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Denali (DNLI) Q4 Loss Wider Than Expected, Revenues Lag

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Denali Therapeutics (DNLI - Free Report) incurred a loss of 62 cents per share for fourth-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 41 cents. In the year-ago quarter, the company reported earnings of $1.91 per share.

Collaboration revenues came in at $12.5 million for the reported quarter, missing the Zacks Consensus Estimate of $38 million and declining from $316.8 million in the year-ago period. The year-over-year decline was primarily owing to a decrease in revenues from the company’s collaboration with Biogen (BIIB - Free Report) .

In the year so far, Denali’s shares have declined 27% compared with the industry’s 15.8% decline.

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Quarter in Detail

Research and development expenses were $67.9 million for the quarter under review compared with $54.7 million in the year-ago period, primarily driven by an increase in personnel-related costs.

General and administrative expenses were $21.8 million, up from $18 million in the year-ago quarter due to an increase in personnel-related costs, including stock-based compensation, primarily due to higher headcount and additional equity award grants.

Cash, cash equivalents and marketable securities were approximately $1.3 billion as of Dec 31, 2021.

Full-Year Results

In 2021, Denali Therapeutics generated revenues of $48.7 million, reflecting a significant year-over-year decline from the year-ago figure of $335.7 million.

For the same period, the company reported a loss of $2.39 per share versus earnings of 63 cents in the year-ago period.

2022 Guidance

Denali anticipates an increase in cash operating expenses by 25-30% in 2022 from the year-ago period.

Recent Updates

Denali is collaborating with Biogen to advance its LRRK2 inhibitor program to address Parkinson’s disease (PD). Both DNLI and Biogen plan to initiate dosing PD patients with their investigational LRRK2 inhibitor, DNL151, in two separate clinical studies in 2022. While the phase IIb LUMA study will evaluate the inhibitor in PD patients without LRRK2 mutations, the phase III LIGHTHOUSE study will evaluate DNL151 in PD patients with LRRK2 mutations. Biogen will lead both the studies.

Denali remains on track to begin dosing patients in the phase II/III study evaluating DNL310, an investigational brain-penetrant enzyme replacement therapy, to treat Hunter syndrome in first-half 2022.

The company has also partnered with Sanofi (SNY - Free Report) for its two separate receptor-interacting serine/threonine protein kinase 1 ("RIPK1") inhibitor programs to address neurological diseases using central nervous system (CNS)-penetrant RIPK1 inhibitors and peripheral inflammatory diseases using non-CNS penetrant RIPK1 inhibitors.

Sanofi continues to enroll patients in a phase II study of DNL758, a peripherally-restricted small molecule inhibitor of RIPK1, in patients with cutaneous lupus erythematosus (CLE), which has already commenced dosing. Sanofi also plans to evaluate the candidate in a phase II study in ulcerative colitis.

Sanofi also plans to start dosing patients with DNL788, its CNS-penetrant RIPK1 inhibitor, in a phase II HIMALAYA study in first-quarter 2022 to treat ALS. A phase II study is also being planned to evaluate the candidate in multiple sclerosis indication.

Denali also has a collaboration and option agreement with Takeda Pharmaceutical Company Limited (TAK - Free Report) , whereby it granted Takeda an option to develop and commercialize certain biologic products that are enabled by Denali’s delivery technology and intended for the treatment of neurodegenerative disorders.

Last November, Takeda exercised its option to the PTV:PGRN program. Takeda will now co-develop and co-commercialize DNL593, an investigational therapy for frontotemporal dementia-granulin. A phase I/II study evaluating the candidate in healthy volunteers is expected to begin in first-quarter 2022.

Zacks Rank

Denali currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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