Denali Therapeutics — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net product revenue was $17.8 million for the quarter ended September 30, 2026, compared to $0 in the same period in 2025.
• Total revenue for the quarter was $17.8 million, up from $0 in the prior year period.
• Net income was $70.1 million for the quarter, a significant turnaround from a net loss of $126.9 million in the same period in 2025.
• Net income included a one-time net gain of $194.0 million from the sale of a Priority Review Voucher.
• Cost of goods sold was $0.2 million for the quarter, compared to $0 in the prior year period.
• Research and development expenses were $106.1 million for the quarter, an increase of $4.1 million from $102.0 million in the prior year period.
• Selling, general and administrative expenses were $37.5 million for the quarter, an increase of $2.0 million from $35.5 million in the prior year period.
• Intangible asset amortization was $0.8 million for the quarter, compared to $0 in the prior year period.
• Cash, cash equivalents, and marketable securities totaled approximately $1.0 billion as of September 30, 2026.
• Total assets were $1.26 billion as of September 30, 2026, compared to $1.14 billion as of December 31, 2025.
• Total liabilities were $330 million as of September 30, 2026, compared to $131 million as of December 31, 2025, driven by a new $209.7 million liability related to a revenue participation right agreement.

Guidance and Future Outlook:

• Q4 2026 net product revenue is guided to be between $30.0 million and $32.0 million.
• The company expects to submit a Biologics License Application (BLA) for zafinofusp alfa in 2027, seeking accelerated approval for Sanfilippo syndrome type A.
• Five TransportVehicle™ programs are expected to generate data in 2027: zafinofusp alfa, DNL593, DNL628, DNL921, and DNL952.
• Data from the Phase 1b study of DNL628 for Alzheimer's disease is expected in the first half of 2027.
• Safety and clinical proof-of-concept data for DNL921 for Alzheimer's disease are expected in 2027.
• Initial clinical data for DNL952 for Pompe disease are expected in 2027.
• Data from the Phase 2a BEACON study for DNL151 in Parkinson's disease are expected in the first half of 2027.
• Data from the Phase 1/2 study of DNL593 for FTD-GRN are expected in the first half of 2027.
• Data from the COMPASS study for AVLAYAH are expected in the first half of 2028.

Business Segments and Product Lines:

• AVLAYAH (tividenofusp alfa-eknm) is the first FDA-approved medicine leveraging the transferrin receptor to cross the blood-brain barrier for Hunter syndrome (MPS II).
• AVLAYAH coverage now exceeds 70% of U.S. commercial lives, up from over 50% in the prior quarter, with 20 state Medicaid programs having published coverage.
• A permanent J-code for AVLAYAH became effective October 1, 2026.
• Zafinofusp alfa (DNL126) is an investigational ETV-enabled enzyme replacement therapy for Sanfilippo syndrome type A (MPS IIIA).
• Preliminary data for zafinofusp alfa showed mean reductions of 80% and 83% at week 49 in CSF HS and urine HS, respectively.
• DNL593 (PTV:PGRN) received Orphan Drug Designation from the FDA in August 2026 for FTD-GRN.
• Enrollment in the Phase 1/2 study of DNL593 is complete with 40 participants.
• DNL952 (ETV:GAA) is an investigational ETV-enabled enzyme replacement therapy for Pompe disease, currently enrolling in a Phase 1 study.
• DNL628 (OTV:MAPT) is an investigational OTV-enabled antisense oligonucleotide for Alzheimer's disease.
• DNL921 (ATV:Abeta) is an investigational ATV-enabled antibody for Alzheimer's disease.
• DNL151 is an investigational small molecule LRRK2 inhibitor for Parkinson's disease.
• Additional programs in the IND-enabling stage include DNL111, DNL622, and DNL422.

Market and Competitive Landscape:

• AVLAYAH was recognized as the "Best Biotechnology Product" of 2026 by The Galien Foundation.
• The company is applying learnings from the AVLAYAH launch to accelerate the development of its TransportVehicle portfolio.
• The company faces competition from other product candidates and developments in the biopharmaceutical industry, though specific competitors are not named.

Risks and Challenges:

• Risks include adverse economic conditions, delays in clinical trial timelines, and potential failures in meeting expected clinical trial outcomes.
• There is a risk that the FDA may not accept data or surrogate endpoints intended to support accelerated approval or may require additional studies.
• The company relies on third-party manufacturers and suppliers for clinical trial and commercial materials.
• There is a risk of difficulties enrolling patients for ongoing and future clinical trials.
• The company faces risks related to obtaining and maintaining intellectual property rights and securing additional capital.
• Quarterly revenue variability and the risk that revenue growth may not continue at recent rates are noted.

Management Commentary and Tone:

• CEO Ryan Watts, Ph.D., stated that families and physicians report AVLAYAH is making a difference for children with Hunter syndrome.
• Management highlighted positive responses from patients, physicians, and payers, attributing success to strong commercial execution.
• The tone is confident regarding the potential of the TransportVehicle portfolio and the urgency to bring zafinofusp alfa to market.
• Management expressed confidence in the Phase 1/2 data supporting the 2027 BLA submission for zafinofusp alfa.

Other Key Points:

• The company completed enrollment of Cohort B for the global Phase 2/3 COMPASS study, bringing total enrollment to 65 participants.
• The sale of a Priority Review Voucher generated a one-time net gain of $194.0 million.
• A revenue participation right agreement liability of $209.7 million was recognized on the balance sheet as of September 30, 2026.
• The company will host a conference call and webcast on November 3, 2026, at 4:30 p.m. ET.
• Upcoming investor conference participation includes the Stifel 2026 Healthcare Conference, UBS Global Biopharma Conference, Jefferies Global Healthcare Conference, Evercore Healthcare Conference, and J.P. Morgan 2027 Healthcare Conference.