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Why Is Denali Therapeutics Inc. (DNLI) Down 27.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Denali Therapeutics Inc. (DNLI - Free Report) . Shares have lost about 27.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Denali Therapeutics Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Denali Q2 Earnings Beat, Pipeline Progress in Focus

Denali Therapeutics incurred a loss of 48 cents per share in second-quarter 2022, narrower than the Zacks Consensus Estimate of a loss of 52 cents and the year-ago quarter’s loss of 50 cents per share.

Collaboration revenues came in at $52.5 million in the reported quarter, beating the Zacks Consensus Estimate of $45 million and up from $22.9 million in the year-ago period. The increase was primarily due to a $12.0 million preclinical milestone earned for approval of the CTA for TAK-920/DNL919 (ATV:TREM2) in the second quarter and $40.0 million of milestone revenues earned in April 2022 upon dosing the first patient in a phase II  study of SAR443820/DNL788 in individuals with amyotrophic lateral sclerosis (ALS).

Quarter in Detail

Research and development expenses were $92.7 million in the quarter under review compared with $65.7 million in the year-ago period.

General and administrative expenses were $21.2 million, up from $19 million in the year-ago quarter.

Cash, cash equivalents and marketable securities were approximately $1.16 billion as of Jun 30, 2022.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -5.05% due to these changes.

VGM Scores

Currently, Denali Therapeutics Inc. has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Denali Therapeutics Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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