Why Is Denali Therapeutics (DNLI) Up 16.2% Since Last Earnings Report?

Core Viewpoint - Denali Therapeutics Inc. has shown a positive stock performance, gaining approximately 16.2% since the last earnings report, outperforming the S&P 500, but questions remain about the sustainability of this trend leading up to the next earnings release [1] Financial Performance - Denali reported a second-quarter 2025 loss of 72 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 74 cents, but worse than the loss of 59 cents in the same quarter last year [2] - The company did not generate any collaboration revenues in the reported quarter, despite a Zacks Consensus Estimate for revenues set at $25 million [3] - Research and development expenses increased by 12.4% to $102.7 million, primarily due to heightened spending on multiple preclinical programs, while general and administrative expenses rose by 28% to $32.3 million due to preparations for a potential product launch [4] Cash Position - As of June 30, 2025, Denali had cash, cash equivalents, and marketable securities totaling approximately $977.4 million [5] Pipeline Developments - The FDA accepted Denali's biologics license application (BLA) for tividenofuspalfa for priority review, with a target action date set for January 5, 2026 [6] - The BLA seeks accelerated approval based on data from a phase I/II study for Hunter syndrome, with tividenofuspalfa having received multiple designations from the FDA [7] - Denali is preparing for the commercial launch of tividenofuspalfa and is conducting a phase II/III COMPASS study to support global regulatory submissions [8] Additional Pipeline Candidates - Denali is evaluating DNL126 for Sanfilippo syndrome type A and has aligned with the FDA on using cerebrospinal fluid heparan sulfate as a potential surrogate endpoint for accelerated approval [9] - Data from an ongoing phase I/II study for DNL126 shows significant reductions in CSF HS and a favorable safety profile [10] - Denali is also collaborating with Takeda on DNL593 for frontotemporal dementia and with Biogen on BIIB122/DNL151 for Parkinson's disease [12][13] Future Outlook - Denali plans to submit regulatory applications for one to two TV-enabled programs each year over the next three years across various therapeutic franchises [14] - Estimates for Denali's stock have been trending upward, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [15][17] Industry Comparison - Denali operates within the Zacks Medical - Biomedical and Genetics industry, where another player, MannKind, has seen a 50.6% increase in stock price over the past month [18] - MannKind reported revenues of $76.53 million, reflecting a year-over-year increase of 5.7%, but is expected to post a significant decline in earnings for the current quarter [19]