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Item 1. Business

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Our goal is to discover, develop and deliver therapeutics to defeat degeneration.

Neurodegeneration represents one of the most significant unmet medical needs of our time, with few effective therapeutic options available for patients with neurodegenerative diseases.

Recent genetic insights are revealing the underlying biology of neurodegeneration and potential drug targets while enabling better patient selection, similar to how genetic insights have transformed the field of oncology.

Our scientific strategy is guided by three overarching principles that we believe will significantly increase the probability of success and accelerate the timing to bring effective therapeutics to patients with neurodegenerative diseases:

Genetic Pathway Potential - We select our therapeutic targets and disease pathways based on studies that link human genetic variation to the risk of developing a neurodegenerative disease.

These studies identify genes that, when mutated, cause, or are major risk factors for, neurodegenerative diseases, which we refer to as degenogenes.

Engineering Brain Delivery - We engineer our product candidates to cross the blood-brain barrier ("BBB"), and act directly in the brain.

Biomarker-Driven Development - We discover, develop and utilize biomarkers to select the right patient population and demonstrate target engagement, pathway engagement and impact on disease progression of our product candidates.

By executing this strategy with a team of experienced and passionately dedicated scientists and drug developers, we believe we can succeed in a field that has seen limited progress over the past several decades.

We have a focused yet diversified portfolio with five clinical programs and more than fifteen programs in the preclinical development stage.

To further increase the probability of success of our programs, we make parallel investments in lead and back-up development candidates, and plan to advance only those candidates to the later stages of clinical development that show strong preclinical and early clinical data.

We replenish, grow and optimize our portfolio through in-house discovery and external business development activities, in each case enabled by our strong internal research and development expertise and capabilities.

We maintain a high bar to move our product candidates through development and quickly terminate molecules and programs based on data that do not meet our rigorous discovery and development standards.

Collaborations and partnering are central components of our strategy to build and develop our portfolio of product candidates.

We have arrangements with biopharmaceutical companies, technology companies, academic institutions, foundations, and patient-focused data companies.

Notable active arrangements include those with Biogen Inc.’s subsidiaries, Biogen MA Inc.

(“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”), Takeda Pharmaceutical Company Limited ("Takeda"), Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A.

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

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 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.

As we build and grow our capabilities, we maintain a deep focus on science at the core of our efforts to discover, develop and deliver medicines.

We plan to further grow our discovery and early clinical development capabilities and intend to expand global late-stage clinical development capabilities, internal manufacturing capabilities and commercial infrastructure in a staged manner that is aligned with the development timelines of our portfolio.

We intend to commercialize our product candidates globally, if approved, with a tailored strategic approach for each therapeutic area.

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

We are a clinical stage biopharmaceutical company developing a broad portfolio of product candidates engineered to cross the blood-brain barrier (“BBB”) for neurodegenerative diseases and lysosomal storage diseases.

We have a diversified and differentiated portfolio of both small molecule and biotherapeutic medicines, comprising seven product candidates in clinical development across eight indications as well as more than a dozen preclinical therapeutic candidates.

Each of our programs has been engineered for efficient delivery across the BBB to increase drug exposure in the brain after systemic administration.

We have discovered and developed a proprietary platform technology called the Transport Vehicle or “TV”, which we have used in developing our portfolio of brain-penetrant therapies based on our Enzyme Transport Vehicle (“ETV”), A ntibody Transport Vehicle (“ATV”), Protein Transport Vehicle (“PTV”), and Oligonucleotide Transport Vehicle (“OTV”).

We believe the combination of a clinically validated delivery platform and a maturing therapeutic portfolio will position us for long-term success in our goal to advance next-generation, targeted medicines for people living with neurodegenerative diseases.

We plan to further grow our discovery and clinical development capabilities and intend to build internal manufacturing capabilities and commercial infrastructure in a staged manner that is aligned with the progression of our portfolio.

We aim to serve patients as a fully integrated global organization.

Key Achievements Since Company Founding in 2015

• Built a broad portfolio comprised of seven clinical-stage programs of which three are currently late-stage and a fourth program expected to enter late-stage development in 2023

• Invented and developed proprietary BBB TV technology with potential to deliver enzymes, antibodies, proteins and oligonucleotides via systemic administration

◦ Advanced three TV-enabled programs to clinical development and established biomarker proof of concept with ETV:IDS

◦ Achieved preclinical proof of concept for TV-enabled brain delivery of antisense oligonucleotides

• Advanced 10 investigational new drug applications and clinical trial applications for new molecules to enter clinical development

• Entered into three strategic collaborations totaling $1.3 billion in upfront payments and over $3 billion in potential milestones

• Published over 20 peer-reviewed papers in top-tier scientific journals

• Granted over 90 patents worldwide

• Three of our female leaders were recognized by various publications as leaders in the field

We have three late-stage development programs:

DNL310 (ETV:IDS) for MPS II (Hunter syndrome);

BIIB122/DNL151 (LRRK2 inhibitor) for Parkinson’s disease;

and SAR443820/DNL788 (CNS-penetrant RIPK1 inhibitor) for amyotrophic lateral sclerosis (“ALS”).

In addition, we have initiated planning for a Phase 2/3 study of DNL343 (eIF2B activator) as part of the HEALEY Platform Trial in ALS.

SAR443820/DNL788 is also being evaluated in a Phase 2 study for multiple sclerosis.

We are conducting first-in-human studies of TAK-920/DNL919 (ATV:TREM2) for Alzheimer’s disease and TAK-594/DNL593 (PTV:PGRN) for frontotemporal dementia-granulin (“FTD-GRN”).

SAR443122/DNL758 (peripheral RIPK1 inhibitor) is in two Phase 2 studies for cutaneous lupus erythematosus (“CLE”) and ulcerative colitis ("UC").

As our portfolio matures and our company scales, we plan to maintain a deep focus on science to guide our efforts to discover, develop and deliver medicines to patients.

Our discovery and development strategy is guided by three overarching principles that we believe will significantly increase the probability of success and accelerate the timing to bring effective therapeutics to people living with neurodegenerative diseases:

• Degenogene Pathways – each of our programs addresses a molecular target or biological pathway that is genetically validated to cause or increase the risk for neurodegenerative diseases.

• Engineering Brain Delivery – we engineer our product candidates to cross the BBB and act directly in the brain by following a rigorous approach in designing small molecules and by using our proprietary TV platform technology to effectively deliver large therapeutic molecules, such as enzymes, proteins, antibodies, and oligonucleotides, across the BBB after intravenous administration.

• Biomarker-Driven Development – we discover, develop and use biomarkers to inform dose selection, assess clinical activity, and identify patients most likely to respond to our therapies.

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

We expect our first potential product launches will be in rare disease categories.

Launching first in rare indications gives us the opportunity to build and establish our commercial organization so that we are poised for success in larger indications over time.

Our most advanced TV-enabled program, DNL310 (ETV:IDS), is intended to replace the standard of care in Hunter syndrome, which belongs to a group of rare lysosomal storage diseases (“LSDs”).

LSDs affect more than 30,000 individuals worldwide for whom central nervous system (“CNS”) manifestations and many peripheral symptoms continue to remain unaddressed by the current standard of care, if available at all.

We aim to leverage certain efficiencies of scale to support the commercialization of additional product candidates to create an LSD franchise.

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 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 40 to 50 million individuals world-wide, we plan to initially leverage strategic collaborations that contribute existing global commercial infrastructure.

In parallel, we are advancing our programs for rare neurodegenerative diseases such as ALS and FTD, which impact around 500,000 individuals worldwide.

We may commercialize these product candidates, if approved, independently in key markets and/or leverage partnerships to ensure optimal access for patients.

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

Collaborations and partnering are central components of our strategy to build, develop and commercialize our portfolio of product candidates.

We have numerous arrangements with biopharmaceutical companies, technology companies, academic institutions, foundations, and patient-focused data companies.

Notable active arrangements include those with Biogen Inc.’s subsidiaries, Biogen MA Inc.

(“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”), and Takeda Pharmaceutical Company Limited ("Takeda"), and Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A.

We hold significant development and commercialization rights to all of our 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.

Our costs of developing programs associated with these collaborations are largely covered through upfront payments, expected incoming milestones and cost sharing.

We may seek additional strategic partnering opportunities as we strive to capture the full value of our portfolio and platforms.

For example, the TV platform has potential applications beyond our core focus on neurodegeneration (e.g., oncology, infectious disease, neuropsychiatry, pain).

At Denali, we are guided by the core Denali values of trust, growth, grit and unity, and these values form the foundation of our Environmental, Social & Governance (“ESG”) practices.

Our working culture seeks to develop quality leaders, foster diversity and inclusion, and emphasize continuous growth.

We embrace differences and acknowledge the valuable perspectives that a diverse and inclusive workforce brings to problem-solving and innovation.

We strive to manage our operations in a way that is sustainable and reduces our impact on the environment, including through a Green Alternative program which provides researchers with information on suitable alternative chemicals that have a lower environmental impact for common solvents.

Additionally, several waste streams have been segregated on-site for proper disposal or recycling, such as containers, food waste, plastics, styrofoam, and glass chemical containers, to maximize recycling and composting.

We also maintain an ongoing commitment to corporate governance principles, with oversight of ESG matters by Denali's Board of Directors, and strong performance orientation in our compensation program.

Our Approach to Defeating Neurodegeneration

Disease Overview

Neurodegenerative diseases are a collection of conditions defined by progressive nervous system dysfunction, degeneration and/or death of neurons causing cognitive decline, functional impairment and eventually death.

Neurodegeneration represents one of the most significant unmet medical needs of our time, with the aging of the population and the lack of effective therapeutic options causing a rapid increase in the number of patients.

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, 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.

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.

Degenogene Biology

Since 2007, the number of genetic associations discovered in neurodegenerative diseases has grown rapidly.

Degenogenes identify important disease pathways that, when dysregulated, increase the risk of developing neurodegenerative disease, and provide a strong scientific foundation for prioritizing drug development programs.

Our Scientific Principles

Degenogene Pathways

The number of genetic associations discovered in neurodegenerative diseases has grown rapidly in recent years.

Degenogenes are genes that when mutated cause, or are major risk factors for, neurodegenerative diseases.

Analysis of recently discovered degenogenes point to important disease pathways that, when dysregulated, increase the risk of developing neurodegenerative disease, and provide a strong scientific foundation for prioritizing drug development programs.

We currently focus on programs that seek to modulate three key disease pathways:

Lysosomal Function:

Dysfunction of the lysosomal system is associated with several neurodegenerative diseases, including Parkinson’s disease and neurodegeneration in the context of LSDs.

• Lysosomal Function – Dysfunction of the lysosomal system, the disposal and recycling compartment of the cell, is associated with several neurodegenerative diseases, including Parkinson's disease and neurodegeneration in the context of LSDs.

Degenogenes linked to lysosomal function include leucine-rich repeat kinase 2 ("LRRK2"), progranulin ("PGRN"), alpha-synuclein ("aSyn"), and lysosomal enzymes, including iduronate 2-sulfatase ("IDS"), sulfamidase ("SGSH"), and glucocerebrosidase ("GBA").

Glial Biology:

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

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.

Specifically, receptor interacting serine/threonine protein kinase 1 ("RIPK1"), a kinase downstream of the TNF receptor pathway, is overactive in inflamed microglia and several other cells in the brain.

Cellular Homeostasis:

The brain is particularly susceptible to defects in lipid, protein or RNA homeostasis.

• Glial Biology – Glial cells, the resident immune cells of the brain, serve various functions including supporting neuronal health, pruning neuronal synapses, and providing immune surveillance and response in the brain.

Genetic and pathological data suggest that glial dysfunction significantly contributes to neurodegenerative diseases, such as Alzheimer’s disease.

Degenogenes that implicate immune dysfunction in the brain include triggering receptors expressed on myeloid cells 2 ("TREM2") and receptor interacting serine/threonine protein kinase 1 ("RIPK1"), a critical signaling protein in a canonical inflammatory and cell death pathway.

• Cellular Homeostasis – The brain is particularly susceptible to defects in lipid, protein or RNA homeostasis.

Mutations in several ALS and FTD degenogenes alter RNA homeostasis and increase cellular stress.

Eukaryotic initiation factor 2 B ("eIF2B") is an essential regulator of cellular stress, and modulators of eIF2B activity have been shown to be beneficial in numerous in vitro and in vivo models of neurodegenerative disease.

Other degenogenes linked to cellular homeostasis include amyloid precursor protein ("APP"), Tau and Apolipoprotein E.

BBB Platform Technology

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, such as the transferrin receptor (“TfR”), which are highly expressed in brain capillaries and facilitate transport of proteins into the brain (Figure 1).

Other degenogenes linked to cellular homeostasis include amyloid precursor protein ("APP"), Tau and Apolipoprotein E (“ApoE”).

Engineering Brain Delivery

Historically, the BBB has been a major challenge to the development of medicines for diseases of the CNS.

While the BBB protects the brain from threats such as harmful substances and infections by tightly regulating transport of molecules into and out of the brain, the BBB also prevents the delivery of small- and large-molecule medicines to the brain in sufficient quantities to have therapeutic effect.

We directly address the BBB challenge by engineering brain delivery for both small and large molecules.

Most small molecules are actively excluded from the brain by efflux pumps at the BBB;

it has been estimated that approximately 98% do not cross the BBB.

We rigorously design our small molecule therapeutic candidates to be orally bioavailable with chemical and physical properties that enable them to be readily absorbed from the gut and to penetrate the BBB while avoiding transporter-mediated efflux.

We invented, developed, and continue to optimize a proprietary technology, called the Transport Vehicle, to deliver our large molecule biotherapeutic candidates to the brain after systemic administration.

Clinical and preclinical studies with several of our TV-enabled product candidates demonstrated high concentrations and broad distribution in all explored regions of the CNS and in key CNS cell types and showed improved pharmacodynamic effects compared to standard biotherapeutics.

We believe that the TV can significantly increase the probability of success of biotherapeutics for CNS indications and can enable many new potential treatment options.

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

The TV technology is engineered 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 ) in a process called receptor mediated transcytosis, or RMT.

Engineering brain delivery.

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.

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.

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.

Our TV technology is differentiated from other BBB technologies through its engineering approach, which may provide superior stability, safety, and higher exposure of drug candidates in the brain (Figure 2).

Our pipeline currently includes 15 programs that are based on our TV technology, including the most advanced program ETV:IDS (DNL310).

In November 2020, we announced first human clinical biomarker proof of concept for our TV technology from an ongoing Phase 1/2 trial of DNL310 in patients with Hunter syndrome.

Delivering high concentrations of protein therapeutics to the brain has potential benefits for a large range of therapeutic applications.

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

Our pipeline of TV-enabled programs currently includes three clinical-stage programs and more than a dozen programs in preclinical development.

We demonstrated proof of concept with safety and pharmacokinetic and pharmacodynamic data from the ongoing Phase 1/2 study with DNL310 (ETV:IDS), and pharmacokinetic data from the ongoing Ph1 study with DNL593, as well as data from several preclinical studies in mouse and nonhuman primate models.

Preclinical studies demonstrated robust and sustained pharmacodynamic effects in the brain after intravenous dosing of TV-enabled antibodies, enzymes, proteins, and antisense oligonucleotides ("ASOs"), while standard antibodies, enzymes, proteins and ASOs had no or minimal pharmacodynamic effects.

These data show that TV-enabled product candidates have the potential to achieve therapeutically relevant concentrations in the brain after systemic administration, making them potentially superior to traditional biologic therapeutics in targeting neurodegenerative diseases.

Our TV technology is differentiated from other BBB technologies through its engineering approach, which may provide superior stability and safety and higher exposure of drug candidates in the brain ( Figure 2 ).

Denali’s TV technology is modular and highly differentiated

Our most advanced TV-enabled program, DNL310 (ETV:IDS), is currently in an ongoing Phase 2/3 study, and we have advanced two additional TV-enabled molecules into clinical testing, namely, PTV:PGRN (TAK-594/DNL593) and ATV:TREM2 (TAK-920/DNL919).

In addition, we plan to submit an IND application for another ETV-enabled molecule, DNL126 (ETV:SGSH) in the first half of 2023.

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

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 ("TV") technology is highly differentiated

TV technology provides opportunities for platform expansion

Denali’s TV technology provides opportunities for platform expansion

Biomarker-Driven 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.

Ultimately, by reducing the number of patients that are likely to experience a low treatment response, we expect to positively impact market acceptance of these targeted therapies driven by high and meaningful response rates within the targeted population as defined by the patient selection biomarkers.

Ultimately, we expect to positively impact market acceptance of these targeted therapies, driven by high and meaningful response rates within the targeted population as defined by the patient selection biomarkers.

In certain indications, regulatory approval may limit the market of a product candidate to target patient populations when patient selection biomarkers are used.

In these indications, regulatory authorities may require us to run additional clinical trials prior to expanding the label for approval that includes a broader patient population.

The following table summarizes key information about our programs and pipeline:

Denali’s current pipeline

The following table summarizes key information about our clinical programs and pipeline:

Denali’s current development pipeline

We are developing a broad portfolio of targeted therapeutic candidates for neurodegenerative diseases.

Our programs are at different stages of clinical and preclinical development.

In addition to our current clinical development portfolio, we expect to advance at least three new molecule entities (“NMEs”) into clinical development in the 2023 to 2025 timeframe.

We discuss our most advanced programs in further detail below.

Our Transport Vehicle (TV)-Enabled Programs

DNL310 ETV:IDS Enzyme Replacement Therapy Program for MPS II (Hunter Syndrome)

MPS II, also called Hunter syndrome, is a rare genetic disease that affects over 2,000 individuals, primarily males, world-wide, and leads to behavioral, cognitive, and physical symptoms ultimately resulting in shortened lifespan.

MPS II is caused by mutations in the iduronate-2-sulfatase ( IDS ) gene, which leads to a deficiency of the IDS enzyme.

Symptoms often begin emerging around age two and include physical complications, including organ dysfunction, joint stiffness, hearing loss and impaired growth, and neurocognitive symptoms with impaired development.

The disease is characterized by a buildup of glycosaminoglycans (GAGs) in lysosomes — the part of the cell that breaks down materials including GAGs.

The current standard of care enzyme replacement therapy partially treats the physical symptoms but does not cross the blood-brain barrier, and as a result, cognitive and behavioral symptoms experienced by the majority of patients with MPS II are not addressed.

Therapies that address behavioral, cognitive, and physical manifestations of the disease are one of the greatest unmet needs for this community.

DNL310 is an investigational fusion protein composed of IDS fused to Denali’s proprietary ETV, which is engineered to cross the blood-brain barrier via receptor-mediated transcytosis into the brain.

Preclinical studies demonstrate that DNL310 delivers IDS to lysosomes, where it is needed to break down GAGs.

DNL310 is engineered for broad delivery of IDS into cells and tissues throughout the body, including the brain with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II.

In March 2021, the U.S.

Food and Drug Administration granted Fast Track designation to DNL310 for the treatment of patients with MPS II.

In May 2022, the European Medicines Agency granted DNL310 Priority Medicines designation.

DNL310 is an investigational product candidate and has not been approved by any Health Authority.

Based on supportive clinical and preclinical data to date, we are conducting the Phase 2/3 COMPASS study in North America, South America, and Europe ( Figure 5 ).

The Phase 2/3 COMPASS study is expected to enroll 54 participants with MPS II, with and without neuronopathic disease.

The participants will be randomized 2:1 to receive either DNL310 or idursulfase, respectively.

Cohort A will include children ages ≥2 to <6 years with neuronopathic disease;

cohort B will include children ages ≥6 to <17 without neuronopathic disease.

Upon completion of the ongoing Phase 1/2 study, and together with data from the global COMPASS study, this combined data package is intended to support registration.

DNL310 Phase 2/3 COMPASS Study design

In parallel with the Phase 2/3 COMPASS study, we are also conducting a Phase 1/2 trial for DNL310 in patients with MPS II as a multicenter, multiregional, open-label, single-arm trial to assess the safety, pharmacokinetics, and pharmacodynamics of DNL310 administered once weekly by intravenous infusion.

We have previously reported interim analyses from the Phase 1/2 study and most recently at the 2023 WORLD Symposium in February 2023.

The presentation included data as of the September 2022 data cut off from the 28 participants enrolled in the Phase 1/2 study, all but one with neuronopathic MPS II, and having a median age of 5 years (range 2 to 12) at enrollment.

Participants received weekly intravenous doses of DNL310 starting on day 1 of the study, with no wash-out period for those switching from idursulfase.

Key results are summarized below.

The data reported at the 2023 WORLD Symposium continued to demonstrate that DNL310 enables rapid and sustained normalization of heparan sulfate in cerebrospinal fluid (CSF) with mean reductions from baseline of 91% and 90% at weeks 24 and 49, respectively.

Normalization of CSF heparan sulfate was observed even in participants with high levels of preexisting anti-iduronate-2-sulfatase antibodies.

( Figure 6 ).

Rapid normalization or near normalization of CSF HS was observed in all participants, was sustained at week 49, and remained normal in the three participants tested at week 104.

Sustained reduction of lysosomal lipid biomarkers in CSF was also observed, which is consistent with improved lysosomal function.

At week 24, the mean decline in levels of gangliosides GM2, GM3, and glucosylsphingosine lipids were 64%, 54%, and 57%, respectively, which was sustained at week 49 (63%, 49%, and 48%, respectively).

After switching from idursulfase to DNL310, a mean decline from baseline of 85% and 89% was observed for heparan sulfate and dermatan sulfate biomarkers in the urine, respectively, at week 49, suggesting DNL310 has added peripheral activity over approved enzyme replacement therapy.

Exploratory clinical outcomes data from Vineland Adaptive Behavior Scales (VABS)-II ( Figure 7 ) and Bayley Scales of Infant and Toddler Development (BSID)-III assessments ( Figure 8 ) were reported for the first time at the 2023 WORLD Symposium and positive mean changes in raw scores over one year with DNL310 treatment relating to adaptive behavior and cognitive skill gains were observed, respectively.

These raw score results are consistent with previously reported one-year findings from the Clinician Global Impression Scales of Change and Caregiver Global Impression Scales of Change, showing that most participants demonstrated improvement or stabilization across all domains at week 49 of study treatment.

Hearing, as assessed by auditory brainstem response (ABR) testing, numerically improved over time after initiation of DNL310 across all frequencies.

At week 49, ABR thresholds showed statistically significant improvements across three of the four frequencies, with a trend toward greater improvement at higher frequencies.

The safety profile of DNL310 remains consistent with standard of care, now with data up to two years of treatment with DNL310.

The most frequent treatment-emergent adverse events were infusion related reactions, which decreased in frequency and severity with continued dosing.

An independent data monitoring committee met in October 2022 and recommended that the study may continue without modifications.

2023 expected progress and milestones:

• Presentation of additional interim Phase 1/2 data at the Society for the Study of Inborn Errors of Metabolism (SSIEM) Annual Symposium.

• Continued recruitment of participants with MPS II in the global Phase 2/3 COMPASS study.

Over 49 weeks, mean VABS-II raw scores increased across subdomains, including those particularly relevant to MPS families, reflecting adaptive behavior skill gain.

Mean increases were observed in BSID III Cognitive Raw Scores at Week 49 and were larger in magnitude when accounting for participants cognitively capable of completing the Kaufman Assessment Battery for Children.

TAK-594/DNL593 (PTV:PGRN) Program for FTD-GRN

FTD is the most common form of dementia in people under 60 years of age.

While the progression of symptoms varies by individual, FTD brings an inevitable decline in function together with changes in personality and social behaviors, and sometimes language and/or motor dysfunction.

Mutations in the granulin (" GRN" ) gene, which encodes the PGRN protein, generally result in reduced levels of PGRN and are among the most common genetic causes of FTD.

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

There are currently no approved medicines to stop or slow the progression of FTD or FTD-GRN.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Takeda to co-develop and co-commercialize TAK-594/DNL593 (PTV:PGRN), an investigational, brain-penetrant PGRN replacement therapy enabled by Denali's PTV platform and designed to restore normal levels of PGRN in the brain without interfering with normal PGRN transport and processing.

Preclinical proof of concept demonstrates 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.

In addition, TAK-594/DNL593 rescued both neurodegeneration and microglial dysfunction in PGRN-deficient mice.

Our improved mechanistic understanding of the role of PGRN in lysosomal function indicates that direct delivery of TAK-594/DNL593 to the brain may be an effective therapeutic approach to increase PGRN levels in lysosomes for the potential treatment of people with certain types of FTD, especially FTD-GRN caused by PGRN deficiency.

Together with Takeda, we initiated a Phase 1/2 clinical trial of TAK-594/DNL593 for FTD-GRN in 2022.

Interim results from Part A of this study evaluating DNL593 in healthy subjects were presented at the Frontotemporal Dementia Prevention Initiative meeting in November 2022 and demonstrated that single doses of DNL593 resulted in substantial increases in CSF PGRN levels suggesting brain delivery of DNL593 was achieved and has the potential to address PGRN deficiency, which drives FTD-GRN disease progression ( Figure 9 ).

Single doses of DNL593 were generally well tolerated, based on blinded safety analysis.

The data support the ongoing recruitment of participants with FTD-GRN in Part B (ascending multiple doses) of the Phase 1/2 study.

2023 expected progress and milestones:

• Final data from Phase 1/2 Part A healthy volunteer study in mid 2023.

• Continued recruitment of participants with FTD-GRN in Part B (ascending multiple doses) of the Phase 1/2 study.

Dose-dependent increase in CSF PGRN in healthy volunteers with intravenous DNL593.

TAK-920/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 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;

therefore, activating the receptor could be an efficacious therapeutic strategy.

As described in more detail in “Business - Licenses and Collaborations” below, w e are collaborating with Takeda to co-develop and co-commercialize TAK-920/DNL919 (ATV:TREM2), an investigational, brain-penetrant TREM2 agonist enabled by Denali's PTV platform and designed to activate TREM2 and improve microglial function.

Animal model data demonstrate enhanced brain uptake and biodistribution with TAK-920/DNL919 as compared to a non-ATV TREM2 antibody and improved pharmacodynamic response, including enhanced microglia metabolism and mitochondrial respiration ( Figure 10 ).

ATV:TREM2 shifts most microglia to responsive states compared to standard anti-TREM2 and a control ATV (ATV:CNTL) in mice.

Single cell RNAseq UMAP plots of brain microglia 24h post 10 mg/kg dose in a APP KI;TfR KI mouse model.

Nature Neuroscience , January 12, 2023.

Together with Takeda, we initiated a Phase 1 single ascending dose study in healthy volunteers in the Netherlands in 2022 which is actively enrolling participants.

In January 2022, we announced that the TAK-920/DNL919 Investigational New Drug ("IND") application had been placed on clinical hold by the U.S.

Food and Drug Administration ("FDA").

We plan to continue to engage with the FDA and regulatory authorities in Europe to define the path forward for the TAK-920/DNL919 clinical program, including plans to advance into a Phase 1b study in patients with Alzheimer's disease.

2023 expected progress and milestones:

• Data from the Phase 1 single ascending dose study in healthy volunteers by year-end 2023.

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 fatal brain damage.

MPS IIIA is caused by genetic defects that result in a reduction in the lysosomal activity of SGSH, an enzyme responsible for degrading heparan sulfates in the lysosome.

There are no approved treatments for MPS IIIA.

Preclinical data demonstrated that DNL126 reduced heparan sulfate in a dose-dependent manner in brain, cerebrospinal fluid and liver in an MPS IIIA model ( Figure 11 ).

Submission of an IND application is planned for the first half of 2023.

2023 expected progress and milestones:

• Submission of an IND application in the first half and Phase 1/2 recruitment activities in the second half of 2023.

12 weekly doses of ETV:SGSH reduces brain, CSF, and liver HS levels in a MPS IIIA mouse model.

DNL622 (ETV:IDUA) for MPS I (Hurler syndrome)

Alpha-L-iduronidase (“IDUA”) is an enzyme responsible for degrading heparan and dermatan sulfate in the lysosome.

Genetic defects in IDUA result in a reduction or absence of lysosomal IDUA activity and cause Hurler syndrome (or MPS I), which is characterized by alterations in the skeleton, heart, respiratory system, and brain.

DNL622 (ETV:IDUA) is a recombinant IDUA enzyme engineered to cross the BBB, to replace IDUA, and to treat the cognitive, behavioral and physical manifestations of the disease.

DNL622 is currently in the IND-enabling stage of preclinical development.

Oligonucleotide Transport Vehicle ("OTV") Platform

Oligonucleotides, such as ASOs, are a novel class of biotherapeutics with the potential to address the root cause of many diseases 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 into the CSF (e.g., intrathecal injection) or certain brain regions has not achieved the robust biodistribution into deep brain tissue, which may be necessary for effective therapeutic activity.

Nonhuman primate data demonstrated that intravenous delivery of an ASO enabled by our OTV technology resulted in broad brain biodistribution of the ASO ( Figure 12 ) and knockdown of target gene expression in all brain cell types, which was superior to intrathecal administration of the ASO.

These data support the potential of our OTV platform to enable peripheral administration of oligonucleotide therapeutics and to address a wide range of neurodegenerative and other neurological diseases.

Denali has selected five ASO targets for further development with a near-term focus on advancing two OTV candidates towards clinical development ( Figure 13 ).

Broad brain biodistribution of an intravenously administered ASO enabled by our OTV technology (right) as compared to limited brain biodistribution of ASO delivered intrathecally (left).

OTV is designed to open a large potential indication space in neurodegeneration and beyond by enabling superior biodistribution of ASOs across brain regions, providing superior knockdown of target gene expression across all cell types, and enabling intravenous dosing of oligonucleotide therapeutics.

Five ASO targets have been selected for further development with a near-term focus on advancing two OTV candidates towards clinical development.

Other TV-Enabled Discovery Programs

Our portfolio includes additional preclinical programs, including programs targeting amyloid beta ("Abeta") (“ATV:Abeta”) and HER2 (“ATV:HER2”).

Targeting Abeta plaques in the brain has been investigated by the field as a therapeutic approach to treat AD, and two Abeta-targeted antibodies, lecanemab and aducanumab, have been approved by the FDA using the Accelerated Approval pathway.

These accelerated approvals were based on clinical data demonstrating that treatment was associated with a reduction in the accumulation of Abeta plaque in the brain, a defining feature of AD.

Our ATV:Abeta utilizes the TV platform to enable increased brain exposure and target engagement of anti-Abeta.

In preclinical studies in mice, we demonstrated a notable difference in ATV:Abeta localization with plaques, and quantification revealed up to a 17-fold increase in ATV:Abeta signal colocalization with plaques compared to a non-TV-enabled Abeta antibody.

This significant increase in target engagement compared to the standard antibody could indicate potential for superior efficacy or an improved therapeutic window.

Biogen has an exclusive option to license ATV:Abeta, which option may be exercised up to the initiation of IND-enabling studies.

Human epidermal growth factor receptor 2 ("HER2") is a growth factor receptor that is over-expressed in multiple cancers, including breast, colorectal, and gastric cancer.

Up to half of patients diagnosed with metastatic HER2-positive breast cancer have brain metastases for which limited treatment options exist.

Using ATV, we have engineered mono- and bispecific formats of HER2 antibodies.

In preclinical mouse studies, we have demonstrated improved anti-tumor activity of ATV-enabled HER2 antibodies in a HER2-positive peripheral tumor model.

Our bispecific ATV:HER2 antibody demonstrated improved peripheral anti-tumor activity as compared to non-ATV HER2 antibodies as well as enhanced brain uptake as compared to a non-ATV HER2 antibody.

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

Our Brain-Penetrant Small Molecule Programs

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.

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

It is commonly thought of as a movement disorder because patients can experience tremors, slowness of movement, stiffness and difficulty with walking and balance.

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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.

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 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.

Rab10 is a member of the Rab GTPase family involved in endolysosomal function and is a direct substrate of LRRK2 kinase.

To provide greater insight into the effects of LRRK2 inhibitors on lysosomal biology in humans, in addition to pRab10 phosphorylation, we have measured di-22:6-bis(monoacylglycerol)phosphate ("BMP di22:6") in the urine of subjects treated with LRRK2 inhibitors.

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.

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.

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen to co-develop and co-commercialize our small molecule inhibitors of LRRK2 for Parkinson's disease.

BIIB122/DNL151 is the most clinically advanced small molecule inhibitor of LRRK2 currently in clinical testing for Parkinson's disease.

Results from Phase 1 and Phase 1b trials of BIIB122/DNL151 in healthy volunteers and patients with Parkinson's disease, respectively, showed robust target and pathway engagement as measured by pS935 LRRK2 and pT73 Rab10 (“pRab10”), respectively.

In addition, a dose-dependent reduction in urine of the lysosomal lipid 22:6-bis[monoacylglycerol] phosphate (“BMP”), a biomarker of lysosomal function, was achieved with BIIB122/DNL151 treatment, providing 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.

Biogen is conducting two global late-stage clinical trials of BIIB122/DNL151:

the Phase 2b LUMA study, which commenced in May 2022 and is evaluating the efficacy and safety of BIIB122/DNL151 as compared to placebo in approximately 640 participants with early-stage Parkinson's disease;

and the Phase 3 LIGHTHOUSE study in approximately 400 participants with Parkinson's disease with a confirmed LRRK2 pathogenic variant, which commenced dosing in September 2022.

2023 expected progress and milestones:

• Continued recruitment of participants with Parkinson's disease in the Phase 2b LUMA and Phase 3 LIGHTHOUSE studies.

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.

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 (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 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.

In patients with Hunter syndrome receiving standard ERT, a reduction in urine GAG levels is associated with improvements in peripheral manifestations of the disease whereas there is no effect on CSF GAG levels or neurocognitive manifestations.

Based on our preclinical models with ETV:IDS, we anticipate that reductions in both urine and CSF GAG levels may result in improvements in both peripheral and neurocognitive manifestations of the disease.

In addition, we have identified downstream pathway and disease biomarkers that are dysregulated in animal models of Hunter syndrome, and we are exploring these biomarkers in clinical studies.

Phase 1/2 Trial in Patients with Hunter Syndrome

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 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.

Future Development Plan

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.

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, 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").

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

RIPK1 is a critical signaling protein in the tumor necrosis factor receptor pathway and is a regulator of inflammation and cell death.

SAR443820/DNL788 RIPK1 Inhibitor Program for CNS Disease

As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Sanofi on the development of small molecules that inhibit RIPK1, a critical signaling protein in the tumor necrosis factor (“TNF”) receptor pathway and a regulator of inflammation and cell death.

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 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 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.

RIPK1 inhibition has been shown to have beneficial effects in preclinical models of ALS, multiple sclerosis (“MS”), Alzheimer's disease, and other diseases.

SAR443820/DNL788 is our lead CNS-penetrant RIPK1 inhibitor in clinical development.

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 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.

Biopsy-derived T-cells from CLE patients are dominated by IFN-γ and TNF-α positive cells.

Furthermore, primary pro-inflammatory cytokines i nvolved in the pathophysiology of CLE are strongly linked to RIPK1 activation and downstream signaling.

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

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 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 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.

In 2022, Sanofi commenced dosing in the HIMALAYA global Phase 2 study of SAR443820/DNL788 and expects to enroll approximately 260 participants with ALS.

A Phase 2 study of SAR443820/DNL788 in MS was initiated in January 2023 and is expected to enroll approximately 168 patients.

In addition, we are leading preclinical exploration of SAR443820/DNL788 as a potential treatment for AD.

2023 expected progress and milestones:

• Completion of recruitment of participants with ALS in the Phase 2 HIMALAYA study.

• Ongoing recruitment of MS Phase 2 study.

DNL343 eIF2B Activator Program for ALS

We are developing DNL343 as a novel eIF2B activator with first-in-class potential for the treatment of ALS and other indications.

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

When neurons experience stress, activation of the integrated stress response (ISR) pathway leads to suppression of eIF2B activity, resulting in impaired protein synthesis and formation of stress granules.

Stress granules are thought to be a precursor of TDP-43 aggregation, which is a hallmark pathology in ALS.

DNL343 is designed to activate eIF2B and thereby restore protein synthesis, disperse TDP-43 aggregates, and improve neuronal survival.

Results from a Phase 1 study in healthy volunteers demonstrated that DNL343 was generally well tolerated for up to 14 days of dosing, with robust distribution in the CNS.

Furthermore, biomarker assessments of DNL343 treatment confirmed ISR pathway engagement, demonstrating modulation of ISR-dependent genes and proteins in a dose-dependent manner.

Enrollment in the study is complete with 29 participants.

An interim analysis was performed after 20 participants randomized to receive either DNL343 or placebo had completed the double-blind period of the study.

The interim results demonstrated that once-daily oral dosing with DNL343 for 28 days was generally well tolerated and demonstrated extensive BBB penetration as well as robust inhibition of biomarkers associated with the ISR pathway (ATF4 protein levels and CHAC1 gene expression) in blood samples from study participants at both doses levels of DNL343 ( Figure 14 ).

An interim analysis (n=20) from the ongoing Phase 1b study demonstrated 28-day dosing with DNL343 reduced ISR biomarkers in blood samples from ALS patients.

The data to date continue to support late-stage development of DNL343.

The design phase of the DNL343 regimen is underway for entry into the Phase 2/3 HEALEY ALS Platform Trial led by the Sean M.

Healey & AMG Center for ALS ("Healey Center") at Massachusetts General Hospital ("MGH") in collaboration with the Northeast ALS Consortium ("NEALS") clinical trial network.

The HEALEY ALS Platform Trial is a large-scale collaborative effort made possible by contributions from patients and families, clinical trial sites, industry partners and research collaborators to evaluate multiple investigational therapies simultaneously with the goal of accelerating the development of potential new treatments for ALS.

Therapeutic candidates that enter the platform trial are chosen by a group of expert ALS scientists and members of the Healey & AMG Center.

2023 expected progress and milestones:

• Final data from the 28-day double-blind, placebo-controlled portion of the Phase 1b study in mid 2023.

• Initiation of Phase 2/3 study in the HEALEY ALS Platform Trial in mid 2023.

Other Programs

SAR443122/DNL758 RIPK1 Inhibitor Program for Peripheral Inflammatory Diseases

Sanofi is conducting two Phase 2 studies of the peripherally-restricted RIPK1 inhibitor SAR443122/DNL758 (eclitasertib), one in patients with CLE and the other in patients with UC.

Sanofi is solely responsible for the development and commercialization of peripherally restricted RIPK1 inhibitors.

2023 expected progress and milestones:

• Primary completion of Phase 2 CLE study in June 2023.

• Continued recruitment of participants with UC in the Phase 2 study.

Licenses and Collaborations

Takeda Option and Collaboration Agreement

In January 2018, we entered into the Collaboration Agreement with Takeda ("Takeda Collaboration Agreement"), pursuant to which we granted Takeda an option with respect to our ATV:BACE1/Tau, ATV:TREM2 and PTV:PGRN programs.

The Takeda Collaboration Agreement provided that Takeda pay a $40.0 million upfront payment related to the collaboration, as well as $110.0 million under a share purchase agreement , both of which were received in February 2018.

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

In February 2019, we amended the agreement to replace the ATV:BACE1/Tau program with the ATV:Tau program.

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 TfR 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.

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

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.

Further, Takeda may also be obligated to pay us up to $75.0 million per biologic product upon achievement of a certain sales-based milestone, or an aggregate of $225.0 million if one biologic product from each program achieves the milestone.

Once Takeda has exercised its option for a particular target, we and Takeda will share equally the development and commercialization costs, and, if applicable, the profits, for each collaboration program.

However, for each collaboration program, we may elect not to continue sharing development and commercialization costs, or Takeda may elect to terminate our cost-profit sharing rights and obligations if, following notice from Takeda and a cure period, we fail to satisfy our cost sharing obligations with respect to the relevant collaboration program.

After such an election by us or termination by Takeda becomes effective, we will no longer be obligated to share in the development and commercialization costs for the relevant collaboration program, and we will not share in any profits from that collaboration program.

Instead we will be entitled to receive tiered royalties.

The royalty rates will be in the low- to mid-teen percentages on net sales, or low- to high-teen percentages on net sales if we have met a certain co-funding threshold at the time of our election to opt out of co-development or Takeda’s termination of our cost-profit sharing rights and obligations, and, in each case, these royalty rates will be subject to certain reductions specified in the Takeda Collaboration Agreement.

Takeda will pay these royalties to us for each biologic product included in the relevant collaboration program, on a country-by-country basis, until the latest of (i) the expiration of certain patents covering the relevant biologic product, (ii) the expiration of all regulatory exclusivity for that biologic product, and (iii) an agreed period of time after the first commercial sale of that biologic product in the applicable country, unless biosimilar competition in excess of a significant level specified in the Takeda Collaboration Agreement occurs earlier, in which case Takeda’s royalty obligations in the applicable country would terminate.

For each collaboration program for which we are sharing costs and profits with Takeda, we will lead the conduct of clinical activities for each indication up to the first trial with a clinical outcomes-based efficacy endpoint, and Takeda will lead the conduct of all subsequent clinical activities for that indication.

For each collaboration program for which we are sharing costs and profits with Takeda, we and Takeda will jointly commercialize biologic products included in the relevant collaboration program in the United States and China.

Unless we have opted out of cost-sharing for two collaboration programs, we have the right to lead commercialization activities in the United States for one collaboration program and Takeda will lead commercialization activities in the United States for all collaboration programs for which we do not lead commercialization activities.

Further, Takeda will lead commercialization activities in China and will solely conduct commercialization activities in all other countries.

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.

Each party may terminate the Takeda Collaboration Agreement in its entirety, or with respect to a particular collaboration program, as applicable, if the other party remains in material breach of the Takeda Collaboration Agreement following a cure period to remedy the material breach.

Takeda may terminate the Takeda Collaboration Agreement in its entirety or with respect to any particular collaboration program, for convenience and after giving a specified amount of prior notice to us, but Takeda may not do so for a certain period of time after the effective date of the Takeda Collaboration Agreement.

Takeda may also terminate the Takeda Collaboration Agreement with respect to any collaboration program if the joint steering committee established under the Takeda Collaboration Agreement unanimously agrees that a material safety event has occurred with respect to the applicable collaboration program.

We may terminate the Takeda Collaboration Agreement with respect to a particular collaboration program if Takeda fails to conduct material development and commercial activities for a specified period of time with respect to a collaboration program, unless Takeda cures such failure within a certain period of time.

We and Takeda may each terminate the Takeda Collaboration Agreement in its entirety if the other party is declared insolvent or in similar financial distress or if, subject to a specified cure period, the other party challenges any patents licensed to it under the Takeda Collaboration Agreement.

Following any termination of the Takeda Collaboration Agreement with respect to a particular collaboration program or the Takeda Collaboration Agreement in its entirety, our rights to each terminated collaboration program will revert to us, Takeda will grant us a license to intellectual property owned by Takeda with respect to such collaboration program (which could be subject to certain royalty payments that would be negotiated at the time of such a termination) and, unless the termination was by Takeda on the basis of a material safety event, Takeda will conduct certain development, manufacturing and commercialization wind-down activities.

Common Stock Purchase Agreement

Pursuant to the terms of the Takeda Collaboration Agreement, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Takeda in January 2018, pursuant to which we agreed to issue and sell, and Takeda agreed to purchase, 4,214,559 shares of our common stock (the “Shares”) for an aggregate purchase price of $110.0 million pursuant to the terms and conditions thereof.

We closed the sale of the Shares to Takeda in February 2018.

We and Takeda also entered into a standstill and stock restriction agreement (the “Standstill Agreement”).

Pursuant to the terms of the Standstill Agreement, Takeda agreed to certain transfer and standstill restrictions, including a restriction on acquiring more than 10% of our capital stock, for a specified period of time following the closing of the sale of the Shares to Takeda, or earlier upon our change of control or, with respect to the transfer restrictions, termination of the Takeda Collaboration Agreement.

In addition, Takeda is entitled to certain registration rights with respect to the Shares following termination of the transfer restrictions if the Shares cannot be resold without restriction pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended.

Sanofi Collaboration and License Agreement

In October 2018, we entered into the Collaboration Agreement with Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A.

("Sanofi") pursuant to which certain small molecule compounds that bind to and inhibit RIPK1 (“RIPK1 Inhibitors”) contributed by Sanofi and by us will be developed and commercialized.

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, ulcerative colitis, 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 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, 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.

Such milestone payments include $215.0 million in clinical milestone payments and $385.0 million in regulatory milestone payments for CNS Products, as defined, that are developed and approved in the United States, by the European Medicines Agency ("EMA") and in Japan for three indications, including Alzheimer's disease.

These milestones also include $120.0 million in clinical milestone payments, $175.0 million in regulatory milestone payments and $200.0 million in commercial milestone payments for Peripheral Products, as defined, that are developed and approved in the United States, by the EMA and in Japan for three indications.

We will share profits and losses equally with Sanofi for CNS Products sold in the United States and China, and receive royalties on net sales for CNS Products sold outside of the United States and China and for Peripheral Products sold worldwide, each as further described below.

RIPK1 Inhibitors contributed by Sanofi and developed and commercialized under the Sanofi Collaboration Agreement will be subject to lower milestone and royalty payments to us compared to RIPK1 Inhibitors contributed by us.

We will also retain responsibility for certain payment obligations under our agreement with an academic institution which licensed certain intellectual property to us that we are sublicensing to Sanofi under the Sanofi Collaboration Agreement.

Program for Development and Commercialization of CNS Products

We and Sanofi will jointly develop CNS Products pursuant to a global development plan ("CNS Development Plan").

We will be responsible, at our cost, for conducting Phase 1 and Phase 2 trials for CNS Products for Alzheimer’s disease and any activities required to support such clinical trials and specific for Alzheimer’s disease.

Sanofi will be responsible, at its cost, for all other Phase 1 and Phase 2 trials for CNS Products, including for ALS and multiple sclerosis.

Sanofi will lead the conduct of all Phase 3 and later stage development trials for CNS Products, with Sanofi and us funding 70% and 30% of such costs, respectively.

The Sanofi Collaboration Agreement contains certain protections for us with respect to Phase 3 development costs not included in the initial budget for the CNS Development Plan agreed by the parties, including a deferral mechanism for costs incurred above the budgeted amounts for such trials and for costs incurred in respect of Phase 3 and other clinical trials not contemplated in the initial CNS Development Plan.

In addition, we have the ability to opt out of the cost-profit sharing provisions of the Sanofi Collaboration Agreement, as further described below.

Sanofi will lead commercialization activities globally for CNS Products.

We may elect to conduct certain co-commercialization activities outside of MS with respect to each CNS Product in the United States and/or China, provided that the cost-profit sharing provisions of the Sanofi Collaboration Agreement for the relevant CNS Product are still in effect, as further described below.

We may opt out of the cost-profit sharing provisions of the Sanofi Collaboration Agreement for CNS Products in the United States and China on a CNS product-by-CNS Product and country-by-country basis.

Sanofi may also terminate our cost-profit sharing provisions of the Sanofi Collaboration Agreement in its entirety if, following notice from Sanofi and a cure period, we fail to satisfy our cost-sharing obligations.

After such an opt out by us or termination by Sanofi, we will no longer be obligated to share in the development and commercialization costs for the applicable CNS Products and we will not share in the applicable profits from such CNS Products.

Instead, we will be entitled to receive tiered royalties on net sales of the applicable CNS Products in the relevant country (or countries).

The royalty rates will be a percentage in the low double digits to mid-teens, but may increase to the mid-teens to low-twenties percentages for all countries in which Sanofi is paying royalties on the applicable CNS Products, if we have met certain co-funding thresholds at the time of our election or Sanofi’s termination of our cost-profit sharing rights and obligations.

Program for Development and Commercialization of Peripheral Products

Sanofi is responsible, at its cost, for conducting activities relating to the development and commercialization of all Peripheral Products.

Sanofi will lead commercialization activities globally for Peripheral Products.

We will be entitled to receive tiered royalties in the low- to mid- teen percentages on net sales of Peripheral Products.

Manufacturing

Sanofi will be responsible for delivering all supplies for current and future clinical trials and commercial production for CNS Products and Peripheral Products.

However, we retain manufacturing rights for certain independent clinical activities.

For any CNS Product with respect to any country for which Sanofi is required to pay royalties on net sales and for each Peripheral Product, Sanofi will pay royalties to us on a country-by-country basis until the latest of (i) the expiration of certain patents covering the relevant product, (ii) the expiration of all regulatory exclusivity for that product in the applicable country, and (iii) an agreed period of time after the first commercial sale of that product in the applicable country.

If, in a particular country, a CNS Product for which Sanofi is required to pay royalties or a Peripheral Product is not covered by specified patent rights in that country or net sales in that country decrease below specified thresholds as a result of generic competition, Sanofi’s royalty obligations in the applicable country would be reduced or would terminate as specified in the Sanofi Collaboration Agreement.

During the term of the Sanofi Collaboration Agreement, neither we nor Sanofi may conduct IND-enabling, clinical or commercial activities involving any RIPK1 Inhibitor, anywhere in the world, unless the RIPK1 Inhibitor is included by us or Sanofi, as the case may be, under the collaboration and only to the extent such activity is permitted under the Sanofi Collaboration Agreement.

Each party may terminate the Sanofi Collaboration Agreement in its entirety, or with respect to a particular program (i.e., the CNS Products program or Peripheral Products program), as applicable, if the other party remains in material breach of the Sanofi Collaboration Agreement following a cure period to remedy the material breach.

After giving a specified amount of prior notice to us, Sanofi may terminate the Sanofi Collaboration Agreement for convenience in its entirety, with respect to any particular program, or with respect to one or more specified regions of the world.

Sanofi may also terminate the Sanofi Collaboration Agreement with respect to any program or a particular RIPK1 Inhibitor if a material safety event has occurred and cessation of all development and commercialization of all RIPK1 Inhibitors in the affected program or the affected RIPK1 Inhibitor is recommended.

We and Sanofi may each terminate the Sanofi Collaboration Agreement in its entirety if the other party is declared insolvent or in similar financial distress or if, subject to a specified cure period, the other party challenges any patents licensed to it under the Sanofi Collaboration Agreement.

Following any termination of the Sanofi Collaboration Agreement with respect to a particular program or a particular region (or regions) of the world or termination of the Sanofi Collaboration Agreement in its entirety, our rights to each of our RIPK1 Inhibitors that were licensed to Sanofi will revert to us.

Sanofi will conduct certain development, manufacturing and commercialization activities on a transitional basis following termination of the Sanofi Collaboration Agreement, as outlined in the Sanofi Collaboration Agreement or agreed by Sanofi, depending upon the basis for the applicable termination.

If the Sanofi Collaboration Agreement is terminated for any reason other than by Sanofi for our material uncured breach, our insolvency or our challenge to any of the patents licensed to us by Sanofi, Sanofi will grant us an exclusive license to certain intellectual property controlled by Sanofi with respect to such RIPK1 Inhibitors (which could be subject to low single digit royalties payable to Sanofi).

Biogen License and Collaboration Agreement and Right of First Negotiation, Option and License Agreement

In August 2020, we entered into a binding Provisional Collaboration and License Agreement (“Provisional Biogen Collaboration Agreement”) with Biogen Inc.’s subsidiaries, Biogen MA Inc.

(“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”) pursuant to which we granted Biogen a license to co-develop and co-commercialize our small molecule LRRK2 inhibitor program (the “LRRK2 Program”), an option to our amyloid beta program utilizing our TV technology platform to cross the BBB as well as one other unnamed program also utilizing our TV technology platform (the “Option Programs”), and a right of first negotiation with respect to two additional unnamed programs for indications within Alzheimer’s disease, Parkinson’s disease, ALS and multiple sclerosis utilizing our TV technology platform (the “ROFN Programs”) should we decide to seek a collaboration with a third party for such programs.

(“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”) pursuant to which we granted Biogen a license to co-develop and co-commercialize our small molecule LRRK2 inhibitor program (the “LRRK2 Program”), an option to our amyloid beta program utilizing our TV technology platform to cross the BBB as well as one other unnamed program also utilizing our TV technology platform (the “Option Programs”), and a right of first negotiation ("ROFN") with respect to two additional unnamed programs for indications within Alzheimer’s disease, Parkinson’s disease, ALS and MS utilizing our TV technology platform (the “ROFN Programs”), should we decide to seek a collaboration with a third party for such programs.

In October 2020, we entered into a Definitive LRRK2 Collaboration and License Agreement (“LRRK2 Agreement”) and a Right of First Negotiation, Option and License Agreement (the “ROFN and Option Agreement”) with Biogen (collectively the "Biogen Collaboration Agreement").

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Development and Commercialization of LRRK2 Program

We and Biogen will jointly develop LRRK2 Products pursuant to a clinical development plan set forth in the LRRK2 Agreement.

We and Biogen will share responsibility and costs for global development of LRRK2 Products, with Biogen funding 60% of such costs and us funding 40% of such costs.

We and Biogen are jointly developing LRRK2 Products pursuant to a clinical development plan set forth within the LRRK2 Agreement.

We and Biogen share responsibility and costs for global development of LRRK2 Products pursuant to a mutually agreed development plan and budget ("LRRK2 Development Activities"), with Biogen funding 60% of such costs and us funding 40% of such costs.

We have the ability to opt out of the development cost sharing arrangement, as further described below.

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We will co-commercialize the LRRK2 Products with Biogen in the United States and China, provided that the profit-sharing arrangement for the LRRK2 Products is still in effect, as further described below.

We may opt out of development cost sharing worldwide and upon such election, of all further profit sharing from the LRRK2 Program.

We may opt out of development cost sharing worldwide and upon such election, from any further profit-sharing from the LRRK2 Program.

We also have the right to opt out of the profit-sharing arrangement for the LRRK2 Program or for only those LRRK2 Products that do not penetrate the BBB (“Peripheral LRRK2 Products”), in each of the United States and China.

After such an opt out, we will no longer be obligated to share in the development and commercialization costs for, and we will not share in the applicable revenues from, such LRRK2 Program (or from the Peripheral LRRK2 Products), in such country, as applicable.

In such cases, we will be entitled to receive tiered royalties on net sales of the applicable LRRK2 Program in the relevant country (or countries).

After such an opt out, we will no longer be obligated to share in the development and commercialization costs for, or be entitled to share in the applicable revenues from, such LRRK2 Program (or from the Peripheral LRRK2 Products) for such country, as applicable.

If we choose to exercise our opt out rights, we will be entitled to receive tiered royalties on net sales of the applicable LRRK2 Program in the relevant country (or countries).

The royalty rates for the applicable LRRK2 Program will be a percentage in the high teens to low twenties, but may increase to the low twenties to mid-twenties, if we have met certain co-funding thresholds or there has been a first commercial sale at the time of our election.

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Exclusivity of LRRK2 Program

During the term of the LRRK2 Agreement, neither we nor Biogen may conduct preclinical, clinical or commercial activities involving any small molecule that targets LRRK2 as its primary mechanism of action anywhere in the world, unless such molecule is included under the collaboration and only to the extent such activity is permitted under the LRRK2 Agreement or, with respect to Biogen, the molecule is an antisense oligonucleotide product that is the subject of a collaboration between Biogen and a particular third party.

During the term of the LRRK2 Agreement, neither we nor Biogen may conduct preclinical, clinical or commercial activities involving any small molecule that targets LRRK2 as its primary mechanism of action anywhere in the world, unless such molecule is included under the collaboration and only to the extent such activity is permitted under the LRRK2 Agreement or, with respect to Biogen, the molecule is an ASO product that is the subject of a collaboration between Biogen and a particular third party.

Each party may terminate the LRRK2 Agreement in its entirety, if the other party remains in material breach of the LRRK2 Agreement following a cure period to remedy the material breach.

After giving a specified amount of prior notice to us, Biogen may terminate the LRRK2 Agreement for convenience in its entirety, or with respect to one or more specified regions of the world, but Biogen may not do so for a certain period of time after the effective date of the LRRK2 Agreement.

After giving a specified amount of prior notice to us, Biogen may terminate the LRRK2 Agreement for convenience in its entirety, or with respect to one or more specified regions of the world.

We may terminate the LRRK2 Agreement if Biogen fails to conduct meaningful activities to advance the development or commercialization of any LRRK2 Products for a specified period of time, unless Biogen cures such failure within a certain period of time or if Biogen challenges any patents licensed to it under the LRRK2 Agreement.

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Option Programs

In addition to the LRRK2 Program, Biogen also received an exclusive option to license two preclinical programs that utilize our TV technology platform, including our ATV:Abeta program and a second program for an unnamed target, excluding small molecules, AAVs and oligonucleotides (each, an "Option Program").

In addition to the LRRK2 Program, Biogen also received an exclusive option to license two preclinical programs enabled by our TV technology platform, including our ATV:Abeta program and a second program utilizing our TV technology for an undisclosed target, excluding small molecules, AAVs and oligonucleotides (each, an "Option Program").

Biogen’s option may be triggered up to initiation of IND-enabling studies for each program and continues for each program until a specified period of time after delivery of an option data package or 30 business days after the 5th anniversary of the effective date of the Provisional Biogen Collaboration Agreement, whichever is earlier.

ROFN Programs

Further, Biogen will have the right of first negotiation on two additional TV-enabled therapeutics in the fields of Alzheimer’s disease, Parkinson’s disease, ALS or multiple sclerosis should we decide to seek a collaboration with a third party for such programs, but this does not include any of our small molecule, AAVs and oligonucleotide programs.

Further, Biogen will have the right of first negotiation on two additional TV-enabled therapeutics within the fields of Alzheimer’s disease, Parkinson’s disease, ALS and MS should we decide to seek a collaboration with a third party for such programs, but this does not include any of our small molecule, AAVs or oligonucleotide programs.

The ROFN period continues until seven years after the effective date of the Provisional Biogen Collaboration Agreement or the date on which we have offered Biogen two ROFN Programs and for which Biogen has agreed to trigger a ROFN for such program, whichever is earlier.

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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, 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.

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 $325.0 million upon first commercial sale, and up to $290.0 million of net sales-based 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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Common Stock Purchase Agreement

In August 2020, in connection with the Provisional Biogen Collaboration Agreement, we entered into a common stock purchase agreement (the “Stock Purchase Agreement”) with BIMA, pursuant to which we agreed to issue and sell, and BIMA agreed to purchase, 13,310,243 shares of our common stock (the “Shares”) for an aggregate purchase price of $465.0 million pursuant to the terms and conditions thereof.

The sale of the Shares closed, and payment was received, in September 2020.

Pursuant to the terms of a standstill and stock restriction agreement (the “Standstill Agreement”) entered into between Biogen and us at the closing of the sale of the Shares, Biogen has agreed to certain transfer and standstill restrictions, including a restriction on acquiring more than 10% of our capital stock, and to vote the Shares in the same manner and proportion as the votes cast by the other holders of our common stock on certain matters, in each case for a period of eighteen months following the closing of the sale of the Shares, or earlier upon a change of control of us.

In addition, Biogen will be entitled to certain demand registration rights with respect to the Shares following termination of the transfer restrictions.

In August 2020, in connection with the Provisional Biogen Collaboration Agreement, we entered into a common stock purchase agreement with BIMA, pursuant to which we sold 13,310,243 shares of our common stock to BIMA for an aggregate purchase price of $465.0 million in September 2020.

In connection with the sale of shares, we entered into a standstill and stock restriction agreement (the “Standstill Agreement”) with Biogen, pursuant to which Biogen agreed to certain transfer and standstill restrictions, which have now expired, with the exception of certain volume limitations.

Biogen remains entitled to certain demand registration rights for the shares received in the transaction under the terms of the Standstill Agreement.

Sanofi Collaboration and License Agreement

In October 2018, we entered into the Collaboration Agreement with Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A.

("Sanofi") pursuant to which certain small molecule compounds that bind to and inhibit RIPK1 (“RIPK1 Inhibitors”) contributed by Sanofi and by us will be developed and commercialized.

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 are jointly developing products containing RIPK1 Inhibitors for neurological indications, such as Alzheimer’s disease, ALS and MS, and Sanofi is developing products containing RIPK1 Inhibitors for systemic inflammatory indications, such as CLE and UC.

The two most advanced RIPK1 Inhibitors in the collaboration

are SAR443820/DNL788 and SAR443122/DNL758.

SAR3443820/DNL788 is a CNS Product that was discovered by us and licensed to Sanofi who has completed Phase 1 trials in healthy volunteers, and is leading two distinct Phase 2 clinical trials in patients with ALS and MS.

SAR443122/DNL758 is a Peripheral Product discovered by us, and licensed to Sanofi who is leading two distinct Phase 2 clinical trials in patients with CLE and UC.

License Grant

When the Sanofi Collaboration Agreement became effective in November 2018, Sanofi paid us $125.0 million upfront.

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.

Sanofi has made milestone payments of $40.0 million for CNS clinical milestones through December 31, 2022, with an additional $25.0 million earned and received in January 2023 upon commencement of dosing in the Phase 2 study of SAR443820/ DNL788 in patients with MS.

The cumulative earned and potential milestones include $120.0 million in clinical milestone payments, $175.0 million in regulatory milestone payments and $200.0 million in commercial milestone payments for Peripheral Products, as defined, that are developed and approved in the United States, by the EMA and in Japan for three indications.

Sanofi has made milestone payments of $35.0 million for peripheral clinical milestones through December 31, 2022 .

We will share profits and losses equally with Sanofi for CNS Products sold in the United States and China, and receive variable royalties on net sales for CNS Products sold outside of the United States and China and for Peripheral Products sold worldwide, each as further described below.

Program for Development and Commercialization of CNS Products

We and Sanofi jointly develop CNS Products pursuant to a global development plan ("CNS Development Plan").

Sanofi is responsible, at its cost, for all other Phase 1 and Phase 2 trials for CNS Products, including for ALS and MS.

Sanofi will lead the conduct of all Phase 3 and later stage development trials for CNS Products, with Sanofi and us funding 70% and 30% of such costs, respectively.

In addition, we have the ability to opt out of the cost-profit sharing provisions of the Sanofi Collaboration Agreement, as further described below.

Sanofi will lead commercialization activities globally for CNS Products.

Instead, we will be entitled to receive tiered royalties on net sales of the applicable CNS Products in the relevant country (or countries).

Program for Development and Commercialization of Peripheral Products

Sanofi will be responsible, at its cost, for conducting activities relating to the development and commercialization of all Peripheral Products.

Sanofi will lead commercialization activities globally for Peripheral Products.

We will be entitled to receive tiered royalties in the low- to mid- teen percentages on net sales of Peripheral Products.

Manufacturing

Sanofi will be responsible for delivering all supplies for current and future clinical trials and commercial production for CNS Products and Peripheral Products.

However, we retain manufacturing rights for certain independent clinical activities.

Takeda Option and Collaboration Agreement

In January 2018, we entered into a Collaboration Agreement ("Takeda Collaboration Agreement") with Takeda Pharmaceutical Company Limited ("Takeda"), pursuant to which we granted Takeda an option with respect to our ATV:BACE1/Tau, ATV:TREM2 and PTV:PGRN programs.

Takeda paid us a $40.0 million upfront payment related to the collaboration, and an additional $110.0 million under a share purchase agreement in February 2018.

The Takeda Collaboration Agreement became effective in February 2018, following satisfaction of certain requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

In February 2019, we amended the agreement to replace the ATV:BACE1/Tau program with the ATV:Tau program and in March 2022, the parties mutually agreed to terminate activity on the ATV:Tau program over which Takeda had its option to develop and commercialize jointly with the Company.

Takeda exercised the options for the PTV:PGRN and ATV:TREM2 programs in November 2021 and December 2021, respectively.

Research Phase and Takeda’s Option

Under the Takeda Collaboration Agreement we were responsible, at our cost, for conducting activities relating to pre-IND development of biologic products directed to the identified targets and enabled by our BBB delivery technology targeting TfR during the applicable option period.

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

Takeda was obligated to pay us up to an aggregate of $25.0 million with respect to each of the programs under the Takeda Collaboration Agreement directed to a target and based upon the achievement of certain preclinical milestone events, up to $55.0 million in total after the ATV:Tau program termination, all of which was received by December 31, 2022 .

Collaboration Activities Following Takeda’s Option Exercise

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), 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 are obligated to grant to Takeda a co-exclusive license under the intellectual property we control related to those biologic products.

Takeda was obligated to pay us a $5.0 million option fee for each target for which Takeda exercised its option, and we received fees totaling $10.0 million from Takeda in 2021 for option exercise payments for the PTV:PGRN and ATV:TREM2 programs.

Since Takeda exercised its option for both collaboration programs, Takeda may be obligated to pay us up to an aggregate of $280.0 million upon achievement of certain clinical milestone events and up to an aggregate of $200.0 million in regulatory milestone events relating to receipt of regulatory approval in the United States, certain European countries and Japan.

Further, Takeda may also be obligated to pay us up to $75.0 million per biologic product upon achievement of a certain sales-based milestone, or an aggregate of $150.0 million if one biologic product from each program achieves the milestone.

Further, we and Takeda share equally the development and commercialization costs, and, if applicable, the profits, for each collaboration program.

Instead we will be entitled to receive tiered royalties.

Unless we have opted out of cost-sharing for both collaboration programs, we have the right to lead commercialization activities in the United States for one collaboration program and Takeda will lead commercialization activities in the United States for all collaboration programs for which we do not lead commercialization activities.

Further, Takeda will lead commercialization activities in China and will solely conduct commercialization activities in all other countries.

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

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 LSDs), except to the extent permitted under the Takeda Collaboration Agreement.

Common Stock Purchase Agreement

Pursuant to the terms of the Takeda Collaboration Agreement, we entered into a common stock purchase agreement with Takeda in January 2018, pursuant to which we sold 4,214,559 shares of our common stock (the “Shares”) to Takeda for an aggregate purchase price of $110.0 million.

We closed the sale to Takeda in February 2018.

At closing, we also entered into a standstill and stock restriction agreement (the “Standstill Agreement”) with Takeda.

Pursuant to the terms of the Standstill Agreement, Takeda agreed to certain transfer and standstill restrictions for a specified period of time following the closing of the sale, which have now expired.

Takeda remains entitled to certain demand registration rights with respect to the Shares following termination of the transfer restrictions if the Shares cannot be resold without restriction pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act").

F-star License and Collaboration Agreement

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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 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.

In addition, we are required to make contingent payments, to F-star Ltd and the former shareholders of F-star Gamma, up to a maximum amount following completion of the research phase of the F-star collaboration of $243.0 million in the aggregate upon the achievement of certain defined preclinical, clinical, regulatory and commercial milestones.

These include up to $3.0 million in preclinical contingent payments, $30.0 million in clinical contingent payments, $60.0 million in regulatory contingent payments and $150.0 million in commercial contingent payments.

The amount of the contingent payments will vary based on whether F-star delivers an Fcab (constant Fc-domains with antigen-binding activity) that meets pre-defined criteria and whether the Fcab has been identified solely by us or solely by F-star or jointly by us and F-star.

In June 2019, we made a payment of $1.5 million to F-star Ltd upon the achievement of a specified preclinical milestone in the Company's ETV:IDS program.

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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.

In May 2018, we exercised our right to nominate two additional Fcab Targets and identified CD98 as the 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.

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We are obligated to use commercially reasonable efforts during the first three years of the agreement to research, develop and commercialize at least one licensed product.

Our financial obligations under the agreement with Genentech included an upfront payment of $8.5 million and a technology transfer fee of $1.5 million .

Our financial obligations upon entering the agreement with Genentech included an upfront payment of $8.5 million and a technology transfer fee of $1.5 million .

In addition, we may owe Genentech milestone payments upon the achievement of certain development, regulatory and commercial milestones, up to a maximum of $315.0 million in the aggregate.

These milestones include up to $37.5 million in clinical milestone payments, $102.5 million in regulatory milestone payments and $175.0 million in commercial milestone payments.

In the year ended December 31, 2022, we paid Genentech $12.5 million in milestone payments triggered upon the achievement of specified clinical milestone events in the company's LRRK2 program being developed in collaboration with Biogen, with milestones totaling $15.0 million earned through December 31, 2022 .

In addition, we are obligated to pay royalties on net sales of licensed products ranging from low to high single-digit percentages, with the exact royalty rate dependent on various factors, including (i) whether the compound incorporated in the relevant licensed product is a Genentech-provided compound or a compound acquired or developed by us, (ii) the date a compound was first discovered, derived or optimized by us, (iii) the existence of patent rights covering the relevant licensed product in the relevant country, (iv) the existence of orphan drug exclusivity covering a licensed product that is a Genentech-provided compound and (v) the level of annual net sales of the relevant licensed product.

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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.

We have established relationships with several CDMOs, including Lonza Sales AG ("Lonza"), WuXi Biologics Limited and Thermo Fisher Scientific.

We have established relationships with several CDMOs, including Lonza Sales AG ("Lonza") and WuXi Biologics Limited ("Wuxi").

Effective September 2017, we entered into a development and manufacturing services agreement with Lonza, which we have subsequently amended to add scope of work.

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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.

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.

In August 2021 we entered into, and subsequently amended, 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, with the goal of increasing flexibility and speed in advancing new investigational therapies into clinical trials.

The build-out of the Utah site is in process, and we currently expect to gain access to the facility in 2023 and begin manufacturing in 2024.

We currently do not need commercial manufacturing capacity.

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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).

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 and the European Union ("EU"), with subsequent global expansion (including China).

For programs covered by collaboration agreements (including those with Takeda, Sanofi and Biogen), we expect to commercialize only in certain geographies, as defined by the terms of the agreements with the counterpart, and rely on our partners to provide commercialization infrastructure for the rest of the world.

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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 (recent FDA approval of Aduhelm), Eli Lilly, Eisai, Roche (including Genentech, its wholly owned subsidiary), Alector and AbbVie in various stages of development.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Biogen, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary) , 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), 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.

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, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary) , AstraZeneca, Takeda, 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 (FDA & Health Canada approval of Relyvrio/Albrioza), AB Science, Novartis, Bristol Myers Squibb, and Calico/Abbvie in various stages of development.

Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Alector/GSK, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Passage Bio, Arkuda Therapeutics, Biomarin, Orchard Therapeutics in various stages of development.

• Lysosomal Storage Diseases:

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

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.

Various BBB-penetrant and direct to CNS delivered ERTs and gene therapies are being developed by several large and specialty pharmaceutical and biotechnology companies, including 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.

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

We own ten 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.

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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.

ETV Platform, ETV:IDS, and ETV:

SGSH Programs

We own seven patent families directed to our ETV platform and related products, including ETV:IDS and ETV:

This 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.

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 also own five 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.

Of the seven patent families, two families relate to the composition of matter of our ETV:SGSH structures, including DNL126.

Any patents issuing from these families are expected to expire in 2038 and 2041, respectively, not including any patent term adjustments and any patent term extensions.

PTV:PGRN Program

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.

These include two families directed to the composition of matter of our PTV:PGRN structures, including TAK-594/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 TAK-594/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.

ATV:TREM2 Program

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.

Oligonucleotide Transport Vehicle Platform

We own two patent families related to our OTV platform.

These families are directed to compositions and methods of use of our OTVs, and if issued, are expected to expire in 2042 and 2043, not including any patent term adjustments and any patent term extensions.

LRRK2 Inhibitor Program

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RIPK1 Inhibitor Program

Our RIPK1 program is subject to our collaboration agreement with Sanofi.

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

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The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent.

The length of the patent term extension is related to the length of time the drug is under regulatory review.

Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.

Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

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• Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice ("GLP"), requirements;

• 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 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;

• Submission of an IND to the FDA, which must become effective before human interventional clinical trials may begin;

• Approval by an independent institutional review board ("IRB") 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 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;

• Submission to the FDA of an NDA or BLA;

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• Satisfactory completion of a FDA pre-approval inspection of the manufacturing facility or facilities where the drug or biologic will be produced to assess compliance with current good manufacturing practices ("cGMP"), requirements to assure that the facilities, methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity;

• Potential FDA audit of the preclinical and/or clinical trial sites that generated the data in support of the NDA or BLA;

• Potential FDA inspection of the preclinical and/or clinical trial sites that generated the data in support of the NDA or BLA;

• FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug or biologic in the United States;

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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.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

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• Phase II clinical trials involve studies in disease-affected patients to determine the dose required to produce the desired benefits.

At the same time, safety and further PK and PD information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted.

At the same time, safety and further PK and Parkinson's disease information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted.

• Phase III clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product approval.

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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.

For example, the FDA has issued guidance on conducting clinical trials during the pandemic, which describes a number of considerations for sponsors of clinical trials impacted by the pandemic, including certain reporting requirements, and additional guidance on the good manufacturing practice considerations for responding to COVID-19 infection and other topics.

We may be required to make further adjustments to our clinical trials or business operations based on current or future guidance and regulatory requirements as a result of the COVID-19 pandemic.

Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all.

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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.

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.

Recently, President Biden announced that the administration intends to end the COVID-19 national and public health emergencies on May 11, 2023.

The full impact of the termination of the public health emergencies on FDA and other regulatory policies and operations are unclear.

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

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).

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The results of preclinical studies and clinical trials are then submitted to the FDA as part of an NDA or BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data.

In short, the NDA or BLA is a request for approval to market the drug or biologic for one or more specified indications and must contain proof of safety and efficacy for a drug or safety, purity and potency for a biologic.

In short, the NDA or BLA is a request for approval to market the drug or biologic for the specified indication(s) and must contain proof of safety and efficacy for a drug or safety, purity and potency for a biologic.

The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings.

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

The FDA reviews all submitted NDAs and BLAs before it accepts them for filing, and may request additional information rather than accepting the NDA or BLA for filing.

The FDA reviews all submitted NDAs and BLAs before it accepts them for filing, and may request additional information rather than accepting the NDA or BLA for filing, such as the issuance of a Refuse to File (RTF) letter.

The FDA must make a decision on accepting an NDA or BLA for filing within 60 days of receipt.

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Orphan drug status in the EU has similar, but not identical, requirements and benefits.

In Catalyst Pharms., Inc.

Becerra , 14 F.4th 1299 (11th Cir.

2021), the court disagreed with the FDA’s longstanding position that the orphan drug exclusivity only applies to the approved use or indication within an eligible disease, and not to all uses or indications within the entire disease or condition.

In particular, the circuit court held that the orphan-drug exclusivity for Catalyst’s drug blocked FDA’s approval of another drug for all uses or indications within the same orphan-designated disease, or Lambert-Eaton myasthenic syndrome (LEMS), even though Catalyst’s drug was approved at that time only for use in the treatment of LEMS in adults.

Accordingly, the court ordered the FDA to set aside the approval of a drug indicated for LEMS in children.

This decision created uncertainty in the application of the orphan drug exclusivity.

On January 24, 2023, the FDA published a notice in the Federal Register to clarify that while the agency complies with the court’s order in Catalyst, the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order – that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease or condition that have not yet been approved.

It is unclear how future litigation, legislation, agency decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

Expedited Development and Review Programs

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If the FDA concludes that a drug or biologic shown to be effective can be safely used only if distribution or use is restricted, it may require such post-marketing restrictions, as it deems necessary to assure safe use of the product.

In December 2022, the Consolidated Appropriations Act, 2023, including the Food and Drug Omnibus Reform Act (FDORA), was signed into law.

FDORA made several changes to the FDA’s authorities and its regulatory framework, including, among other changes, reforms to the accelerated approval pathway, such as requiring the FDA to specify conditions for post-approval study requirements and setting forth procedures for the FDA to withdraw a product on an expedited basis for non-compliance with post-approval requirements.

Fast track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval, but may expedite the development or approval process.

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• animal studies (including the assessment of toxicity).

• a clinical trial or trials (including the assessment of immunogenicity and PK or PD) sufficient to demonstrate safety, purity and potency in one or more conditions for which the reference product is licensed and intended to be used.

In addition, an application must include information demonstrating that:

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Following approval of a new product, the manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and record-keeping requirements, requirements to report adverse experiences, and complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (known as “off-label use”) and limitations on industry-sponsored scientific and educational activities.

Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such uses.

Although physicians in the United States may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such uses.

Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use.

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.

Further, an applicant would be required to submit and obtain FDA approval of a new NDA/BLA or a supplement before any material modifications can be implemented for a drug or biologic, including changes in labeling or manufacturing processes or facilities, which may require the development of additional data or nonclinical studies and clinical trials.

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

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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 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 assumed additional regulatory responsibilities for medical products marketed in the UK, as pan-EU regulatory procedures before the EMA 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.

Proposals set forth in the new MHRA guidance will take effect through legislative changes that are subject to parliamentary approval, which may increase the amount of resources and time needed for obtaining regulatory approval in the UK and delay our clinical development and commercialization.

The full impact of Brexit on our business remains unclear.

On January 1, 2024, MHRA plans to launch a new streamlined international recognition framework, which will replace the current European Commission Decision Reliance Procedure (ECDRP) and allow the MHRA to rely on or give regard to a European decision or decision of other regulators to grant a new marketing authorization for a product.

Coverage and Reimbursement

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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, 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.

For example, 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.

In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear.

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.

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As noted above, the marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement.

An increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing.

An increasing emphasis on cost containment measures in the United States indicates continued pressure on pharmaceutical pricing.

Coverage policies and third-party reimbursement rates may change at any time.

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Employees and Human Capital Resources

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.

As of December 31, 2022 , we had approximately 427 full-time employees.

A large majority of our employees work out of our headquarters location in South San Francisco, CA, with the remainder working 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.

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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.

In addition, we engage both internal and third-party compliance assessments and 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.

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

Diversity and Inclusion.

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Our website address is www.denalitherapeutics.com.

We also use our website as a channel of distribution of important company information.

Important information, including news or announcements regarding our financial performance, investor events and press releases, is posted on and accessible from our website.

We intend to use Denali’s website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We make available on our website at www.denalitherapeutics.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

The public may read or copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, D.C.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

We also use our website as a channel of distribution of important company information, including news or announcements regarding our financial performance, investor events and press releases.

We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

We file electronically with the Securities and Exchange Commission ("SEC") our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act").

We make available on our website at www.denalitherapeutics.com, free of charge, copies of these reports, including amendments to such reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business