Denali Therapeutics Inc

Previous wording

•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;

Current wording

•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, 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;

Previous wording

•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;

Current wording

•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 Transport Vehicle ("TV");

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•the impact of increased geopolitical uncertainty, the global pandemic, tariffs and trade barriers, and related global economic disruptions and social conditions on our business; and

Previous wording

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

Current wording

•BIIB122/DNL151, a small molecule LRRK2 inhibitor, is being developed in collaboration with Biogen for the potential treatment of Parkinson's disease ("PD"); and

Previous wording

•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").

Current wording

•Eclitasertib (SAR443122/DNL758), a peripheral and non-central nervous system ("CNS") penetrant small molecule RIPK1 inhibitor, is being developed by Sanofi to address peripheral inflammatory diseases such as ulcerative colitis ("UC").

Previous wording

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.

Current wording

Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our TV platform, assembling our core capabilities in understanding key neurodegenerative and lysosomal storage disease pathways, operationalizing clinical trials, building manufacturing capabilities and establishing commercial capabilities.

Previous wording

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 $107.2 million and $308.0 million for the three and nine months ended September 30, 2024, respectively, and net losses of$99.4 million and $25.8 million for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $1.42 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.

Current wording

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 $133.0 million and $101.8 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $1.67 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 TV platform; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.

Previous wording

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:

Current wording

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 TV platform include:

Previous wording

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 Agreementand 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.

Current wording

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 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 Agreementand 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.

Previous wording

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

Current wording

•our ability to add and retain key research and development and commercial, sales and marketing personnel;

Previous wording

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.

Current wording

General and administrative expenses include personnel related expenses, such as salaries, benefits, travel and stock-based compensation expense, expenses for outside professional services, pre-commercialization activities, and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent, depreciation and other expenses related to our office and research and development facility not otherwise included in research and development expenses. We expect to increase our administrative headcount as we prepare for commercialization of Tividenofusp alfa (DNL310, ETV:IDS) and advance our other product candidates through clinical development, which will increase our general and administrative expenses.

Previous wording

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 and interest on our finance lease liability.

Current wording

Interest and other income, net, consists primarily of interest income, investment income earned on our cash, cash equivalents, and marketable securities, and sublease income, as well as an offset for interest expense on our finance lease liability.

Previous wording

Research and development expenses. Research and development expenses were $98.2 million and $296.7 million for the three and nine months ended September 30, 2024, compared to $89.7 million and $316.1 million for the three and nine months ended September 30, 2023, respectively.

Current wording

Research and development expenses. Research and development expenses were $116.2 million and $107.0 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

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

Current wording

The following table provides a breakdown of our research and development expenses by category (in thousands):

Previous wording

(1)Personnel related expenses include stock-based compensation expense of $14.1 million and $44.8 million for the three and nine months ended September 30, 2024, respectively, and $15.8 million and $47.8 million for the three and nine months ended September 30, 2023, respectively, reflecting decreases of $1.7 million and $3.0 million, respectively.

Current wording

(1)Personnel related expenses include stock-based compensation expense of $15.1 million and $16.3 million for the three months ended March 31, 2025 and 2024, respectively, reflecting a decrease of $1.2 million.

Previous wording

The increase in research and development expenses of approximately $8.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, was primarily attributable to the following:

Current wording

The increase in research and development expenses of approximately $9.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, was primarily attributable to an increase of $6.3 million related to our TV programs, driven by increased spend on both clinical programs such as DNL126 and preclinical programs, such as our OTV franchise, as well as an increase of $9.2 million in other research and development expenses, including lab consumables, consultants and general facilities costs, driven in part by the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah. These increases were partially offset by a $2.1 million decrease in personnel-related expenses, including lower salaries and stock-based compensation, and a reduction in expenses related to small molecule programs. The decline in small molecule program expenses was primarily due to the Collaboration and Development Funding Agreement entered into with an unrelated third party, under which, starting in the second quarter of 2024, funding earned offsets LRRK2 program expenses.

Previous wording

As of September 30, 2024, we had cash, cash equivalents and marketable securities in the amount of $1.28 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.

Current wording

As of March 31, 2025, we had cash, cash equivalents and marketable securities in the amount of $1.05 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.

Previous wording

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.

Current wording

In February 2025, we established a registered “at-the-market” facility for the potential future 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 and Leerink Partners LLC as sales agents. The previous equity distribution agreement and related “at-the-market” facility entered into in February 2022 was terminated in February 2025. To date, no shares have been sold under either equity distribution agreement. All sales under the current equity distribution agreement are conditioned upon satisfaction of customary closing conditions.

Previous wording

Pursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, through September 30, 2024 we have received upfront, option and milestone payments of$115.0 million,$225.0 million, $565.0 million and $25.0 million, respectively, and have also received$47.2 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.

Current wording

Through March 31, 2025, we have received$115.0 million,$225.0 million, $565.0 million and $25.0 million, pursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, respectively. These payments include upfront, option and milestone payments. Additionally, we have received$50.0 million and $16.2 million in gross cost sharing reimbursements from Takeda and Biogen, respectively, and received$13.7 million in specified reimbursements from Sanofi.

Previous wording

Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $1.42 billion through September 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.

Current wording

Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $1.67 billion as of March 31, 2025. 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.

Previous wording

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 September 30, 2024, the operating lease liability was $46.9 million and the finance lease liability was $5.7 million. Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of September 30, 2024 of $49.0 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.

Current wording

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 March 31, 2025, we had total undiscounted lease payment obligations of $66.6 million. Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of March 31, 2025 of $68.7 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. Further, we may be required to make contingent payments under existing arrangements upon the achievement of defined clinical, regulatory and commercial milestones in certain programs, including contingent consideration payments to former shareholders of F-star under the F-star Gamma license, and milestone and royalty payments to Genentech under the Genentech License Agreement. 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, and in Note 4, "Acquisition, License Agreement and Research and Development Funding Collaboration Agreement" and Note 7, "Commitments and Contingencies" to the consolidated financial statements included in Item 8. of our Annual Report on Form 10-K filed on February 27, 2025.

Previous wording

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

Current wording

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

Previous wording

During the nine months ended September 30, 2024, net cash used in operating activities was $264.0 million, which consisted of a net loss of $308.0 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.

Current wording

During the three months ended March 31, 2025, net cash used in operating activities was $131.5 million, which consisted of a net loss of $133.0 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, and non-cash rent expenses. Cash used in operating activities was also driven by changes in our operating assets and liabilities.

Previous wording

Net Cash Provided By Financing Activities

Current wording

Net Cash Provided By (Used In) Investing Activities

Previous wording

During the nine months ended September 30, 2024, net cash used in investing activities was $261.0 million, which consisted of $1.06 billion of purchases of marketable securities and $10.8 million of capital expenditures to purchase property and equipment, partially offset by $806.1 million in proceeds from maturities and sales of marketable securities.

Current wording

During the three months ended March 31, 2025, net cash provided by investing activities was $18.7 million, which consisted of $161.8 million in proceeds from the maturities of marketable securities, partially offset by $137.9 million of purchases of marketable securities and $5.1 million capital expenditures to purchase property and equipment.

Previous wording

Net Cash (Used In) Provided By Investing Activities

Current wording

Net Cash (Used In) Provided By Financing Activities

Previous wording

During the nine months ended September 30, 2024, cash provided by financing activities was $488.5 million which consisted of $499.3 million of net proceeds from issuance of common stock and pre-funded warrants in a private placement in February 2024 and $13.2 million in proceeds from the exercise of stock options and the Company's ESPP, partially offset by an aggregate of $24.0 million of payments related to our finance lease.

Current wording

During the three months ended March 31, 2025, cash used in financing activities was $3.8 million which consisted of the aggregate of $4.4 million of payments related to our finance lease, partially offset by the $0.6 million in proceeds from the exercise of stock options and the Company's ESPP.

Previous wording

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 nine months ended September 30, 2024.

Current wording

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, 2024, as filed with the SEC on February 27, 2025, 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 three months ended March 31, 2025.

Previous wording

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 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.

Current wording

There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2025, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025, that are of significance or potential significance to us.