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Denali Therapeutics Inc. (DNLI)·Q4 2024 Earnings Summary

Executive Summary

  • Denali reported Q4 2024 GAAP net loss of $114.8M ($0.67 per share) with no collaboration revenue; year-over-year quarterly net loss improved modestly vs Q4 2023 ($119.5M), while sequentially worsened vs Q3 2024 ($107.2M) .
  • Management reiterated a near-term regulatory path: BLA submission for tividenofusp alfa (DNL310) planned for early 2025, backed by FDA Breakthrough Therapy designation in January 2025; commercial launch targeted for late 2025 or early 2026 .
  • 2025 cash operating expenses guidance was introduced at +10% to +15% year-over-year, reflecting pre-launch buildout and portfolio advancement; cash, cash equivalents, and marketable securities were ~$1.19B at year-end 2024 .
  • Strategic financing flexibility added via a new $400M ATM program with Goldman Sachs and Leerink Partners; prior 2022 ATM terminated concurrently .

What Went Well and What Went Wrong

What Went Well

  • Regulatory momentum for tividenofusp alfa (DNL310): BLA planned for accelerated approval, with FDA Breakthrough Therapy designation in January 2025 and alignment that CSF heparan sulfate can support accelerated approval as a surrogate endpoint .
  • Clinical progress and pre-launch readiness: Expansion of COMPASS neuronopathic Cohort A target enrollment to 42 patients and ongoing build-out of payer/prescriber engagement and patient support services ahead of launch .
  • Portfolio breadth: Advancement across Enzyme TV (ETV), Oligonucleotide TV (OTV), and Antibody TV (ATV) franchises with IND-enabling programs including Pompe (DNL952), GCase (DNL111), and OTV programs (DNL628, DNL422) .

Management quote: “In 2024, we made significant strides across our portfolio... we will continue expanding our capabilities as we prepare for our first potential product launch of tividenofusp alfa” — Ryan Watts, Ph.D., CEO .

What Went Wrong

  • ALS readout: DNL343 primary endpoint in the HEALEY ALS platform trial was not met; further biomarker and subgroup analyses are planned .
  • No quarterly collaboration revenue in Q4 2024 (and full-year 2024), versus heavy revenue recognition in 2023 primarily from Biogen’s ATV:Abeta option exercise, driving a full-year net loss increase to $422.8M in 2024 versus $145.2M in 2023 .
  • Operating cost pressure: G&A increased year-over-year in Q4 (to $30.1M from $24.8M) due to BLA preparation and commercial readiness activities, while R&D remained elevated given portfolio advancement .

Financial Results

Metric ($USD)Q4 2023Q2 2024Q3 2024Q4 2024
Collaboration Revenue ($MM)$0.0 $0.0 $1.3 $0.0
R&D Expense ($MM)$107.8 $91.4 $98.2 $99.8
G&A Expense ($MM)$24.8 $25.2 $24.9 $30.1
Total Operating Expenses ($MM)$132.6 $116.6 $123.2 $129.8
Loss from Operations ($MM)$(132.6) $(116.6) $(123.2) $(129.8)
Interest & Other Income, net ($MM)$13.1 $17.6 $16.0 $15.2
Net Loss ($MM)$(119.5) $(99.0) $(107.2) $(114.8)
Net Loss per Share ($)$(0.86) $(0.59) $(0.63) $(0.67)

Liquidity snapshot

Metric ($USD)Dec 31, 2023Jun 30, 2024Sep 30, 2024Dec 31, 2024
Cash & Equivalents ($MM)$127.1 $74.7 $90.6 $175.0
Short-term Marketable Securities ($MM)$907.4 $821.4 $745.9 $657.4
Long-term Marketable Securities ($MM)$0.0 $451.0 $445.5 $359.4
Total Cash + Marketable Securities ($MM)$1,034.5 $1,347.0 $1,282.0 $1,191.7

Drivers and context:

  • Q4 2024 had no collaboration revenue; full-year revenue fell $330.5M due to prior-year Biogen ATV:Abeta option recognition and lower Sanofi/Takeda milestone timing .
  • Q4 2024 R&D decreased vs Q4 2023 by ~$8.0M, reflecting personnel-related and small molecule divestiture impact, partially offset by clinical program investment; G&A increased due to BLA preparation and commercial launch readiness .

Segment breakdown: Not applicable; Denali reports consolidated results without revenue segments .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Operating Expenses YoYFY 2024Equal to or less than FY 2023 cash opex (prior); updated to +5% to +10% YoY +5% to +10% YoY (updated in Q3 2024) Raised vs initial FY 2024 commentary
Cash Operating Expenses YoYFY 2025Not previously provided+10% to +15% YoY New FY 2025 guidance

Additional liquidity and financing:

  • Year-end 2024 cash, cash equivalents, and marketable securities were approximately $1.19B .
  • New $400M ATM equity distribution program established; prior ATM terminated .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Regulatory/legal: DNL310 accelerated approval pathFDA openness to CSF HS surrogate; BLA intent in early 2025 Successful FDA meeting; CSF HS agreed as surrogate; BLA planned early 2025 BLA submission early 2025; Breakthrough Therapy designation (Jan 2025); launch late 2025/early 2026 Strengthening regulatory alignment
R&D execution: ETV franchiseETV programs progressing; COMPASS enrollment expected to complete in 2024 Interim data in DNL126; COMPASS progress COMPASS Cohort A target expanded to 42; ongoing prelaunch activities Continued advancement
OTV platform (technology/AI-like initiatives)Publication in Science Translational Medicine; broad biodistribution OTV breadth highlighted; platform potential OTV IND-enabling programs (DNL628, DNL422) advancing Scaling programs
Parkinson’s (LRRK2) BIIB122Ongoing LUMA; 2024 Phase 2a initiation planned Screening initiated for Phase 2a; LUMA ongoing BEACON dosing initiated Dec 5, 2024 Clinical progress
ALS (DNL343)Enrollment complete in HEALEY Regimen G Continuing; platform updates Primary endpoint not met; further analyses planned in 2025 Negative readout; awaiting analyses
Business/financingStrong liquidity; no specific ATM mention Updated FY24 opex guidance up +5–10% New $400M ATM program; 2025 opex +10–15% Building flexibility and pre-launch spend

Management Commentary

  • “In 2024, we made significant strides across our portfolio... we will continue expanding our capabilities as we prepare for our first potential product launch of tividenofusp alfa.” — Ryan Watts, Ph.D., CEO .
  • “[We’re] on track to submit a Biologics License Application (BLA) under the accelerated approval pathway in early 2025 and [are] preparing for a U.S. commercial launch in late 2025 or early 2026.” .
  • “FDA Breakthrough Therapy Designation is another significant achievement... designed to optimize enzyme delivery to both brain and body, addressing the full spectrum of Hunter syndrome.” — Carole Ho, M.D., CMO .

Q&A Highlights

  • Filing timeline and label scope: Management emphasized BLA submission “as quickly as possible” with an approval goal by late 2025/early 2026; label will include full data, with CSF HS as the key accelerated approval surrogate .
  • COMPASS confirmatory study: Cohort A enrollment expanded; non-neuronopathic cohort B not on critical path; two-year endpoint from last patient for confirmatory readout .
  • Sanfilippo (DNL126) strategy: START program enabling accelerated path discussions; potential for smaller Phase 1/2 and use of natural history comparator given no standard of care .
  • Commercialization approach: Initial focus on U.S., Canada, and top-five EU markets; considering distributor models or partners ex-U.S. while building an integrated biotech capability .

Estimates Context

  • Wall Street consensus EPS and revenue estimates from S&P Global were unavailable at the time of analysis due to access limitations. As a result, we cannot quantify beats/misses versus consensus for Q4 2024. Values would ordinarily be retrieved from S&P Global.

Where estimates may need to adjust:

  • Given zero collaboration revenue in Q4 and increased pre-launch G&A, Street models may reflect higher near-term operating expenses and limited revenue until potential tividenofusp alfa launch; liquidity (~$1.19B) supports execution runway .
  • ALS setback (DNL343) likely to reduce probability-weighted contributions in outer years; regulatory momentum in Hunter syndrome may increase probability of approval and early launch assumptions .

Key Takeaways for Investors

  • Regulatory path for DNL310 is clear and accelerating: BLA submission early 2025, Breakthrough Therapy designation secured, and launch targeted late 2025/early 2026 — the central near-term stock catalyst .
  • Operational spending will rise into launch: FY 2025 cash opex guided up +10% to +15%; expect continued investment in commercial buildout and portfolio advancement .
  • Liquidity is robust: ~$1.19B in cash and marketable securities at year-end 2024, plus a $400M ATM for additional flexibility; watch dilution overhang versus opportunistic issuance .
  • Portfolio breadth provides multi-asset optionality: ETV (Pompe, GCase), OTV (MAPT, SNCA), and ATV:Abeta programs advancing toward INDs, strengthening medium-term pipeline value .
  • DNL343 ALS miss is a setback; further biomarker analyses may clarify potential, but investors should haircut near-term ALS optionality pending readouts .
  • Parkinson’s BIIB122 progressing: BEACON Phase 2a dosing initiated and LUMA ongoing, supporting broader CNS franchise momentum .
  • Near-term narrative hinges on rare disease launch readiness and confirmatory COMPASS execution; monitor enrollment expansion and subsequent timelines for Cohort A .