Denali Therapeutics Inc.
For the period ended Dec 31, 2025. Filed Feb 26, 2026.
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FY2025 · Filed Feb 26, 2026
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Report of Independent Registered Public Accounting Firm (PCAOB ID:
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Denali Therapeutics Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Denali Therapeutics Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Accrued and prepaid clinical research and development costs | |
| Description of the Matter | As more fully described in Note 1 to the consolidated financial statements, the Company records accrued and prepaid clinical research and development (R&D) costs based on information obtained from vendors including contract research organizations. Each reporting period, estimation is required to determine the costs for certain services when the Company has either not been invoiced or has not received information from vendors regarding actual costs incurred to determine the clinical research and development expenses incurred during the period, and the accrued and prepaid amounts in relation to payments for those services. As of December 31, 2025, accrued and prepaid clinical research and development costs were $13.7 million and $7.3 million, respectively. The accrued and prepaid clinical research and development costs (“Accrued and Prepaid Clinical R&D Costs”) are based in part on estimates for certain clinical research and developments costs incurred under the Company’s service agreements with vendors including contract research organizations. The Company expenses clinical research and development costs incurred based on several factors, such as information obtained from vendors and estimates of certain costs and services completed by certain vendors. |
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| Auditing the Company's accounting for Accrued and Prepaid Clinical R&D Costs was complex due to the estimation of costs for certain services when the Company has either not been invoiced or has not received information regarding actual costs incurred. | |
| How We Addressed the Matter in Our Audit | We evaluated and tested the design and operating effectiveness of the Company’s internal controls over management’s process to account for Accrued and Prepaid Clinical R&D Costs, including management’s controls over the completeness and accuracy of the data and the process used in determining these costs. |
| To test the Accrued and Prepaid Clinical R&D Costs, our audit procedures included, among others, confirmation directly with vendors of the completeness of the terms and conditions of significant clinical R&D service agreements and the data used by management in the determination of the Company’s clinical costs incurred. Additionally, we tested the completeness and accuracy of the underlying inputs used in the Company’s analyses through verification of significant inputs, such as costs incurred, invoices received prior to and after the balance sheet, and the terms and conditions of the underlying agreements. We evaluated the completeness of services rendered by the vendors, including examination of meeting materials and performing inquiries of R&D personnel outside the accounting department, to evaluate the completeness of clinical R&D service agreements and the costs incurred by the Company. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2015.
San Mateo, California
February 26, 2026
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