DNLI Posts Narrower-Than-Expected Q3 Loss, Advances MPS IIIA Drug

Denali Therapeutics DNLI reported a third-quarter 2025 loss of 74 cents per share, narrower than the Zacks Consensus Estimate of a loss of 76 cents. The company reported a loss of 63 cents in the year-ago quarter.

The loss per share widened year over year due to an increase in total operating expenses.

In the absence of a marketed product, the company only recognizes revenues from ongoing collaborations. Denali did not generate collaboration revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $14 million.

Shares of DNLI have lost 29.3% year to date against the industry’s 11.5% growth.

Highlights of DNLI’s Q3 Results

Research and development expenses increased 3.8% to $101.9 million. The increase was primarily due to the commencement of operations at Denali's large molecule manufacturing facility in Salt Lake City, UT.

General and administrative expenses increased 42.2% to $35.5 million due to activities related to the preparations for a potential launch of tividenofusp alfa.

As of Sept. 30, 2025, cash, cash equivalents, and marketable securities amounted to approximately $872.9 million.

DNLI’s Regulatory and Pipeline Updates

Last month, Denali suffered a setback when the FDA extended its review timeline of the biologics license application (BLA) seeking accelerated approval of tividenofusp alfa for the treatment of mucopolysaccharidosis type II (MPS II), also known as Hunter syndrome.

Consequently, the target action date has been extended to April 5, 2026, from January 5, 2026.

The BLA was extended after DNLI submitted updated clinical pharmacology information in response to an information request from the FDA as part of the standard review process. DNLI stated that the response was not related to efficacy, safety or biomarkers.

The FDA classified the submission as a major amendment (MA) to the BLA, leading to the extension of the target action date. Nevertheless, the regulatory body did not ask for additional data.

Denali believes that the updated information submitted in the amendment does not affect the clinical pharmacology or benefit-risk conclusions of the BLA.

The FDA had previously granted tividenofusp alfa Breakthrough Therapy, Fast Track, Orphan Drug, and Rare Pediatric Disease designations.

Tividenofusp alfa is an investigational, next-generation enzyme replacement therapy designed to cross the blood-brain barrier (BBB) and deliver the iduronate-2-sulfatase (IDS) enzyme throughout the body and brain.

Denali is also evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). In September, Denali completed enrollment in the ongoing phase I/II study of DNL126 to support an accelerated approval path in Sanfilippo syndrome type A.

Denali had earlier announced data on DNL126 that demonstrated a significant reduction in cerebrospinal fluid (CSF) heparan sulfate (HS) from baseline, including normalization, and a safety profile that supports continued development. A global phase III confirmatory study is being planned.

Denali is also developing other candidates in partnership with Takeda TAK and Biogen BIIB.

Denali and partner Takeda have collaborated to develop DNL593, an investigational therapeutic designed to deliver progranulin across the blood-brain barrier for the treatment of granulin (GRN) mutation-associated frontotemporal dementia (FTD-GRN). A phase I/II study is ongoing.

Last month, DNLI submitted a clinical trial application for DNL628 (OTV:MAPT) to initiate clinical studies in Alzheimer’s disease, marking a significant milestone in advancing the oligonucleotide TransportVehicle (OTV) platform.

Denali and Biogen continue co-development of BIIB122.

Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage PD. In May 2025, Biogen announced that the LUMA study was fully enrolled with a readout expected in 2026.

Meanwhile, Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease.

In October, Denali submitted an investigational new drug application for DNL952 (ETV:GAA) to begin clinical studies in Pompe disease.

Our Take on DNLI’s Performance

While DNLI continues to advance its pipeline, a delay in approval of tividenofusp alfa is disappointing, as it is the company’s lead pipeline candidate.

Nonetheless, the company’s progress with DNL126 is encouraging as well.

The company’s sound cash position is a positive and ensures its ability to fund ongoing programs.

Zacks Rank and Key Pick

Denali currently carries a Zacks Rank #4 (Sell).

A better-ranked biotech stock is Alkermes ALKS, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes’ earnings per share (EPS) estimates for 2025 have increased to $1.96 from $1.82, while those for 2026 have risen from $1.70 to $1.77 in the past 30 days. The stock has gained nearly 10.2% year to date.

Alkermes’ earnings beat estimates in three of the trailing four quarters and missed the mark in one, delivering an average surprise of 4.58%. 

 

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