DNLI Q4 Loss Narrower Than Expected, Hunter Syndrome Drug in Focus

Denali Therapeutics DNLI reported a fourth-quarter 2025 loss of 73 cents per share, narrower than the Zacks Consensus Estimate of a loss of 75 cents. The company reported a loss of 67 cents in the year-ago quarter.

The loss per share increased year over year due to a rise 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 $18 million.

Shares of DNLI have gained 13.4% in the past year compared with the industry’s 11.5% growth.

Highlights of DNLI’s Q4 Results

Research and development expenses decreased 1.9% to $97.9 million due to lower external expenses related to small molecule programs.

General and administrative expenses increased 31.3% to $39.5 million due to activities related to the preparations for a potential launch of tividenofusp alfa.

As of Dec. 31, 2025, cash, cash equivalents, and marketable securities amounted to approximately $966.2 million.

DNLI’s 2025 Results

The company did not generate revenues in 2025.

Loss per share in 2025 was $2.97, wider than $2.57 in 2024.

Updates on DNLI Lead Candidate

Denali is preparing for a commercial launch for lead candidate tividenofusp alfa.

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, is under review in the United States.

The FDA had earlier extended its review timeline of the BLA to April 5, 2026, from Jan. 5, 2026.

The regulatory body 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.

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 to the BLA, leading to the extension of the target action date.

The ongoing global phase II/III COMPASS study is expected to generate confirmatory evidence and support global regulatory submissions while enrollment in Cohort A (neuronopathic participants) was completed in December 2025.

DNLI’s Other Pipeline Candidates

Denali is evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA).

Earlier in the month, Denali presented preliminary phase I/II data at WORLDSymposium showing that DNL126 drove substantial reductions in key disease biomarkers in cerebrospinal fluid (heparan sulfate and GM3) and in the periphery (urinary heparan sulfate), with a safety profile broadly consistent with established enzyme replacement therapies. The findings support a potential accelerated approval pathway in Sanfilippo syndrome type A, while plans for a global phase III confirmatory study are underway.

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

Denali and 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).

Enrollment in the ongoing phase I/II study is complete with a total of 40 participants with FTD-GRN enrolled. Initial FTD-GRN patient data are expected in 2026.

Last month, Denali announced that the clinical trial application for the phase Ib study of DNL628 had been approved and study start-up activities are underway.

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. Data is expected in mid-2026.

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 (IND) for DNL952 (ETV:GAA) to begin clinical studies in Pompe disease. Last month, Denali announced that the FDA has lifted the clinical hold on the investigational new drug (IND) application for DNL952. Phase I study start-up activities are underway.

Sanofi is eclitasertib for moderate to severe ulcerative colitis. Data from the phase II study is expected in the first half of the year.

Our Take on DNLI’s Performance

A potential approval of tividenofusp alfa will significantly boost DNLI’s growth prospects. The company’s progress with DNL126 is encouraging as well.

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

Zacks Rank

Denali currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

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This article originally published on Zacks Investment Research (zacks.com).

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