Denali(DNLI) - 2025 Q3 - Quarterly Report

Financial Performance - The company reported net losses of $126.9 million and $384.0 million for the three and nine months ended September 30, 2025, respectively, compared to $107.2 million and $308.0 million for the same periods in 2024[95]. - As of September 30, 2025, the company had an accumulated deficit of $1.92 billion[95]. - The net loss for the three months ended September 30, 2025, was $126.90 million, an 18% increase compared to a net loss of $107.19 million in 2024[107]. - The company expects to continue incurring significant losses as it expands research and development activities and seeks regulatory approvals for product candidates[123]. - The company has not generated any product revenue to date and does not expect to until regulatory approval and commercialization of product candidates occur[122]. - For the nine months ended September 30, 2025, net cash used in operating activities was $314.1 million, driven by a net loss of $384.0 million[130]. - Cash, cash equivalents, and marketable securities amounted to $872.9 million as of September 30, 2025[117]. - The company had cash, cash equivalents, and marketable securities totaling $872.9 million as of September 30, 2025[136]. Research and Development - The company incurred significant research and development expenses, which are a major component of its operating expenses[97]. - Research and development expenses increased to $101.95 million for the three months ended September 30, 2025, up 4% from $98.24 million in the same period of 2024[108]. - Research and development expenses for the nine months ended September 30, 2025, totaled $320.87 million, an 8% increase from $296.65 million in 2024[112]. - The company is developing multiple product candidates, including tividenofusp alfa for MPS II and DNL126 for Sanfilippo syndrome, with ongoing clinical trials[91]. - The company plans to continue incurring significant expenses and operating losses as it advances its clinical programs and develops its TV platform[95]. Regulatory and Collaboration Efforts - The FDA granted Breakthrough Therapy Designation for tividenofusp alfa (DNL310) for the treatment of MPS II in January 2025, with a rolling submission of a Biologics License Application (BLA) completed in May 2025[93]. - The company announced that the FDA accepted the BLA for tividenofusp alfa for priority review, with a target action date of January 5, 2026, later extended to April 5, 2026[96]. - The company is actively pursuing collaborations with third parties, including Takeda and Biogen, to enhance its development and commercialization efforts[90]. - The company anticipates needing substantial additional resources to fund operations and meet future commitments[125]. Operating Expenses - General and administrative expenses rose to $35.48 million for the three months ended September 30, 2025, a 42% increase from $24.95 million in 2024[115]. - Total operating expenses for the three months ended September 30, 2025, were $137.43 million, reflecting a 12% increase from $123.19 million in 2024[107]. - The company anticipates an increase in general and administrative expenses due to preparations for the potential commercialization of Tividenofusp alfa[115]. Cash Flow and Financial Position - Net cash provided by investing activities was $234.5 million, primarily from $431.0 million in proceeds from marketable securities maturities[131]. - Cash used in financing activities was $2.9 million, consisting of $8.2 million in finance lease payments, partially offset by $5.2 million from stock option exercises[132]. - The company has raised approximately $754.4 million from public offerings of common stock through September 30, 2025[118]. Risks and Future Outlook - The company is exposed to interest rate risk, but a hypothetical 10% change in interest rates would not have a material impact on its financial statements[137]. - The company is also subject to foreign exchange risk due to transactions in currencies other than the U.S. dollar, primarily the Euro, Swiss Franc, and British Pound[138]. - Future funding requirements will depend on various factors, including regulatory approvals and the progress of clinical development activities[127]. - The company expects to incur substantial additional losses in the future due to ongoing research and development activities[125]. - Total undiscounted lease payment obligations amount to $57.4 million, with non-refundable purchase commitments of $39.4 million as of September 30, 2025[126].