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Item 1. Business

2022-02-28 compared with 2021-02-26 · 380 added, 231 removed, 684 unchanged (47% of the section changed)

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("Sanofi"), Genentech, Inc., F-star, Sirion, Harvard University, the Michael J.

Fox Foundation, Centogene and Secarna, amongst others.

Through these arrangements, we are able to gain access to additional resources and complementary expertise, new product candidates, deepen our scientific understanding of certain areas of biology, identify potential patients for our clinical trials and thereby accelerate and increase the probability of success of the development of our programs.

Fox Foundation, Centogene and Secarna Pharmaceuticals, amongst others.

Through these arrangements, we are able to gain access to additional resources, complementary expertise and new product candidates, deepen our scientific understanding of certain areas of biology, identify potential patients for our clinical trials and thereby accelerate and increase the probability of success of the development of our programs.

We believe that being an active participant in the scientific community and accessing external innovation is important to our success and we plan to remain active in business development activities.

Our goal is to be the most attractive partner for academic groups and companies in the field of neurodegeneration based on our singular focus, deep scientific expertise in neurodegeneration and BBB biology, established research and development capabilities, growing manufacturing and commercial capabilities and the ability to execute development programs with speed and scientific rigor.

We hold significant development and commercialization rights to all of our programs, including the programs which are subject to our collaboration agreements with Biogen and Takeda, as well as with Sanofi for central nervous system ("CNS") indications, where we share responsibility for clinical development and share commercialization rights in the United States and China.

We hold significant development and commercialization rights to all of our central nervous system ("CNS") programs, including the programs which are subject to our collaboration agreements with Biogen, Sanofi and Takeda, where we share responsibility for clinical development and share commercialization rights in the United States and China.

We envision our future as a fully integrated global organization serving patients.

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We believe that our investigational therapy for Hunter syndrome (DNL310) has the potential to be our first approved medicine and that we can leverage certain efficiencies of scale to support the commercialization of additional lysosomal storage disease ("LSD") therapeutics.

More than 30,000 patients suffer from LSDs world-wide, with approximately two-thirds having CNS manifestations that are not addressed by currently available enzyme replacement therapies.

More than 30,000 individuals live with LSDs world-wide, where CNS manifestations and many peripheral symptoms continue to remain unaddressed by current standard of care.

We are actively working toward building clinical manufacturing capabilities and continuing to expand our commercial capabilities in LSDs and intend to serve patients directly in several countries.

Subsequently, we intend to expand into rare CNS diseases, such as amyotrophic lateral sclerosis ("ALS") and Frontotemporal Dementia ("FTD"), which afflict more than 200,000 patients world-wide.

Subsequently, we intend to expand into rare CNS diseases, such as amyotrophic lateral sclerosis ("ALS") and Frontotemporal Dementia ("FTD"), which impact around 500,000 individuals world-wide.

We may commercialize these product candidates, if approved, independently or seek partners to ensure optimal access for patients.

For the common neurodegenerative diseases, such as Alzheimer's disease and Parkinson's disease, which afflict more than 50 million patients world-wide, we plan to initially leverage strategic collaborations that contribute existing global commercial infrastructure.

For the common neurodegenerative diseases, such as Alzheimer's disease and Parkinson's disease, which afflict 40 to 50 million individuals world-wide, we plan to initially leverage strategic collaborations that contribute existing global commercial infrastructure.

Our Approach to Defeating Neurodegeneration

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The two most common neurodegenerative diseases are Alzheimer’s disease, representing an estimated 60% to 70% of all dementias according to the World Health Organization, and Parkinson’s disease.

In the United States, 5.8 million people suffer from Alzheimer’s disease, as many as one million people suffer from Parkinson’s disease, and more than 16,000 people suffer from ALS, according to estimates from the Alzheimer’s Association, the Parkinson’s Disease Foundation, and the ALS Association, respectively.

In the United States, more than 6 million people live with Alzheimer’s disease, as many as one million people live with Parkinson’s disease, and as many as 21,000 people live with ALS, according to estimates from the Alzheimer’s Association, the Parkinson’s Disease Foundation, and the ALS Association, respectively.

The cost to society from neurodegenerative disease is enormous.

The direct costs of caring for individuals with Alzheimer’s disease and other dementias in the United States were an estimated $290 billion in 2019.

By 2050, these costs could rise to $1.1 trillion, according to the Alzheimer’s Association.

In the United States, the total cost of care to patients suffering from Alzheimer’s disease and other dementias far exceeds that of many other diseases, including cancer.

Alzheimer’s disease and other dementias are estimated to cost the United States $335 billion in 2021.

These costs could rise to more than $1.1 trillion by 2050, according to the Alzheimer’s Association.

Our target indications include diseases with large patient populations, such as Alzheimer’s disease and Parkinson’s disease, as well as orphan indications, such as Hunter syndrome, FTD and ALS.

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Degenogenes implicate immune dysfunction in the brains of patients with Alzheimer’s disease and other neurodegenerative diseases.

These degenogenes include triggering receptor expressed on myeloid cells 2 ("TREM2") and numerous other genes that are highly expressed in inflamed microglia, the resident immune cells of the brain.

These degenogenes include triggering receptors expressed on myeloid cells 2 ("TREM2") and numerous other genes that are highly expressed in inflamed microglia, the resident immune cells of the brain.

We believe the impact of immune modulation in neurodegeneration is a promising approach to treating disease.

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Our TV technology enables several classes of biotherapeutics to more effectively cross the BBB, including enzymes, antibodies, proteins and oligonucleotides.

This technology is designed to engage specific BBB transport receptors, which are ubiquitously expressed in brain capillaries and facilitate transport of proteins into the brain (Figure 1).

This technology is designed to engage specific BBB transport receptors, such as the transferrin receptor (“TfR”), which are highly expressed in brain capillaries and facilitate transport of proteins into the brain (Figure 1).

Engineering brain delivery.

Schematic of the TV technologies, designed to cross the BBB through receptor-mediated transcytosis, leveraging endogenous receptors expressed on endothelial cells in the vasculature of the brain.

The platform has demonstrated proof of concept safety and pharmacokinetic/pharmacodynamic data in mouse and nonhuman primate models, including a robust and sustained pharmacodynamic effect in the brain after intravenous ("IV") dosing of a TV-enabled antibody, while a standard antibody had minimal pharmacodynamic effect, and robust and sustained efficacy in the brain in a mouse model of Hunter syndrome after IV dosing of a TV-enabled IDS enzyme, while a standard recombinant IDS enzyme had only minimal effect.

Schematic of the TV technologies, designed to cross the BBB through receptor-mediated transcytosis, leveraging endogenous receptors expressed on endothelial cells of the central nervous system vasculature.

Robust and sustained efficacy in the brain of a mouse model of Hunter syndrome was also demonstrated after IV dosing of a TV-enabled IDS enzyme, while a standard recombinant IDS enzyme had only minimal effect.

The improvement in brain exposure may enable TV-enabled product candidates to achieve therapeutically relevant concentrations in the brain after systemic administration, making them potentially superior to traditional antibody and enzyme therapeutics in targeting neurodegenerative diseases.

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We believe that we can expand our portfolio leveraging the modularity of the TV technology.

In addition to our current focus on neurodegenerative and LSDs, we are exploring programs in oncology (ATV:HER2) and infectious diseases as well as other neurological and neuromuscular indications (Figure 3).

In addition to our current focus on neurodegenerative diseases and LSDs, we are exploring programs in oncology ("ATV:HER2") and infectious diseases as well as other neurological and neuromuscular indications (Figure 3).

We may develop these additional programs ourselves in the future or seek partnerships.

Transport Vehicle technology is highly differentiated

Transport Vehicle ("TV") technology is highly differentiated

TV technology provides opportunities for platform expansion

As part of our strategy, we identify and validate biomarkers which are relevant for both animal models and human trials, are critical for selecting patients, predicting and measuring target engagement, supporting dose selection and enabling decisions on progression of product candidates to the next phase of development.

As part of our strategy, we identify and validate biomarkers which are relevant for both animal models and human trials and are critical for selecting patients, predicting and measuring target engagement, supporting dose selection and enabling decisions on progression of product candidates to the next phase of development.

When practicable, we are developing patient selection biomarkers for our programs to enable identification of patients with the relevant disease biology and stage of disease likely to benefit from targeted therapy in order to increase the likelihood of success of clinical trials.

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We discuss our most advanced programs in further detail below.

LRRK2 Inhibitor Program

BIIB122/DNL151 LRRK2 Inhibitor Program for Parkinson's disease

Parkinson's disease is one of the most common brain diseases, affecting approximately 10 million people world-wide.

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The disease results from the loss of dopamine-producing cells in the brain and is likely caused by a combination of genetic and environmental risk factors.

LRRK2 is the most common genetic risk factor for Parkinson's disease, and is involved in maintaining a healthy cellular environment by regulating lysosomal function through modification of Rab proteins.

Increased levels of LRRK2 lead to lysosomal dysfunction, which contributes to neurodegeneration and the formation of Lewy bodies, a central pathology of Parkinson's disease.

Mutations in the LRRK2 gene are one of the most common genetic risk factors for Parkinson's disease.

LRRK2 is involved in maintaining a healthy cellular environment by regulating lysosomal function through modification of Rab proteins.

Increased levels of LRRK2 kinase activity lead to lysosomal dysfunction, which contributes to neurodegeneration.

Inhibition of LRRK2 activity may slow the progression of Parkinson’s disease in patients with and without known genetic risks based on restoration of lysosomal function.

We have advanced two chemically distinct CNS-penetrant small molecules that inhibit LRRK2 into clinical development, DNL201 and DNL151.

Based on the totality of preclinical and clinical data to date, both DNL201 and DNL151 have met our requirements to proceed into further late-stage clinical studies.

In August 2020, we, in collaboration with Biogen, announced the selection of DNL151 to advance into two late-stage studies in Parkinson’s disease:

one in Parkinson's patients who carry LRRK2 mutations and the other in Parkinson's patients independent of mutation status.

DNL151 was selected for its pharmacokinetic properties that provide additional dosing regimen flexibility.

DNL201 remains a backup molecule for this program.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen on the LRRK2 program and intend to initiate late-stage development in the second half of 2021.

In August 2020, we, in collaboration with Biogen, announced the selection of BIIB122/DNL151, a small molecule inhibitor of LRRK2, to advance into two late-stage studies in Parkinson’s disease:

one in Parkinson's patients who carry LRRK2 mutations and the other in Parkinson's patients who do not carry a LRRK2 mutation (idiopathic Parkinson's disease).

A second LRRK2 inhibitor, DNL201, which has also met our preclinical and early clinical development goals, remains a backup molecule for this program.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen on the LRRK2 program.

Biomarker-Driven Development

We have developed assays that measure pS935 LRRK2 and pRab10 phosphorylation as markers of LRRK2 kinase activity to demonstrate target engagement in humans.

We have developed assays that measure pS935 LRRK2 and pRab10 phosphorylation as markers of LRRK2 kinase activity to demonstrate target engagement and pathway engagement in humans.

Phosphorylation of LRRK2 at serine 935 ("pS935") is a well-established biomarker of LRRK2 kinase activity that has been demonstrated to respond to pharmacological inhibition.

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BMP di22:6 is a lysosomal lipid biomarker that indicates changes in lysosome function associated with LRRK2 inhibition and is elevated in individuals that carry LRRK2 disease-associated mutations.

Preliminary Results of DNL151 (BIIB122) Phase 1 Clinical Trial

DNL151 (BIIB122) has completed dosing of 162 healthy volunteers in an ongoing Phase 1 trial in healthy volunteer subjects and met safety, target engagement and biomarker goals.

In January 2020, we announced that preliminary results from the ongoing Phase 1 trial for DNL151 (BIIB122) in healthy volunteers demonstrated an encouraging safety and pharmacokinetic/pharmacodynamic profile (Figure 5A).

DNL151 (BIIB122) was generally well tolerated at all doses tested, and the majority of subjects experienced either no or mild AEs.

Target and pathway engagement of greater than 50 percent and a dose-dependent reduction of BMP in urine of up to 50 percent were observed at clinically relevant doses.

We are currently completing further dose escalation cohorts in the Phase 1 trial to define the full therapeutic window of DNL151 (BIIB122).

DNL151 (BIIB122) demonstrated:

pS935 LRRK2 inhibition, a biomarker of LRRK2 kinase activity and target engagement.

pRab10 inhibition, a biomarker of LRRK2 kinase pathway engagement linked to lysosomal regulation.

reduction in urinary BMP.

DNL151 (BIIB122) Phase 1b trial in Parkinson’s disease patients

The DNL151 (BIIB122) Phase 1b trial (NCT04056689) in Parkinson's disease patients was a 28-day, multicenter, randomized, placebo controlled, double-blind clinical trial in patients with mild-to-moderate Parkinson’s disease conducted in the United States and Europe.

Its purpose was to evaluate safety, tolerability, pharmacokinetics, pharmacodynamics, including target and pathway engagement biomarkers as well as certain exploratory clinical endpoints, after multiple oral doses of DNL151 (BIIB122).

A total of 36 Parkinson's patients were enrolled.

In January 2021, we announced completion of the Phase 1b trial and that target engagement and pathway engagement goals (the same as for DNL201) were met.

We plan to present data from the Phase 1b trial at upcoming medical congresses.

DNL151 (BIIB122) Future Development Plan

We and Biogen expect to initiate late-stage clinical development of DNL151 (BIIB122) in Parkinson's patients by year-end 2021.

Two clinical trials are planned:

one in Parkinson's patients who carry LRRK2 mutations and the other in Parkinson's patients independent of mutation status.

Results of DNL201 Phase 1 Clinical Trial

The DNL201 Phase 1 clinical trial in healthy volunteers was completed in July 2018.

This was a randomized, double-blind, placebo-controlled, single-center clinical trial in 105 healthy young and 17 healthy elderly subjects to investigate the safety and tolerability of single and multiple oral doses of DNL201 and characterize the pharmacokinetics and pharmacodynamics of DNL201 in plasma and CSF.

In this trial, DNL201 met all objectives including cerebrospinal fluid ("CSF") exposure levels and LRRK2 inhibition, as well as evidence of pathway engagement, at doses that were well tolerated.

The data from this clinical trial supported our decision to initiate the Phase 1b clinical trial in Parkinson’s disease patients.

Results of DNL201 Phase 1b Clinical Trial

The DNL201 Phase 1b clinical trial in Parkinson’s disease patients was completed in December 2019, and safety and biomarker data from this trial, including biomarkers of lysosomal function, support advancement to the next stage of clinical development (Figure 5B below).

This trial (NCT03710707) was a 28-day, randomized, placebo-controlled Phase 1b clinical trial in patients with mild to moderate Parkinson’s disease, with and without genetic LRRK2 mutations.

Its purpose was to evaluate safety, tolerability, pharmacokinetics, pharmacodynamics, and target and pathway engagement biomarkers in multiple oral doses of DNL201.

Exploratory endpoints included certain clinical endpoints.

The 28 patients dosed in the trial were randomized to receive either a low dose of DNL201, a high dose of DNL201, or placebo.

DNL201 was generally well tolerated at the low dose and the majority of subjects experienced either no or mild adverse events (“AEs”).

There was one serious adverse event considered unrelated to drug.

At the high dose, the majority of subjects experienced either mild or moderate AEs and there was one severe AE (headache) leading to dose reduction and one study withdrawal (headache and nausea).

All treatment-related AEs were manageable and reversible.

Target and Pathway Engagement

The Phase 1b results with DNL201 in patients with Parkinson’s disease met all biomarker goals by demonstrating greater than 50 percent inhibition of pS935 LRRK2 and pRAB10 in blood for both doses tested and improvement of the lysosomal biomarker BMP by 20 percent and 60 percent in urine at the low and high dose, respectively.

DNL201 demonstrated:

pS935 LRRK2 inhibition, a biomarker of LRRK2 kinase activity and target engagement.

pRab10 inhibition, a biomarker of LRRK2 kinase pathway engagement linked to lysosomal regulation.

reduction in urinary BMP, an established biomarker of lysosomal dysfunction in biofluids that is elevated in LRRK2 mutation carriers.

BIIB122/DNL151 Phase 1 trial in healthy volunteers and Phase 1b trial in Parkinson’s disease patients

In May 2021, we announced final results from Phase 1 and Phase 1b trials of BIIB122/DNL151.

Results from the Phase 1 trial of healthy volunteers (N=184) and the Phase 1b trial of patients with Parkinson’s disease (N=36) showed achievement of robust target and pathway engagement with BIIB122/DNL151 treatment as measured by pS935 LRRK2 and pT73 Rab10 ("pRab10"), respectively.

In addition, a dose-dependent reduction in urine of the lysosomal lipid BMP, a biomarker of lysosomal function, was achieved with BIIB122/DNL151 treatment, providing peripheral evidence supporting improvement of lysosomal function.

BIIB122/DNL151 was generally well tolerated across a broad range of doses for up to 28 days, the longest treatment duration in both studies.

Key results are summarized below.

Summary of key biomarker results from Phase 1 and Phase 1b studies of BIIB122/DNL151

A total of 184 healthy volunteers (145 BIIB122/DNL151, 39 placebo) were enrolled in the Phase 1 trial and treated with single or once daily multiple doses ranging from 10 mg to 300 mg for up to 28 days or twice daily doses of up to 400 mg for 14 days.

A total of 36 patients with Parkinson’s disease (26 BIIB122/DNL151, 10 placebo) were enrolled in the Phase 1b trial and treated with once daily multiple doses up to 300 mg for 28 days.

In the Phase 1 and Phase 1b trials, a robust dose-dependent reduction in pS935 of greater than or equal to 50% in whole blood was observed at doses of BIIB122/DNL151 greater than 70 mg in healthy volunteers and across all dose levels studied in patients (80 mg, 130 mg, and 300 mg given once daily for 28 days).

This level of pS935 reduction observed is consistent with the magnitude of reduction required for normalization of increased LRRK2 kinase activity observed in Parkinson’s patients with kinase activating LRRK2 mutations.

In addition, across both studies, a robust reduction in pS935 of greater than or equal to 80% was observed at doses of BIIB122/DNL151 greater than or equal to 225 mg.

Further, a dose-dependent reduction in phosphorylation of Rab10, a substrate of LRRK2, was observed across the healthy volunteer cohorts in Phase 1, and a reduction of greater than or equal to approximately 50% was observed at all dose levels studied in patients in Phase 1b.

After normalizing for total LRRK2 levels, pRab10 was elevated by approximately 2-fold in patients with sporadic Parkinson’s disease and in LRRK2 mutation carriers compared with healthy volunteers.

Thus, the levels of pRab10 reduction observed in the Phase 1b study are consistent with the magnitude required for normalization of pRab10 levels in patients with Parkinson’s disease.

Finally, in both healthy volunteers and patients with Parkinson’s disease, treatment with BIIB122/DNL151 was associated with a dose-dependent reduction in urine lysosomal lipid BMP di22:6, a marker of peripheral lysosomal function, as measured from baseline to steady-state (Figure 5).

Summary of BIIB122/DNL151 safety and tolerability profile in Phase 1 and Phase 1b trials

BIIB122/DNL151 was generally well tolerated in healthy volunteers and patients with Parkinson’s disease.

No serious adverse events were observed.

The majority of healthy volunteers and patients with treatment-emergent adverse events ("TEAEs") experienced mild to moderate TEAEs.

Two healthy volunteers in the Phase 1 trial who received 250 mg twice daily and 400 mg twice daily, respectively, discontinued with symptoms including nausea and headache considered related to study drug.

Two patients in the Phase 1b trial discontinued on the first study day:

one who received 130 mg once daily experienced severe asymptomatic hypotension, considered by the investigator as being unrelated to study drug (pre-existing hypotension), and another patient who received 300 mg once daily experienced mild hypotension and orthostatic hypotension with mild dizziness.

In all discontinuations, symptoms resolved with discontinuation of therapy.

There were no clinically meaningful changes in pulmonary or renal function in either study.

In both healthy volunteers and patients with Parkinson’s disease, treatment with BIIB122/DNL151 was associated with a dose-dependent reduction in urine lysosomal lipid BMP di22:6, a marker of peripheral lysosomal function, as measured from baseline to steady-state.

BIIB122/DNL151 Development Plan

BIIB122/DNL151 is the most clinically advanced small molecule inhibitor of LRRK2 currently in clinical testing for PD.

Based on the strength of the Phase 1/1b data with BIIB122/DNL151, start-up activities are ongoing for two late-stage trials in PD for which Biogen will lead operational execution.

The LUMA Study is a global Phase 2b trial expected to enroll approximately 640 participants with PD who do not carry a LRRK2 mutation and is designed to potentially support registration of BIIB122/DNL151.

The LIGHTHOUSE Study is a global Phase 3 trial expected to enroll approximately 400 PD participants with LRRK2 mutations.

Minimum treatment periods are 48 weeks and 96 weeks in the LUMA and LIGHTHOUSE studies, respectively.

The primary endpoint of both trials will be assessed using the Movement Disorder Society-Sponsored Revision of the Unified Parkinson's Disease Rating Scale ("MDS-UPDRS").

In collaboration with Centogene, progress in identification of PD patients who carry a mutation in LRRK2 include patients from The Rostock International Parkinson's Disease ("ROPAD") Study, which was extended after having reached a significant milestone of 10,000 participants in May 2021.

We expect that dosing in the LUMA and LIGHTHOUSE studies will begin in 2022.

Other LRRK2 Compounds

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As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen on the Peripheral LRRK2 program.

ETV:IDS Enzyme Replacement Therapy Program for Hunter Syndrome

Hunter syndrome is an X-linked, monogenic LSD, which affects approximately 2,000 boys world-wide.

Hunter syndrome is caused by a mutation in the gene that encodes for the enzyme iduronate-2-sulfatase (IDS).

DNL310 ETV:IDS Enzyme Replacement Therapy Program for Hunter Syndrome

Hunter syndrome is an X-linked, monogenic LSD, affecting over 2,000 individuals, primarily males, world-wide.

Hunter syndrome is caused by a mutation in the gene that encodes for the enzyme IDS.

IDS is an enzyme responsible for breaking down glycosaminoglycans ("GAGs") in the lysosome thereby maintaining lysosomal homeostasis.

In Hunter syndrome, the reduction or loss of IDS enzyme activity leads to accumulation of GAGs, which causes lysosomal dysfunction and neurodegeneration as well as progressive damage to multiple organs including bone, cartilage, heart, lung and brain.

Approximately two-thirds of Hunter syndrome patients suffer from central manifestations of the disease, which is characterized by intellectual disability and a progressive cognitive decline that emerges between three and five years of age.

Hunter syndrome is currently treated with IV infusions of recombinant IDS protein.

These treatments do not efficiently distribute to the brain and, therefore, cannot address the neurological symptoms of the disease.

There is a demonstrated need for enzyme replacement therapies ("ERTs") that effectively cross the BBB so as to treat both central and peripheral manifestations of Hunter syndrome and other LSDs.

DNL310 ("ETV:IDS") is an intravenously, centrally administered ERT biotherapeutic enabled by our enzyme transport vehicle ("ETV"), designed to address both central and peripheral manifestations of the disease by delivering IDS and reducing GAGs, both peripherally and in the brain, in patients with Hunter syndrome.

In Hunter syndrome, the reduction or loss of IDS enzyme activity leads to accumulation of GAGs (e.g., heparan sulfate and dermatan sulfate), which causes lysosomal dysfunction and neurodegeneration as well as progressive damage to multiple organs including bone, cartilage, heart, lung and brain.

Approximately two-thirds of individuals with Hunter syndrome have CNS manifestations of the disease, which is characterized by intellectual disability and a progressive cognitive decline that emerges between three and five years of age.

The standard-of-care enzyme replacement therapy ("ERT") for Hunter syndrome is weekly intravenous infusions of recombinant IDS protein.

These treatments partially address peripheral manifestations of MPS II and cannot address the neurological symptoms of the disease as they do not efficiently distribute to the brain.

There is a demonstrated need for enzyme replacement therapies ("ERTs") that effectively cross the BBB so as to treat both CNS and peripheral manifestations of Hunter syndrome and other LSDs.

DNL310 (ETV:IDS) is an intravenously administered ERT biotherapeutic enabled by our enzyme transport vehicle ("ETV"), designed to address both CNS and peripheral manifestations of the disease by delivering IDS and reducing GAGs, both peripherally and in the brain, in patients with Hunter syndrome.

DNL310 is currently being evaluated in a Phase 1/2 trial in patients with Hunter syndrome.

Biomarker-Driven Development

We have developed and validated assays to quantify GAGs in CSF and urine of patients receiving DNL310.

We have developed and validated assays to quantify GAGs in cerebrospinal fluid ("CSF") and urine of patients receiving DNL310.

These assays are designed to measure changes in primary substrate accumulation that is a result of enzyme deficiency in these patients.

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Phase 1/2 Trial in Patients with Hunter Syndrome

The investigational new drug application ("IND") for DNL310 was accepted in January 2020.

We initiated a Phase 1/2 trial for DNL310 in Hunter syndrome patients in August 2020 as a multicenter, multiregional, open-label trial to assess the safety, pharmacokinetics, and pharmacodynamics of increasing dose levels of DNL310 administered once weekly by intravenous infusion.

The initial trial design included two staggered cohorts:

the first (Cohort A) enrolled a total of five neuronopathic patients aged five to ten years;

the second (Cohort B) is enrolling either neuronopathic or non-neuronopathic patients aged two to eighteen years.

A third cohort (Cohort C) is planned to enroll neuronopathic patients aged two to under four years.

In November 2020, we announced achieving first-in-human biomarker proof of concept for our TV technology based on safety and biomarker results after patients in Cohort A had received four weekly IV doses of DNL310.

In February 2021, we presented an interim analysis of additional safety and biomarker data from the five patients enrolled in Cohort A, who all received three months of weekly IV doses of DNL310 after switching from idursulfase ERT on Day 1 of the trial.

Key results included:

• Normal levels of heparan sulfate, a GAG, in CSF that were seen after four weeks of dosing in four of the five patients were sustained after three months of dosing (mean 85% reduction;

heparan sulfate levels were further significantly reduced and approached normal levels in the fifth patient (from 25% to 73% reduction from one to three months, respectively).

• Reductions in downstream exploratory CSF biomarkers, GM3 and BMP (lysosomal lipids), of 39% and 15%, respectively, were observed after eight weeks of dosing with DNL310, consistent with improvement in lysosomal function.

• Reductions in urine heparan sulfate (Figure 6) and dermatan sulfate following a switch from idursulfase, of 76% and 82%, respectively, were observed after eight weeks of dosing of DNL310, supporting potential for improved peripheral effects relative to standard of care.

• DNL310 was generally well tolerated with no dose reductions and all five patients continue in the trial.

The most frequently observed adverse events were mild or moderate infusion-related reactions in three of the five patients, which is consistent with other ERTs.

• Based on three-month clinical data, doses of DNL310 from 3 mg/kg to 30 mg/kg are generally well tolerated and provide flexibility for dose selection in clinical trials.

The investigational new drug ("IND") application for DNL310 was accepted in January 2020.

We initiated a Phase 1/2 trial for DNL310 in patients with Hunter syndrome in August 2020 as a multicenter, multiregional, open-label trial to assess the safety, pharmacokinetics, and pharmacodynamics of increasing dose levels of DNL310 administered once weekly by intravenous infusion.

The trial is enrolling patients with neuronopathic and non-neuronopathic disease into five cohorts, of which the first two cohorts are fully enrolled with five patients in Cohort A and 18 patients in Cohort B.

Enrollment in the third cohort, Cohort C, has begun.

In November 2020, we announced achieving first-in-human biomarker proof of concept for our TV technology based on safety and biomarker results showing a robust reduction in CSF levels of the GAG heparan sulfate after patients in Cohort A had received four weekly intravenous doses of DNL310.

Since then, we have presented additional interim data at medical meetings as summarized below.

In February 2021, we presented an interim analysis of additional safety and biomarker data from the five patients enrolled in Cohort A at the 17th Annual WORLD Symposium TM on lysosomal diseases demonstrating the following key results:

sustained normalization of CSF heparan sulfate levels in 4 of 5 patients after 3 months of dosing and approaching normal levels in the fifth patient;

reductions in exploratory CSF biomarkers consistent with improved lysosomal function;

and reductions in levels of urine GAGs following a switch from idursulfase, which supports the potential for improved peripheral effects relative to standard of care.

DNL310 was found to be generally well tolerated with safety profile consistent with other ERTs with the most frequently observed adverse events being infusion-related reactions ("IRRs").

In July 2021, at the 16th International Symposium on MPS and Related Diseases, we presented safety data up to Weeks 43 and 25 from Cohort A (n=5) and Cohort B (n=12), respectively;

6-month biomarker data from Cohort A and up to 3-month biomarker data from Cohort B;

and up to 6-month data on Clinician and Caregiver Global Impression of Change Scales from Cohort A.

Key results of this interim analysis included sustained normalization of CSF heparan sulfate in all patients with rapid normalization (after 4-6 doses) in most, demonstrating robust and durable CNS activity with intravenous administration;

enhanced peripheral activity with reductions in urine and serum heparan sulfate after switching from standard-of-care idursulfase ERT;

Clinician and Caregiver Global Impression of Change scales data suggesting clinical improvement in overall MPS II symptoms, cognitive abilities, behavior, and physical abilities;

exploratory biomarker data demonstrating reductions in CSF lysosomal lipid biomarkers that were consistent with improved lysosomal function;

and high variability in the exploratory biomarker Nf-L was observed pre- and post-treatment.

The safety profile of DNL310 with up to 43 weeks of dosing was consistent with standard-of-care ERT with IRRs being the most frequently observed adverse events.

In February 2022, we presented longer-term data from 20 patients in the Phase 1/2 clinical trial at the 18th Annual WORLD Symposium ™.

The data presented included longer-term biomarker data up to Weeks 49 and 24 from Cohort A and B, respectively;

clinical outcomes data across Cohorts A and B at Week 24;

and safety data up to Weeks 56 and 39 from Cohorts A and B, respectively.

The median age of patients was 6 years in both cohorts, with the youngest patients being 5 and 2 years of age in Cohorts A and B, respectively.

All patients received weekly intravenous doses of DNL310 on Day 1 of the study after switching from idursulfase ERT.

The main differences between the cohorts include exploration of different dose levels and age groups, with younger patients eligible for Cohort B.

Across Cohorts A (n=5) and B (n=15), all patients had normalized levels of CSF heparan sulfate by Week 24 of treatment with DNL310, which were sustained in all 5 patients from Cohort A at Week 49.

Rapid response was observed in most patients after 4 to 6 weekly intravenous doses of DNL310, including in patients on lower dose regimens of DNL310 (Figure 6).

These results are consistent with robust and efficient crossing of the BBB by DNL310 and durable activity in the CNS.

Furthermore, the observed decline in urine heparan and dermatan sulfate, as well as CSF dermatan sulfate, was consistent with increased peripheral and central activity with DNL310 compared to standard-of-care ERT, respectively.

Exploratory CSF lysosomal lipid biomarker data showed further reductions with longer duration of treatment with DNL310, consistent with improved lysosomal function.

Across Cohorts A and B, CSF GM3 ganglioside levels decreased from baseline, with normalized CSF GM3 ganglioside levels apparent in all 5 patients in Cohort A at Week 49, and in 9 of 12 patients in Cohort B at Week 24 (3 of 15 total patients in Cohort B had not reached Week 24 at the time of the data cut in September 2021).

In addition, available preliminary exploratory data on other biomarkers of lysosomal function demonstrated reductions in levels of glucosylceramide ("GlcCer") across Cohorts A and B at Week 24 and reductions in levels of other lysosomal lipid biomarkers including di-18:1-bis(monoacylglycerol)phosphate ("BMP di18:1"), GM2 and glucosylsphingosine in Cohort A at 24 weeks.

Exploratory clinical outcomes data at Week 24 from Cohort A (n=5), and now including Cohort B (n=12;

3 of 15 total patients had not reached Week 24 at the time of the data cut in September 2021), suggest improved clinical symptoms and function in the majority of patients as reported by investigators and parents/caregivers.

Based on Global Impression of Change scales (Clinician Global Impression of Change and Parent/Caregiver Global Impression of Change), which are standardized assessment scales used to measure change and modified to measure specific domains impacted by MPSII, the data showed clinical improvement in overall MPS II symptoms, cognitive abilities, and behavior from baseline.

The safety profile of DNL310, which now includes data up to Weeks 56 and 39 from Cohorts A and B, respectively, remains consistent with standard-of-care enzyme replacement therapy.

DNL310 was generally well tolerated with the most common treatment-emergent adverse events being IRRs.

IRRs occurred in 15 of 20 (75%) patients:

the majority had mild (n=6) or moderate (n=8) IRRs, and 1 patient had severe IRRs.

Most IRRs occurred during the first 12 study weeks;

IRR frequency decreased with chronic dosing, including in patients who dose escalated up to 30 mg/kg.

A total of 4 serious adverse events ("SAEs") were reported:

1 previously reported SAE for a patient enrolled in Cohort A based on a mild IRR;

2 previously reported SAEs in a patient enrolled in Cohort B based on severe IRRs;

and 1 SAE in a patient in Cohort B hospitalized for constipation.

The SAEs resolved, and all three patients are continuing in the study.

There were no notable abnormalities or trends in safety laboratory evaluations except for previously reported mild or moderate anemia in 4 of 20 patients.

Anemia stabilized (n=2) or resolved (n=2) while continuing treatment with DNL310.

All other treatment-emergent adverse events were mild or moderate.

The study continues without modification following recommendation by an independent data monitoring committee in October 2021.

CSF heparan sulfate measured by validated LC-MS/MS assay after enzymatic digestion;

biomarker population (n=20) in Phase 1/2 clinical trial of DNL310 in participants with MPS II.

Normalization of CSF heparan sulfate was observed in all participants by week 24 and sustained at week 49.

We believe the Phase 1/2 data to date continue to support the overall safety profile and biomarker effects of DNL310 as an investigational treatment in Hunter syndrome.

Importantly, at dose levels resulting in robust and durable biomarker response, DN310 appears generally well tolerated with a safety profile consistent with standard-of-care ERT.

In addition, early biomarker effects initially seen after four weeks of treatment with DNL310 were sustained after three months of dosing, and the reductions observed in CSF lipid biomarkers indicate, for the first time, an improvement in lysosomal function.

In addition, early biomarker effects initially seen after 4 weeks of treatment with DNL310 were sustained after one year of dosing, and the reductions observed in CSF lipid biomarkers indicate an improvement in lysosomal function.

The urine GAG results also support the potential for systemic administration of TV-enabled therapeutics to address peripheral disease.

Overall, the magnitude and durability of biomarker response and tolerability seen with DNL310 in this Phase 1/2 trial provide strong support for the potential application of our TV technology to deliver enzymes and other therapeutic modalities to the brain.

Heparan sulfate levels as measured in the CSF (left) and urine (right) from patients with Hunter syndrome enrolled into Cohort A of the ongoing Phase 1/2 trial of DNL310.

Normal range of CSF heparan sulfate (black circle on left).

Preclinical Studies in a Mouse Model of Hunter Syndrome

In a mouse model of Hunter syndrome, we have shown that ETV:IDS treatment reduced CSF GAGs and that these reductions were correlated with GAG reductions in the brain (Figure 7).

Furthermore, reduction in CSF GAG levels was associated with subsequent improvements in lysosomal function, neurodegeneration biomarkers, neurobehavioral outcomes and correction of skeletal disease manifestations in the mouse model.

ETV:IDS reduced peripheral and CNS GAGs in an MPS II mouse model.

Future Development Plan

In January 2021, based on strong proof-of-concept data, we announced the expansion of our DNL310 development program with the addition of a third cohort (Cohort C, approximately 12 patients) to the ongoing Phase 1/2 trial.

Cohort C will enable further exploration of clinical endpoints related to neuronopathic manifestations in patients at early disease stages.

We plan to initiate a pivotal Phase 2/3 trial with DNL310 in the first half of 2022.

EIF2B Program

ALS and FTD are rare neurodegenerative diseases collectively affecting over 200,000 people world-wide.

Based on the strength of the clinical and preclinical data to date, Denali plans to initiate a potentially registrational Phase 2/3 trial with DNL310 with the goal of demonstrating efficacy and safety in participants with neuronopathic and non-neuronopathic MPS II.

The trial is designed to enroll two cohorts of male and female participants with a confirmed diagnosis of MPS II.

Cohort A will enroll neuronopathic participants ages 2 to 6 years and Cohort B will enroll non-neuronopathic participants ages 6 to 17 years.

Eligible participants are required to have been receiving maintenance enzyme replacement therapy and to have tolerated a minimum of 4 months of idursulfase therapy during the period immediately prior to screening.

Participants will be randomized 2 to 1 to receive DNL310 or standard of care (idursulfase), respectively.

The treatment periods are 96 weeks and 48 weeks for Cohorts A and B, respectively, followed by open label extension on DNL310.

Key efficacy endpoints include:

the effect of DNL310 on CSF biomarkers ("CSF GAGs");

the effect of DNL310 on neurobehavioral parameters;

the effect of DNL310 on systemic manifestations of disease;

and patient/caregiver reported outcomes.

Dosing is expected to begin in the Phase 2/3 trial in the first half of 2022.

DNL343 eIF2B Program for ALS and FTD

ALS and FTD are rare neurodegenerative diseases collectively impacting over one million people world-wide.

ALS, often called Lou Gehrig's disease, refers to a group of progressive neurodegenerative diseases that affect nerve cells in the brain and spinal cord, leading to loss of voluntary muscle control and movement.

FTD refers to a rare group of brain disorders that are characterized by atrophy of the frontal and temporal lobes of the brain and are associated with changes to personality and behavior as well as difficulties with language.

Denali is developing DNL343 as a novel eIF2B activator with first-in-class potential for the treatment of ALS and FTD.

eIF2B is an intracellular protein complex that regulates protein synthesis and is required for neuronal health and function.

When neurons experience stress, as occurs in ALS or FTD, the activity of eIF2B is suppressed by a biological pathway called the integrated stress response ("ISR").

This leads to impaired protein synthesis and results in the formation of "stress granules".

Stress granules are thought to be a precursor of TDP-43 aggregation, which is a hallmark pathology found in over 95% of individuals with ALS and approximately 50% of individuals with FTD.

Mutations in genes associated with ALS and FTD alter RNA homeostasis, which contributes to the aggregation of TDP-43 or other RNA binding proteins.

TDP-43 inclusions are found in over 95% of ALS patients and approximately 50% of FTD patients.

Activators of EIF2B have demonstrated benefits in resolving TDP-43 aggregation, restoring protein translation and attenuating neurodegeneration via inhibition of the cellular integrated stress response in numerous in vitro and in vivo models.

Our most advanced EIF2B activator, DNL343, is a brain-penetrant small molecule designed to rescue EIF2B function and restore normal RNA metabolism.

DNL343 is designed to inhibit the ISR to prevent or slow disease progression that is associated with stress granule formation and TDP-43 aggregation (Figure 7).

In a cell-based model, DNL343 treatment reversed pre-formed stress granules and TDP-43 inclusions, a hallmark pathology in nearly all individuals with ALS.

Biomarker-Driven Development

We have developed assays to measure ATF4 protein and other ISR-dependent changes in gene expression as proximal pathway markers of EIF2B activity in humans.

ATF4 is a transcription factor that modulates ISR gene expression and is upregulated when cellular stress modifies EIF2B activity.

We have developed assays to measure ATF4 protein and other ISR-dependent changes in gene expression, such as CHAC1 , as proximal pathway markers of eIF2B activity in humans.

CHAC1 and ATF4 are genes induced by inactivation of eIF2B via the ISR.

The induction of these genes is dependent on eIF2B and they therefore can serve as specific biomarkers of pathway activation.

These biomarkers have been characterized in in vitro assays and in human peripheral blood mononuclear cells ("PBMCs").

Clinical Development Plan

We initiated a Phase 1 clinical trial of DNL343 in healthy volunteers in February 2020.

The Phase 1 trial is a randomized, double-blind, placebo-controlled, single-center clinical trial in 88 healthy subjects to investigate the safety and tolerability of single and multiple ascending oral doses of DNL343 and characterize the PK and PD of DNL343 in plasma and CSF.

Initial safety and biomarker results from this trial are expected in the first half of 2021.

We plan to initiate a Phase 1b trial in ALS patients in the second half of 2021.

DNL343 treatment dissolved existing TDP-43 aggregates in a cell based model and was associated with decreased stress response gene expression.

DNL343 treatment resulted in a dose dependent reduction in the expression of the ISR-dependent gene Chac1 and other ISR-dependent genes in the brain of a mouse neurodegeneration model.

A similar reduction in CHAC1 expression is observed in ex vivo DNL343 studies using PBMCs from healthy volunteers;

overlay of single ascending dose (SAD) pharmacokinetics data from healthy volunteers in Phase 1 treated with DNL343 demonstrated clinical exposures achieved in SAD cohorts.

A dose-dependent reduction in gene expression of CHAC1 and ATF4 protein levels consistent with ex vivo studies was observed (data not shown).

Phase 1 Clinical Trial

We conducted a randomized, double-blind, placebo-controlled, single-center Phase 1 clinical trial in a total of 95 healthy volunteers to investigate the safety and tolerability of single and multiple ascending oral doses of DNL343 and characterize the pharmacokinetics and pharmacodynamics of DNL343 in plasma and CSF.

In October 2021, we presented results of the Phase 1 trial at the 2021 Annual Northeast ALS ("NEALS") Meeting.

The results demonstrated that DNL343 was generally well tolerated for up to 14 days of dosing, with robust distribution in the CNS and predictable dose-related increases in DNL343 exposure with a pharmacokinetic profile supporting once daily dosing.

Biomarker assessments were also made as related to the cellular ISR.

After healthy volunteers were treated with DNL343, samples of their blood cells were subjected to stress ex vivo resulting in expression of ISR related biomarkers.

In DNL343 treated healthy volunteer samples, robust inhibition of biomarkers of the ISR were observed, confirming pathway engagement (Figure 8).

In a Phase 1 trial of healthy volunteers, DNL343 achieved robust inhibition of CHAC1 gene expression at all doses studied in both the single-ascending dose ("SAD") portion and the multiple-ascending dose ("MAD") portion of the trial.

Similar results were observed for inhibition of ATF4 protein levels.

DNL343 Clinical Development Plan

We are conducting a Phase 1b multicenter, randomized, placebo-controlled, double-blind, 28-day trial followed by an 18-month open-label extension, designed to evaluate the safety, pharmacokinetics and pharmacodynamics of DNL343 in approximately 30 participants with ALS.

Dosing in this study began in the third quarter of 2021.

We expect that safety and biomarker results will be available in mid 2022.

RIPK1 Inhibitor Program

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Increased RIPK1 activity in the brain drives neuroinflammation and cell necroptosis and contributes to neurodegeneration.

RIPK1 inhibition has been shown to have beneficial effects in preclinical models of Alzheimer’s disease, ALS and other diseases.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Sanofi on the RIPK1 inhibitor program in neurological diseases, including Alzheimer’s disease, ALS and multiple sclerosis ("MS").

In June 2020, we announced the joint decision with Sanofi to pause clinical studies with DNL747, previously the program's lead brain-penetrant RIPK1 inhibitor molecule, and focus our efforts on accelerating development of DNL788 (SAR443820), which we believe has superior drug properties and a more rapid path toward proof-of-concept clinical studies.

RIPK1 inhibition has been shown to have beneficial effects in preclinical models of ALS, multiple sclerosis ("MS"), and other diseases.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Sanofi on the RIPK1 inhibitor program in neurological diseases, including ALS, MS and Alzheimer’s disease for which SAR443820/DNL788 is the lead CNS-penetrant RIPK1 inhibitor in clinical development.

Biomarker-Driven Development

Target engagement has been characterized using a marker of RIPK1 activity, autophosphorylation of RIPK1 at Serine166 ("pS166").

This biomarker has been characterized in in vitro assays in human and monkey PBMCs and has been demonstrated to be robustly reduced by RIPK1 inhibitors.

DNL747 Phase 1b Results and Decision to Advance DNL788 (SAR443820)

In June 2020, we announced data from 31 patients in two 29-day Phase 1b trials in Alzheimer’s disease and ALS, and additional data from 6 ALS patients in an open label extension trial, showing that DNL747 was safe and well tolerated at the dose tested with no significant treatment related adverse events.

Target engagement of approximately 80% median inhibition of pRIPK1 in blood at trough drug concentration was achieved.

In parallel to the clinical trials, chronic toxicity studies with DNL747 in cynomolgus monkeys showed dose- and duration-dependent adverse nonclinical findings at exposures higher than those tested in the clinic.

These findings, which are considered off-target and molecule-specific, impact the ability to increase the dose of DNL747 and achieve higher levels of target inhibition without time consuming additional clinical safety studies in patients to evaluate the long-term safety and tolerability.

Due to the emerging evidence that higher levels of target inhibition may be required for maximizing efficacy, and challenges to achieving higher doses imposed by molecule-specific toxicity findings with DNL747, we made the decision with Sanofi to pause additional studies with DNL747.

We are encouraged by the emerging pathway biomarker data in Alzheimer’s disease and ALS patients, and our experience and learnings with DNL747 should allow us to progress quickly with clinical studies for DNL788 (SAR443820).

DNL788 (SAR443820) appears to have a superior preclinical therapeutic window compared to DNL747, facilitating development in multiple indications, including Alzheimer’s disease, ALS and MS.

Future Development Plan

Sanofi submitted an IND application for DNL788 (SAR443820) in October 2020.

First-in-human dosing in a Phase 1 healthy volunteer trial commenced in December 2020;

data are expected to be available in the second half of 2021.

This biomarker has been characterized in in vitro assays in human and monkey peripheral blood mononuclear cells and has been demonstrated to be robustly reduced by RIPK1 inhibitors.

SAR443820/DNL788 Clinical Development Plan

Sanofi leads all clinical development activities with SAR443820/DNL788 in ALS and MS.

Sanofi completed a Phase 1 trial of SAR443820/DNL788 in healthy volunteers in which robust target engagement was demonstrated at doses that were generally well tolerated.

Based on these results, Sanofi decided to initiate a Phase 2 trial, named HIMALAYA , which is a multi-center, randomized, double-blind, placebo-controlled trial, followed by an open-label long-term extension, to evaluate the efficacy and safety of SAR443820/DNL788 in approximately 260 adult participants with ALS.

This Phase 2 study is expected to commence in Q1 2022.

Food and Drug Administration (“FDA”) has granted Fast Track designation to SAR443820/DNL788 for the treatment of ALS.

Fast Track is a U.S.

FDA process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need.

Fast Track designation may allow for early and frequent communication with the U.S.

FDA regarding the development of SAR443820/DNL788 for the treatment of ALS.

This designation also enables rolling review of the marketing application.

Sanofi also plans to start a Phase 2 trial of SAR443820/DNL788 in MS.

Other RIPK1 Compounds

As part of our parallel development strategy, we have also developed a number of other structurally diverse CNS-penetrant and peripherally-restricted RIPK1 inhibitor molecules, which are included as part of the collaboration agreement with Sanofi.

In July 2020, we announced that Sanofi commenced a Phase 1b trial of DNL758 (SAR443122), a Peripheral Product (as defined below), in hospitalized adult patients with severe COVID-19 lung disease.

The Phase 1b trial was completed and DNL758 (SAR443122) was found to be generally well tolerated and resulted in changes in disease relevant biomarkers and clinical outcome trends consistent with the proof of mechanism.

Based on the rapidly evolving landscape of treatment and prevention options for COVID-19, Sanofi has made a sponsor decision to hold further development in COVID-19 at this time.

Sanofi continues to develop DNL758 (SAR443122) as a potential treatment for cutaneous lupus erythematosus ("CLE").

In July 2020, we announced that Sanofi commenced a Phase 1b trial of SAR443122/DNL758, a Peripheral Product (as defined below), in hospitalized adult patients with severe COVID-19 lung disease.

In February 2021, we announced Sanofi's decision, upon completion of a Phase 1b study in hospitalized adult patients with severe COVID-19 lung disease, to cease further development of SAR443122/DNL758 in COVID-19 based on the rapidly evolving landscape of treatment and prevention options for COVID-19.

Although this pilot study had insufficient statistical power to detect differences in clinical outcomes, the results showed consistent trends favoring SAR443122/DNL758 over placebo for both biomarker and clinical endpoints, with an acceptable safety profile.

Sanofi continues to develop SAR443122/DNL758 as a potential treatment for cutaneous lupus erythematosus ("CLE").

CLE is a type of interface dermatitis characterized by immune cell infiltration.

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Therefore, inhibition of RIPK1 activity downstream of TNF and IFN receptor signaling is considered an important target to modulate the pathophysiology of CLE .

Sanofi plans to initiate a Phase 2 clinical trial of DNL758 (SAR443122) in CLE patients in the first half of 2021.

Sanofi leads all clinical development activities with DNL758 (SAR443122) for systemic inflammatory diseases.

PTV:PGRN Program for FTD

PGRN is a soluble lysosomal protein that has critical functions in lysosomes and an innate immunity in the brain.

In June 2021, we announced that Sanofi initiated a Phase 2 clinical trial of SAR443122/DNL758 in CLE patients.

Sanofi leads all clinical development activities with SAR443122/DNL758 for systemic inflammatory diseases.

Sanofi also plans to start a Phase 2 clinical trial of SAR443122/DNL758 in ulcerative colitis.

DNL593 (PTV:PGRN) Program for FTD-GRN

PGRN is a soluble lysosomal protein that has critical functions in lysosomes and innate immunity in the brain.

The GRN gene encodes for the PGRN protein.

Loss of function genetic mutations in the GRN gene causes FTD by decreasing PGRN levels in the brain.

DNL593 (“PTV:PGRN”) is an intravenously, centrally administered recombinant PGRN biotherapeutic enabled by our protein transport vehicle ("PTV").

DNL593 is designed to restore normal levels of PGRN in multiple cell types in the brain without interfering with normal PGRN processing.

DNL593 restored lysosomal function and reduced microglial activation in the brain of granulin knock-out mice.

BMP has been identified as a translatable biomarker for FTD in humans that reflects lysosomal function.

DNL593 has demonstrated the ability to rescue BMP levels both peripherally and in the brain and rescue brain BMP levels in granulin knock-out mice (Figure 9).

PTV:PGRN but not Fc:PGRN rescues brain BMP levels (left) and both rescue Liver BMP levels (right) in granulin knock-out mice.

In December 2020, we initiated IND-enabling studies for DNL593 and we plan to file an IND application or a clinical trial application ("CTA") in late 2021.

As described in more detail in “Business - Licenses and Collaborations” below, Takeda has the right to opt in to our PTV:PGRN program.

The initiation of IND-enabling studies triggered a milestone payment of $8.0 million from Takeda which we received in January 2021.

ATV:TREM2 Program for Alzheimer's disease

Dementias affect approximately 50 million people world-wide.

Loss of function genetic mutations in the GRN gene cause FTD by decreasing PGRN levels in the brain.

It is estimated that FTD-GRN is 5-10% of the total FTD patient population.

DNL593 (PTV:PGRN) is a peripherally administered recombinant PGRN biotherapeutic enabled by our protein transport vehicle ("PTV").

DNL593 is designed to restore normal levels of PGRN in multiple cell types in the brain without interfering with normal PGRN transport and processing.

Preclinical proof of concept was published in the scientific journal Cell in September 2021, demonstrating that PTV enhances brain uptake of recombinant PGRN as well as uptake by multiple cell types in the brain, including neurons and microglia, as compared to non-TV PGRN (Fc:PGRN).

In addition, DNL593 rescued both neurodegeneration and microglial dysfunction in PGRN-deficient mice (Figure 9).

This research supports the potential utility of DNL593 in treating certain types of FTD, especially FTD-GRN caused by PGRN deficiency.

PTV:PGRN but not Fc:PGRN rescues lysosomal function (top panel) and neuronal and glial biomarkers (bottom panel) in PGRN-deficient mice.

Logan T, et al.

Cell 2021 Sep 2;184(18):4651-4668.

DNL593 (PTV:PGRN) Clinical Development Plans

In November 2021, we announced that Takeda exercised its option to co-develop and co-commercialize DNL593 (PTV:PGRN).

We received an option exercise fee of $5 million in December 2021 and may also receive future milestone payments upon achievement of certain clinical and regulatory milestone events as well as certain sales-based milestones.

Subject to the terms of the collaboration agreement, we will share the development and commercialization costs equally with Takeda, and, if applicable, profits on a worldwide basis.

In January 2022, the UK-based Medicines & Healthcare products Regulatory Agency ("MHRA") approved our clinical trial application ("CTA") for DNL593 t riggering a $12.0 million milestone from Takeda which was received in February 2022 .

In Q1 2022, we expect to commence dosing of healthy volunteers in a Phase 1/2 clinical trial , which is a three-part (Parts A-C) multicenter, randomized, double-blind, placebo-controlled clinical trial exploring safety, pharmacokinetics and pharmacodynamics of DNL593 in healthy volunteers and patients with FTD-GRN.

Part A is a single ascending dose study in healthy volunteers.

Part B is a multiple dose, 25-week study in participants with FTD-GRN, followed by Part C, an 18-month open label extension.

Pending initial clinical data from Part A, we expect to begin dosing patients with FTD-GRN in the second half of 2022.

DNL919 (ATV:TREM2) Program for Alzheimer's disease

Dementia affects more than 50 million people worldwide.

Alzheimer's disease is the most common cause of dementia accounting for 60-70% of cases.

TREM2 is a protein expressed in microglia, the resident immune cells of the brain.

Mutations in the TREM2 gene are strongly associated with an increased risk for Alzheimer's disease.

DNL919 (“ATV:TREM2”) is a TV-enabled antibody designed to modulate TREM2 signaling and thereby normalize microglial function.

We have demonstrated significantly higher brain uptake of ATV:TREM2 compared to standard TREM2 antibodies as well as modulation of microglial gene expression in mouse models (Figure 10).

Single dose 10 mg/kg ATV:TREM2 induces robust pharmacodynamic response in brain.

Similar brain concentrations achieved with 10 mg/kg ATV:TREM2 and 100 mg/kg standard TREM2 antibody.

ATV:TREM2 has greater impact on microglia than standard TREM2 antibody using similar doses and exposure in mice.

In January 2021, we initiated IND-enabling studies for DNL919, and we plan to file an IND application or a CTA in late 2021 or early 2022.

As described in more detail in “Business - Licenses and Collaborations” below, Takeda has the right to opt into our ATV:TREM2 program.

The initiation of IND-enabling studies triggered a milestone payment of $8.0 million from Takeda which we expect to receive in early 2021.

Our portfolio includes additional preclinical programs, including programs targeting alpha-Synuclein ("ATV:aSyn"), Tau ("ATV:Tau"), Abeta (“ATV:Abeta”), SGSH ("ETV:SGSH"), GBA (“ETV:GBA”), GAA (“ETV:GAA”), IDUA (“ETV:IDUA”), NAGLU (“ETV:NAGLU”), and ARSA (“ETV:ARSA”) and oligonucleotide delivery (“OTV”) which are enabled by our TV platform technology.

TREM2 is a receptor expressed on microglia, the resident immune cells of the brain.

Loss of function TREM2 genetic mutations are strongly associated with an increased risk for Alzheimer's disease.

We are developing DNL919, a TREM2 activator, for the potential treatment of Alzheimer's disease.

DNL919 is a novel, selective, high affinity TREM2 antibody with a monovalent TfR binding site as antibody transport vehicle ("ATV") in the Fc domain to increase brain exposure.

Animal model data demonstrate enhanced brain uptake with DNL919 as compared to a non-ATV TREM2 antibody and improved pharmacodynamic response (Figure 10).

Preclinical studies in mouse models show that DNL919 has greater impact on microglia than a non-ATV TREM2 antibody (left) and dose dependently increases cerebrospinal fluid levels of sCSF1R, a key indicator of TREM2 pathway engagement in the brain (right).

In December 2021, we submitted an IND application to the FDA to begin clinical testing with DNL919.

On January 13, 2022, we announced that the DNL919 (ATV:TREM2) IND application had been placed on clinical hold by the FDA.

We received a formal clinical hold letter and are moving forward to address the FDA’s observations related to the preclinical toxicology assessment and to provide the information requested to initiate clinical studies, including proposed changes to the clinical trial protocol, the informed consent form, and the investigator brochure.

We expect a delay of at least 3 months to our plans to begin dosing in a first-in-human clinical trial of DNL919.

We intend to provide an update once a clear path forward is established.

On January 10, 2022, we announced that Takeda exercised its option to co-develop and co-commercialize DNL919.

Subject to the terms of the collaboration agreement, we will share the development and commercialization costs equally with Takeda, and, if applicable, profits on a worldwide basis.

DNL126 (ETV:SGSH) Program for MPS IIIA (Sanfilippo Syndrome A)

DNL126 (ETV:SGSH) is our second most advanced ETV program following DNL310 (ETV:IDS).

DNL126 is in development for the potential treatment of MPS IIIA (Sanfilippo syndrome A), a rare lysosomal storage disease that causes progressive neurodegeneration.

MPS IIIA is caused by genetic defects that result in a reduction in the lysosomal activity of N-sulfoglucosamine sulfohydrolase ("SGSH"), an enzyme responsible for degrading heparan sulfates in the lysosome.

There are no approved treatments for MPS IIIA.

In January 2022, Denali announced preclinical data demonstrating that DNL126 reduces heparan sulfate in a dose-dependent manner in brain and cerebrospinal fluid in an MPS IIIA mouse model (Figure 11).

Submission of a regulatory application to being clinical trials with DNL126 is planned for the first half of 2023.

In a mouse model of MPS IIIA, treatment with DNL126 (ETV:SGSH) resulted in significant reductions in levels of heparan sulfate in brain (left) and cerebrospinal fluid (right).

ATV:HER2 Bispecific Program for Oncology

Primary brain tumors and brain metastases are high unmet need indications with limited effective therapies for patients.

HER2 is a tyrosine kinase receptor growth-promoting protein found on the surface of some cancer cells that is associated with aggressive disease and poor prognosis in patients.

In breast cancer patients, HER2-directed therapy controls extracranial disease while the brain represents a “sanctuary site” where systemic HER2-directed therapies are less effective.

Amongst patients with HER2+ metastatic breast cancer, approximately 8% have identified brain metastases at diagnosis and eventually up to 50% develop brain metastases at some time in their illness.

Using our ATV platform, we have engineered mono- and bispecific formats of HER2 antibodies (ATV:HER2).

In October 2020, we presented data demonstrating improved anti-tumor activity of ATV-enabled HER2 antibodies in a HER2-positive peripheral tumor model.

In January 2022, we announced new preclinical data with a bispecific ATV:HER2 antibody demonstrating improved peripheral anti-tumor activity as compared to non-ATV HER2 antibodies as well as enhanced brain uptake of the bispecific ATV:HER2 as compared to a non-ATV HER2 antibody (Figure 12).

The data support the potential for ATV:HER2 to treat HER2-positive peripheral tumors and brain metastases and further validate the potential for TV applications in oncology.

We plan to submit an IND application for a lead bispecific ATV:HER2 therapeutic candidate in 2023.

In a HER2-positive peripheral tumor model in mice, treatment with multiple doses of ATV:HER2 antibodies (ATV:TRAS and ATV:PER) resulted in improved anti-tumor activity as compared to the combination of non-ATV HER2 antibodies (Trastuzumab and Pertuzumab) (left).

Improved brain uptake (far right) and improved anti-tumor activity in the periphery was also observed with a single dose of a bispecific ATV:HER2 (middle).

Oligonucleotide Transport Vehicle platform

Oligonucleotides, such as antisense oligonucleotides ("ASOs"), are a class of therapeutics with the potential to address the root cause of disease through modulation of gene expression.

This class, however, has been limited in its potential for treatment of neurodegenerative diseases, primarily due to the challenge of delivering effective amounts of drug to relevant brain regions.

Direct injection of oligonucleotides into the CSF via intrathecal injection has not achieved robust biodistribution into deep brain tissue, which may be necessary for effective therapeutic activity.

In January 2022, Denali announced the first nonhuman primate data with its Oligonucleotide Transport Vehicle ("OTV") delivery platform.

The data demonstrated that intravenous administration of an ASO enabled by OTV technology elicited superior broad brain biodistribution of the ASO (particularly in deep brain regions) and target gene knockdown that was superior to intrathecal administration of the same ASO in a larger species (Figure 13).

Further, intravenously delivered OTV in human TfR expressing mice provides robust target knockdown expression across all brain cell types, including neurons, microglia, astrocytes, and oligodendrocytes (Figure 13).

These data support the potential of the OTV platform to enable superior biodistribution of ASOs across brain regions, provide superior knockdown of target gene expression across all CNS cell types, and enable peripheral dosing.

Denali has a research collaboration with Secarna Pharmaceuticals to discover and develop ASOs in the field of CNS diseases.

In nonhuman primates ("NHPs"), intravenous ("IV") delivery of an ASO with OTV ("OTV IV") showed broad brain biodistribution compared to intrathecal ("IT") delivery of an ASO ("ASO IT") as shown by immunohistochemistry ("IHC") staining for the ASO (top left).

Further, OTV IV resulted in superior frontal cortex knockdown of the target gene ("Malat1") in NHPs compared to ASO IT or ASO IV (bottom left).

Superior knockdown of Malat1 gene expression was shown in all brain cell types in mice (right).

Other TV-enabled Discovery Programs

Our portfolio includes additional preclinical programs, including programs targeting alpha-Synuclein ("ATV:aSyn"), Tau ("ATV:Tau"), Abeta (“ATV:Abeta”), Gcase (“ETV:Gcase”), GAA (“ETV:GAA”), IDUA (“ETV:IDUA”), NAGLU (“ETV:NAGLU”), and ARSA (“ETV:ARSA”) which are enabled by our TV platform technology.

In addition to ATV:TREM2 and PTV:PGRN, our ATV:Tau program is subject to our collaboration agreement with Takeda and our ATV:Abeta program is subject to our collaboration agreement with Biogen, as described in more detail in “Business - Licenses and Collaborations” below.

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Research Phase and Takeda’s Option

Under the Takeda Collaboration Agreement and unless we otherwise agreed jointly with Takeda, we will be responsible, at our cost, for conducting activities relating to pre-IND development of biologic products directed to the three identified targets and enabled by our BBB delivery technology targeting transferrin receptor during the applicable option period.

The option period continues for each target until the first biologic product candidate directed to the relevant target is IND-ready or about five years after selection of the target, whichever is earlier.

Takeda is obligated to pay us up to an aggregate of $25.0 million with respect to each of the three programs under the Takeda Collaboration Agreement directed to a target and based upon the achievement of certain preclinical milestone events, up to $75.0 million in total, of which $5.0 million was received when the Takeda Collaboration Agreement became effective.

Additional payments totaling $26.0 million have become due based on the achievement of certain preclinical milestone events, of which $10.0 million was received by December 31, 2020, and an additional $8.0 million was received in January 2021.

We received additional payments totaling $26.0 million by December 31, 2021 based on the achievement of certain preclinical milestone events.

In January 2022, a further $12.0 million milestone became due based on the achievement of a certain preclinical milestone event, which we received in February 2022.

Collaboration Activities Following Takeda’s Option Exercise

If Takeda exercises its option with respect to a particular target and collaboration program (i.e., the biologic products directed to the target for which Takeda has exercised its option), then Takeda will have the right to develop and commercialize, jointly with us, a specified number of biologic products enabled by our BBB technology that were developed during the option period and which are directed to the relevant target, and we will grant to Takeda a co-exclusive license under the intellectual property we control related to those biologic products.

Subsequent to Takeda exercising its option with respect to a particular target and collaboration program (i.e., the biologic products directed to the target for which Takeda has exercised its option), then Takeda has the right to develop and commercialize, jointly with us, a specified number of biologic products enabled by our BBB technology that were developed during the option period and which are directed to the relevant target, and we grant to Takeda a co-exclusive license under the intellectual property we control related to those biologic products.

Takeda is obligated to pay us a $5.0 million option fee for each target for which Takeda exercises its option, up to $15.0 million in total.

We received fees totaling $10.0 million from Takeda in December 2021 for option exercises.

In addition, if Takeda exercises its option for all three collaboration programs, Takeda may be obligated to pay us up to an aggregate of $407.5 million upon achievement of certain clinical milestone events and up to an aggregate of $300.0 million in regulatory milestone events relating to receipt of regulatory approval in the United States, certain European countries and Japan.

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We have the right to lead all manufacturing activities for all collaboration programs for which the parties are sharing costs and profits.

Information on cost sharing reimbursements between us and Takeda is included in this Annual Report on Form 10-K in our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

During the option period for a particular target and, if the applicable option is exercised by Takeda (unless the Takeda Collaboration Agreement is terminated earlier), until expiration of an agreed period of time after the first regulatory approval in the United States or Europe of a biologic product within the applicable collaboration program, neither party may conduct clinical or commercial activities involving antibodies or protein-based therapeutic products directed to the same target (or in the case of a bi-specific program, the same combination of targets) that have an intended therapeutic effect in diseases and conditions of the CNS (including lysosomal storage diseases), except to the extent permitted under the Takeda Collaboration Agreement.

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The Sanofi Collaboration Agreement became effective in November 2018 when the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 were satisfied.

We and Sanofi plan to jointly develop products containing RIPK1 Inhibitors for neurological indications, such as Alzheimer’s disease, ALS and MS, and Sanofi plans to develop and commercialize products containing RIPK1 Inhibitors for systemic inflammatory indications, such as cutaneous lupus, rheumatoid arthritis and psoriasis.

The Sanofi Collaboration Agreement includes our and Sanofi’s RIPK1 Inhibitors that measurably penetrate the BBB ("CNS Products"), and our and Sanofi’s RIPK1 Inhibitors that do not measurably penetrate the BBB ("Peripheral Products").

The two most advanced RIPK1 Inhibitors in the collaboration are DNL788 (SAR443820), a CNS Product that was discovered by us and is currently in a Phase 1 trial in healthy volunteers, and DNL758 (SAR443122), a Peripheral Product discovered by us, which has completed a Phase 1b trial in COVID-19 patients and in which Sanofi plans to initiate a Phase 2 clinical trial in patients with cutaneous lupus in the first half of 2021.

In June 2020, together with Sanofi we decided to pause clinical studies with DNL747 and focus our efforts on accelerating development of DNL788 (SAR443820), which we believe has superior drug properties and a more rapid path toward proof-of-concept clinical studies in patients in multiple neurological indications.

The two most advanced RIPK1 Inhibitors in the collaboration

are SAR443820/DNL788, a CNS Product that was discovered by us and licensed to Sanofi who lead the clinical development in ALS and MS, and has completed Phase 1 trials in healthy volunteers, and SAR443122/DNL758, a Peripheral Product discovered by us, and licensed to Sanofi who lead a Phase 2 clinical trial in patients with cutaneous lupus.

License Grant

Under the Sanofi Collaboration Agreement, we granted Sanofi an exclusive, worldwide license under intellectual property that we control related to our RIPK1 Inhibitors, including certain intellectual property licensed to us by an academic institution.

When the Sanofi Collaboration Agreement became effective in November 2018, Sanofi paid us $125.0 million upfront, and in August 2019, Sanofi paid us $10.0 million for the milestone triggered by the commencement of a DNL758 (SAR443122) Phase 1 clinical trial in healthy volunteers.

When the Sanofi Collaboration Agreement became effective in November 2018, Sanofi paid us $125.0 million upfront, in August 2019, Sanofi paid us $10.0 million for the milestone triggered by the commencement of a SAR443122/DNL758 Phase 1 clinical trial in healthy volunteers, and in July 2021, Sanofi paid us $15.0 million for the milestone triggered by the commencement of a SAR443122/DNL758 Phase 2 clinical trial in patients with cutaneous lupus.

Under the Sanofi Collaboration Agreement, Sanofi is required to make milestone payments up to approximately $1.1 billion upon achievement of certain clinical, regulatory and sales milestone events.

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LRRK2 Agreement

The LRRK2 Agreement includes our small molecule LRRK2 inhibitors (“LRRK2 Products”) that penetrate the BBB, including DNL201 and DNL151 (BIIB122), as well as those that do not penetrate the BBB.

Based on the totality of preclinical and clinical data to date, both DNL201 and DNL151 (BIIB122) (two chemically distinct LRRK2 inhibitors) have met our requirements to proceed into further late-stage clinical testing, however, DNL151 (BIIB122) has been selected to proceed due to pharmacokinetic properties that provide additional dosing regimen flexibility.

The LRRK2 Agreement includes our small molecule LRRK2 inhibitors (“LRRK2 Products”) that penetrate the BBB, including DNL201 and BIIB122/DNL151, as well as those that do not penetrate the BBB.

Based on the totality of preclinical and clinical data to date, both DNL201 and BIIB122/DNL151 (two chemically distinct LRRK2 inhibitors) have met our requirements to proceed into further late-stage clinical testing, however, BIIB122/DNL151 has been selected to proceed due to pharmacokinetic properties that provide additional dosing regimen flexibility.

Under the terms of the LRRK2 Agreement, Biogen paid us a $400.0 million upfront payment in October 2020.

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We will be entitled to receive royalties in the high teens to low twenties percentages on net sales for LRRK2 Products outside of the United States and China.

Information on cost sharing reimbursements between us and Biogen is included in this Annual Report on Form 10-K in our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

License Grant to LRRK2 Program

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Under the ROFN and Option Agreement, Biogen paid us a $160.0 million upfront payment in October 2020.

With respect to the options granted by us to Biogen, Biogen is obligated to pay to us an aggregate of up to $270.0 million in option exercise and development milestone payments and an aggregate of up to $615.0 million in commercial milestone payments, following the achievement of certain prespecified milestone events and if Biogen exercises both of its options.

Furthermore, Biogen is obligated to pay us royalties in the mid-single digit to mid-teens percentages, depending on the program for which Biogen exercises its option and upon the achievement of certain sales thresholds.

With respect to the options granted by us to Biogen, if exercised, Biogen is obligated to pay to us an aggregate of up to $270.0 million in option exercise and development milestone payments and an aggregate of up to $615.0 million in commercial milestone payments, following the achievement of certain prespecified milestone events and if Biogen exercises both of its options.

Furthermore, Biogen is

obligated to pay us royalties in the mid-single digit to mid-teens percentages, depending on the program for which Biogen exercises its option and upon the achievement of certain sales thresholds.

In addition, if Biogen exercises its ROFN with respect to an eligible Denali program, the parties are obligated to negotiate in good faith for a specified period of time regarding the financial and other terms of an agreement pursuant to which Biogen would obtain rights to such program.

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We made initial exercise payments under the Purchase Agreement and the F-star Gamma License of $18.0 million in the aggregate, less the net liabilities of F-star Gamma, which were approximately $0.2 million .

In addition, we are required to make future contingent payments, to F-star Ltd and the former shareholders of F-star Gamma, up to a maximum amount of $447.0 million in the aggregate upon the achievement of certain defined preclinical, clinical, regulatory and commercial milestones.

In addition, we are required to make future contingent payments, to F-star Ltd and the former shareholders of F-star Gamma, up to a maximum amount as of the date of acquisition of $447.0 million in the aggregate upon the achievement of certain defined preclinical, clinical, regulatory and commercial milestones.

These include up to $27.0 million in preclinical contingent payments, $50.0 million in clinical contingent payments, $120.0 million in regulatory contingent payments and $250.0 million in commercial contingent payments.

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Under the terms of the original F-star Collaboration Agreement, we could nominate up to three Fcab targets (“Accepted Fcab Targets”) within the first three years of the date of the F-star Collaboration Agreement.

Upon entering into the F-star Collaboration Agreement, we had selected transferrin receptor (“TfR”) as the first Accepted Fcab Target and paid F-star Gamma an upfront fee of $5.5 million , which included selection of the first Accepted Fcab Target.

Upon entering into the F-star Collaboration Agreement, we had selected TfR as the first Accepted Fcab Target and paid F-star Gamma an upfront fee of $5.5 million , which included selection of the first Accepted Fcab Target.

In May 2018, we exercised our right to nominate two additional Fcab Targets and identified a second Accepted Fcab Target.

We made a one-time payment for the two additional Accepted Fcab Targets of, in the aggregate, $6.0 million and extended the time period for our selection of the third Accepted Fcab Target until approximately the fourth anniversary of the date of the original F-star Collaboration Agreement.

We have not identified a third Fcab Target.

We are also responsible for certain research costs incurred by F-star Ltd in conducting activities under an agreed development plan for each Fcab, for up to 24 months after the target Fcab is accepted.

We did not identify a third Fcab Target.

We were also responsible for certain research costs incurred by F-star Ltd in conducting activities under an agreed development plan for each Fcab, for up to 24 months after the target Fcab is accepted.

In July 2021, we executed a side letter to our agreements with F-star which confirmed the completion of the research services performed by F-star Ltd that were funded by us.

Genentech Exclusive License Agreement

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As we mature as a company and approach commercial stage operations, securing reliable high-quality commercial drug supply will be critical.

We do not currently own or operate facilities for product manufacturing, storage, distribution or testing.

We are actively working towards building our preclinical and clinical manufacturing capabilities as part of our goal to become a fully integrated global organization.

We currently rely on third-party contract development and manufacturing organizations ("CDMOs"), to manufacture and supply our preclinical and clinical materials used during the development of our product candidates.

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Pursuant to the Lonza agreement, Lonza agreed to provide clinical development and manufacturing services with respect to certain of our biologic products on a fee-for-service basis.

We do not currently operate facilities for product manufacturing, storage, distribution or testing.

In August 2021 we entered into a lease for a clinical manufacturing site in Salt Lake City, Utah.

We plan to use the facility to expand our clinical manufacturing capabilities for biologic therapeutics including the manufacture of materials for toxicology studies and drug substance for early human clinical studies.

The build-out of the Utah site has been initiated, with the goal of increasing flexibility and speed in advancing new investigational therapies into clinical trials.

We currently do not need commercial manufacturing capacity.

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Therefore, we have no sales, marketing or commercial product distribution capabilities at the current time.

Our vision is to become a fully integrated, independent global leader in neurodegeneration with capabilities spanning discovery, development, manufacturing and commercial in order to optimize speed, quality and level of patient access to our medicines.

Our vision, however, is to become a fully integrated, independent global leader in neurodegeneration with capabilities spanning discovery, development, manufacturing and commercial in order to optimize speed, quality and level of patient access to our medicines.

We look to grow strategically both in terms of therapeutic areas of high unmet need, starting with lysosomal storage diseases with CNS pathology and expanding into large neurodegenerative disorders, as well as from a geographic perspective, with an initial focus on establishing a commercial presence in the United States, with a subsequent expansion worldwide (including the European Union ("EU") and China).

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• Alzheimer’s Disease:

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Biogen, Eli Lilly, Eisai, Roche (including Genentech, its wholly owned subsidiary), Alector and AbbVie in various stages of clinical trials.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Biogen (recent FDA approval of Aduhelm), Eli Lilly, Eisai, Roche (including Genentech, its wholly owned subsidiary), Alector and AbbVie in various stages of development.

• Parkinson’s Disease:

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Prothena, Roche (including Genentech, its wholly owned subsidiary), Sanofi, Biogen/Ionis, Prevail/Eli Lilly, AstraZeneca, and Takeda in various stages of clinical trials.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies and academic institutions, including Biogen/Ionis, Amylyx, AB Science, and Novartis in various stages of clinical trials.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Prothena, Roche (including Genentech, its wholly owned subsidiary), Novartis/UCB, Biogen, Ionis, Prevail/Eli Lilly, AstraZeneca, Takeda, ESCAPE Bio, Oncodesign/Servier and Neuron 23 in various stages of development.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Biogen, Ionis, Amylyx, AB Science, Novartis, and Calico in various stages of development.

• Lysosomal Storage Diseases:

The currently approved treatments for LSDs are enzyme-based therapies.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including BioMarin, JCR Pharmaceuticals, RegenxBio, Sangamo, Orchard Therapeutics, Takeda and Ultragenyx in various stages of clinical trials.

Various BBB-penetrant ERTs and gene therapies are being developed by several large and specialty pharmaceutical and biotechnology companies, including BioMarin, JCR Pharmaceuticals, RegenxBio, Homology Medicines, Orchard Therapeutics, Takeda and Ultragenyx in various stages of development.

In addition, there are companies that are developing technologies that would compete directly with our technologies, including:

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For our product candidates and our BBB platform technology, we generally pursue or in-license patent protection covering compositions of matter, methods of use, and manufacture.

For example, we own patent applications in the United States and internationally that are directed to the composition of matter of certain antibodies and small molecule product candidates that we intend to develop or are developing, as well as the Fc domain portion of our BBB platform technology.

For our BBB platform technology we own pending patent applications directed to the composition and sequences of our TfR-binding TVs and two issued U.S.

patents, which are expected to expire in 2038, not including any patent term adjustments and any patent term extensions, as well as pending patent applications, to other BBB platform technology.

Furthermore, we own patent applications directed to our ETV:IDS, ATV:TREM2, and PTV:PGRN programs.

In particular, we own an issued U.S.

We own eight patent families related to our BBB platform technology.

These include a family directed to the composition and sequences of our TfR-binding TVs, which, if issued are expected to expire in 2038, not including any patent term adjustments and any patent term extensions.

We also have two issued U.S.

patents, which are also expected to expire in 2038, not including any patent term adjustments and any patent term extensions, as well as pending patent applications, to other BBB platform technology.

Other families related to BBB platform technology, if issued, are expected to expire in 2038 or later, all not including any patent term adjustments and any patent term extensions.

In addition, we license multiple patent families from F-star, the earliest issued patents of which are expected to expire in 2026, not including any patent term adjustments and any patent term extensions.

We own one patent family directed to our enzyme platform, including ETV:IDS.

This family includes an issued U.S.

patent, which is expected to expire in 2038, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of our ETV:IDS molecules, including DNL310.

addition, we license multiple patent families from F-star, the earliest issued patents of which are expected to expire in 2026, not including any patent term adjustments and any patent term extensions.

For our LRRK2 program, which is subject to our collaboration agreement with Biogen, we license multiple patent families from Genentech directed to, among other things, DNL201, DNL151 (BIIB122) and other related compounds, which are expected to expire in 2031, not including any patent term adjustments and any patent term extensions.

Furthermore, we own patent families that have projected expiration dates in 2038 or later, not accounting for any patent term adjustments and any patent term extensions.

We also own two issued U.S.

patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of DNL151 (BIIB122) and methods of treatment using DNL151 (BIIB122), respectively, as well as pending patent applications in jurisdictions outside the U.S.

For our RIPK1 program, we own four issued U.S.

patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions and pending patent applications, which are directed to the composition of matter of our prior lead DNL747 as well as other RIPK1 inhibitor compounds.

We additionally have pending applications both in and outside the U.S.

directed to the composition of matter of our current RIPK1 lead, DNL788 (SAR443820), as well as other RIPK1 inhibitor compounds, which, if issued, would expire in 2038, not including any patent term adjustments and any patent term extensions.

We also own additional patent families directed to various aspects of our DNL310 program, which if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions.

We own four patent families directed to our PTV:PGRN program.

These include two families directed to the composition of matter of our PTV:PGRN structures, including DNL593, which, if issued, are expected to expire in 2039 and 2040, respectively, not including any patent term adjustments and any patent term extensions.

We also own additional patent families directed to various aspects of our DNL593 program, which, if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions.

Our PTV:PGRN program is subject to our Takeda collaboration.

We own five patent families related to our ATV:TREM2 program.

These families include a granted U.S.

patent, which is expected to expire in 2041, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of our ATV:TREM2 molecules, including DNL919.

The other four patent families, if issued, are expected to expire between 2038 and 2040, all not including any patent term adjustments and any patent term extensions.

Our ATV:TREM2 program is subject to our Takeda collaboration.

We own two patent families directed to our ETV:SGSH program.

These two families are directed to the composition of matter of our ETV:SGSH structures, including DNL126.

These families, if issued, are expected to expire in 2038 and 2041, respectively, not including any patent term adjustments and any patent term extensions.

We own a patent family directed to the composition of matter of our ATV:HER2 molecules and three additional families directed to the composition of matter our ATV:HER2 bispecific molecules.

These families, if issued, would expire between 2039 and 2042, not including any patent term adjustments and any patent term extensions.

LRRK2 Inhibitor Program

Our LRRK2 program is subject to our collaboration agreement with Biogen.

For this program, we license multiple patent families from Genentech directed to, among other things, DNL201, BIIB122/DNL151 and other related compounds, which are expected to expire in 2031, not including any patent term adjustments and any patent term extensions.

Furthermore, we own additional patent families that have projected expiration dates in 2038 or later, not accounting for any patent term adjustments and any patent term extensions related to the LRRK2 program.

We also own a patent family that includes three issued U.S.

patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of BIIB122/DNL151 and methods of treatment using BIIB122/DNL151, respectively, as well as pending patent applications and granted patents in jurisdictions outside the U.S.

RIPK1 Inhibitor Program

We own five patent families directed to our RIPK1 inhibitor program.

These include a family with one issued U.S.

patent, directed to the composition of matter of our current RIPK1 lead, SAR443820/DNL788, which is expected to expire in 2038, not including any patent term adjustments and any patent term extensions.

We also own a patent family that includes two issued U.S.

patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions and pending patent applications, which are directed to the composition of matter of SAR443122/DNL758 as well as other RIPK1 inhibitor compounds.

eIF2b Activator Program

We own seven patent families directed to our eIF2B activator program, including two patent families directed to DNL343 that are expected to expire in 2038 or later, with the remaining families directed to other eIF2B compounds expiring between 2038 and 2040, not including any patent term adjustments and any patent term extensions.

We cannot guarantee that our owned and licensed pending patent applications, or any patent applications that we may in the future file or license from third parties, will result in the issuance of patents.

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• Submission of an IND to the FDA, or a CTA to the EMA or to an appropriate National Competent Authority, one of which must become effective before human interventional clinical trials may begin;

• Approval by an independent institutional review board ("IRB"), or ECs at each clinical trial site before each trial may be initiated;

• Approval by an independent institutional review board ("IRB"), or Ethics Committees ("ECs") at each clinical trial site before each trial may be initiated;

• Performance of adequate and well-controlled human clinical trials in accordance with applicable IND or CTA regulations, good clinical practice ("GCP"), requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

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An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.

Some long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue after the IND is submitted.

Some long-term preclinical testing, such as animal tests of reproductive adverse events, chronic toxicity and carcinogenicity, may continue after the IND is submitted.

An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time, the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on clinical hold.

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The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety and assess efficacy.

Interventional clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety and assess efficacy.

Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND.

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Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA.

Expedited written IND safety reports must be submitted to the FDA, IRBs, ECs and the investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the drug, findings from animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate or severity of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Expedited written IND safety reports must be submitted to the FDA, IRBs, and the investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the drug, findings from animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate or severity of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Further, as a result of the COVID-19 pandemic, we may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects from the COVID-19 virus.

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Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that our product candidates do not undergo unacceptable deterioration over their shelf life.

We may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects from the novel coronavirus disease (COVID-19).

For example, in March 2020, the FDA issued guidance, which the FDA subsequently updated, on conducting clinical trials during the pandemic, which describes a number of considerations for sponsors of clinical trials impacted by the pandemic.

In 2020 and 2021, the FDA published a number of industry guidance documents, including updates to previous guidance, related to Good Manufacturing Practices, remote interactive evaluations of drug manufacturing and bioresearch monitoring facilities, and drug product manufacturing and supply chain inspections, among others.

The extent to which the COVID-19 pandemic impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

NDA/BLA Review Process

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PDUFA also imposes an annual program fee for each marketed human drug or biologic of $369,413.

Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Fee waivers or reductions are available in certain limited circumstances.

Additionally, no user fees are assessed on NDAs or BLAs for products designated as orphan drugs for an orphan indication submission.

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Further, if there are any modifications to the drug or biologic, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA/BLA or NDA/BLA supplement, which may require the development of additional data or preclinical studies and clinical trials.

The FDA may also place other conditions on approvals including the requirement for a Risk Evaluation and Mitigation Strategy ("REMS"), to assure the safe use of the product.

The FDA may also place other conditions on approvals including the requirement for a REMS, to assure the safe use of the product.

A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

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Under the current regime, before a clinical trial can be initiated it must be approved in each of the EU countries where the trial is to be conducted by two distinct bodies:

the National Competent Authority ("NCA"), and one or more Ethics Committees ("ECs").

the National Competent Authority ("NCA"), and one or more ECs.

Under the current regime all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred.

The EU clinical trials legislation currently is undergoing a transition process mainly aimed at harmonizing and streamlining clinical-trial authorization, simplifying adverse-event reporting procedures, improving the supervision of clinical trials and increasing their transparency.

Clinical Trials Regulation EU No 536/2014, which is expected to be enacted, will ensure that the rules for conducting clinical trials in the EU will be identical.

In the meantime, Clinical Trials Directive 2001/20/EC continues to govern all clinical trials performed in the EU.

Clinical Trials Regulation EU No 536/2014, which went into effect on January 31, 2022, will ensure that the rules for conducting clinical trials in the EU will be identical.

European Union Drug Review and Approval

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Under the procedures described above, before granting the MA, the EMA or the competent authorities of the Member States of the EEA assess the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

Starting in January 2021, the Medicines and Healthcare products Regulatory Agency (MHRA) will take on additional regulatory responsibilities for medical products marketed in the UK, as pan-EU regulatory procedures before the EMA will no longer apply in the UK.

Starting in January 2021, the MHRA will take on additional regulatory responsibilities for medical products marketed in the UK, as pan-EU regulatory procedures before the EMA will no longer apply in the UK.

MHRA and the National Institute for Biological Standards and Control ("NIBSC") recently issued new guidance documents to the industry regarding regulation under the UK system.

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Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

At the federal level, in 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration's proposals.

The FDA also released a final rule in September 2020 providing guidance for states to build and submit importation plans for drugs from Canada.

Further, in November 2020, the U.S.

Secretary of the Department of Health and Human Services ("HHS") finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

The CMS also issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

In December 2020, CMS issued a final rule implementing significant manufacturer price reporting changes under the Medicaid Drug Rebate Program, including regulations that affect manufacturer-sponsored patient assistance programs subject to pharmacy benefit manager accumulator programs and Best Price reporting related to certain value-based purchasing arrangements.

It is unclear to what extent these new regulations and any future regulations and legislation by the Biden administration will have on our business, including our ability to generate revenue and achieve profitability.

At the federal level, in 2020, under the Trump administration, HHS and CMS issued various rules that are expected to impact, among others, price reductions from pharmaceutical manufacturers to plan sponsors under Part D, fee arrangements between pharmacy managers and manufacturers, importation of prescription drugs from Canada and other countries, manufacturer price reporting requirements under the Medicaid Drug Rebate Program, including regulations that affect manufacturer-sponsored patient assistance programs subject to pharmacy benefit manager accumulator programs and Best Price reporting related to certain value-based purchasing arrangements.

Multiple lawsuits have been brought against the HHS challenging various aspects of these rules implemented during the Trump administration.

As a result, the Biden administration and HHS have delayed the implementation or published rules rescinding some of these Trump-era policies.

Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs will be eliminated.

Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than it receives on the sale of products, which could have a material impact on our business.

in addition, Congress is considering legislation that, if passed, could have a significant impact on prices of prescription drugs covered by Medicare, including limitations on drug price increases and allowing Medicare to negotiate pricing for certain covered drug products.

The impact of these regulations and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is currently unknown.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved.

At the state level, legislatures have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, a number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws once we begin commercialization after obtaining regulatory approval for any of our products.

We are unable to predict the future course of federal or state healthcare legislation in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare.

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Employees and Human Capital Resources

As of December 31, 2020, we had 291 employees, all of whom were full-time, and approximately two-thirds of which hold Ph.D.

Of these full-time employees, 234 were engaged in research and development activities and 57 were engaged in finance, legal, business development, human resources, information technology, facilities and other general administrative functions.

Substantially all of our employees are located in South San Francisco, California.

None of our employees is represented by a labor union or covered by a collective bargaining agreement.

We consider our relations with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.

The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

As of December 31, 2021, we employed approximately 380 people.

The vast majority of our employees work out of our headquarters located in South San Francisco, CA, with the remainder out of our locations in Salt Lake City, Utah and Zurich, Switzerland.

Our human capital strategy aims to attract new talent and retain and incentivize existing employees by investing in their professional development, as well as providing them with challenging and rewarding opportunities for personal growth.

Our working environment is guided by the core Denali values of trust, growth, grit and unity, and reinforced by developing quality leadership, fostering diversity and inclusion, emphasizing continuous growth, creating opportunities for engagement, and embracing our goal to defeat degeneration.

Our values-driven culture is complemented by our incentive plans, which serve to (1) attract and retain employees through the granting of stock-based and cash-based compensation awards;

and (2) motivate employees to perform to the best of their abilities and achieve our objectives, thereby increasing the value and success of our company.

Key areas of focus for Denali include:

Health and Safety.

Our health and safety programs are designed around global standards with specifications addressing regulations, specific hazards, and the unique working environment of our operations.

We mandate employee health and safety training and ergonomic assessments, and require specialized training for all lab-based employees.

We conduct regular internal safety audits to ensure that proper safety policies and program procedures are in place.

In addition, we engage an independent, third-party conformity assessment and certification vendor to audit selected operations for adherence to health and safety standards.

Denali’s safety programs have been highly effective:

since we commenced operations in 2015, we have had zero reportable regulatory safety.

Diversity and Inclusion.

Denali embraces differences and acknowledges the valuable perspectives that a diverse workforce brings to problem-solving.

Our Unity in Diversity team spearheads action-oriented diversity programs, such as social responsibility through community leadership and volunteerism, investment in STEM-focused outreach, and creating a safe place for expression and ideas.

As part of our plan to create a more inclusive workplace, we have adopted a zero tolerance policy towards harassment and discrimination and created safe avenues for employees to submit complaints, including an anonymous hotline and a formal complaint system that allows for direct access to our Human Resources Department.

We have implemented several measures to ensure that we are accountable for making progress on our diversity and inclusion initiatives.

Diversity and inclusion objectives are embedded in our annual performance goals.

We also ensure pipeline diversity by partnering with each division in their workforce planning forecasts to develop initiatives and goals to recruit diverse talent across all leadership and skill areas.

As of December 31, 2021, approximately 50% of our workforce and 49% of managers were female.

As of December 31, 2021, ethnic or racial minorities represented approximately 56% of our workforce and 43% of our managers.

Training and Development.

We believe training and development are an important part of creating a safe, productive, fair, and equal environment.

We encourage continuous feedback, improvement, and growth for our employees.

We provide technical, leadership and compliance training to all employees in several formats, including through live seminars, online trainings and professional organizations.

Managers are given annual training to hone their supervisory skills and better support their employees’ development;

they are, in turn, accountable for guiding the development of a personal and professional growth plan for each employee.

In addition, Denali has designed employee development programs to help employees develop essential skills that are aligned to promote growth and Denali’s values.

Flexible Work Options.

The global pandemic has accelerated our capabilities and culture with respect to flexible work.

Denali values workplace flexibility and hybrid ways of working, and has introduced a policy which we believe balances more workplace flexibility with time together to collaborate and connect in person.

We use enhanced tools and technology designed to help us optimize productivity and collaboration while facilitating a hybrid work environment for our diverse workforce.

Corporate Information

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Item 1. Business