Denali Therapeutics ((DNLI Quick QuoteDNLI - Free Report) ) reported a second-quarter 2025 loss of 72 cents per share, narrower than the Zacks Consensus Estimate of a loss of 74 cents. The company reported a loss of 59 cents in the year-ago quarter.

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 $25 million.

Shares of DNLI have lost 31.7% year to date compared with the industry’s 0.6% decline.

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Highlights of DNLI’s Q2 Results

Research and development expenses increased 12.4% to $102.7 million. The increase was primarily due to increased spending on multiple preclinical programs. An increase in other research and development expenses, consultants and general facilities costs also contributed to the surge.

General and administrative expenses increased 28% to $32.3 million due to activities related to the preparations for a potential launch of tividenofusp alfa.

As of June 30, 2025, cash, cash equivalents, and marketable securities amounted to approximately $977.4 million.

DNLI Makes Encouraging Pipeline Progress

In July 2025, Denali announced that the FDA accepted its biologics license application (BLA) for pipeline candidate tividenofusp alfa for priority review. The regulatory body assigned a target action date of Jan. 5, 2026.

The BLA seeks accelerated approval based on a data package, including results from the phase I/II study in individuals with Hunter syndrome. The FDA had previously granted tividenofusp alfa Breakthrough Therapy, Fast Track, Orphan Drug, and Rare Pediatric Disease designations.

Tividenofusp alfa is an investigational, next-generation enzyme replacement therapy designed to cross the blood-brain barrier (BBB) and deliver the iduronate-2-sulfatase (IDS) enzyme throughout the body and brain.

Denali continues to prepare for commercial launch and is conducting the phase II/III COMPASS study to support global regulatory submissions.

Denali is also evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). Concurrent with the quarterly results, Denali announced that it has reached alignment with the FDA’s Center for Drug Evaluation and Research that cerebrospinal fluid heparan sulfate (CSF HS) may be considered a reasonably likely surrogate endpoint to predict clinical benefit and may therefore be used to support accelerated approval of DNL126 for MPS IIIA.

Data from the ongoing open-label phase I/II study at week 49 is consistent with previously announced 25-week data, demonstrating a significant reduction in CSF HS from baseline, including normalization, and a safety profile that supports continued development. Denali has almost completed enrollment in the phase I/II study, and planning is underway for a confirmatory global phase III study.

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 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 Quick QuoteBIIB - 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. In May 2025, Biogen 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.

Denali expects to submit regulatory applications to begin clinical testing of one to two TV-enabled programs each year over the next three years across its Enzyme TV (ETV), Antibody TV (ATV), and Oligonucleotide TV (OTV) franchises. The most advanced programs include: DNL952 (ETV: GAA) for Pompe disease; DNL111 (ETV:GCase) for Parkinson’s/Gaucher disease; DNL622 (ETV:IDUA) for MPS I; DNL921 (ATV:Abeta) for Alzheimer’s disease; DNL628 (OTV:MAPT) for Alzheimer’s disease; and DNL422 (OTV:SNCA) for Parkinson’s disease.

Our Take on DNLI’s Performance

Denali’s recent pipeline progress is impressive. A potential approval of tividenofusp alfa should be a significant boost for DNLI. The company’s progress with DNL126 is encouraging as well.

The company’s sound cash position is a positive as well and ensures its ability to fund ongoing programs.

Zacks Rank and Key Picks

Denali currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the pharma/biotech sector are CorMedix ((CRMD Quick QuoteCRMD - Free Report) ) and Bayer ((BAYRY Quick QuoteBAYRY - Free Report) ). While CRMD sports a Zacks Rank #1 (Strong Buy) at present, BAYRY carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for CorMedix’s earnings per share (EPS) have increased from 93 cents to 97 cents for 2025. During the same period, EPS estimate for 2026 has inched up to $1.65 from $1.64. Year to date, shares of CRMD have rallied 24%.

CorMedix’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 34.85%.

BAYRY’s EPS estimate has increased from $1.25 to $1.30 for 2025 over the past 60 days and the same for 2026 has risen from $1.31 to $1.35. Year to date, shares of Bayer have surged 52.7%.