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Denali (DNLI) Q2 Earnings Beat on Higher Collaboration Revenues
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Denali Therapeutics (DNLI - Free Report) delivered earnings of $1.30 per share for second-quarter 2023 on higher collaboration revenues. The Zacks Consensus Estimate was pegged at a loss of 86 cents per share. The company had recorded a loss of 48 cents in the year-ago quarter.
Collaboration revenues came in at $294.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $11 million and surging significantly from $52.5 million in the year-ago quarter.
The massive year-over-year increase of $241.6 million in collaboration revenues was primarily due to an increase of $293.6 million in revenues under the company’s collaboration agreement with Biogen (BIIB - Free Report) .
In April 2023, Denali announced that Biogen exercised its option to license Denali’s ATV:Abeta. Biogen will assume responsibility for all development and commercial activities as well as associated expenses. Denali received a one-time option exercise payment and if certain milestones are achieved, Denali will be eligible to receive potential development and commercial milestone payments and royalties based on future net sales.
Denali’s shares have lost 11.1% in the year so far compared with the industry’s 12.5% decline.
Image Source: Zacks Investment Research
Quarter in Detail
Research and development expenses increased 5.1% to $97.5 million in the quarter under review. The hike was due to increases in ETV:IDS and eIF2B programs’ external expenses reflecting the continued progress of these programs in clinical trials during 2023.
General and administrative expenses increased 23.4% to $26.1 million.
Cash, cash equivalents and marketable securities were $1.19 billion as of Jun 30, 2023 compared with $1.29 billion as of Mar 31, 2022.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali had also collaborated with Biogen to advance its LRRK2 inhibitor program to address Parkinson’s disease (PD). Biogen was conducting two late-stage studies: the phase IIb LUMA study in participants with early-stage PD and the phase III LIGHTHOUSE study in participants with PD and a confirmed LRRK2 pathogenic variant.
However, in June, Denali and Biogen announced plans to revise the clinical development program for BIIB122/DNL151 based on a review of portfolio timelines and resource prioritization.
Hence, taking into account the LIGHTHOUSE study’s complexity, including the long timeline with anticipated study completion in 2031, Biogen and Denali plan to refocus their efforts to enable a timely readout on efficacy in idiopathic early-stage PD while gaining further clinical data in Parkinson’s disease with and without an LRRK2 mutation. Consequently, Biogen and Denali will modify the LUMA study’s enrollment criteria to allow for the inclusion of eligible participants with PD and a confirmed pathogenic variant of LRRK2, in addition to continuing to enroll eligible participants with idiopathic early-stage PD. Collectively, the data from the LUMA study will inform the next steps for developing BIIB122 in PD.
In June, Denali announced new interim results from the ongoing open-label, single-arm phase I/II study of DNL310 in children with Hunter syndrome (MPS II).
Results demonstrated a robust reduction in neurofilament light (NfL), a marker of neuroaxonal damage. A decline in serum NfL levels was observed after six months of treatment with DNL310, reaching a statistically significant reduction of approximately 40% at week 61 and 64% after two years of treatment with DNL310 compared with baseline.
Denali also announced that the FDA had recently recommended Denali assess NfL as an exploratory endpoint to evaluate its potential as a possible biomarker to assess diagnostic, prognostic or therapeutic response in subjects with neuronopathic MPS II. Denali intends to share the new NfL data with the FDA at an upcoming meeting as part of the ongoing dialogue related to the DNL310 development program.
Denali and partner Sanofi (SNY - Free Report) are co-developing SAR443820. Sanofi is conducting the global phase II HIMALAYA study for participants with amyotrophic lateral sclerosis.
Both companies are also developing SAR443122/DNL758 (eclitasertib). In June, Sanofi completed a phase II study of DNL758 in patients with cutaneous lupus erythematosus and its data analysis is ongoing. Sanofi is also conducting a mid-stage study of SAR443122 in patients with ulcerative colitis.
Over the past 60 days, loss estimates for ACAD have narrowed to 41 cents from 56 cents for 2023. ACAD topped earnings estimates in two of the last four quarters and missed in the remaining two, the average surprise being 20.33%.
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Denali (DNLI) Q2 Earnings Beat on Higher Collaboration Revenues
Denali Therapeutics (DNLI - Free Report) delivered earnings of $1.30 per share for second-quarter 2023 on higher collaboration revenues. The Zacks Consensus Estimate was pegged at a loss of 86 cents per share. The company had recorded a loss of 48 cents in the year-ago quarter.
Collaboration revenues came in at $294.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $11 million and surging significantly from $52.5 million in the year-ago quarter.
The massive year-over-year increase of $241.6 million in collaboration revenues was primarily due to an increase of $293.6 million in revenues under the company’s collaboration agreement with Biogen (BIIB - Free Report) .
In April 2023, Denali announced that Biogen exercised its option to license Denali’s ATV:Abeta. Biogen will assume responsibility for all development and commercial activities as well as associated expenses. Denali received a one-time option exercise payment and if certain milestones are achieved, Denali will be eligible to receive potential development and commercial milestone payments and royalties based on future net sales.
Denali’s shares have lost 11.1% in the year so far compared with the industry’s 12.5% decline.
Image Source: Zacks Investment Research
Quarter in Detail
Research and development expenses increased 5.1% to $97.5 million in the quarter under review. The hike was due to increases in ETV:IDS and eIF2B programs’ external expenses reflecting the continued progress of these programs in clinical trials during 2023.
General and administrative expenses increased 23.4% to $26.1 million.
Cash, cash equivalents and marketable securities were $1.19 billion as of Jun 30, 2023 compared with $1.29 billion as of Mar 31, 2022.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali Therapeutics Inc. price-consensus-eps-surprise-chart | Denali Therapeutics Inc. Quote
Recent Updates
Denali had also collaborated with Biogen to advance its LRRK2 inhibitor program to address Parkinson’s disease (PD). Biogen was conducting two late-stage studies: the phase IIb LUMA study in participants with early-stage PD and the phase III LIGHTHOUSE study in participants with PD and a confirmed LRRK2 pathogenic variant.
However, in June, Denali and Biogen announced plans to revise the clinical development program for BIIB122/DNL151 based on a review of portfolio timelines and resource prioritization.
Hence, taking into account the LIGHTHOUSE study’s complexity, including the long timeline with anticipated study completion in 2031, Biogen and Denali plan to refocus their efforts to enable a timely readout on efficacy in idiopathic early-stage PD while gaining further clinical data in Parkinson’s disease with and without an LRRK2 mutation. Consequently, Biogen and Denali will modify the LUMA study’s enrollment criteria to allow for the inclusion of eligible participants with PD and a confirmed pathogenic variant of LRRK2, in addition to continuing to enroll eligible participants with idiopathic early-stage PD. Collectively, the data from the LUMA study will inform the next steps for developing BIIB122 in PD.
In June, Denali announced new interim results from the ongoing open-label, single-arm phase I/II study of DNL310 in children with Hunter syndrome (MPS II).
Results demonstrated a robust reduction in neurofilament light (NfL), a marker of neuroaxonal damage. A decline in serum NfL levels was observed after six months of treatment with DNL310, reaching a statistically significant reduction of approximately 40% at week 61 and 64% after two years of treatment with DNL310 compared with baseline.
Denali also announced that the FDA had recently recommended Denali assess NfL as an exploratory endpoint to evaluate its potential as a possible biomarker to assess diagnostic, prognostic or therapeutic response in subjects with neuronopathic MPS II. Denali intends to share the new NfL data with the FDA at an upcoming meeting as part of the ongoing dialogue related to the DNL310 development program.
Denali and partner Sanofi (SNY - Free Report) are co-developing SAR443820. Sanofi is conducting the global phase II HIMALAYA study for participants with amyotrophic lateral sclerosis.
Both companies are also developing SAR443122/DNL758 (eclitasertib). In June, Sanofi completed a phase II study of DNL758 in patients with cutaneous lupus erythematosus and its data analysis is ongoing. Sanofi is also conducting a mid-stage study of SAR443122 in patients with ulcerative colitis.
Zacks Rank and Stocks to Consider
Denali currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the biotech sector is Acadia Pharmaceuticals (ACAD - Free Report) , which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, loss estimates for ACAD have narrowed to 41 cents from 56 cents for 2023. ACAD topped earnings estimates in two of the last four quarters and missed in the remaining two, the average surprise being 20.33%.