Denali Therapeutics Inc.

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, 2025, as filed with the SEC on February 26, 2026 (the "2025 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2025 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 nine months ended September 30, 2026, the Company added significant accounting policies related to product revenue, accounts receivable, inventory, cost of goods sold, intangible assets and the liability related to the revenue participation right. Aside from these new accounting policies, there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2025 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 2025 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).

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, marketable securities, and accounts receivable. 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 September 30, 2026 and December 31, 2025, the Company hadno off-balance sheet concentrations of credit risk.

The Company’s accounts receivable are primarily related to product sales. For the three and nine months ended September 30, 2026, one customer accounted for substantially all product revenues. As of September 30, 2026, one customer accounted for substantially all accounts receivable related to product sales. The Company monitors the creditworthiness of its customers and collaboration partners and has not experienced significant credit losses to date.

The Company is subject to a number of risks similar to other early commercial-stage biopharmaceutical companies, including, but not limited to, the risk that its approved product, AVLAYAH®(tividenofusp alfa-eknm), may not achieve expected levels of market acceptance or commercial success; the need to obtain adequate additional funding to continue as a going concern; its history of significant losses and expectation of continued losses; possible failure or delay of current or future preclinical testing or clinical trials; its reliance on third parties to conduct its clinical trials, manufacture product, and support commercialization; the need to successfully develop, commercialize, and gain market acceptance of its product candidates; competitors developing new technological innovations; its rights to develop and commercialize its product candidates pursuant to the terms and conditions of licenses granted to the Company; protection of proprietary technology; the ability to make milestone, royalty or other payments due under license or collaboration agreements; the need to enforce its intellectual property rights; and the need to scale internal manufacturing and/or secure and maintain adequate manufacturing arrangements with third parties. If the Company does not successfully commercialize AVLAYAH or its other product candidates, it may be unable to generate sufficient product revenue or achieve profitability. Further, the Company is also subject to broad market risks and uncertainties, such as bank failures or instability in the financial services sector, geopolitical instability, war and armed conflicts, inflation, rising interest rates, and recession risks, as well as supply chain and labor shortages.

Investments

The Company holds an equity investment in a venture-backed privately held company. The privately held company is a Variable Interest Entity ("VIE"), but the Company is not the primary beneficiary. The Company does not have the power to direct the activities that most significantly impact the economic performance of the investee. The Company’s maximum exposure to loss from this VIE is limited to the value of the equity investment. The equity investment held by the Company lacks a readily determinable fair value and therefore the securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar equity securities of the same issuer. The Company reviews the carrying value of its equity investment for impairment whenever events or changes in business circumstances indicate the carrying amount of such asset may not be fully recoverable. Impairments, if any, are based on the excess of the carrying amount over the recoverable amount of the asset. There wereno impairments during the nine months ended September 30, 2026 and 2025.

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 restricted cash of $3.1 million as of September 30, 2026 and December 31, 2025, which is included within other non-current assets in the Condensed Consolidated Balance Sheets. Restricted cash relates to letters of credit supporting the Company’s headquarters building lease and a letter of credit supporting the Company’s credit card program.

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, short-term marketable securities or long-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.

Accounts Receivable

Accounts receivable represents amounts arising from product sales and is recorded net of allowances for credit losses, if required. The Company estimates an allowance for credit losses by considering factors such as credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The Company's payment terms are generally less than 90 days from the invoice date. The Company evaluates the creditworthiness of each counterparty on a regular basis. As of September 30, 2026, the credit profiles of the customers were deemed to be in good standing and, as such, an allowance for credit losses was not recorded.

Revenue Recognition

The Company recognizes product revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”).

In March 2026, the U.S. Food and Drug Administration granted accelerated approval of AVLAYAH® (tividenofusp alfa-eknm), and the Company commenced commercial sales in the United States during the second quarter of 2026. AVLAYAH is the Company’s only commercial product, and substantially all product revenue to date has been generated in the United States.

Under ASC 606, the Company is required to complete the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company sells AVLAYAH to a single specialty distributor ("Distributor”) in the US, which is the Company's sole customer, who delivers to (i) hospitals where patients are administered the medication in a healthcare setting and (ii) to a specialty pharmacy (“SP”) provider where patients are administered by a healthcare professional in either a healthcare professional or home setting.

The Company’s distribution agreements with the Distributor, together with each accepted purchase order, is accounted for as a contract with a single performance obligation — the delivery of AVLAYAH to the Distributor. Revenue is recognized when the Company satisfies a performance obligation by transferring control of the promised goods to the customer.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring AVLAYAH. The Company sells AVLAYAH at a Wholesale Acquisition Cost (“WAC”) and records product revenue at the net selling price (the transaction price) — WAC reduced by variable consideration and by consideration payable to the Distributor and to other parties in the distribution channel that does not represent payment for a distinct good or service. The Company estimates variable consideration using the most-likely-amount method and includes it in the transaction price only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the related uncertainty is resolved. Estimates are reassessed each reporting period, with any change recognized in net product revenue in the period of change. The components of variable consideration are:

•Distributor service fees — fees payable to the Distributor for distribution. These services are not distinct from the sale of AVLAYAH and the related fees, calculated as a contractual percentage of the WAC of product sold, are recorded as a reduction of product revenue when the related sales are recognized.

•Government rebates — amounts owed under the Medicaid Drug Rebate Program and supplemental state Medicaid agreements, refunds under the Medicare Part B discarded-drug provisions, and rebates to the U.S. Department of Veterans Affairs and the Department of Defense (including under the TRICARE program). The Company estimates these amounts using statutory and contractual rebate rates and probability-weighted assumptions for the expected payer and channel mix, recorded as a reduction of product revenue with a corresponding current liability.

•Product returns — the product may be returned only in the limited circumstances specified in the distribution agreement, principally product that is damaged or within a defined period of its expiration date. The Company records a reserve for estimated returns as a reduction of product revenue with a corresponding refund liability.

•Other fees and incentives — amounts payable to a specialty pharmacy that dispenses AVLAYAH purchased through the Distributor and co-pay assistance program for eligible patients with commercial insurance in the U.S. The co-pay assistance program assists commercially insured patients and is intended to reduce each participating patient’s portion of the financial responsibility of the purchase price up to a specified dollar amount of assistance. The Company records funds paid under the co-pay assistance program for each patient as a reduction of revenue.

Variable consideration payable to the Distributor, and to parties against which the Distributor has a contractual right of off-set — Distributor service fees, third-party-logistics fees, and government chargebacks processed through the Distributor is presented as a reduction of accounts receivable. Variable consideration payable to parties other than the Distributor is presented within other accrued expenses and other current liabilities.

Inventory

Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out ("FIFO") basis. Inventory costs consist primarily of raw materials, third-party contract manufacturing organization ("CMO") costs, and other direct production costs, including allocable overhead, related to our commercial product AVLAYAH. Inventory is valued using standard costing methodology, which approximates actual cost.

Prior to FDA approval, all costs incurred in connection with the manufacture of AVLAYAH were recorded as research and development expenses in the consolidated statements of operations in the period incurred.

The Company expenses costs associated with the manufacture of product candidates prior to regulatory approval. Inventory consists of the Company’s currently approved product, including raw materials and work-in-process.

The Company began capitalizing inventory costs associated with AVLAYAH upon receiving U.S. Food and Drug Administration ("FDA") accelerated approval in March 2026, at which time the inventory was determined to have probable future economic benefit. Additionally, inventory used in research and development activities is expensed to research and development at the time of such designation.

The Company evaluates its inventory on a periodic basis for obsolescence, slow-moving, excess, or otherwise unsalable items, and records a write-down to net realizable value when the carrying value is in excess of net realizable value and there are no alternative future uses for the inventory, or if inventory quantities exceed expected future demand prior to expiration. If the Company determines an adjustment is required to the carrying value of inventory, those adjustments are recognized as cost of goods sold in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Inventory that is expected to be consumed beyond our normal operating cycle is classified as non-current inventory and included within other non-current assets in the balance sheet.

Cost of Goods Sold

Cost of goods sold consists primarily of direct and indirect costs related to the manufacture of AVLAYAH for commercial sale, including third-party manufacturing costs, raw material and component costs, packaging services, freight, and storage costs.

Prior to the FDA approval of AVLAYAH in March 2026, costs incurred for the manufacture of AVLAYAH were recorded as research and development expenses and therefore are not included in cost of sales. As a result, the cost of goods sold related to AVLAYAH will initially reflect a lower average per unit cost of materials, as previously expensed inventory is utilized and sold to customers.

Intangible Assets

Milestone payments made to acquire or maintain rights to intellectual property associated with an approved product are capitalized when the related contingency is resolved and the payment becomes probable and payable. Amounts capitalized are recorded as intangible assets and generally amortized on a straight-line basis over the estimated useful life of the underlying intellectual property. The Company evaluates such intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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. The Company recognizes finance and operating lease right-of-use ("ROU") assets, and finance and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. The Company adjusts ROU assets as needed for any lease incentives it receives and for assets it purchases that are regarded as landlord-owned. 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.

The Company recognizes amortization of the ROU assets and interest on the lease liabilities for its finance lease. Finance lease ROU assets are amortized on a straight-line basis from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. Operating lease expense is recognized on a straight-line basis over the lease term.

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 has leases with lease and non-lease components, which the Company has elected to account for as a single lease component.

Liability Related to the Revenue Participation Right

The Company accounts for the synthetic royalty funding agreement with Royalty Pharma Investments 2023 ICAV ("Royalty Pharma") pursuant to which Royalty Pharma agreed to provide up to $275.0 million in funding to the Company in exchange for a 9.25% royalty on worldwide net sales of AVLAYAH as a debt financing under ASC Topic 470, Debt (ASC 470). The $200.0 million of proceeds received in March 2026 are recorded as a liability on the Company's Condensed Consolidated Balance Sheets, net of transaction costs.

The liability will be amortized under the effective interest method based on the Company's estimates of future royalty payments to Royalty Pharma over the life of the agreement. The resulting non-cash interest expense is recognized in Interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The liability related to the revenue participation right and related interest expense are based on current estimates of the amount and timing of projected royalty payments, which are based on estimates of future AVLAYAH net sales. The Company periodically assesses the forecasted net sales and to the extent the amount or timing of estimated royalty payments are materially different than previous estimates, the Company will account for any such change by adjusting the liability related to the sale of future revenues and prospectively recognizing the related non-cash interest expense.

The Company classifies the portion of the liability related to the revenue participation right that is expected to be amortized or settled within twelve months of the reporting date as current, with the remainder classified as non-current. Classification is based on forecasted royalty payments and the related recognition of interest and principal under the effective interest method.

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. The weighted-average common shares outstanding for the three and nine months ended September 30, 2026 include the pre-funded warrants to purchase shares of common stock that were issued in connection with the February 2024 private placement and December 2025 public offering, as discussed further in Note 11.

Diluted net income (loss) per share gives effect to potentially dilutive common stock equivalents, including outstanding stock options, unvested restricted stock units and shares issuable under the Employee Stock Purchase Plan, using the treasury stock method. Potential common shares are excluded from diluted net income (loss) per share when their effect would be anti-dilutive. For periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share because the effect of all potentially dilutive common shares is anti-dilutive.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments can be applied either prospectively or retrospectively. The Company has not early adopted this update and is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

2. Fair Value Measurements

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

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 nine months ended September 30, 2026 or for the year ended December 31, 2025.

3. Marketable Securities

All marketable securities were considered available-for-sale at September 30, 2026 and December 31, 2025. 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):

As of September 30, 2026 and December 31, 2025, the Company had marketable securities in an unrealized loss position. The Company hasnot recognized an allowance for credit losses as of September 30, 2026 or December 31, 2025. 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 September 30, 2026, all of the Company’s marketable securities have an effective maturity of less than three years.

4. Inventory

Inventory consisted of the following (in thousands):

No adjustments to the carrying value of inventory were recorded during the three and nine months ended September 30, 2026 and 2025, respectively. All inventory as of September 30, 2026 is classified as current.

5. Intangible Asset

In connection with the May 2018 acquisition of F-star Gamma Limited ("F-star Gamma") and related license arrangements, the Company is obligated to make contingent payments upon the achievement of specified preclinical, clinical, regulatory and commercial milestones. Additional information regarding these arrangements is included in Note 4, “Acquisition, License Agreement and Research and Development Funding Collaboration Agreement,” to the consolidated financial statements included in the Company’s 2025 Annual Report on Form 10-K.

In March 2026, following the U.S. Food and Drug Administration’s accelerated approval of AVLAYAH®, a $36.0 million milestone payment became due under this arrangement. The amount was capitalized as an intangible asset and is amortized on a straight-line basis over its estimated useful life. As of September 30, 2026, the Company had paid the $36.0 million milestone payment in full.

The Company recognized amortization expense of $0.8 million and $1.5 million for the three and nine months ended September 30, 2026, respectively. As of September 30, 2026, the accumulated amortization expense was $1.5 million, and the carrying value of the intangible asset was$34.5 million.

Future annual amortization expense for the unamortized intangible assets is as follows (in thousands):

In addition to the U.S. regulatory milestone described above, the Company may be required to make additional contingent consideration payments of up to $174.0 million, composed of $24.0 million due upon regulatory approval of AVLAYAH in the European Union, and up to $150.0 million in commercial contingent payments.

6. Research and Development Funding Collaboration Agreement

In January 2024, the Company entered into a Collaboration and Development Funding Agreement with an unrelated third party, which obligates the third party to provide up to $75.0 million of funding and collaborate with the Company to conduct a global Phase 2a study of DNL151 in patients with Parkinson’s disease and confirmed pathogenic variants of LRRK2. This arrangement is further described in Note 4, "Acquisition, License Agreement and Research and Development Funding Collaboration Agreement," to the consolidated financial statements in the 2025 Annual Report on Form 10-K.

Under this arrangement, the Company received $12.5 million during the nine months ended September 30, 2026, resulting in cumulative payments received of $62.5 million as of September 30, 2026. Payments received are recorded as a deferred research and development funding liability and recognized as an offset to research and development expenses as the underlying research and development costs are incurred. The Company recognized an offset to research and development expenses of $3.6 million and $3.7 million for the three months ended September 30, 2026 and 2025, respectively, and $17.2 million and $12.5 million for the nine months ended September 30, 2026 and 2025, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company recorded current deferred research and development funding liabilities of $16.4 million and $21.1 million on the Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025, respectively.

7. 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 TransportVehicle TM ("TV") 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 and July 2024 side letter 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 2025 Annual Report on Form 10-K.

In May 2026, the Company and Biogen announced topline results from the Phase 2b LUMA study of BIIB122/DNL151 in individuals with early-stage Parkinson’s disease. The LUMA study did not meet its primary or secondary endpoints. Based on these results, the Company and Biogen discontinued further development of BIIB122 in idiopathic Parkinson's disease. The Company continues to independently conduct the Phase 2a BEACON study evaluating the small molecule inhibitor in carriers of a pathogenic LRRK2 variant.

The Company hasno remaining performance obligations under the Biogen Collaboration Agreement, and thereforeno contract liability remained onthe Condensed Consolidated Balance Sheets as of September 30, 2026 or December 31, 2025. As of September 30, 2026, the Company hadnot 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, the February 2025 side letter, 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 2025 Annual Report on Form 10-K. The Company hasno remaining performance obligations under the Sanofi Collaboration Agreement, and thereforeno contract liability remains onthe Condensed Consolidated Balance Sheets as of September 30, 2026 or December 31, 2025.

Under the Sanofi Collaboration Agreement, the Company is eligible to receive milestone payments totaling up to approximately $495.0 million upon achievement of certain clinical, regulatory and sales milestone events for Peripheral Products, and variable royalties on worldwide net sales. As of September 30, 2026, the Company had earned milestone payments of$100.0 million and hadnot 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 2025 Annual Report on Form 10-K. There areno remaining performance obligations or potential payments remaining under the initial Takeda Option and Collaboration Agreement.

The opt-in by Takeda on the PTV:PGRN and ATV:TREM2 programs representedtwo 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 February 2025 ATV:TREM2 discontinuation and the PTV:PGRN Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

In April 2026, Takeda notified the Company of its decision to terminate the PTV:PGRN collaboration agreement in its entirety. As a result, the Company regained full rights to DNL593 and the related intellectual property portfolio. Subsequent to the effective date of the termination, there are no future milestones, costs, or profit sharing obligations related to this agreement. The Company did not recognize any revenue, gain, asset or other material accounting impact in connection with the termination, other than the final cost-sharing settlement. The final cost-sharing settlement related to the PTV:PGRN Collaboration Agreement is reflected in the cost sharing table below.

As of September 30, 2026, 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 hadnot recorded any product sales under either agreement.

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):

(1)No cost sharing reimbursement asset or liability was recorded as of September 30, 2026. As of December 31, 2025, $1.6 million of cost sharing reimbursements was recorded as a receivable within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets.

(2)Cost sharing payments due to Biogen of $0.7 million and $2.8 million were recorded within other accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025, respectively.

8. Balance Sheet Components

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

9. Liability Related to the Revenue Participation Right

In December 2025, the Company entered into a synthetic royalty funding agreement (the “Royalty Agreement”) with Royalty Pharma. Pursuant to the Royalty Agreement, Royalty Pharma agreed to provide up to $275.0 million in funding to the Company in exchange for a 9.25% royalty on worldwide net sales of AVLAYAH ("Revenue Participation Right").

The Company received $200.0 million in gross proceeds in March 2026 triggered by the U.S. Food and Drug Administration’s accelerated approval of AVLAYAH. The Company is entitled to receive an additional $75.0 million upon approval of AVLAYAH by the European Medicines Agency ("EMA") on or before December 31, 2029. The Company retains all worldwide development and commercialization rights to AVLAYAH.

The royalty obligation to Royalty Pharma will cease upon cumulative royalty payments reaching a cap of 3.0 times the total funding received, or 2.5 times the funding received if such cap is reached in respect of sales that occur on or before the end of the first quarter of 2039.

The $200.0 million, net of transaction costs of approximately $0.4 million, is recorded as a non-current liability on the Company's Condensed Consolidated Balance Sheet as of September 30, 2026 based on the estimated timing of future royalty payments. The royalty payments to Royalty Pharma will be recorded as a reduction of the liability. The additional $75.0 million contingent upon EMA approval of AVLAYAH has not been recognized as a liability as of September 30, 2026, as the receipt is contingent upon a future regulatory event. Upon receipt, the additional proceeds will be recorded as an increase to the liability, net of any incremental transaction costs, and the effective interest rate will be adjusted prospectively.

As of September 30, 2026, the Company's estimate of total future royalty payments resulted in an effective annual interest rate of approximately 12%, and the Company recorded $6.1 millionand$12.1 million of interest expense during the three and nine months ended September 30, 2026, respectively. A royalty payment of $0.3 million was made during the three and nine months ended September 30, 2026.

As of September 30, 2026, the carrying value of the liability approximates its estimated fair value. The Company’s projections of future royalty payments are subject to estimation uncertainty and are based on various assumptions underlying projected net product sales over the term of the agreement. These inputs are considered to be Level 3 inputs in the fair value hierarchy, as they involve unobservable inputs and judgment. Changes in these assumptions could have a material impact on the effective interest rate.

10. 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"), and in April 2023, the Company entered into a finance lease for its clinical manufacturing site in Salt Lake City (the "SLC Lease"). Both leases are further described in Note 7, "Commitments and Contingencies," to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

There were no changes to the terms of the leases recognized under ASC 842 during thethree and nine months ended September 30, 2026 or 2025.

The following table summarizes lease costs recognized for the periods presented (in thousands):

Operating cash flows for operating leases were $3.1 million and $3.0 million for the three months ended September 30, 2026 and 2025, respectively, and $9.1 million and $8.8 million for the nine months ended September 30, 2026 and 2025, respectively.

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

In the normal course of business, the Company enters into firm purchase commitments primarily related to supply of commercial product, certain research and development services, and clinical manufacturing activities. The Company had contractual obligations of $95.8 million as of September 30, 2026, of which $84.5 million related to supply of commercial product, and $44.3 million as of December 31, 2025.

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.

11. Common Stock

In December 2025, the Company entered into a public offering of 9,142,857 shares of the Company’s common stock and pre-funded warrants to purchase 2,285,714 shares of Common Stock. This public offering and the pre-funded warrants are both further described in Note 8, "Common Stock," to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K. In January 2026, the underwriters of the Company’s December 2025 public offering exercised their option to purchase an additional 746,468 shares of common stock, resulting in aggregate net proceeds to the Company of approximately $12.4 million.

As of September 30, 2026, pre-funded warrants to purchase 28,331,779 shares of common stock remained outstanding, and no pre-funded warrants were exercised during the nine months ended September 30, 2026. These warrants are classified as permanent equity because 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.

12. 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 2025 Annual Report on Form 10-K.

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2026:

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

Restricted Stock Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2026:

Stock-Based Compensation Expense

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

13. Net Income (Loss) Per Share

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

Potentially dilutive securities, including options issued and outstanding, Employee Stock Purchase Plan (“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 16.6 million and 28.3 million shares for the three and nine months ended September 30, 2026, respectively, and 27.4 million shares for both the three and nine months ended September 30, 2025.

14. Non-Marketable Equity Investment

In March 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 Tenvie Therapeutics, Inc. ("Tenvie"). This arrangement is further described in Note 13, "Divestiture of Preclinical Small Molecule Programs", to the consolidated financial statements in the 2025 Annual Report on Form 10-K.

The Company recorded the investment in the shares of Series A Preferred Stock at $15.0 million, which represents the fair value of the shares on the date of issuance. There have been no subsequent observable price changes in orderly transactions for the identical or similar equity securities of Tenvie, and as such, the measurement of this investment remains unchanged, with the $15.0 million included within other non-current assets in the Condensed Consolidated Balance Sheets as of both September 30, 2026 and December 31, 2025.

15. Segment Information

The Company hasone operating segment with the goal to discover, develop and commercialize therapeutics (“Therapeutics”). There have been no material changes to the Company's segment structure, the basis of segmentation, or the measurement basis for segment profit or loss or segment assets, compared to those disclosed in Note 14, "Segment Information", to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

The following table presents selected financial information with respect to the Company’s single operating segment for thethree and nine months ended September 30, 2026 and 2025 (in thousands):

There is no difference between the segment net income (loss) and total consolidated net income (loss) for thethree and nine months ended September 30, 2026 and 2025.

16. Sale of Priority Review Voucher

In June 2026, the Company entered into an asset purchase agreement (the "PRV Transfer Agreement") for the sale of its rare pediatric disease priority review voucher ("PRV") for gross proceeds of $195.0 million in cash. The Company received the PRV in connection with the FDA accelerated approval of AVLAYAH in March 2026.

In July 2026, the Company completed the sale and received net proceeds of $194.0 million after deducting transaction costs paid at closing. These net proceeds were recognized as a gain, presented separately within Other income in the Company's Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2026.