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Denali Q1 Loss Wider Than Expected, Hunter Syndrome Drug in Focus
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Denali Therapeutics (DNLI - Free Report) reported a first-quarter 2025 loss of 78 cents per share, wider than the Zacks Consensus Estimate of a loss of 71 cents. The company reported a loss of 68 cents in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The loss per share deteriorated year over year due to an increase in total operating expenses.
In the absence of a marketed product, the company only recognizes revenues from ongoing collaborations. Denali did not generate collaboration revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $8 million.
Shares of DNLI have lost 31.4% year to date compared with the industry’s 2.2% decline.
Image Source: Zacks Investment Research
Highlights of DNLI’s Q1 Results
Research and development expenses increased 8.6% to $116.3 million. The increase was primarily to increased spending on clinical programs, such as DNL126, as well as preclinical programs, such as the OTV franchise. An increase in other research and development expenses, including lab consumables, consultants and general facilities costs, also contributed to the surge.
General and administrative expenses increased 16.4% to $29.4 million due to activities related to the submission of a biologics license application (BLA) for tividenofusp alfa, which was completed in May 2025, and preparations for a commercial launch.
As of May 31, 2025, cash, cash equivalents, and marketable securities amounted to approximately $1.05 billion.
DNLI Makes Encouraging Pipeline Progress
Denali completed the submission of a BLA for tividenofusp alfa under the FDA’s accelerated approval pathway based on data from the phase I/II study in participants with Hunter syndrome.
The submission of the final BLA modules initiates the FDA’s 60-day filing review process. A target action date will be announced by the regulatory body upon acceptance of the application.
In January 2025, the FDA granted Breakthrough Therapy Designation for tividenofusp alfa for the treatment of individuals with Hunter syndrome (MPS II).
Denali is conducting the ongoing global phase II/III COMPASS study to support global regulatory approvals.
It is also evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). Last month, Denali announced productive collaboration and discussions with the FDA under the START program (“Support for clinical Trials Advancing Rare Disease Therapeutics”) around the potential for an accelerated development and approval path for DNL126 in the treatment of Sanfilippo syndrome Type A.
Another candidate in DNLI’s pipeline is TAK-594/DNL593. Denali has collaborated with Takeda for the co-development and co-commercialization of DNL593, a therapeutic candidate engineered for the delivery of progranulin (PGRN) across the blood brain barrier (BBB) and into lysosomes for the treatment of frontotemporal dementia (FTD) associated with a mutation in the granulin (GRN) gene. Denali is conducting the ongoing phase I/II study of DNL593 in FTD-GRN.
Denali and Biogen (BIIB - Free Report) are jointly evaluating an LRRK2 inhibitor, BIIB122/DNL151, in development to treat Parkinson’s disease (PD).
Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage PD. Biogen recently announced that the LUMA study was fully enrolled with a readout expected in 2026.
Meanwhile, Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease. Dosing is currently ongoing.
DNL343, an eIF2B activator, is being evaluated in a phase II/III HEALEY study to treat amyotrophic lateral sclerosis (ALS).
However, in January 2025, Denali announced that the primary endpoint was not met in the HEALEY ALS platform trial.
In March 2025, Denali provided an update stating that additional analyses did not demonstrate a treatment effect on neurofilament light (NfL), a biomarker of neuronal damage, over the 24-week, double-blind period, nor in a subset of participants who completed an additional 28 weeks of open-label active treatment extension. Based on these outcomes, the active treatment extension in Regimen G was discontinued.
Denali and partner Sanofi (SNY - Free Report) were co-developing SAR443820/DNL788. We remind investors that Sanofi had earlier discontinued the development of SAR443820/DNL788 for the treatment of ALS based on the results of the phase II HIMALAYA study, which did not meet the primary endpoint.
Denali also has multiple early-stage clinical and preclinical programs in its pipeline.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali’s pipeline progress is encouraging. A potential approval of tividenofusp alfa should be a significant boost for DNLI. The company’s sound cash position is a positive and ensures its ability to fund ongoing programs.
Image: Bigstock
Denali Q1 Loss Wider Than Expected, Hunter Syndrome Drug in Focus
Denali Therapeutics (DNLI - Free Report) reported a first-quarter 2025 loss of 78 cents per share, wider than the Zacks Consensus Estimate of a loss of 71 cents. The company reported a loss of 68 cents in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The loss per share deteriorated year over year due to an increase in total operating expenses.
In the absence of a marketed product, the company only recognizes revenues from ongoing collaborations. Denali did not generate collaboration revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $8 million.
Shares of DNLI have lost 31.4% year to date compared with the industry’s 2.2% decline.
Image Source: Zacks Investment Research
Highlights of DNLI’s Q1 Results
Research and development expenses increased 8.6% to $116.3 million. The increase was primarily to increased spending on clinical programs, such as DNL126, as well as preclinical programs, such as the OTV franchise. An increase in other research and development expenses, including lab consumables, consultants and general facilities costs, also contributed to the surge.
General and administrative expenses increased 16.4% to $29.4 million due to activities related to the submission of a biologics license application (BLA) for tividenofusp alfa, which was completed in May 2025, and preparations for a commercial launch.
As of May 31, 2025, cash, cash equivalents, and marketable securities amounted to approximately $1.05 billion.
DNLI Makes Encouraging Pipeline Progress
Denali completed the submission of a BLA for tividenofusp alfa under the FDA’s accelerated approval pathway based on data from the phase I/II study in participants with Hunter syndrome.
The submission of the final BLA modules initiates the FDA’s 60-day filing review process. A target action date will be announced by the regulatory body upon acceptance of the application.
In January 2025, the FDA granted Breakthrough Therapy Designation for tividenofusp alfa for the treatment of individuals with Hunter syndrome (MPS II).
Denali is conducting the ongoing global phase II/III COMPASS study to support global regulatory approvals.
It is also evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). Last month, Denali announced productive collaboration and discussions with the FDA under the START program (“Support for clinical Trials Advancing Rare Disease Therapeutics”) around the potential for an accelerated development and approval path for DNL126 in the treatment of Sanfilippo syndrome Type A.
Another candidate in DNLI’s pipeline is TAK-594/DNL593. Denali has collaborated with Takeda for the co-development and co-commercialization of DNL593, a therapeutic candidate engineered for the delivery of progranulin (PGRN) across the blood brain barrier (BBB) and into lysosomes for the treatment of frontotemporal dementia (FTD) associated with a mutation in the granulin (GRN) gene. Denali is conducting the ongoing phase I/II study of DNL593 in FTD-GRN.
Denali and Biogen (BIIB - Free Report) are jointly evaluating an LRRK2 inhibitor, BIIB122/DNL151, in development to treat Parkinson’s disease (PD).
Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage PD. Biogen recently announced that the LUMA study was fully enrolled with a readout expected in 2026.
Meanwhile, Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease. Dosing is currently ongoing.
DNL343, an eIF2B activator, is being evaluated in a phase II/III HEALEY study to treat amyotrophic lateral sclerosis (ALS).
However, in January 2025, Denali announced that the primary endpoint was not met in the HEALEY ALS platform trial.
In March 2025, Denali provided an update stating that additional analyses did not demonstrate a treatment effect on neurofilament light (NfL), a biomarker of neuronal damage, over the 24-week, double-blind period, nor in a subset of participants who completed an additional 28 weeks of open-label active treatment extension. Based on these outcomes, the active treatment extension in Regimen G was discontinued.
Denali and partner Sanofi (SNY - Free Report) were co-developing SAR443820/DNL788. We remind investors that Sanofi had earlier discontinued the development of SAR443820/DNL788 for the treatment of ALS based on the results of the phase II HIMALAYA study, which did not meet the primary endpoint.
Denali also has multiple early-stage clinical and preclinical programs in its pipeline.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali Therapeutics Inc. price-consensus-eps-surprise-chart | Denali Therapeutics Inc. Quote
Our Take on DNLI’s Performance
Denali’s pipeline progress is encouraging. A potential approval of tividenofusp alfa should be a significant boost for DNLI. The company’s sound cash position is a positive and ensures its ability to fund ongoing programs.
Zacks Rank
Denali currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.