation	9,555		21,590
Operating lease liability, current	7,771		7,260
Deferred research funding liability	10,232		—

Total current liabilities	74,533		77,982

Operating lease liability, less current portion	40,981		44,981

Total liabilities	115,514		122,963
Commitments and contingencies (Note 6)
Stockholders' equity:
Convertible preferred stock, $0.01 par value; 40,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023	—		—
Common stock, $0.01 par value; 400,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 143,123,582 shares and 138,385,498 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	1,757		1,711
Additional paid-in capital	2,704,992		2,144,811
Accumulated other comprehensive income (loss)	(2,659)		643
Accumulated deficit	(1,317,039)		(1,116,211)
Total stockholders' equity	1,387,051		1,030,954
Total liabilities and stockholders’ equity	$	1,502,565	$	1,153,917

See accompanying notes to unaudited condensed consolidated financial statements.

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Denali Therapeutics Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Collaboration revenue:
Collaboration revenue from customers(1)	$	—	$	294,123	$	—	$	329,264

Total collaboration revenue	—		294,123		—		329,264
Operating expenses:
Research and development(2)	91,399		97,520		198,415		226,336
General and administrative	25,194		26,120		50,430		53,260
Total operating expenses	116,593		123,640		248,845		279,596
Gain from divestiture of small molecule programs	—		—		14,537		—
Income (loss) from operations	(116,593)		170,483		(234,308)		49,668
Interest and other income, net	17,567		12,900		33,480		23,934


Net income (loss)	(99,026)		183,383		(200,828)		73,602
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable securities, net of tax	(1,363)		1,076		(3,302)		5,445
Comprehensive income (loss)	$	(100,389)	$	184,459	$	(204,130)	$	79,047

Net income (loss) per share:
Net income (loss) per share, basic	$	(0.59)	$	1.34	$	(1.26)	$	0.54
Net income (loss) per share, diluted	$	(0.59)	$	1.30	$	(1.26)	$	0.52

Weighted-average shares used in calculating:
Weighted average number of shares outstanding, basic	168,831,329		137,047,227		159,117,759		136,787,321
Weighted average number of shares outstanding, diluted	168,831,329		140,930,625		159,117,759		140,550,226

__________________________________________________

(1)Includes related-party collaboration revenue from customers of $294.1 million and $294.3 million for the three and six months ended June 30, 2023, respectively.

(2)Includes expenses for cost sharing payments due to a related party of $7.0 million and $11.1 million for the three and six months ended June 30, 2023, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

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Denali Therapeutics Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)


	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
		Shares									Amount
Balance at December 31, 2023		138,385,498	$	1,711	$	2,144,811	$	643	$	(1,116,211)		$	1,030,954
Issuance of common stock and pre-funded warrants, net of issuance costs of $480K		3,244,689	32		499,221		—		—			499,253
Issuances under equity incentive plans		657,522	7		7,771		—		—			7,778
Vesting of restricted stock units		835,873	7		(7)		—		—			—
Stock-based compensation		—	—		53,196		—		—			53,196
Net loss		—	—		—		—		(200,828)			(200,828)
Other comprehensive loss		—	—		—		(3,302)		—			(3,302)
Balance at June 30, 2024		143,123,582	$	1,757	$	2,704,992	$	(2,659)	$	(1,317,039)		$	1,387,051

Balance at March 31, 2024		142,512,856	$	1,751	$	2,673,033	$	(1,296)	$	(1,218,013)		$	1,455,475
Issuances under equity incentive plans		527,308	5		6,750		—		—			6,755
Vesting of restricted stock units		83,418	1		(1)		—		—			—
Stock-based compensation		—	—		25,210		—		—			25,210
Net loss		—	—		—		—		(99,026)			(99,026)
Other comprehensive loss		—	—		—		(1,363)		—			(1,363)
Balance at June 30, 2024		143,123,582	$	1,757	$	2,704,992	$	(2,659)	$	(1,317,039)		$	1,387,051

Balance at December 31, 2022		135,965,918	$	1,686	$	2,018,617	$	(6,886)	$	(970,987)		$	1,042,430
Issuances under equity incentive plans		730,887	7		10,616		—		—			10,623
Vesting of restricted stock units		665,883	7		(7)		—		—			—
Stock-based compensation		—	—		54,725		—		—			54,725
Net income		—	—		—		—		73,602			73,602
Other comprehensive income		—	—		—		5,445		—			5,445
Balance at June 30, 2023		137,362,688	$	1,700	$	2,083,951	$	(1,441)	$	(897,385)		$	1,186,825

Balance at March 31, 2023		136,741,627	$	1,694	$	2,048,297	$	(2,517)	$	(1,080,768)		$	966,706
Issuances under equity incentive plans		526,579	5		9,014		—		—			9,019
Vesting of restricted stock units		94,482	1		(1)		—		—			—
Stock-based compensation		—	—		26,641		—		—			26,641
Net income		—	—		—		—		183,383			183,383
Other comprehensive income		—	—		—		1,076		—			1,076
Balance at June 30, 2023		137,362,688	$	1,700	$	2,083,951	$	(1,441)	$	(897,385)		$	1,186,825

See accompanying notes to unaudited condensed consolidated financial statements.

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Denali Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024		2023
Operating activities
Net income (loss)	$	(200,828)	$	73,602
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,104		12,332
Stock–based compensation expense	52,940		54,654
Net accretion of discounts on marketable securities	(20,574)		(19,386)
Non-cash adjustment to operating lease expense	(1,976)		(1,805)
Non-cash gain from divestiture of small molecule programs	(14,537)		—
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(20,336)		1,823
Accounts payable	4,523		8,472
Accruals and other current liabilities	(8,156)		(12,399)

Related-party contract liability	—		(289,264)


Net cash used in operating activities	(204,840)		(171,971)
Investing activities
Purchases of marketable securities	(955,802)		(901,841)
Purchases of property and equipment	(6,936)		(8,636)
Maturities and sales of marketable securities	608,120		985,829

Net cash (used in) provided by investing activities	(354,618)		75,352
Financing activities

Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs of $480K	499,253		—


Proceeds from exercise of awards under equity incentive plans	7,778		10,623
Net cash provided by financing activities	507,031		10,623
Net decrease in cash, cash equivalents and restricted cash	(52,427)		(85,996)
Cash, cash equivalents and restricted cash at beginning of period	128,681		219,544
Cash, cash equivalents and restricted cash at end of period	$	76,254	$	133,548
Supplemental disclosures of cash flow information
Cash paid during the period for income taxes	$	—	$	4
Equity consideration received in the divestiture of small molecule programs (Note 10)	$	15,000	$	—
Property and equipment purchases accrued but not yet paid	$	228	$	575

See accompanying notes to unaudited condensed consolidated financial statements.

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Denali Therapeutics Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Significant Accounting Policies

Organization and Description of Business

Denali Therapeutics Inc. ("Denali" or the “Company”) is a biopharmaceutical company, incorporated in Delaware, that discovers and develops therapeutics to defeat neurodegenerative diseases and lysosomal storage diseases. The Company is headquartered in South San Francisco, California.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission ("SEC") Regulation S-X for interim financial information.

These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024 (the "2023 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from the audited annual consolidated financial statements as of and for the period then ended. Certain information and footnote disclosures typically included in the Company's annual consolidated financial statements have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All such adjustments are of a normal recurring nature except for the impacts of adopting new accounting standards, if any, discussed below. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

During the six months ended June 30, 2024 there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2023 Annual Report on Form 10-K. For further information with regard to the Company’s Significant Accounting Policies, please refer to Note 1, "Significant Accounting Policies," to the Company’s Consolidated Financial Statements included in the 2023 Annual Report on Form 10-K.

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. For the Company and its subsidiaries, the functional currency has been determined to be U.S. dollars. Monetary assets and liabilities denominated in foreign currency are remeasured at period-end exchange rates, non-monetary assets and liabilities denominated in foreign currencies are remeasured at historical rates, and transactions in foreign currencies are remeasured at average exchange rates. Foreign currency gains and losses resulting from remeasurement are recognized in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. Substantially all of the Company’s cash and cash equivalents are deposited in accounts with financial institutions that management believes are of high credit quality. Such deposits have and will continue to exceed federally insured limits. The Company maintains its cash with accredited financial institutions and accordingly, such funds are subject to minimal credit risk.

The Company’s investment policy limits investments to certain types of securities issued by the U.S. government and its agencies, as well as institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and marketable securities and issuers of marketable securities to the extent recorded on the Condensed Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, the Company had no off-balance sheet concentrations of credit risk.

The Company is subject to a number of risks similar to other clinical-stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of current or future preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain regulatory and marketing approvals for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, protection of proprietary technology, the ability to make milestone, royalty or other payments due under any license or collaboration agreements, and the need to secure and maintain adequate manufacturing arrangements with third parties. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Further, the company is also subject to broad market risks and uncertainties resulting from recent events, such as bank failures or instability in the financial services sector, global pandemics, war and armed conflicts, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages.

Segments

The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources.

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Investments

Investments in equity securities may be accounted for using (i) the fair value option, if elected, (ii) fair value through earnings if fair value is readily determinable or (iii) for equity investments without readily determinable fair values, the measurement alternative to measure at cost adjusted for any impairment and observable price changes, as applicable. The election to use the measurement alternative is made for each eligible investment.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents. Cash equivalents are reported at fair value.

Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Condensed Consolidated Balance Sheets and $1.6 million of restricted cash for the letter of credit for the Company’s headquarters building lease which is included within other non-current assets in the Condensed Consolidated Balance Sheets.

Marketable Securities

The Company generally invests its excess cash in money market funds and investment grade short to intermediate-term fixed income securities. Such investments are included in cash and cash equivalents, or short-term marketable securities on the Condensed Consolidated Balance Sheets, are considered available-for-sale, and are reported at fair value with net unrealized gains and losses included as a component of stockholders’ equity.

The Company classifies investments in securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. The Company classifies investments in securities with remaining maturities of over one year as long-term investments, unless intended to fund current operations. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Realized gains and losses and declines in value determined to be due to credit losses on marketable securities, if any, are included in interest and other income, net.

The Company periodically evaluates the need for an allowance for credit losses. This evaluation includes consideration of several qualitative and quantitative factors, including whether it has plans to sell the security, whether it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis, and if the entity has the ability and intent to hold the security to maturity, and the portion of any unrealized loss that is the result of a credit loss. Factors considered in making these evaluations include quoted market prices, recent financial results and operating trends, implied values from any recent transactions or offers of investee securities, credit quality of debt instrument issuers, expected cash flows from securities, other publicly available information that may affect the value of the marketable security, duration and severity of the decline in value, and the Company's strategy and intentions for holding the marketable security.

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Accounts Receivable

Accounts receivable are included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The accounts receivable balance represents amounts receivable from the Company's collaboration partners net of an allowance for credit losses, if required.

Leases

The Company leases real estate and certain equipment for use in its operations. A determination is made as to whether an arrangement is a lease at inception. Right-of-use (“ROU”) assets and operating lease liabilities are recognized for identified operating leases in the Condensed Consolidated Balance Sheets. The changes in operating lease ROU assets and operating lease liabilities are presented net within non-cash adjustment to operating lease expense in the Condensed Consolidated Statements of Cash Flows.

ROU assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments due over the lease term, with the ROU assets adjusted for lease incentives received. When determining the present value of lease payments, the Company uses its incremental borrowing rate on the date of lease commencement, or the rate implicit in the lease, if known. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed by management to be reasonably certain at lease inception.

Leases with an initial term of twelve months or less are not recorded on the balance sheet, unless they include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease expenses on a straight-line basis over the lease term. The Company has leases with lease and non-lease components, which the Company has elected to account for as a single lease component.

Revenue Recognition

License, Option and Collaboration Revenue

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. The accounting treatment pursuant to Topic 606 is outlined below.

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The terms of license, option and collaboration agreements entered into typically include payment of one or more of the following: non-refundable, up-front license fees; option exercise fees; development, regulatory and commercial milestone payments; payments for manufacturing supply and research and development services and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenue. The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. The Company may also receive reimbursement or make payments to a collaboration partner to satisfy cost sharing requirements. These payments are accounted for pursuant to ASC 808 and are recorded as an offset or increase to research and development expenses, respectively.

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Amounts received prior to satisfying the revenue recognition criteria are recorded as contract liabilities in the Company’s Condensed Consolidated Balance Sheets. If the related performance obligation is expected to be satisfied within the next twelve months this will be classified in current liabilities. Amounts recognized as revenue prior to the Company having an unconditional right (other than a right that is conditioned only on the passage of time) to receipt are recorded as contract assets in the Company's Condensed Consolidated Balance Sheets. If the Company expects to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets. A net contract asset or liability is presented for each contract with a customer.

At contract inception, the Company assesses the goods or services promised in a contract with a customer and identifies those distinct goods and services that represent a performance obligation. A promised good or service may not be identified as a performance obligation if it is immaterial in the context of the contract with the customer, if it is not separately identifiable from other promises in the contract (either because it is not capable of being separated or because it is not separable in the context of the contract), or if the promised good or service does not provide the customer with a material right.

The Company considers the terms of the contract to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration will only be included in the transaction price when it is not considered constrained, which is when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices ("SSP"). The relative SSP for each deliverable is estimated using external sourced evidence if it is available. If external sourced evidence is not available, the Company uses its best estimate of the SSP for the deliverable.

Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when, or as, the customer obtains control of that asset, which for a service is considered to be as the services are received and used. The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the nature of the service promised to the customer.

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After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events. Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception, or to a single performance obligation as applicable. The Company accounts for the exercise of a material right as either a contract modification or as a continuation of the existing contract, as is most appropriate based on the facts and circumstances.

Management may be required to exercise considerable judgment in estimating revenue to be recognized. Judgment is required in identifying performance obligations, estimating the transaction price, estimating the SSP of identified performance obligations, which may include forecasted revenue, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success, and estimating the progress towards satisfaction of performance obligations.

Comprehensive Income (Loss)

Comprehensive income (loss) is composed of net income (loss) and certain changes in stockholders’ equity that are excluded from net income (loss), primarily unrealized gains or losses on the Company’s marketable securities.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents.

Diluted net income (loss) per share is computed based on the treasury stock method by dividing net income by the combined weighted-average number of common shares outstanding during the period and potentially dilutive common equivalent shares outstanding. However, where there is a net loss per share, no adjustment is made for potentially issuable shares since their effect would be anti-dilutive. In this case, diluted net loss per share is equal to basic net loss per share. The weighted-average common shares outstanding as of June 30, 2024 includes pre-funded warrants to purchase shares of common stock that were issued in connection with the February 2024 private placement, as discussed further in Note 7 - "Common Stock".

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this Update are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company has not early adopted this update, and is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendments in this Update are effective to be applied prospectively for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has not early adopted this update, and is currently evaluating the impact of the new standard on its income tax disclosures.

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2. Fair Value Measurements

Assets and liabilities measured at fair value at each balance sheet date are as follows (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	53,306	$	—	$	—	$	53,306


Short-term marketable securities:
U.S. government treasuries	775,814		—		—		775,814

Corporate debt securities	—		10,172		—		10,172
Commercial paper	—		35,379		—		35,379
Long-term marketable securities:
U.S. government treasuries	421,941		—		—		421,941

Corporate debt securities	—		29,053		—		29,053



Total	$	1,251,061	$	74,604	$	—	$	1,325,665


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	121,034	$	—	$	—	$	121,034


Short-term marketable securities:
U.S. government treasuries	869,172		—		—		869,172
U.S. government agency securities	—		7,086		—		7,086

Commercial paper	—		31,147		—		31,147




Total	$	990,206	$	38,233	$	—	$	1,028,439

The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.

The Company has not transferred any assets or liabilities between the fair value measurement levels for the six months ended June 30, 2024 or 2023.

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3. Marketable Securities

All marketable securities were considered available-for-sale at June 30, 2024 and December 31, 2023. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs as discussed in Note 2, "Fair Value Measurements". The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below (in thousands):


	June 30, 2024
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	776,793	$	—	$	(979)	$	775,814

Corporate debt securities(2)	10,184		—		(12)		10,172
Commercial paper	35,379		—		—		35,379
Total short-term marketable securities	822,356		—		(991)		821,365
Long-term marketable securities:
U.S. government treasuries(3)	423,194		7		(1,260)		421,941

Corporate debt securities(4)	29,117		—		(64)		29,053
Total long-term marketable securities	452,311		7		(1,324)		450,994
Total	$	1,274,667	$	7	$	(2,315)	$	1,272,359

__________________________________________________

(1)Unrealized holding losses on 26 securities with an aggregate fair value of $755.9 million.

(2)Unrealized holding losses on 2 securities with an aggregate fair value of $10.2 million.

(3)Unrealized holding losses on 11 securities with an aggregate fair value of $387.0 million.

(4)Unrealized holding losses on 5 securities with an aggregate fair value of $29.1 million.


	December 31, 2023
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries	$	868,174	$	998	$	—	$	869,172
U.S. government agency securities(1)	7,089		—		(3)		7,086

Commercial paper	31,147		—		—		31,147






Total	$	906,410	$	998	$	(3)	$	907,405

__________________________________________________

(1)Unrealized holding losses on 2 securities with an aggregate fair value of $7.1 million.

As of June 30, 2024 and December 31, 2023, some of the Company's marketable securities were in an unrealized loss position. The Company has not recognized an allowance for credit losses as of June 30, 2024 or December 31, 2023. The Company determined that it had the ability and intent to hold all marketable securities that have been in a continuous loss position until maturity or recovery. Further, a majority of these marketable securities are held in U.S. government securities, and the remainder were initially, and continue to be, held with investment grade, high credit quality institutions. All marketable securities with unrealized losses as of each balance sheet date have been in a loss position for less than twelve months or the loss is not material.

As of June 30, 2024, all of the Company’s marketable securities have an effective maturity of less than two years.

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4. Acquisition and Research Funding Collaboration Agreement

Acquisition of F-star Gamma

In August 2016, the Company entered into a License and Collaboration Agreement (“F-star Collaboration Agreement”) with F-star Gamma Limited (“F-star Gamma”), F-star Biotechnologische Forschungs-und Entwicklungsges M.B.H ("F-star GmbH") and F-star Biotechnology Limited ("F-star Ltd") (collectively, “F-star”) to leverage F-star’s modular antibody technology and the Company’s expertise in the development of therapies for neurodegenerative diseases. In May 2018, the Company exercised the pre-negotiated option agreement (the "Option Agreement") under the F-star Collaboration Agreement and entered into a Share Purchase Agreement (the “Purchase Agreement”) with the shareholders of F-star Gamma and Shareholder Representative Services LLC, pursuant to which the Company acquired all of the outstanding shares of F-star Gamma (the “Acquisition”). The details of the Acquisition are further described in Note 4, "Acquisition", to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K.

As of June 30, 2024, the Company had paid consideration of $49.8 million in the aggregate consisting of up-front, preclinical, and clinical contingent consideration, all of which was recorded as research and development expense as incurred. This amount includes a $30.0 million contingent consideration payment which was triggered and recorded as research and development expense in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program. This contingent consideration payment fully satisfies the Company's clinical contingent consideration obligations under the Purchase Agreement. There was no contingent consideration expense recognized for the three and six months ended June 30, 2024 or the three months ended June 30, 2023.

Collaboration and Development Funding Agreement

On January 29, 2024, the Company entered into a Collaboration and Development Funding Agreement with an unrelated third party, pursuant to which this third party will provide up to $75.0 million of funding and collaborate with the Company to conduct a global Phase 2a study of BIIB122/DNL151 in patients with Parkinson’s disease and confirmed pathogenic variants of LRRK2.

Pursuant to this agreement, an upfront payment of $12.5 million was received in January 2024, and a further payment of $12.5 million was received in July 2024, with the remainder to be paid upon achievement of operational milestones in the study. After the full $75.0 million in consideration has been paid, the third party will be eligible to receive low single-digit royalties from the Company on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease.

The Company determined that this arrangement is an R&D funding arrangement under ASC 730. As the third party is sharing in the risk associated with research and development activities with the Company, the development funding is recognized as an obligation to perform contractual services. Accordingly, payments received will be recorded as a liability, and recognized by the Company as a reduction to research and development expenses over the estimated Phase 2a study period as the underlying research and development costs are incurred. R&D funding under this arrangement of $2.3 million offset research and development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024. As of June 30, 2024, a liability of $10.2 million was recorded within deferred research funding liability on the Condensed Consolidated Balance Sheet.

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5. Collaboration Agreements

Biogen

In October 2020, the Company entered into a Definitive Collaboration and License Agreement (“LRRK2 Agreement”), pursuant to which it granted Biogen a license to co-develop and co-commercialize its small molecule LRRK2 inhibitor program (the “LRRK2 Program”), and a Right of First Negotiation, Option and License Agreement (the “ROFN and Option Agreement”), pursuant to which it granted an option and right of first negotiation to certain of the Company's programs utilizing our TV technology platform, including its amyloid beta program (collectively the "Biogen Collaboration Agreement"), with Biogen Inc.’s subsidiaries, Biogen MA Inc. (“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”). The details of the Biogen Collaboration Agreement, the August 2023 amendment to the ROFN and Option Agreement, and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the 2023 Annual Report on Form 10-K.

On July 26, 2024, Denali and Biogen executed a Side Letter to the ROFN and Option Agreement, pursuant to which, effective as of the date of the Side Letter, Biogen terminated its license to the ATV:Abeta program enabled by Denali’s TfR-targeting technology against amyloid beta for the potential treatment of Alzheimer's disease, and granted Denali rights to data generated during the collaboration. The side letter also effected the immediate termination of the ROFN and Option Agreement; as such, the Company expects to receive no future milestone or royalty payments from Biogen related to the ATV:Abeta program. There were no changes to the terms of the LRRK2 Agreement during the three and six months ended June 30, 2024 or 2023.

The Company has no remaining performance obligations under the Biogen Collaboration Agreement, and therefore no contract liability remained on the Condensed Consolidated Balance Sheets as of June 30, 2024 or December 31, 2023. As of December 31, 2023, Biogen was no longer considered a related party as defined in ASC 850.

As of June 30, 2024, the Company had earned $5.0 million in option fee payments, but had not recorded milestone revenue or product sales under the Biogen Collaboration Agreement.

Sanofi

In October 2018, the Company entered into a Collaboration and License Agreement ("Sanofi Collaboration Agreement") with Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A. ("Sanofi"). The details of the Sanofi Collaboration Agreement and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. The Company has no remaining performance obligations under the Sanofi Collaboration Agreement, and therefore no contract liability remains on the Condensed Consolidated Balance Sheets as of June 30, 2024 or December 31, 2023. As of June 30, 2024, the Company had earned milestone payments of $100.0 million and had not recorded any product sales under the Sanofi Collaboration Agreement.

Takeda

In January 2018, the Company entered into a Collaboration and Option Agreement ("Takeda Collaboration Agreement") with Takeda Pharmaceutical Company Limited ("Takeda"). The details of the Takeda Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. There are no remaining performance obligations or potential payments remaining under the initial Takeda Collaboration Agreement.

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The opt-in by Takeda on the PTV:PGRN and ATV:TREM2 programs represented two new contracts with a customer for accounting purposes (the "PTV:PGRN Collaboration Agreement" and the "ATV:TREM2 Collaboration Agreement"), both of which became effective in December 2021. The details of the PTV:PGRN Collaboration Agreement and the ATV:TREM2 Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K.

As of June 30, 2024, the Company had earned an aggregate of $10.0 million in option fee payments and $10.0 million in milestone payments from Takeda under the PTV:PGRN and ATV:TREM2 Collaboration Agreements, and had not recorded any product sales under either agreement.

Collaboration Revenue

Revenue disaggregated by collaboration agreement and performance obligation is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Takeda Collaboration Agreement:

PTV:PGRN Collaboration Agreement(1)	$	—	$	—	—		10,000

Total Takeda Collaboration Revenue	—		—		—		10,000
Sanofi Collaboration Agreement
CNS Program License(2)	—		—		—		25,000



Total Sanofi Collaboration Revenue	—		—		—		25,000
Biogen Collaboration Agreement

ATV:Abeta Program License(3)	—		293,912		—		293,912
Option Research Services(4)	—		211		—		352
Total Biogen Collaboration Revenue	—		294,123		—		294,264
Total Collaboration Revenue	$	—	$	294,123	$	—	$	329,264

_________________________________________________

(1)Revenue for the six months ended June 30, 2023 from a specified clinical milestone in the Phase 1/2 study of DNL593 in patients with frontotemporal dementia-granulin (FTD-GRN).

(2)Revenue for the six months ended June 30, 2023 from a milestone payment triggered and received in January 2023 upon the commencement of dosing in a Phase 2 study of SAR443820/DNL788 in individuals with multiple sclerosis.

(3)Revenue for the three and six months ended June 30, 2023 was associated with Biogen exercising its option to license Denali’s ATV:Abeta program which was previously concluded to be a material right, $288.9 million of which was included in the contract liability balance at the beginning of the period and $5.0 million of which was an option exercise fee received in April 2023.

(4)Revenue for the three and six months ended June 30, 2023 was included in the contract liability balance at the beginning of the period.

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Cost Sharing Payments and Reimbursements

Cost sharing payments to collaboration partners recorded as expenses in research and development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and cost sharing reimbursements from collaboration partners recorded as an offset to expense in research and development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Takeda Collaboration Agreement:
PTV:PGRN cost sharing (reimbursements)	$	(1,138)	$	(1,864)	$	(2,338)	$	(3,342)
ATV:TREM2 cost sharing (reimbursements)	(215)		(1,605)		(728)		(3,262)
Total Takeda cost sharing (reimbursements)(1)	(1,353)		(3,469)		(3,066)		(6,604)
Biogen Collaboration Agreement: LRRK2 cost sharing payments(2)	4,440		6,976		9,229		11,126
Net cost sharing payments (reimbursements)	$	3,087	$	3,507	$	6,163	$	4,522

_________________________________

(1)Cost sharing reimbursements of $1.4 million and $2.7 million were recorded as a receivable within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, respectively.

(2)Cost sharing payments due to Biogen of $4.4 million and $3.2 million were recorded within accounts payable on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, respectively.

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6. Commitments and Contingencies

Lease Obligations

In May 2018, the Company entered into an operating lease for its corporate headquarters in South San Francisco (the "Headquarters Lease"), as further described in Note 8, "Commitments and Contingencies," to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. In August 2021, the Company entered into an operating lease for laboratory, office and warehouse premises in Salt Lake City, Utah (the “SLC Lease”). In March 2023, the Company terminated the SLC Lease, which resulted in the recognition of $7.9 million of accelerated depreciation on leasehold improvements in the six months ended June 30, 2023.

In April 2023, the Company entered into a new operating lease in Salt Lake City for a 59,336 square foot laboratory, office and warehouse premises with a contractual term of approximately 15 years upon commencement, and undiscounted lease payments of approximately $13.4 million, which was subsequently amended in October 2023. For accounting purposes, this new lease has not yet commenced, and as such, no lease liability or ROU asset is recorded on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, and no operating lease expense has been recorded on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024. Payments of $26.5 million made by the company, primarily for assets that are deemed to be landlord owned, and which will form part of the ROU asset upon lease commencement, are included within other non-current assets on the Condensed Consolidated Balance Sheet as of June 30, 2024.

Management exercised judgment in applying the requirements of ASC 842, including the determination as to whether certain contracts contain a lease, the lease consideration, and the commencement date of the lease, and for leases identified under the standard, the discount rate used to determine the measurement of the lease liability. The discount rates of our operating leases are an approximation of the Company's incremental borrowing rate and are dependent upon the term and economics of the agreement. To estimate the incremental borrowing rate, management considers observable debt yields of comparable market instruments, as well as benchmarks within the lease agreement that may be indicative of the rate implicit in the lease. There were no changes to the terms of the leases recognized under ASC 842 during the three and six months ended June 30, 2024.

Operating lease costs, including variable costs recognized under ASC 842, was $3.1 million and $6.2 million for the three and six months ended June 30, 2024, respectively, and $3.3 million and $6.2 million for the three and six months ended June 30, 2023, respectively. The following table contains a summary of other information pertaining to the Company’s operating lease for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Cash paid for amounts included in measurement of lease liabilities	$	2,854	$	2,763	$	5,647	$	5,759

	As of June 30,
	2024				2023
Weighted average remaining lease term	4.8 years				5.8 years
Weighted average discount rate	9.0%				9.0%

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The following table reconciles the undiscounted cash flows for the next five years and total of the remaining years to the operating lease liabilities recorded in the Condensed Consolidated Balance Sheet as of June 30, 2024 (in thousands):


Year Ended December 31:
2024 (six months)	$	5,770
2025	11,793
2026	12,182
2027	12,584
2028	13,001
Thereafter	4,381
Total undiscounted lease payments	59,711
Present value adjustment	(10,959)
Net operating lease liability	$	48,752

Indemnification

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, lessors, business partners, board members, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company, negligence or willful misconduct of the Company, violations of law by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), or Condensed Consolidated Statements of Cash Flows.

Commitments

Effective September 2017, the Company entered into a Development and Manufacturing Services Agreement as amended (“DMSA”) with Lonza Sales AG (“Lonza”) for the development and manufacture of biologic products. Under the DMSA, the Company will execute purchase orders based on project plans authorizing Lonza to provide development and manufacturing services with respect to certain of the Company's antibody and enzyme products, and will pay for the services provided and batches delivered in accordance with the DMSA and project plan. Unless earlier terminated, the DMSA will expire when all development and manufacturing services are completed, which is not expected to be before November 2029. As of June 30, 2024 and December 31, 2023, the Company had total non-cancellable purchase commitments under the DMSA of $24.0 million and $37.6 million, respectively.

During the three months ended June 30, 2024 and 2023, the Company incurred costs of $6.2 million and $10.9 million, respectively, and made payments of $16.8 million and $8.3 million, respectively, for the development and manufacturing services rendered under the DMSA. During the six months ended June 30, 2024 and 2023, the Company incurred costs of $22.6 million and $16.1 million, respectively, and made payments of $30.3 million and $12.1 million, respectively, for the development and manufacturing services rendered under the DMSA.

In the normal course of business, the Company enters into other firm purchase commitments primarily related to research and development activities. The Company had contractual obligations under certain clinical and manufacturing agreements other than the DMSA of $32.5 million and $34.8 million, as of June 30, 2024 and December 31, 2023, respectively, with certain amounts subject to cost sharing with Takeda.

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Contingencies

From time to time, the Company may be involved in lawsuits, arbitration, claims, investigations and proceedings consisting of intellectual property, employment and other matters which arise in the ordinary course of business. The Company records accruals for loss contingencies to the extent that the Company concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated.

7. Common Stock

On February 27, 2024, the Company entered into a securities purchase agreement (the "Purchase Agreement") with certain investors for the private placement of (i) 3,244,689 shares of Denali's common stock at a price of $17.07 per share and (ii) pre-funded warrants to purchase an aggregate of 26,046,065 shares of Denali's common stock (the "Pre-Funded Warrants") at a purchase price of $17.06 per Pre-Funded Warrant, which represents the per share price for the common stock less the $0.01 exercise price. The private placement closed on February 29, 2024, at which time the Company received aggregate net proceeds of approximately $499.3 million, after deducting issuance costs of approximately $0.5 million.

The Pre-Funded Warrants were classified as a component of permanent equity in the Company’s consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its shares and permit the holders to receive a fixed number of shares of common stock upon exercise. As of June 30, 2024, all of the Pre-Funded Warrants issued in the private placement were outstanding.

8. Stock-Based Awards

The Company has issued stock-based awards from various equity incentive and stock purchase plans, as more fully described in Note 9, "Stock-Based Awards" to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K.

Stock Option Activity

The following table summarizes stock option activity for the six months ended June 30, 2024:


	Number of Options	Weighted-Average Exercise Price
Balance at December 31, 2023	16,490,551	$	27.34
Granted	4,370,561	20.25
Exercised	(453,206)	10.09
Forfeited	(1,435,314)	30.95
Balance at June 30, 2024	18,972,592	$	25.84
Vested and expected to vest at June 30, 2024	18,162,721	$	27.85
Exercisable at June 30, 2024	11,565,306	$	27.31

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The estimated fair value of stock options granted to employees were calculated using the Black-Scholes option-pricing model using the following assumptions:


	Six Months Ended June 30,
	2024	2023
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Volatility	64.5% - 66.0%	68.7% - 69.6%
Risk-free interest rate	3.9% - 4.5%	3.4% - 4.2%
Dividend yield	—	—

Restricted Stock Activity

The following table summarizes restricted stock unit ("RSU") activity for the six months ended June 30, 2024:


	Number of RSU shares	Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2023	3,635,157	$	35.60
Granted	1,989,571	20.18
Vested and released	(835,873)	38.86
Forfeited	(641,220)	29.10
Unvested and expected to vest at June 30, 2024	4,147,635	$	28.55

Stock-Based Compensation Expense

The Company’s results of operations include expenses relating to stock-based compensation as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	14,364	$	15,189	$	30,706	$	31,973
General and administrative	10,736		11,381		22,234		22,681
Total	$	25,100	$	26,570	$	52,940	$	54,654

9. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share amounts):

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	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income (loss)	$	(99,026)	$	183,383	$	(200,828)	$	73,602

Denominator:
Weighted average number of:
Common stock shares outstanding	142,785,264		137,047,227		141,515,199		136,787,321
Private placement pre-funded warrants	26,046,065		—		17,602,560		—
Weighted average number of shares outstanding, basic	168,831,329		137,047,227		159,117,759		136,787,321
Dilutive effect of outstanding common stock options, ESPP shares issuable, and restricted shares	—		3,883,398		—		3,762,905
Weighted average number of shares outstanding, diluted	168,831,329		140,930,625		159,117,759		140,550,226
Net income (loss) per share, basic	$	(0.59)	$	1.34	$	(1.26)	$	0.54
Net income (loss) per share, diluted	$	(0.59)	$	1.30	$	(1.26)	$	0.52

Potentially dilutive securities, including options issued and outstanding, ESPP shares issuable, and restricted shares subject to future vesting that were not included in the diluted per share calculations for the periods presented because they would be anti-dilutive totaled approximately 23.3 million and 11.8 million shares as of June 30, 2024 and June 30, 2023, respectively.

10. Divestiture of Preclinical Small Molecule Programs

On March 1, 2024, the Company divested certain assets, including specified intellectual property, tangible assets, and equipment used to conduct early stage small molecule drug discovery ("Divested Assets") through an Asset Purchase and License Agreement (the "Asset Purchase Agreement") executed with a venture-backed private company ("VBPC"). Additionally, certain of the Company’s employees terminated their employment with the Company and became employees of VBPC.

In exchange for the Divested Assets, the Company received equity consideration in the form of a simple agreement for future equity (“SAFE”), equal to $15.0 million of equity in VBPC’s next financing round or, if VBPC’s next equity financing does not occur prior to December 31, 2024, a number of shares of preferred stock issued in VBPC’s previous round of equity financing prior to this agreement equal to $15.0 million divided by the price per share paid by investors in that previous equity financing. The Company may also be eligible to receive certain market valuation, development and sales based milestone payments up to approximately $1.2 billion in the form of either cash or equity at the election of VBPC. The Company will also be entitled to receive future royalties on aggregate net sales of any products that bind to certain identified targets, on a product-by-product and country-by-country basis during the periods of time commencing at the time of the first commercial sale of such product in such country, until the later of (i) the expiration of certain related patents, (ii) the expiration of Regulatory Exclusivity, or (iii) ten years after such first commercial sale.

Concurrently, VBPC and the Company also entered into a sublease for 12,985 square feet of office and lab space within the Company's corporate headquarters, and transition and research services agreement ("Service Agreements"). The sublease commenced in May 2024 and will continue for a period of approximately ten months, with two optional six month extension periods. The Service Agreements allow Denali to provide access to equipment and provision of certain specified administrative and research services to VBPC for a period up to the end of the sublease term.

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This divestiture did not meet the criteria for reporting discontinued operations as the sale does not represent a strategic shift in the Company’s business. The Company recognized a gain on divestiture of approximately $14.5 million in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during the six months ended June 30, 2024, representing the difference between the fair value of the consideration received and the carrying amount of the Divested Assets.

The Company recorded the SAFE at $15.0 million based on the expected value of the equity to be received within other non-current assets in the Condensed Consolidated Balance Sheet. The SAFE remains outstanding as of June 30, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis and other parts of this report contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts, and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q.

Forward-looking statements include, but are not limited to, statements about:

•the progress, success, cost, and timing of our development activities, preclinical studies, and clinical trials, and in particular the development of our blood-brain barrier (“BBB”) platform technology, programs, and biomarkers, including the initiation and completion of studies or trials and related preparatory work, enrollment in such trials, the timing of when data from clinical trials will become available, the advancement of new molecule entities into clinical development and related timing, and the filing of investigational new drug applications or clinical trial applications;

•the impact of preclinical findings on our ability to achieve exposures of our product candidates that allow us to explore a robust pharmacodynamic range of these candidates in humans;

•the expected potential benefits and potential revenue resulting from strategic collaborations with third parties and our ability to attract collaborators with development, regulatory, and commercialization expertise;

•the timing or likelihood of regulatory filings and approvals;

•our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations, and/or warnings in the label of any approved product candidate;

•the extent to which any dosing limitations that we have been subject to, and/or may be subject to in the future, may affect the success of our product candidates;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

•the terms and conditions of licenses granted to us and our ability to license and/or acquire additional intellectual property relating to our product candidates and BBB platform technology;

•our ability to obtain funding for our operations, including funding necessary to develop and commercialize our current and potential future product candidates;

•our plans and ability to establish sales, marketing, and distribution infrastructure to commercialize any product candidates for which we obtain approval;

•future agreements with third parties in connection with the commercialization of our product candidates;

•the size and growth potential of the markets for our product candidates, if approved for commercial use, and our ability to serve those markets;

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•the rate and degree of market acceptance of our product candidates;

•existing regulations and regulatory developments in the United States and foreign countries;

•potential claims relating to our intellectual property and third-party intellectual property;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•our plans and ability to develop our own manufacturing facilities;

•the pricing and reimbursement of our product candidates, if approved and commercialized;

•the success of competing products or platform technologies that are or may become available;

•our ability to attract and retain key managerial, scientific, and medical personnel;

•the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

•our ability to enhance operational, financial, and information management systems;

•the impact of adverse economic conditions such as instability in the financial services sector, rising interest rates, rising inflation, and increased labor market competition;

•the impact of increased geopolitical uncertainty, a pandemic or other global health emergency, and related global economic disruptions and social conditions on our business;

•expectations regarding the intended use of proceeds from our February 2024 Private Investment in Public Equity ("PIPE") financing; and

•our financial performance.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in “Risk Factors.” In some cases, you can identify these statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. These forward-looking statements reflect our beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report on Form 10-Q and are subject to risks and uncertainties. We discuss many of these risks in greater detail in the section entitled “Risk Factors” included in Part II, Item 1A and elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Overview

Our goal is to discover, develop and deliver therapeutics to defeat degeneration.

Our discovery and development strategy is guided by three overarching principles that we believe will significantly increase the probability of success and accelerate the timing to bring effective therapeutics to people living with neurodegenerative and lysosomal storage diseases:

•Degenogenes: Genetic Pathway Realization – each of our programs addresses a molecular target or biological pathway that is genetically validated to cause or increase the risk for neurodegenerative diseases.

•Brain Delivery: Validation and Optionality – we engineer our product candidates to cross the BBB and act directly in the brain. Our proprietary transport vehicle ("TV") platform technology is designed to effectively deliver large therapeutic molecules, such as enzymes, proteins, antibodies, and oligonucleotides, across the BBB after intravenous administration.

•Biomarker-Driven Development and Approval – we discover, develop and use biomarkers to inform dose selection, assess clinical activity, and identify patients most likely to respond to our therapies. We are actively engaged in discussions with health authorities regarding the potential use of biomarkers as primary clinical endpoints to support faster paths to approval.

Our late and mid-stage clinical programs are as follows:

•Tividenofusp alfa (DNL310, ETV:IDS), our lead enzyme replacement therapy ("ERT") program enabled by our Enzyme Transport Vehicle ("ETV"), is designed to cross the BBB and restore Iduronate 2-sulfatase ("IDS") and reduce glycosaminoglycans ("GAGs"), both peripherally and in the brain, in individuals with mucopolysaccharidosis II ("MPS II" or "Hunter syndrome");

•DNL343, our eukaryotic initiation factor 2 B ("eIF2B") activator program to address diseases such as amyotrophic lateral sclerosis ("ALS") and frontotemporal dementia ("FTD");

•BIIB122/DNL151, our leucine-rich repeat kinase 2 ("LRRK2") inhibitor program, being developed in collaboration with Biogen, to address Parkinson’s disease ("PD");

•SAR443820/DNL788, our CNS-penetrant receptor interacting serine/threonine protein kinase 1 ("RIPK1") inhibitor program, being developed in collaboration with Sanofi, to address neurological diseases such as multiple sclerosis ("MS") and Alzheimer's disease; and

•Eclitasertib (SAR443122/DNL758), a peripheral and non-CNS penetrant RIPK1 inhibitor, being developed in collaboration with Sanofi, to address peripheral inflammatory diseases such as ulcerative colitis ("UC").

Our early-stage clinical programs are as follows:

•DNL126 (ETV:SGSH), our second most advanced ETV enabled program, which is designed to restore lysosomal activity of N-sulfoglucosamine sulfohydrolase ("SGSH"), an enzyme responsible for degrading heparan sulfates in the lysosome, in individuals with MPS IIIA (Sanfilippo syndrome Type A); and

•TAK-594/DNL593 (PTV:PGRN), our recombinant progranulin ("PGRN") biotherapeutic enabled by our Protein Transport Vehicle ("PTV"), being developed in collaboration with Takeda, to address frontotemporal dementia-granulin ("FTD-GRN"), or frontotemporal dementia due to loss of function mutations in the GRN gene.

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The following table summarizes key information about our clinical stage programs:

Program

Product Candidate

Clinical Study(ies)

Indication

Operational Control

ETV:IDS

tividenofusp alfa, or DNL310

Ph 1/2

Hunter syndrome (MPS II)

Denali

Ph 2/3

eIF2B

DNL343

Ph 1b

ALS

Denali

Ph 2/3

ALS

Joint with Healey Center

LRRK2

BIIB122/DNL151

Ph 2a (planned)

Parkinson's disease

Denali

Ph 2b

Joint with Biogen

RIPK1 (CNS-penetrant)

SAR443820/DNL788

Ph 2

Sanofi

RIPK1 (Peripheral)

eclitasertib, or SAR443122/DNL758

Ph 2

Sanofi

ETV:SGSH

DNL126

Ph 1/2

Sanfilippo syndrome Type A (MPS IIIA)

Denali

PTV:PGRN

TAK-594/DNL593

Ph 1/2

FTD-GRN

Joint with Takeda

Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our BBB platform technology and assembling our core capabilities in understanding key neurodegenerative disease pathways.

Key operational and financing milestones in 2024 to date include:

•In January 2024, we announced that enrollment continues in the global Phase 2/3 COMPASS study and is expected to be completed in 2024. In February, 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 (NfL; neurofilament light), 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 HS as a potential surrogate biomarker to support accelerated approval in MPS. In April, 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 cerebrospinal fluid heparan sulfate (CSF HS) as a surrogate biomarker. We look forward to continued engagement with CDER regarding our intention to file for approval of tividenofusp alfa using the accelerated approval pathway. We will provide an update in 2H 2024;

•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 for the Phase 1/2 study and prescreening of participants for Cohort B2 is ongoing;

•In January 2024, we announced our intention to divest our preclinical small molecule portfolio, which was completed effective March 1, 2024. We will maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs. The decision was made based on clinical validation and prioritization of our TV-enabled platforms for brain delivery of large molecules;

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•In February 2024, we announced that dosing had been initiated in the Phase 1/2 study of DNL126 in MPS IIIA; Phase 1/2 biomarker and safety data are expected by the end of 2024. 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;

•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). Sanofi is evaluating SAR443820/DNL788 in another Phase 2 clinical trial in participants with MS which is fully enrolled, and the outcome of HIMALAYA study has no impact on the ongoing MS study;

•In February 2024, we announced that we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,689 shares of our common stock at a price of $17.07 per share and pre-funded warrants to purchase an 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 million. The pre-funded warrants have an exercise price of $0.01 per share of Common Stock, and are immediately exercisable and will remain exercisable until exercised in full. The private placement closed on February 29, 2024, subject to customary closing conditions;

•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 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2. 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. We plan to initiate the Phase 2a study in 2024. Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease. Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval;

•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;

•In June 2024, we announced that the CDER has selected DNL126 (ETV:SGSH) for participation in the FDA's Support for clinical Trials Advancing Rare disease Therapeutics (START) Pilot Program to further accelerate the development of novel drug and biological products for rare diseases. Participation in START is expected to facilitate and accelerate development of DNL126; and

•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.

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We do not have any products approved for sale and have not generated any product revenue since our inception. 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 and funding agreements with Takeda, Sanofi, Biogen 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 $99.0 million and $200.8 million for the three and six months ended June 30, 2024, respectively. Due to revenue recognized from our collaboration arrangement with Biogen, we had net income of $183.4 million and $73.6 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $1.32 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 current clinical stage programs through healthy volunteer and patient trials; broaden and improve our BBB platform technology; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.

Components of Operating Results

Collaboration Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. All revenue recognized to date has been collaboration and license revenue from our collaboration agreements with Takeda, Sanofi and Biogen.

Future revenue may be recognized from the Takeda Collaboration Agreement, Sanofi Collaboration Agreement, and Biogen Collaboration Agreement, and may be generated from product sales or milestone payments, royalties and profit sharing reimbursement from other collaboration agreements, strategic alliances and licensing arrangements. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of license fees, option exercise fees, milestone payments, profit sharing reimbursement, other payments and product sales, to the extent any are successfully commercialized. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

Operating Expenses

Research and Development

Research and development activities account for a significant portion of our operating expenses. We record research and development expenses as incurred. Research and development expenses incurred by us for the discovery and development of our product candidates and BBB platform technology include:

•external research and development expenses, including:

–expenses incurred under arrangements with third parties, such as contract research organizations ("CROs"), preclinical testing organizations, contract development and manufacturing organizations ("CDMOs"), academic and non-profit institutions and consultants;

–expenses to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use;

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–fees related to our license and collaboration agreements;

•personnel related expenses, including salaries, benefits and stock-based compensation expense; and

•other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.

A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis once a program has commenced late-stage IND-enabling studies.

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, Sanofi Collaboration Agreement and Biogen 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.

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 global pandemics and increased geopolitical uncertainty. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

•our ability to add and retain key research and development personnel;

•our ability to establish an appropriate safety profile with IND-enabling toxicology studies;

•our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates;

•our successful enrollment in and completion of clinical trials;

•the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations;

•our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our molecules;

•our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved;

•the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;

•our ability to obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates if and when approved;

•our receipt of marketing approvals from applicable regulatory authorities;

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•our ability to commercialize products, if and when approved, whether alone or in collaboration with others; and

•the continued acceptable safety profiles of the product candidates following approval.

A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We expect our research and development expenses to increase at least over the next several years as we continue to implement our business strategy, advance our current programs, expand our research and development efforts, seek regulatory approvals for any product candidates that successfully complete clinical trials, access and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

General and Administrative

General and administrative expenses include personnel related expenses, such as salaries, benefits, travel and stock-based compensation expense, expenses for outside professional services 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 advance our product candidates through clinical development, which will increase our general and administrative expenses.

Gain from divestiture of small molecule programs

The gain from the divestiture of small molecule programs consists entirely of the non-cash gain associated with the divestiture of assets associated with select preclinical small molecule programs, including specified intellectual property, tangible assets and equipment used to conduct early stage small molecule drug discovery from the Company, in exchange for equity consideration.

Interest and Other Income, Net

Interest and other income, net, consists primarily of interest income and investment income earned on our cash, cash equivalents, and marketable securities, as well as sublease income.

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Results of Operations

Comparison of the three and six months ended June 30, 2024 and 2023

The following table sets forth the significant components of our results of operations (in thousands):


	Three Months Ended June 30,				Change
	2024		2023		$		%
Collaboration revenue:
Collaboration revenue from customers	$	—	$	294,123	$	(294,123)	*	%

Total collaboration revenue	—		294,123		(294,123)		*
Operating expenses:
Research and development	91,399		97,520		(6,121)		(6)
General and administrative	25,194		26,120		(926)		(4)
Total operating expenses	116,593		123,640		(7,047)		(6)

Income (loss) from operations	(116,593)		170,483		(287,076)		*
Interest and other income, net	17,567		12,900		4,667		36


Net income (loss)	$	(99,026)	$	183,383	$	(282,409)	*	%

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*Percentage is not meaningful.


	Six Months Ended June 30,				Change
	2024		2023		$		%
Collaboration revenue:
Collaboration revenue from customers	$	—	$	329,264	$	(329,264)	*	%

Total collaboration revenue	—		329,264		(329,264)		*
Operating expenses:
Research and development	198,415		226,336		(27,921)		(12)
General and administrative	50,430		53,260		(2,830)		(5)
Total operating expenses	248,845		279,596		(30,751)		(11)
Gain from divestiture of small molecule programs	14,537		—		14,537		*
Income (loss) from operations	(234,308)		49,668		(283,976)		*
Interest and other income, net	33,480		23,934		9,546		40


Net income (loss)	$	(200,828)	$	73,602	$	(274,430)	*	%

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*Percentage is not meaningful.

Collaboration revenue. There was no collaboration revenue for three and six months ended June 30, 2024, respectively, and $294.1 million and $329.3 million for three and six months ended June 30, 2023, respectively. The decrease for the three months ended June 30, 2024 compared to June 30, 2023 was primarily due to $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program. The decrease for the six months ended June 30, 2024 compared to June 30, 2023 was primarily due to the decrease in Biogen revenue described above, as well as decreases of revenue earned under the Takeda and Sanofi Collaboration Agreements of $10.0 million and $25.0 million, respectively.

Research and development expenses. Research and development expenses were $91.4 million and $198.4 million for the three and six months ended June 30, 2024, compared to $97.5 million and $226.3 million for the three and six months ended June 30, 2023, respectively.

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The following table summarizes our research and development expenses by program and category (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
ETV:IDS program external expenses	$	21,079	$	20,642	$	50,799	$	67,286
ETV:SGSH program external expenses	4,404		3,670		7,039		4,535
PTV:PGRN program external expenses	1,955		3,372		3,645		6,218

TV platform and other program external expenses	4,410		4,471		7,882		9,850
LRRK2 program external expenses	1,465		913		2,082		2,818
eIF2B program external expenses	8,925		5,247		16,517		9,895
Other external research and development expenses	3,781		5,673		9,643		13,388
Personnel related expenses(1)	34,052		39,001		76,381		80,062
Other unallocated research and development expenses	10,509		11,024		20,532		27,762
Net cost sharing and research funding payments(2)	819		3,507		3,895		4,522
Total research and development expenses	$	91,399	$	97,520	$	198,415	$	226,336

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(1)Personnel related expenses include stock-based compensation expense of $14.4 million and $30.7 million for the three and six months ended June 30, 2024, respectively, and $15.2 million and $32.0 million for the three and six months ended June 30, 2023, respectively, reflecting decreases of $0.8 million and $1.3 million, respectively.

(2)The breakdown of net cost sharing and research funding payments is shown in the table below. The underlying costs for reimbursements and research funding are included with the specified external expenses line and personnel related expenses in the table above. ATV:TREM2 program external expenses are presented within the TV platform and other program external expenses line.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Takeda: net reimbursements for PTV:PGRN program	$	(1,138)	$	(1,864)	$	(2,338)	$	(3,342)
Takeda: net reimbursements for ATV:TREM2 program	(215)		(1,605)		(728)		(3,262)
Biogen: net payments for LRRK2 program	4,440		6,976		9,229		11,126
LRRK2 research funding	(2,268)		—		(2,268)		—
Net cost sharing payments and research funding payments	$	819	$	3,507	$	3,895	$	4,522

The decrease in research and development expenses of approximately $6.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, was primarily attributable to the following:

•a decrease of $4.9 million in personnel related expenses due to decreases in salary and stock based compensation expenses due to decreased headcount, primarily as a result of the divestiture of our preclinical small molecule programs in March 2024;

•a decrease in net cost sharing and research funding payments, primarily due to the recognition of $2.3 million of research funding for the LRRK2 program from the Collaboration and Development Funding Agreement executed in January 2024;

•decreases of $0.1 million and $1.4 million in TV platform and other program external expenses including ATV:TREM2 expenses, and PTV:PGRN program external expenses, respectively, due to the discontinuation of clinical development of TAK-920/DNL919 (ATV:TREM2) in Alzheimer’s disease and voluntary pause of Part B in the TAK-594/DNL593 (PTV:PGRN) Phase 1/2 study, respectively; and

•a decrease of $1.9 million in other external research and development expenses associated with the divestiture of our preclinical small molecule programs.

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These decreases were partially offset by increases in costs in various clinical stage programs, including of eIF2B ($3.7 million), ETV:SGSH ($0.7 million) and ETV:IDS ($0.4 million) reflecting the continued progress of these programs in clinical trials. Further, there was an increase of $0.6 million in LRRK2 program external expenses due to activities related to our planned Phase 2a study in Parkinson's Disease patients.

The decrease in research and development expenses of approximately $27.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, was primarily attributable to the following:

•a decrease of $16.5 million in ETV:IDS program external expenses because the first quarter of 2023 included expense for a contingent consideration payment of $30.0 million related to the acquisition of F-star Gamma, which was triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program. This decrease was partially offset by increased spend from the continued progress of this program in clinical trials in 2024, including costs related to our ongoing Phase 1/2 study and our potentially registrational Phase 2/3 study;

•decreases of $2.0 million and $2.6 million in TV platform and other program external expenses including ATV:TREM2 expenses, and PTV:PGRN program external expenses, respectively, due to the discontinuation of clinical development of TAK-920/DNL919 (ATV:TREM2) in Alzheimer’s disease and voluntary pause of Part B in the TAK-594/DNL593 (PTV:PGRN) Phase 1/2 study, respectively;

•a decrease of $3.7 million in personnel related expenses due to decreases in salary and stock based compensation expenses due to decreased headcount, primarily as a result of the divestiture of our preclinical small molecule programs in March 2024;

•a decrease of $3.7 million in other external research and development expenses primarily due to elevated facility costs in the six months ended June 30, 2023 as a result of accelerated depreciation on leasehold improvements associated with the termination of the former SLC Lease; and

•the recognition of $2.3 million of research funding or the LRRK2 program from the Collaboration and Development Funding Agreement executed in January 2024.

These decreases were partially offset by increases of $6.6 million and $2.5 million in eIF2B and ETV:SGSH program external expenses, respectively, reflecting the continued progress of these programs in clinical trials.

General and administrative expenses. General and administrative expenses were $25.2 million for the three months ended June 30, 2024 compared to $26.1 million for the three months ended June 30, 2023. The decrease of $0.9 million was primarily attributable to a decrease of $1.1 million in personnel-related expenses consisting of employee compensation and stock-based compensation expense, partially offset by combined increases of $0.2 million in professional services, facilities and other corporate costs.

General and administrative expenses were $50.4 million for the six months ended June 30, 2024 compared to $53.3 million for the six months ended June 30, 2023. The decrease of $2.9 million was primarily attributable to $2.2 million of combined decreases in professional services, facilities and other corporate costs and $0.7 million of decreased personnel-related expenses consisting of employee compensation and stock-based compensation expense.

Gain from divestiture of small molecule programs. For a full description, see Item 2. Components of Operating Results included in this Quarterly Report on Form 10-Q.

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Liquidity and Capital Resources

Sources of Liquidity

As of June 30, 2024, we had cash, cash equivalents and marketable securities in the amount of $1.35 billion. We fund our operations primarily with the proceeds from the sale of common stock and payments received from our collaboration partners, including those received under agreements with Takeda, Sanofi, and Biogen. We have sold common stock and other securities in public offerings, a private placement, and stock purchase agreements with Takeda and Biogen.

Through June 30, 2024 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022. Under stock purchase agreements with collaboration partners we have received a further $575.0 million through June 30, 2024.

Further, in February 2024 we received net proceeds of approximately $499.3 million from our private placement through the sale of approximately 3.2 million shares of common stock and pre-funded warrants to purchase approximately 26.0 million shares of our common stock.

In February 2022, we established a registered “at-the-market” facility for the sale of up to $400.0 million of shares of common stock from time to time by entering into an equity distribution agreement with Goldman Sachs & Co. LLC, Leerink Partners LLC (formerly SVB Securities LLC) and Cantor Fitzgerald & Co. as sales agents. To date, no shares have been sold under the equity distribution agreement.

Pursuant to our collaboration and research funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, through June 30, 2024 we have received upfront, option and milestone payments of $115.0 million, $225.0 million, $565.0 million and $12.5 million, respectively, and have also received $45.8 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi.

Future Funding Requirements and Commitments

To date, we have not generated any product revenue. We do not expect to generate any product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if, either will occur.

We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we expand our research and development activities and continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. Further, we expect general and administrative expenses to increase as we continue to incur additional costs associated with supporting our growing operations. We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

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Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from our existing collaboration agreements, or future agreements with other third parties, if ever, we expect to finance our future cash needs through public or private equity or debt financings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash flow and revenue in the future. Any of the foregoing could significantly harm our business, financial condition and prospects.

Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $1.32 billion through June 30, 2024. We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to enable us to fund our projected operations through at least the twelve months following the filing date of this Quarterly Report on Form 10-Q, including our existing commitments as outlined below. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. In the longer term, we anticipate that we will need substantial additional resources to fund our operations and meet future commitments.

Our existing commitments primarily relate to our obligations under existing lease agreements, and certain clinical and manufacturing agreements, including the DMSA with Lonza Sales AG ("Lonza") for the development and manufacture of biologic products. As of June 30, 2024, operating lease liabilities were $48.8 million. Under the SLC lease which was executed in April 2023, we have future undiscounted lease payments totaling approximately $13.4 million. Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of June 30, 2024 of $56.5 million, with certain amounts subject to cost sharing with Takeda. While the lease obligations span multiple years, the majority of the purchase commitments with Lonza and other clinical and manufacturing agreements are due within twelve months, with some spanning several years. These commitments are more fully described in Note 6 - Commitments and Contingencies of our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Our future funding requirements, including changes to and new commitments, will depend on many factors, including:

•the timing and progress of preclinical and clinical development activities;

•the number and scope of preclinical and clinical programs we decide to pursue;

•the progress of the development efforts of third parties with whom we have entered into license and collaboration agreements;

•our ability to maintain our current research and development programs and to establish new research and development, license or collaboration arrangements;

•our ability and success in securing manufacturing relationships with third parties or in establishing and operating a manufacturing facility;

•the costs involved in prosecuting, defending and enforcing patent claims and other intellectual property claims;

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•the cost and timing of regulatory approvals;

•our efforts to enhance operational, financial and information management systems and hire additional personnel, including personnel to support development of our product candidates; and

•the costs and ongoing investments to in-license and/or acquire additional technologies.

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Cash Flows

The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below (in thousands):


	Six Months Ended June 30,
	2024		2023
Net cash used in operating activities	$	(204,840)	$	(171,971)
Net cash (used in) provided by investing activities	(354,618)		75,352
Net cash provided by financing activities	507,031		10,623
Net decrease in cash, cash equivalents and restricted cash	$	(52,427)	$	(85,996)

Net Cash Used In Operating Activities

During the six months ended June 30, 2024, net cash used in operating activities was $204.8 million, which consisted of a net loss of $200.8 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, non-cash rent expenses, and the non-cash gain on divestiture of small molecule programs. Cash used in operating activities was also driven by changes in our operating assets and liabilities, the most significant of which was an increase in other non-current assets related to costs associated with the new Salt Lake City manufacturing facility during the six months ended June 30, 2024.

Net Cash Used In Investing Activities

During the six months ended June 30, 2024, net cash used in investing activities was $354.6 million, which consisted of $955.8 million of purchases of marketable securities and $6.9 million of capital expenditures to purchase property and equipment, partially offset by $608.1 million in proceeds from maturities and sales of marketable securities.

Net Cash Provided By Financing Activities

During the six months ended June 30, 2024, cash provided by financing activities was $507.0 million which consisted of $499.3 million of net proceeds from the sale of common stock and pre-funded warrants in a private placement in February 2024, as well as proceeds from the exercise of options to purchase common stock and purchases of ESPP shares.

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Critical Accounting Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues recognized and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in detail in the notes to our consolidated financial statements included elsewhere in this report. In our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024, we described the accounting estimates that we believe involve a significant level of estimation uncertainty which could have a material impact on our financial condition or results of operations. There have been no material changes to these critical accounting estimates during the six months ended June 30, 2024.

Recent Accounting Pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the six months ended June 30, 2024, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024, that are of significance or potential significance to us.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business, primarily related to interest rate and foreign currency sensitivities.

Interest Rate Sensitivity

We are exposed to market risk related to changes in interest rates. We had cash, cash equivalents and marketable securities of $1.35 billion as of June 30, 2024, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short to intermediate term fixed income securities.

The primary objective of our investment activities is to preserve capital to fund our operations. We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality and short-term duration, according to our board-approved investment policy. Our investments are subject to interest rate risk and could fall in value if market interest rates increase. A hypothetical 10% relative change in interest rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements.

Foreign Currency Sensitivity

The majority of our transactions occur in U.S. dollars. However, we do have certain transactions that are denominated in currencies other than the U.S. dollar, primarily the Euro, Swiss Franc and British Pound, and we therefore are subject to foreign exchange risk. The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of expenses, assets and liabilities primarily associated with a limited number of preclinical, clinical and manufacturing activities.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Operating and Financial Officer, to allow timely decisions regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Operating and Financial Officer concluded that, as of June 30, 2024, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management attention and resources and other factors.

ITEM 1A. RISK FACTORS

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.

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Risk Factor Summary

This summary of risks below provides an overview of the principal risks we are exposed to. These risks are described more fully in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q.

Risks Related to Our Business, Financial Condition and Capital Requirements

•We are in the clinical stages of drug development and have a limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.

•We have incurred significant net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.

•Drug development is a highly uncertain undertaking. We have never generated any revenue from product sales, and may never do so.

•Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.

•A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, or the perception of its effects, may materially and adversely affect our business, operations, and financial condition.

Risks Related to the Discovery, Development and Commercialization of Our Product Candidates

•We are heavily dependent on the successful development of our BBB technology and the programs currently in our pipeline, which are in the preclinical and clinical development stages.

•We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products.

•We have concentrated a substantial portion of our efforts on the treatment of neurodegenerative and lysosomal storage diseases, fields that have seen limited success in drug development.

•We may encounter substantial delays in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

•We may encounter difficulties enrolling and/or retaining patients in our clinical trials, and our clinical development activities could thereby be delayed or otherwise adversely affected.

•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 our product candidates, which would prevent, delay or limit the scope of regulatory approval and commercialization.

•We face significant competition and our operating results may suffer if we fail to compete effectively.

•If we are unable to establish sales and marketing capabilities or enter into agreements with third parties, we may not be successful in commercializing product candidates if and when they are approved.

•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.

•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.

•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.

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.

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•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. This reliance on third parties 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 BBB 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.

•Our rights to develop and commercialize our BBB 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.

•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.

Denali Therapeutics Inc. [DNLI] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-07]
10-K	[2024-02-28]
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-08]
10-K	[2023-02-27]
10-Q	[2022-11-03]
10-Q	[2022-08-08]
10-Q	[2022-05-05]
10-K	[2022-02-28]
10-Q	[2021-11-04]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-02-26]
10-Q	[2020-11-05]
10-Q	[2020-08-07]
10-Q	[2020-05-07]
10-K	[2020-02-27]
10-Q	[2019-11-06]
10-Q	[2019-08-06]
10-Q	[2019-05-08]
10-K	[2019-03-12]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-11]
10-K	[2018-03-19]
S-1	[2017-11-13]