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DNLI Q1 Loss Narrower Than Expected, Avlayah Approval Boosts Prospects
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Key Takeaways
Denali won FDA approval for Avlayah, a new Hunter syndrome therapy targeting neurological symptoms.
DNLI ended Q1 with $1.05B in cash, supporting ongoing pipeline and launch activities.
Denali expects mid-2026 data from BIIB122 studies in Parkinson's disease with Biogen.
Denali Therapeutics (DNLI - Free Report) reported a first-quarter 2026 loss of 69 cents per share, narrower than the Zacks Consensus Estimate of a loss of 73 cents. The company had incurred a loss of 78 cents in the year-ago quarter.
In late March, Denali secured a major regulatory win with the FDA approval of lead pipeline candidate tividenofusp alfa-eknm, under the brand name Avlayah, for the treatment of Hunter Syndrome (MPS II). The FDA granted accelerated approval to Avlayah, marking the first new treatment option in nearly 20 years for patients with Hunter syndrome, a rare lysosomal storage disorder. It is also the first approved therapy in a new class of biologics designed to cross the blood-brain barrier by targeting the transferrin receptor. The continued approval for this indication may be contingent upon verification of clinical benefit in a confirmatory study.
Avlayah is an enzyme replacement therapy indicated for pediatric patients with MPS II, targeting neurological symptoms when initiated early. However, the drug is yet to be commercially launched in the United States, and therefore, Denali did not generate any revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $10 million. The company also periodically recognizes collaboration revenues.
Following Avlayah approval, the FDA granted Denali a Rare Pediatric Disease Priority Review Voucher, which can be used to secure priority review for a future marketing application or transferred to another sponsor.
Highlights of DNLI’s Q1 Results
Research and development expenses decreased 11% to $103.8 million due to the timing of manufacturing of Avlayah commercial supply in the first quarter of 2025, as well as lower external expenses related to small molecule programs.
General and administrative expenses increased 14% to $33.5 million primarily due to higher personnel-related expenses resulting from increased headcount in the first quarter of 2026, reflecting staffing additions made throughout 2025 to support Avlayah’s post-launch activities.
As of March 31, 2026, cash, cash equivalents, and marketable securities amounted to approximately $1.05 billion compared with $966.2 million as of Dec. 31, 2025.
Shares of DNLI have gained 19.4% year to date against the industry’s 0.2% decline.
Image Source: Zacks Investment Research
DNLI’s Key Pipeline Updates
Denali’s ongoing global phase II/III COMPASS study is expected to provide confirmatory data and support regulatory filings for tividenofusp alfa-eknm worldwide, including in young adult patients with Hunter syndrome. Positive outcomes from this study could further expand the drug’s commercial potential and reinforce DNLI’s position in the rare neurodegenerative disease market.
Denali is evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). It is an investigational intravenously administered ETV-enabled SGSH replacement therapy, being developed to target the neurological and systemic manifestations of the disease by delivering the enzyme to both the brain and body. Per DNLI, the phase I/II MPS IIIA study is ongoing, while start-up activities for a global phase III confirmatory study for this indication are also underway. A regulatory submission with potential accelerated approval is anticipated in 2027.
Denali is also developing other candidates in partnership with Biogen (BIIB - Free Report) and Sanofi (SNY - Free Report) .
Denali and Biogen continue co-development of BIIB122/DNL151.
Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage Parkinson’s disease (PD). Data is expected in mid-2026. Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease.
Sanofi is developing eclitasertib for moderate to severe ulcerative colitis. Data from the phase II study is expected in the first half of the year.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali is also developing DNL952, an ETV-enabled therapy designed to enhance the delivery of the missing GAA enzyme to muscle tissues and across the blood-brain barrier into the brain, with phase I study start-up activities currently underway.
Last month, Denali announced that former partner Takeda (TAK - Free Report) decided to terminate their collaboration agreement to co-develop and co-commercialize DNL593 (PTV: PGRN). Per DNLI, Takeda’s decision was based on strategic priorities and not on any efficacy or safety issues. Following the termination of the co-development agreement, Denali regained full ownership of DNL593 along with its intellectual property.
Denali is conducting a phase I/II study evaluating DNL593, an investigational, intravenously-administered progranulin replacement therapy that uses its PTV platform to deliver progranulin across the blood-brain barrier into the brain for patients with frontotemporal dementia caused by GRN mutations. Enrollment in the study is complete with 40 participants, and results are expected by the end of 2026.
Another candidate in Denali Therapeutics’ pipeline is DNL628, an investigational OTV-enabled therapy for Alzheimer’s disease designed to cross the blood-brain barrier and reduce tau protein levels by targeting the MAPT gene. The first patient was dosed in the phase Ib study in March 2026, with data expected in the first half of 2027.
Our Take on DNLI’s Performance
The approval of Avlayah has significantly boosted DNLI’s growth prospects. The company’s progress with DNL126 is encouraging as well.
The company’s sound cash position is a positive and underscores its ability to fund ongoing programs.
View the Zacks #1 Rank List
Image: Bigstock
DNLI Q1 Loss Narrower Than Expected, Avlayah Approval Boosts Prospects
Key Takeaways
Denali Therapeutics (DNLI - Free Report) reported a first-quarter 2026 loss of 69 cents per share, narrower than the Zacks Consensus Estimate of a loss of 73 cents. The company had incurred a loss of 78 cents in the year-ago quarter.
In late March, Denali secured a major regulatory win with the FDA approval of lead pipeline candidate tividenofusp alfa-eknm, under the brand name Avlayah, for the treatment of Hunter Syndrome (MPS II). The FDA granted accelerated approval to Avlayah, marking the first new treatment option in nearly 20 years for patients with Hunter syndrome, a rare lysosomal storage disorder. It is also the first approved therapy in a new class of biologics designed to cross the blood-brain barrier by targeting the transferrin receptor. The continued approval for this indication may be contingent upon verification of clinical benefit in a confirmatory study.
Avlayah is an enzyme replacement therapy indicated for pediatric patients with MPS II, targeting neurological symptoms when initiated early. However, the drug is yet to be commercially launched in the United States, and therefore, Denali did not generate any revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $10 million. The company also periodically recognizes collaboration revenues.
Following Avlayah approval, the FDA granted Denali a Rare Pediatric Disease Priority Review Voucher, which can be used to secure priority review for a future marketing application or transferred to another sponsor.
Highlights of DNLI’s Q1 Results
Research and development expenses decreased 11% to $103.8 million due to the timing of manufacturing of Avlayah commercial supply in the first quarter of 2025, as well as lower external expenses related to small molecule programs.
General and administrative expenses increased 14% to $33.5 million primarily due to higher personnel-related expenses resulting from increased headcount in the first quarter of 2026, reflecting staffing additions made throughout 2025 to support Avlayah’s post-launch activities.
As of March 31, 2026, cash, cash equivalents, and marketable securities amounted to approximately $1.05 billion compared with $966.2 million as of Dec. 31, 2025.
Shares of DNLI have gained 19.4% year to date against the industry’s 0.2% decline.
Image Source: Zacks Investment Research
DNLI’s Key Pipeline Updates
Denali’s ongoing global phase II/III COMPASS study is expected to provide confirmatory data and support regulatory filings for tividenofusp alfa-eknm worldwide, including in young adult patients with Hunter syndrome. Positive outcomes from this study could further expand the drug’s commercial potential and reinforce DNLI’s position in the rare neurodegenerative disease market.
Denali is evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). It is an investigational intravenously administered ETV-enabled SGSH replacement therapy, being developed to target the neurological and systemic manifestations of the disease by delivering the enzyme to both the brain and body. Per DNLI, the phase I/II MPS IIIA study is ongoing, while start-up activities for a global phase III confirmatory study for this indication are also underway. A regulatory submission with potential accelerated approval is anticipated in 2027.
Denali is also developing other candidates in partnership with Biogen (BIIB - Free Report) and Sanofi (SNY - Free Report) .
Denali and Biogen continue co-development of BIIB122/DNL151.
Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage Parkinson’s disease (PD). Data is expected in mid-2026. Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease.
Sanofi is developing eclitasertib for moderate to severe ulcerative colitis. Data from the phase II study is expected in the first half of the year.
Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali Therapeutics Inc. price-consensus-eps-surprise-chart | Denali Therapeutics Inc. Quote
Denali is also developing DNL952, an ETV-enabled therapy designed to enhance the delivery of the missing GAA enzyme to muscle tissues and across the blood-brain barrier into the brain, with phase I study start-up activities currently underway.
Last month, Denali announced that former partner Takeda (TAK - Free Report) decided to terminate their collaboration agreement to co-develop and co-commercialize DNL593 (PTV: PGRN). Per DNLI, Takeda’s decision was based on strategic priorities and not on any efficacy or safety issues. Following the termination of the co-development agreement, Denali regained full ownership of DNL593 along with its intellectual property.
Denali is conducting a phase I/II study evaluating DNL593, an investigational, intravenously-administered progranulin replacement therapy that uses its PTV platform to deliver progranulin across the blood-brain barrier into the brain for patients with frontotemporal dementia caused by GRN mutations. Enrollment in the study is complete with 40 participants, and results are expected by the end of 2026.
Another candidate in Denali Therapeutics’ pipeline is DNL628, an investigational OTV-enabled therapy for Alzheimer’s disease designed to cross the blood-brain barrier and reduce tau protein levels by targeting the MAPT gene. The first patient was dosed in the phase Ib study in March 2026, with data expected in the first half of 2027.
Our Take on DNLI’s Performance
The approval of Avlayah has significantly boosted DNLI’s growth prospects. The company’s progress with DNL126 is encouraging as well.
The company’s sound cash position is a positive and underscores its ability to fund ongoing programs.
DNLI’s 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.