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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-28 · 148 added, 207 removed, 217 unchanged (62% of the section changed)

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Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” and elsewhere in this report.

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

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 and LSDs :

• Degenogenes:

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

• Brain Delivery:

Validation and Optionality – we engineer our product candidates to cross the BBB and act directly in the brain.

Our proprietary TV platform technology is designed to effectively deliver large therapeutic molecules, such as enzymes, proteins, antibodies, and oligonucleotides, across the BBB after intravenous administration.

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

We are actively engaged in discussions with health authorities regarding the potential use of biomarkers as primary clinical endpoints to support faster paths to approval.

Ou r clinic al-stage large molecule programs are as follows:

• Tividenofusp alfa (DNL310, ETV:IDS), our lead ERT program enabled by our ETV , ETV:IDS is designed to cross the BBB and restore IDS and reduce GAGs , both peripherally and in the brain, in patients with MPS II (Hunter syndrome);

• TAK-594/DNL593 (PTV:PGRN), our recombinant PGRN biotherapeutic enabled by our PTV, being developed in collaboration with Takeda, to address certain types of FTD, specifically FTD-GRN caused by PGRN deficiency;

• DNL126 (ETV:SGSH), our second most advanced ETV enabled program, which is designed to restore lysosomal activity of SGSH, an enzyme responsible for degrading heparan sulfates in the lysosome, in patients with MPS IIIA (Sanfilippo syndrome Type A).

Our clinic al-stage small molecule programs are as follows:

• BIIB122/DNL151 (LRRK2), our LRRK2 inhibitor program, being developed in collaboration with Biogen, to address Parkinson’s disease;

• DNL343 (eIF2B), our eIF2B activator program to address diseases such as ALS and FTD;

• SAR443820/DNL788 (CNS-penetrant RIPK1 inhibitor) , our CNS-penetrant RIPK1 inhibitor program, partnered with Sanofi, to address neurological diseases such as MS and Alzheimer's disease;

• Eclitasertib (SAR443122/DNL758, peripheral RIPK1 inhibitor) , a second non-CNS penetrant RIPK1 inhibitor, partnered with Sanofi, to address peripheral inflammatory diseases such as UC.

Key elements of our strategy include:

1) Discover and develop a new class of barrier-crossing therapeutics by leveraging our TV platforms and deep expertise in BBB biology to enhance the delivery of biotherapeutics to the brain and throughout the body.

2) Accelerate and expand a broad portfolio of TV-based product candidates to fully unlock the potential of barrier-crossing therapeutics, applying patient-informed development and driving biomarker-guided regulatory approvals.

3) Launch initial products targeting rare lysosomal storage diseases as a strategic foundation for expansion into common neurodegenerative conditions and other serious diseases, while building integrated capabilities for long-term growth and profitability.

Ou r clinical programs are as follows:

• Tividenofusp alfa (DNL310, ETV:IDS), composed of IDS fused to TV, is designed to deliver IDS into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II ;

• DNL126 (ETV:SGSH), composed of SGSH fused to TV, is designed to deliver SGSH into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of treating MPS IIIA;

• TAK-594/DNL593 (PTV:PGRN), composed of PGRN fused to TV, is designed to restore PGRN levels in the brain with the goal of treating FTD-GRN and is being developed in collaboration with Takeda;

• BIIB122/DNL151, our small molecule LRRK2 inhibitor program, is being developed in collaboration with Biogen, to address PD;

• DNL343, our small molecule eIF2B activator program, is under evaluation in ALS;

• Eclitasertib (SAR443122/DNL758), a peripheral and non-CNS penetrant small molecule RIPK1 inhibitor, is being developed by Sanofi, to address peripheral inflammatory diseases such as UC.

The following table summarizes key information about our clinical stage programs:

Program Product Candidate Clinical Study(ies) Indication Operational Control

ETV:IDS Tividenofusp alfa, or DNL310 Ph 1/2 Hunter syndrome (MPS II) Denali

TAK-594/DNL593 Ph 1/2 (paused) 1

Joint with Takeda

ETV:IDS tividenofusp alfa, or DNL310

Ph 1/2 Hunter syndrome (MPS II) Denali

ETV:SGSH DNL126 Ph 1/2 Sanfilippo syndrome Type A (MPS IIIA) Denali

LRRK2 BIIB122/DNL151 Ph 2a (planned)

TAK-594/DNL593 Ph 1/2

Joint with Takeda

LRRK2 BIIB122/DNL151 Ph 2a

Parkinson's disease Denali

Joint with Biogen

eIF2B DNL343 Ph 1b ALS Denali

eIF2B DNL343 Ph 2/3

ALS Joint with Healey Center

RIPK1 (CNS-penetrant) SAR443820/DNL788

Ph 2 (closing) 2

RIPK1 (Peripheral) Eclitasertib, or SAR443122/DNL758 Ph 2 UC

__________________________________________________

(1) Study has been voluntarily paused in order to implement protocol modifications and is expected to resume this year.

(2) Study will be closing as it did not meet its primary endpoint.

Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our BBB platform technology and assembling our core capabilities in understanding key neurodegenerative disease pathways.

RIPK1 (Peripheral)

eclitasertib, or SAR443122/DNL758

Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our TV platform, assembling our core capabilities in understanding key neurodegenerative and lysosomal storage disease pathways, operationalizing clinical trials, building manufacturing capabilities and establishing commercial capabilities.

Key operational and financing milestones for the year ended December 31, 2024 and in 2025 to date include:

• Tividenofusp alfa DNL310 (ETV:IDS)

◦ In February 2023, at the WORLD Symposium TM , we reported additional interim data from the open-label, single-arm Phase 1/2 study of DNL310.

Over 49 weeks of DNL310 treatment in the Phase 1/2 study, positive changes across measures of exploratory clinical outcomes including VABS-II (adaptive behavior) and BSID-III (cognitive capabilities) scores and global impression scales were observed.

The data also suggested that DNL310 improved hearing, as assessed by auditory brainstem response testing.

Additional biomarker data out to 49 weeks continued to demonstrate that DNL310 enabled rapid and sustained normalization of cerebrospinal fluid ("CSF") heparan sulfate to normal healthy levels and improvement in lysosomal function biomarkers.

Reduction in urine heparan sulfate and dermatan sulfate after switch from standard of care to DNL310 suggested additional sustained peripheral activity of DNL310.

The DNL310 safety profile, with up to two years of treatment, remained consistent with standard of care;

◦ In June 2023, we announced a robust reduction in Neurofilament Light ("NfL") with DNL310 treatment in MPS II (Hunter syndrome).

Interim results demonstrated average reduction of 64% (p <0.001) from baseline in serum NfL after two years of dosing with DNL310 in the Phase 1/2 study.

The FDA has recommended assessment of NfL, a marker of neuroaxonal damage, as a possible biomarker in MPS II;

◦ In August 2023, we presented new interim data from the Phase 1/2 study of DNL310 in MPS II in an oral presentation at the Society for the Study of Inborn Errors of Metabolism ("SSIEM") Annual Symposium 2023.

The interim clinical outcomes data, safety profile, and biomarker effects, including normalization of CSF heparan sulfate and reduction in NfL, continue to support development of DNL310 in MPS II;

◦ In January 2024, we announced that enrollment continues in the global Phase 2/3 COMPASS study and is expected to be completed in 2024.

We continue to engage with the U.S.

Food and Drug Administration on a faster path to approval;

◦ In February 2024, we presented additional interim data from the open-label, single-arm Phase 1/2 study of DNL310 at the 2024 WORLD Symposium TM .

Data out to 104 weeks showed additional improvement and stabilization in multiple measures of clinical outcomes, including those of adaptive behavior, cognition, hearing, and growth trajectory.

In addition, robust and sustained responses in biomarkers of neuronal health (e.g., CSF heparan sulfate, neurofilament light (NfL)) and peripheral activity (e.g.

urine heparan sulfate and dermatan sulfate) were observed .

DNL310 continued to be generally well tolerated.

• TAK-594/DNL593 (PTV:PGRN)

◦ In March 2023, a $10.0 million milestone payment from Takeda was triggered upon achievement of a specified clinical milestone in the Phase 1/2 study of TAK-594/DNL593 in patients with FTD-GRN, which we received in May 2023;

◦ In July 2023, we presented healthy volunteer data from Part A of the Phase 1/2 study of TAK-594/DNL593 at the Alzheimer's Association International Conference, which continued to demonstrate that single doses of TAK-594/DNL593 resulted in substantial increases in CSF PGRN levels and were generally well tolerated;

◦ In January 2024, we announced that Part B in the TAK-594/DNL593 Phase 1/2 study in participants with FTD-GRN has been voluntarily paused to implement protocol modifications and is expected to resume this year.

◦ In February 2024, we presented new positive data from the ongoing Phase 1/2 study of tividenofusp alfa in MPS II at the 20th Annual WORLD Symposium TM demonstrating sustained normalization of heparan sulfate in cerebrospinal fluid ("CSF HS"), robust and sustained reductions in biomarkers of lysosomal dysfunction and neuronal damage (neurofilament light;

"NfL"), and improvements and stabilization of multiple clinical outcomes measures over two years of treatment.

Also in February, we participated in the Reagan-Udall Foundation for the FDA workshop on CSF heparan sulfate as a potential surrogate biomarker to support accelerated approval in MPS.

◦ In April 2024, we completed enrollment of 47 participants with MPS II in the Phase 1/2 open-label study.

Following the Reagan-Udall Foundation workshop, we received written communication from the Center for Drug Evaluation and Research ("CDER") division of the FDA indicating openness to discussing an accelerated approval pathway for tividenofusp alfa in MPS II with CSF heparan sulfate as a surrogate biomarker;

◦ In September 2024, we announced that we plan to file a biologics license application ("BLA") for accelerated approval for tividenofusp alpha (DNL310) for the treatment of MPS II, based on the outcome of a recent successful meeting with the Center for Drug Evaluation and Research ("CDER") division of the FDA.

In addition, the meeting also provides a path for conversion to full approval based on the totality of the tividenofusp clinical development plan.

Based on discussions with CDER, we will include preclinical and clinical data on biomarkers (CSF HS and NfL) and safety in the BLA for tividenofusp alfa as a treatment of MPS II and intend to submit the BLA under the accelerated approval pathway in early 2025.

We are preparing for the U.S.

launch of tividenofusp alfa for the treatment of MPS II in late 2025 or early 2026;

◦ In January 2025, we announced that the U.S.

Food and Drug Administration (FDA) granted Breakthrough Therapy Designation for tividenofusp alfa (DNL310) for the treatment of individuals with MPS II;

◦ In February 2025, we announced that in our global Phase 2/3 COMPASS study of tividenofusp alfa in participants with MPS II, target enrollment of the planned 33 participants with neuronopathic MPS II in Cohort A has been completed;

we increased the sample size of Cohort A by nine participants, bringing the total to 42 participants.

Cohort B continues to enroll participants with non-neuronopathic MPS II.

• DNL126 (ETV:SGSH)

◦ In February 2024, we announced that dosing had been initiated in the Phase 1/2 study of DNL126 in MPS IIIA.

biomarker proof of concept and safety data are expected by the end of 2024.

Further, in February 2024, we presented preclinical data at WORLD Symposium TM demonstrating that DNL126 improves lysosomal and microglial morphology, degeneration, and cognitive behavior in MPS IIIA mice.

Further, in February 2024, we presented supportive preclinical data at WORLD Symposium TM demonstrating that DNL126 improves lysosomal and microglial morphology, degeneration, and cognitive behavior in MPS IIIA mice;

◦ In June 2024, DNL126 was selected for the FDA's Support for clinical Trials Advancing Rare disease Therapeutics ("START") program to accelerate the development of rare disease therapeutics.

In November 2024, we announced that preliminary data from up to 25 weeks of dosing in the ongoing open-label Phase 1/2 study in MPS IIIA participants demonstrated a significant reduction in CSF HS levels from baseline, including normalization.

The safety profile supports continued development.

The most frequent treatment emergent adverse events were infusion related reactions of mild and moderate severity in all participants.

There was one serious adverse event considered by the investigator not related to drug.

Based on the preliminary Phase 1/2 results and a positive regulatory environment, we recently expanded the study and continue to assess the development plans including an accelerated approval path.

• TAK-594/DNL593 (PTV:PGRN)

◦ In January 2024, we announced that Part B in the TAK-594/DNL593 Phase 1/2 study in participants with FTD-GRN had been voluntarily paused to implement protocol modifications.

In the second quarter of 2024, we finalized the protocol amendment and dosing in the Phase 1/2 study is ongoing.

• BIIB122/DNL151 (LRRK2)

◦ In June 2023, in conjunction with Biogen, and based on review of portfolio timelines and resource prioritization, we announced plans to revise the clinical development program for BIIB122/DNL151.

Prior to the planned revisions, the BIIB122 clinical development program encompassed two global late-stage clinical trials:

the Phase 2b LUMA study in participants with early-stage Parkinson’s disease, which commenced in May 2022;

and the Phase 3 LIGHTHOUSE study in participants with Parkinson’s disease related to LRRK2 mutations, which commenced in September 2022.

In consideration of the LIGHTHOUSE study’s complexity, including the long timeline with anticipated study completion in 2031, Biogen and we plan to refocus our efforts to enable a timely readout on efficacy in idiopathic early-stage Parkinson’s disease while gaining further clinical data in Parkinson’s disease with and without a LRRK2 mutation.

The planned revisions to the BIIB122 clinical development program are not based on any safety or efficacy data from studies of BIIB122.

Biogen and we plan to modify the LUMA study’s enrollment criteria to allow for inclusion of eligible participants with Parkinson’s disease and a confirmed pathogenic variant of LRRK2, in addition to continuing to enroll eligible participants with idiopathic early-stage Parkinson’s disease.

Collectively, data from the LUMA study will inform next steps for the development of BIIB122 in Parkinson’s disease;

◦ In August 2023, we executed an amendment to the Definitive LRRK2 Collaboration and License Agreement and Waiver of and Amendment to Right of First Negotiation (ROFN), Option, and License Agreement.

As part of the amendment, certain milestone criteria were changed while the total amount of development, regulatory, and commercial milestones across all indications remains the same.

In addition, Biogen agreed to waive the remaining option and rights of first negotiation under the ROFN and Option Agreement;

◦ In February 2024, we announced the execution of a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize to evaluate safety and biomarkers associated with BIIB122 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2.

This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024, and the remainder will be triggered based on time and operational milestones in the study.

◦ In February 2024, we announced that we executed a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize, to evaluate safety and biomarkers associated with BIIB122 (DNL151) in participants with LRRK2-associated Parkinson’s disease (LRRK2-PD).

This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024 and $12.5 million was received in July 2024, with the remainder to be triggered based on operational milestones in the study.

The third party will be eligible to receive low single-digit royalties from Denali on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease, with royalty amounts varying based on the scope of the label.

Denali has initiated screening of participants for the global Phase 2a study to evaluate safety and biomarkers associated with BIIB122/DNL151 in participants with LRRK2-PD.

Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease;

enrollment is expected to be completed in 2025.

Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval;

• SAR443820/DNL788 and Eclitasertib (SAR443122/DNL758) (RIPK1)

◦ In January 2023, our collaboration partner Sanofi commenced dosing in the Phase 2 study of SAR443820/DNL788 in patients with MS , triggering a $25.0 million milestone payment, which was received in January 2023.

In November 2023 we announced that Sanofi has completed enrollment in this study;

◦ In August 2023, we announced that Sanofi had completed enrollment in the global Phase 2 HIMALAYA study of SAR443820/DNL788 in ALS in July;

◦ In August 2023, we announced that Sanofi completed a Phase 2 study of eclitasertib, also known as SAR443122/DNL758, in patients with CLE in June.

In October 2023, Sanofi announced that the development of eclitasertib in CLE is being discontinued because the Phase 2 proof-of-concept study did not meet its primary endpoint (percent change from baseline in CLASI-A at week 12).

Eclitasertib was found to be generally well-tolerated.

Sanofi continues to recruit the Phase 2 study of eclitasertib in patients with UC;

◦ In February 2024, we announced that the Phase 2 HIMALAYA study evaluating SAR443820/DNL788 in participants with ALS did not meet the primary endpoint of change in ALS Functional Rating Scale-Revised (ALSFRS-R).

Sanofi intends to present the detailed efficacy and safety results of the ALS Phase 2 HIMALAYA study at a future scientific forum.

Sanofi is evaluating SAR443820/DNL788 in another Phase 2 clinical trial in participants with MS, and the outcome of HIMALAYA study has no impact on the ongoing MS study.

◦ In December 2024, we announced initiation of dosing in the global Phase 2a clinical study, BEACON, BIIB122 (DNL151) in participants with LRRK2-PD.

• DNL343 (eIF2B)

◦ In April 2023, we presented final data from the 28-day treatment period of the Phase 1b study of DNL343 in participants with ALS at the 75 th Annual Meeting of the American Academy of Neurology ("AAN").

The results continued to demonstrate that once-daily oral dosing with DNL343 for 28 days was generally well tolerated and demonstrated extensive CSF penetration.

In addition, robust inhibition of biomarkers associated with the ISR pathway was observed in blood samples from study participants;

◦ In May 2023, the first patient was dosed with DNL343 in the Phase 2/3 HEALEY ALS Platform Trial.

Recruitment of participants continues for this trial.

◦ In March 2023, a contingent consideration payment of $30.0 million associated with our acquisition of F-star Gamma was triggered upon the achievement of a specified clinical milestone in the ETV:IDS program.

This payment fully satisfies our clinical contingent consideration obligations under the Purchase Agreement;

◦ In April 2023, we entered into a new operating lease in Salt Lake City, Utah for a 59,336 square foot laboratory (the "Utah site"), office and warehouse premises, after terminating our previous SLC lease in March 2023, decreasing future lease payments by $6.1 million while increasing the lease term by approximately five and a half years.

The Utah site will expand our clinical manufacturing capabilities for biologic therapeutics (large molecules) as we plan to use the premises for 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;

◦ In April 2023, our collaboration partner Biogen exercised its option to develop and commercialize our ATV program targeting amyloid-beta, triggering an option exercise payment of $5.0 million, which we received in May 2023;

◦ In August 2023 we announced that, in agreement with Takeda, the companies will discontinue clinical development of TAK-920/DNL919 in Alzheimer’s disease.

This is a strategic decision based on the totality of clinical data emerging from the single ascending dose Phase 1 study of TAK-920/DNL919 in healthy volunteers and in consideration of the rapidly evolving treatment landscape for Alzheimer's disease whereby an understanding of drug combinations with newly approved therapies will be important.

A preliminary analysis of Phase 1 data indicates robust target engagement and effects on microglial biomarkers (e.g., CSF1R, SPP1, IL1RA, IP10, MIP1b, MCP-1), which were consistent with preclinical studies that demonstrate that ATV:TREM2 induces robust changes to a responsive microglial cell state (van Lengerich B, et al.

Nat Neurosci.

In the Phase 1 study, TAK-920/DNL919 was clinically well tolerated at doses with demonstrated changes in CSF biomarkers and there were no serious adverse events or severe treatment emergent adverse events;

however, safety signals of moderate, reversible hematologic effects were observed at the highest dose tested, suggesting a narrow therapeutic window for the Alzheimer’s disease patient population.

The Phase 1 safety findings are believed to be specific to properties of TAK-920/DNL919 and TREM2 biology.

Denali and Takeda will continue to focus research efforts on back-up molecules in preclinical development, including exploration of potential combination therapy given recent new drug approvals in Alzheimer's disease;

◦ In January 2024, we announced our intention to spin out our preclinical small molecule portfolio.

We will maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs.

◦ In May 2024, the Sean M.

Healey & AMG Center for ALS at Massachusetts General Hospital ("MGH") in collaboration with the Northeast ALS Consortium ("NEALS") announced that enrollment is complete in Regimen G (DNL343) of the Phase 2/3 HEALEY ALS Platform Trial;

and in January 2025, we announced topline results that the primary and key secondary endpoints were not met.

Further analyses are anticipated later in 2025.

◦ In January 2024, we announced our intention to divest our preclinical small molecule portfolio, which was completed effective March 1, 2024.

We maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs, in collaboration with our partners.

The decision was made based on clinical validation and prioritization of our TV-enabled platforms for brain delivery of large molecules;

◦ In February 2024, we announced that on February 27, 2024 we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,689 shares of our common stock at a price of $17.07 per share and pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting in anticipated gross proceeds of approximately $499.7 million.

The pre-funded warrants will have an exercise price of $0.01 per share of Common Stock, be immediately exercisable and remain exercisable until exercised in full.

The private placement is expected to close on February 29, 2024, subject to customary closing conditions.

◦ In February 2024, we announced that we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,689 shares of our common stock at a price of $17.07 per share and pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting in net proceeds of approximately $499.3 million.

The pre-funded warrants have an exercise price of $0.01 per share of Common Stock, and are immediately exercisable and will remain exercisable until exercised in full.

The private placement closed on February 29, 2024;

◦ In July 2024, Biogen terminated its license to the ATV:Abeta program enabled by our TfR-targeting technology against amyloid beta for the potential treatment of Alzheimer's disease and granted us rights to data generated during the collaboration.

As a result of the termination, all rights to develop, manufacture, perform medical affairs activities, and commercialize new TfR-targeting ATV:Abeta therapeutics reverted to us.

Biogen licensed our TfR-targeting ATV:Abeta program in April 2023 having exercised an option that was part of the 2020 collaboration agreement between the two companies.

Biogen’s decision was not related to any efficacy or safety concerns with the TV platform;

◦ In October 2024, we were informed by Sanofi that the K2 Phase 2 study evaluating the safety and efficacy of SAR443820/DNL788 on serum neurofilament light chain levels in participants with multiple sclerosis was discontinued based on not meeting the primary and key secondary endpoints, and on February 24, 2025, we and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788;

◦ In February 2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 program on February 26, 2025, as per the terms of the Takeda Collaboration Agreement.

The ATV:TREM2 program termination will become effective 60 days following the notice date.

We do not have any products approved for sale and have not generated any product revenue since our inception.

We have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock in public offerings, and payments received from our collaboration agreements with Takeda, Sanofi and Biogen.

We have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock and pre-funded warrants to purchase shares of our common stock in public offerings and private placements, and payments received from our collaboration and funding agreements with Takeda, Sanofi, Biogen and other third parties.

We have incurred significant operating losses to date and expect to continue to incur operating losses for the foreseeable future.

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We expect to continue to incur significant expenses and operating losses as we advance our current clinical stage programs through healthy volunteer and patient trials;

broaden and improve our BBB platform technology;

broaden and improve our TV platform;

acquire, discover, validate and develop additional product candidates;

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and hire additional personnel.

We currently rely on third-party contract manufacturers to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates.

We currently do not need commercial manufacturing capacity.

We have relied on third-party contract manufacturers to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates through 2024.

We are in the final stages of building out our Salt Lake City ("SLC") manufacturing facility , and beginning in early 2025 plan to commence manufacturing operations.

Going forward, we plan to use both our SLC facility and third-party contract manufacturers to supply our preclinical and clinical materials.

If tividenofusp alfa is approved for the treatment of Hunter syndrome, we expect to use third-party contract manufacturers to supply commercial product .

License and Collaboration Agreements

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In addition, Biogen waived its option right to the second option program and waived its rights of first negotiation for two other TV-enabled programs under the ROFN and Option Agreement.

I n July 2024, Denali and Biogen executed a Side Letter to the ROFN and Option Agreement, pursuant to which, effective as of the date of the Side Letter, Biogen terminated its license to the ATV:Abeta program enabled by Denali’s TfR-targeting technology against amyloid beta for the potential treatment of Alzheimer's disease, and granted Denali rights to data generated during the collaboration.

The side letter also effected the immediate termination of the ROFN and Option Agreement;

as such, the Company expects to receive no future milestone or royalty payments from Biogen related to the ATV:Abeta program.

There were no changes to the terms of the LRRK2 Agreement in the year ended December 31, 2024.

Further details regarding the terms of the agreements between us and Biogen are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations."

In relation to the Biogen Collaboration Agreement, we have recognized related party collaboration revenue of $295.5 million, $3.1 million, and $3.7 million in the years ended December 31, 2023, 2022 and 2021, respectively, related party research and development expense of $17.7 million and $8.2 million for cost sharing payments to Biogen in the year ended December 31, 2023 and 2022, respectively, and a related party offset to research and development expense as a result of cost sharing reimbursements from Biogen of $6.5 million in the year ended December 31, 2021.

We did not recognize any collaboration revenue under the Biogen Collaboration Agreement in the year ended December 31, 2024, and we recognized related party collaboration revenue of $295.5 million, and $3.1 million in the years ended December 31, 2023 and 2022, respectively.

Further, we recognized research and development expense of $16.7 million, $17.7 million and $8.2 million related to cost sharing payments we made to Biogen in the years ended December 31, 2024, 2023 and 2022, respectively.

We have recorded cost sharing payables of $2.5 million and $3.2 million on the Consolidated Balance Sheet as of December 31, 2024 and 2023, respectively.

Through December 31, 2023, we had earned $5.0 million in option fee payments but had not recorded any milestone revenue or product sales under the Biogen Collaboration Agreement.

Through December 31, 2024, we have earned $5.0 million in option fee payments but have not recorded any milestone revenue or product sales under the Biogen Collaboration Agreement.

In October 2018, we entered into the Sanofi Collaboration Agreement with Sanofi pursuant to which certain small molecule CNS and peripheral RIPK1 inhibitors contributed by Sanofi and by us are being, or will be developed and commercialized.

On February 24, 2025, we and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788, though Sanofi continues to develop eclitasertib (SAR443122/DNL758).

Further details regarding the terms of the agreement between us and Sanofi, and historic payments between the parties under the agreement, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations."

We have recognized collaboration revenue of $25.0 million, $53.4 million and $15.0 million associated with the Sanofi Collaboration Agreement in the years ended December 31, 2023, 2022 and 2021, respectively, and recorded no receivable from Sanofi on the Consolidated Balance Sheets as of December 31, 2023 and 2022.

Through December 31, 2023, we had received milestone payments of $100.0 million and we had not recorded any product sales under the Sanofi Collaboration Agreement.

We recognized no collaboration revenue associated with the Sanofi Collaboration Agreement in the year ended December 31, 2024, and we recognized collaboration revenue of $25.0 million and $53.4 million in the years ended December 31, 2023 and 2022, respectively.

No receivable from Sanofi was recorded on the Consolidated Balance Sheets as of December 31, 2024 and 2023.

Through December 31, 2024, we had received milestone payments of $100.0 million and we have not recorded any product sales under the Sanofi Collaboration Agreement.

Subsequent to the February 24, 2025 side letter, we expect to receive no future milestone or royalty payments from Sanofi related to the CNS Products program.

In January 2018, we entered into the Takeda Collaboration Agreement pursuant to which we granted Takeda an option to develop and commercialize, jointly with us, our ATV:TREM2, PTV:PGRN and ATV:BACE1/Tau programs, the latter of which was later replaced with our ATV:Tau program.

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In November 2021 and December 2021, Takeda exercised its options for the PTV:PGRN and ATV:TREM2 programs, respectively, subsequent to which we have shared equally in the development costs for the programs.

In March 2022, we mutually agreed under the Takeda Collaboration Agreement to terminate activity on the ATV:Tau program.

In February 2025, after mutual agreement to discontinue preclinical activities on ATV:TREM2, Takeda delivered notice of its election to terminate the ATV:TREM2 program on February 26, 2025, as per the terms of the Takeda Collaboration Agreement.

The ATV:TREM2 program termination will become effective 60 days following the notice date.

Further details regarding the terms of the agreement between us and Takeda, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations."

We recognized collaboration revenue of $10.0 million, $51.9 million and $29.9 million associated with the Takeda Collaboration Agreement in the years ended December 31, 2023, 2022 and 2021, respectively, and offsets to research and development expense for cost sharing reimbursements of $12.2 million, $18.2 million and $13.7 million in the years ended December 31, 2023, 2022, and 2021, respectively.

We did not recognize collaboration revenue under the Takeda Collaboration Agreement in the year ended December 31, 2024, and we recognized collaboration revenue of $10.0 million and $51.9 million in the years ended December 31, 2023 and 2022, respectively.

Further, we offset research and development expense due to cost sharing reimbursements received from Takeda of $5.9 million, $12.2 million and $18.2 million in the years ended December 31, 2024, 2023, and 2022, respectively.

We recorded receivables of $1.5 million and $2.7 million from Takeda as of December 31, 2024 and 2023, respectively.

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Further details regarding the terms of the arrangements between us and the F-star entities, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations."

Through December 31, 2023 we have recognized consideration paid under the F-star Purchase Agreement of $49.8 million as research and development expenses consisting of up-front, preclinical and clinical contingent consideration payments, of which $30.0 million of research and development expense was recognized in the year ended December 31, 2023 for a contingent consideration payment triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.

There was no contingent consideration research and development expense recognized in the years ended December 31, 2022 or 2021.

We recognized $0.1 million of research and development expense related to the funding of F-star research costs for the year ended December 31, 2021, but none for the years ended December 31, 2023 or 2022 .

Through December 31, 2024 we have recognized consideration paid under the F-star Purchase Agreement of $49.8 million as research and development expenses consisting of upfront, preclinical and clinical contingent consideration payments, including a $30.0 million contingent consideration payment triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.

We did not recognize contingent consideration in the years ended December 31, 2024 or 2022.

In June 2016, we entered into an exclusive license agreement with Genentech.

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Our collaboration partner in the LRRK2 program, Biogen, is responsible for 50% of any payment obligation to Genentech under the Biogen Collaboration Agreement.

As consideration to date, we have paid Genentech $25.0 million in the aggregate, including an upfront fee, a technology transfer fee and three clinical milestone payments, with $18.8 million of this recorded as research and development expense as incurred, net of cost sharing reimbursements from Biogen.

Included within this amount, i n the year ended December 31, 2022, we paid Genentech a $7.5 million clinical milestone payment triggered upon the commencement of dosing in the global Phase 2b LUMA study to evaluate the efficacy and safety of BIIB122/DNL151 by Biogen, and a further $5.0 million clinical milestone payment triggered upon the commencement of dosing in the g lobal Phase 3 LIGHTHOUSE study to evaluate the efficacy and safety profile of BIIB122/DNL151 by Biogen.

Of these milestones, we recognized $6.3 million as research and development expense as incurred after cost sharing reimbursements from Biogen in the year ended December 31, 2022.

We recognized no expenses under this agreement in the years ended December 31, 2023 and 2021.

We have made a total of $25.0 million in consideration payments under the Genentech agreement, including $12.5 million in the year ended December 31, 2022 related to two clinical milestones.

We have recognized $18.8 million of research and development expense, net of cost sharing reimbursements from Biogen, including $6.3 million in the year ended December 31, 2022.

We did not recognize expenses under this agreement in the years ended December 31, 2024 and 2023.

Components of Operating Results

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We record research and development expenses as incurred.

Research and development expenses incurred by us for the discovery and development of our product candidates and BBB platform technology include:

Research and development expenses incurred by us for the discovery and development of our product candidates and TV platform include:

• external research and development expenses, including:

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We also track external expenses associated with our TV platform.

These expenses include external expenses incurred by us relating to our Takeda Collaboration Agreement, Sanofi Collaboration Agreement and Biogen Collaboration Agreement.

These expenses include external expenses incurred by us relating to our Takeda Collaboration Agreement, Biogen Collaboration Agreement and Sanofi Collaboration Agreement.

All external costs associated with earlier stage programs, or that benefit the entire portfolio, are tracked as a group.

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Where we share costs with our collaboration partners, such as in our Biogen Collaboration Agreement and Takeda Collaboration Agreement, research and development expenses may include cost sharing reimbursements from, or payments to, our collaboration partners.

Further, where we receive R&D funding from third parties, this may be recognized as a reduction to research and development expenses.

It is challenging to predict the nature, timing and estimated long-range costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.

This is made more challenging by events outside of our control, such as the COVID-19 pandemic and increased geopolitical uncertainty.

This is made more challenging by events outside of our control, such as global pandemics and increased geopolitical uncertainty.

We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates.

This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

• our ability to add and retain key research and development personnel;

• our ability to add and retain key research and development and commercial, sales and marketing personnel;

• our ability to establish an appropriate safety profile with IND-enabling toxicology studies;

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General and Administrative

General and administrative expenses include personnel related expenses, such as salaries, benefits, travel and stock-based compensation expense, expenses for outside professional services and allocated expenses.

Outside professional services consist of legal, accounting and audit services and other consulting fees.

Allocated expenses consist of rent, depreciation and other expenses related to our office and research and development facility not otherwise included in research and development expenses.

We expect to increase our administrative headcount as we advance our product candidates through clinical development, which will increase our general and administrative expenses.

We expect to increase our administrative headcount as we prepare for commercialization of Tividenofusp alfa (DNL310, ETV:IDS) and advance our other product candidates through clinical development, which will increase our general and administrative expenses.

Gain from divestiture of small molecule programs

The gain from the divestiture of small molecule programs consists entirely of the non-cash gain associated with the divestiture of assets associated with select preclinical small molecule programs, including specified intellectual property, tangible assets and equipment used to conduct early-stage small molecule drug discovery from the Company, in exchange for equity consideration.

Interest and Other Income, Net

Interest and other income, net, consists primarily of interest income and investment income earned on our cash, cash equivalents, and marketable securities, and sublease income.

Interest and other income, net, consists primarily of interest income and investment income earned on our cash, cash equivalents and marketable securities, as well as sublease income, and an offset from interest expense on our finance lease liability.

Results of Operations

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Collaboration revenue from customers $ — $ 330,531 (330,531) * %

Other collaboration revenue — 3,398 (3,398) (100)

Total collaboration revenue — 330,531 (330,531) *

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Total operating expenses 501,878 527,230 (25,352) (5)

Gain from divestiture of small molecule programs 14,537 — 14,537 *

Loss from operations (487,341) (196,699) (290,642) *

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Collaboration revenue.

Collaboration revenue was $330.5 million for the year ended December 31, 2023 compared to $108.5 million for the year ended December 31, 2022.

The increase in collaboration revenue of $222.0 million was primarily due to $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program, partially offset by a decrease of $41.9 million in revenue earned under the Takeda Collaboration Agreement, as well as a decrease of $28.4 million in milestone revenue earned under the Sanofi Collaboration Agreement.

The decreases in revenues from the Sanofi and Takeda Collaboration Agreements are due to the timing of underlying activities and achievement of milestones under the collaboration agreements.

There was no collaboration revenue for the year ended December 31, 2024 and $330.5 million for the year ended December 31, 2023.

The decrease in collaboration revenue of $330.5 million was primarily due to $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program, as well as decreases due to revenue earned under the Takeda and Sanofi Collaboration Agreements of $10.0 million and $25.0 million, respectively.

Research and development expenses.

Research and development expenses were $396.4 million for the year ended December 31, 2024 compared to $423.9 million for the year ended December 31, 2023.

The following table summarizes our research and development expenses by program and category (in thousands):

The following table provides a breakdown of our research and development expenses by category (in thousands):

Year Ended December 31,

2024 2023 $ %

ETV:IDS program external expenses $ 114,029 $ 60,872 53,157 87 %

PTV:PGRN program external expenses 11,306 18,464 (7,158) (39)

TV platform and other program external expenses

External research and development expenses - TV programs, including cost sharing

$ 138,196 $ 139,064 (868) (1) %

LRRK2 program external expenses 5,814 20,024 (14,210) (71)

eIF2B program external expenses 24,426 14,843 9,583 65

Other external research and development expenses 26,923 33,971 (7,048) (21)

Personnel related expenses (1)

External research and development expenses - small molecule programs, including cost sharing

42,623 49,850 (7,227) (14)

Other unallocated research and development expenses 48,985 39,697 9,288 23

Net cost sharing payments (reimbursements) (2)

Other research and development expenses 62,715 74,518 (11,803) (16)

Personnel related expenses (1)

152,906 160,444 (7,538) (5)

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_________________________________________________

* Percentage is not meaningful.

(1) Personnel-related expenses include stock-based compensation expense of $62.9 million and $60.2 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $2.7 million.

(2) Net cost sharing payments (reimbursements) details are broken down as shown in the table below.

The underlying costs for reimbursements are included with the specified external expenses line and personnel related expenses in the table above.

ATV:TREM2 program external expenses are presented within the TV platform and other program external expenses line.

Year Ended December 31,

net reimbursements for ATV:TREM2 program

$ (5,100) $ (6,954)

net reimbursements for PTV:PGRN program

(7,065) (11,276)

net payments for LRRK2 program

Net cost sharing payments (reimbursements)

$ 5,513 $ (10,043)

The increase in research and development expenses of approximately $65.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily attributable to the following:

• An increase of $53.2 million in ETV:IDS program external expenses primarily due to the contingent consideration payment of $30.0 million recorded in the first quarter of 2023 related to the acquisition of F-star Gamma, which was triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.

Further, the increase reflects the continued progress of this program in clinical trials during 2023, including costs related to our ongoing Phase 1/2 study and our potentially registrational Phase 2/3 study;

• An increase of $9.6 million in eIF2B program external expenses reflecting the continued progress of the Phase 2/3 HEALEY ALS Platform Trial in 2023;

• An increase of $15.6 million in net cost sharing payments primarily due to an increase in payments to Biogen for LRRK2 program expenses, and a decrease in costs and associated reimbursements from Takeda in the PTV:PGRN and ATV:TREM2 programs;

• An increase of $9.3 million in other unallocated research and development expenses primarily due to increased facility costs as a result of accelerated depreciation on leasehold improvements associated with the termination of the previous SLC Lease as well as other general research costs;

• An increase of $16.4 million in personnel-related expenses, consisting of $13.7 million in employee compensation and $2.7 million in stock-based compensation expense in stock-based compensation expense pertaining to additional salaries, related expenses, and equity award grants driven by an increase in our research and development headcount.

These increases were partially offset by decreases of $14.2 million in LRRK2 program external expenses due to the transition of LRRK2 clinical activities to Biogen, $10.5 million in TV platform and other program external expenses as a result of discontinuation of clinical development of TAK-920/DNL919, and $7.0 million in other external research and development expenses and $7.2 million in PTV:PGRN program external expenses due to the timing of significant external research and manufacturing related activities year over year.

(1) Personnel-related expenses include stock-based compensation expense of $59.1 million and $62.9 million for the years ended December 31, 2024 and 2023, respectively, reflecting a decrease of $3.8 million.

The decrease in research and development expenses of approximately $27.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily attributable to decreases of $7.5 million in personnel-related expenses, including decreases in salary and stock-based compensation expenses, decreases in other research and development expenses of $11.8 million, as well as $7.2 million in small molecule programs external expense, primarily driven by the divestiture of our preclinical small molecule programs in March 2024 and focus on the Company's TV-enabled portfolio.

General and administrative expenses .

General and administrative expenses were $103.4 million for the year ended December 31, 2023 compared to $90.5 million for the year ended December 31, 2022.

The increase of $12.9 million was primarily attributable to the following:

• An increase of $9.5 million of personnel-related expenses consisting of employee compensation and stock-based compensation expense associated with additional salary expenses and equity award grants driven primarily by higher general and administrative headcount;

• An increase of $3.4 million in professional services, facilities and other corporate costs.

General and administrative expenses were $105.4 million for the year ended December 31, 2024 compared to $103.4 million for the year ended December 31, 2023, primarily driven by activities related to the planned submission of a BLA for tividenofusp alfa in early 2025 and preparations for a commercial launch in late 2025 or early 2026.

Comparison of the years ended December 31, 2023 and 2022

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As of December 31, 2024, we had cash, cash equivalent s and marketable securities in the amount of $1.19 billion .

We fund our operations primarily with the proceeds from the sale of common stock and payments received from collaboration partners, including those received under agreements with Takeda, Sanofi, and Biogen.

We have sold common stock in public offerings and stock purchase agreements with Takeda and Biogen.

We fund our operations primarily with the proceeds from the sale of common stock and payments received from our collaboration partners, including those received under agreements with Takeda, Sanofi, and Biogen.

We have sold common stock and other securities in public offerings, a private placement, and stock purchase agreements with Takeda and Biogen.

Through December 31, 2024 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022.

Under stock purchase agreements with collaboration partners we have received a further $575.0 million through December 31, 2024 .

I n February 2022, we established a registered “at-the-market” facility for the sale of up to 400.0 million of shares of common stock from time to time by entering into an equity distribution agreement with Goldman Sachs & Co.

LLC, SVB Securities LLC and Cantor Fitzgerald & Co.

as sales agents.

To date, no shares have been sold under the equity distribution agreement.

Pursuant to our collaboration agreements with Takeda, Sanofi and Biogen, through December 31, 2023 we have received upfront, option and milestone payments of $115.0 million , $225.0 million , and $560.0 million , respectively, and have also received $41.3 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and $13.7 million in specified reimbursements from Sanofi.

Further, in February 2024 we received net proceeds of approximately $499.3 million from our private placement through the sale of approximately 3.2 million shares of common stock and pre-funded warrants to purchase a pproximately 26.0 million shares of our common stock .

I n February 2025, we established a registered “at-the-market” facility for the future sale of up to $400.0 million of shares of common stock from time to time by entering into an equity distribution agreement with Goldman Sachs & Co.

LLC and Leerink Partners LLC as sales agents.

The previous equity distribution agreement and related “at-the-market” facility entered into in February 2022 was terminated in February 2025.

To date, no shares have been sold under either equity distribution agreement.

All sales under the current equity distribution agreement are conditioned upon satisfaction of customary closing conditions.

Pursuant to our collaboration and research and development funding agreements with Takeda, Sanofi and Biogen and an unrelated third party, through December 31, 2024 we have received upfront, option and milestone payments of $115.0 million , $225.0 million , $565.0 million and $25.0 million , respectively, and have also received $48.6 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi.

Future Funding Requirements and Commitments

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Since our inception, we have incurred significant losses and negative cash flows from operations.

We have an accumulated deficit of $1.12 billion through December 31, 2023.

We have an accumulated deficit of $1.54 billion as of December 31, 2024.

We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.

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Our existing commitments primarily relate to our obligations under existing lease agreements, and certain clinical and manufacturing agreements, including the DMSA with Lonza Sales AG ("Lonza") for the development and manufacture of biologic products.

As of December 31, 2023, operating lease liabilities were $52.2 million .

Under the SLC lease which was executed in April 2023, we have future undiscounted lease payments totaling approximately $13.4 million.

A s of December 31, 2024, the operating lease liability was $45.0 million and the finance lease liability was $9.3 million.

Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments of $63.0 million as of December 31, 2024, with certain amounts subject to cost sharing with Takeda.

Further, in the normal course of business, we enter into various firm purchase commitments primarily related to research and development activities.

While the lease obligations span multiple years, the majority of the purchase commitments with Lonza and other clinical and manufacturing agreements are due within twelve months, with some spanning several years.

These commitments are more fully described in Note 8, "Commitments and Contingencies" to the consolidated financial statements included in Item 8.

Further, we may be required to make contingent payments under existing arrangements upon the achievement of defined clinical, regulatory and commercial milestones in certain programs, including contingent consideration payments to former shareholders of F-star under the F-star Gamma license, and milestone and royalty payments to Genentech under the Genentech License Agreement.

These commitments are more fully described in Note 4, "Acquisition, License Agreement and Research and Development Funding Collaboration Agreement" and Note 7, "Commitments and Contingencies" to the consolidated financial statements included in Item 8.

of this Annual Report on Form 10-K .

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Net cash provided by financing activities 484,304 17,820 310,670

Net decrease in cash, cash equivalents and restricted cash $ (90,863) $ (75,433) $ (213,667)

Net increase (decrease) in cash, cash equivalents and restricted cash

$ 47,854 $ (90,863) $ (75,433)

Net Cash Used In Operating Activities

During the year ended December 31, 2023, net cash used in operating activities was $358.0 million, which consisted of a net loss of $145.2 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net amortization of premiums and (discounts) on marketable securities and non-cash rent expenses.

Cash used in operating activities was also driven by changes in our operating assets and liabilities, the most significant of which was the reduction in our related-party contract liability as a result of Biogen's option exercise during the second quarter of 2023.

During the year ended December 31, 2024, net cash used in operating activities was $347.7 million, which consisted of a net loss of $422.8 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, non-cash rent expenses, and the non-cash gain on divestiture of small molecule programs.

Cash used in operating activities was also driven by changes in our operating assets and liabilities.

Net Cash Provided By (Used In) Investing Activities

During the year ended December 31, 2023, net cash provided by investing activities was $249.3 million, which consisted of $2.1 billion in proceeds from the maturities and sales of marketable securities, partially offset by $1.8 billion of purchases of marketable securities, and $12.9 million capital expenditures to purchase property and equipment.

During the year ended December 31, 2024, net cash used in investing activities was $88.8 million, which consisted of $1.23 billion of purchases of marketable securities, and $15.9 million capital expenditures to purchase property and equipment, partially offset by $1.16 billion in proceeds from the maturities of marketable securities.

Net Cash Provided By Financing Activities

During the year ended December 31, 2023, net cash provided by financing activities was $17.8 million, which consisted of proceeds from the exercise of options to purchase common stock and purchases of ESPP shares.

During the year ended December 31, 2024, net cash provided by financing activities was $484.3 million, which consisted of $499.3 million of net proceeds from issuance of common stock and pre-funded warrants in a private placement in February 2024 and $17.4 million of proceeds from the exercise of stock options and the Company's ESPP, partially offset by an aggregate of $32.3 million of payments related to our finance lease.

Years ended December 31, 2023 and 2022

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We recognize revenue associated with our collaboration arrangements, which may require us to exercise considerable judgment in estimating revenue to be recognized, including judgments made on day one accounting and judgments associated with the amount of revenue to be recognized over time as performance obligations are satisfied.

Significant judgment is required to apply the authoritative accounting guidance at the outset of a collaboration arrangement, and over time, as detailed below:

• Identification of performance obligations - there is judgment involved in identifying the promised goods or services in the collaboration agreement, determining whether these are distinct in the context of the contract, and determining if these represent a performance obligation to a customer.

These determinations are highly subjective and can differ between arrangement based on specific contractual terms.

The identified performance obligations will impact most significantly the timing of revenue recognition, and is a point-in-time assessment performed at the outset of a collaboration arrangement.

• Measurement of the transaction price - determining the transaction price includes varying levels of judgment.

Where amounts are fixed and paid, such as upfront payments, estimation is not required.

However, other elements of the transaction price do require estimation or assumptions by management.

The calculation of a share issuance premium requires the use of a valuation model for purposes of determining the fair value of the shares for financial reporting purposes, with any resulting premium impacting the transaction price.

An assumption needs to be made regarding whether future variable consideration, such as milestone payments, are constrained, which also requires management judgment.

The measurement of transaction price impacts the measurement of revenue, and is performed both at the outset of a collaboration arrangement and at each reporting period.

To date, we have not recognized any adjustments to revenue as a result of an adjustment to variable consideration constraint.

• Allocation of the transaction price to the performance obligations - there is significant judgment required to allocate the transaction price to performance obligations.

Generally, this is done by estimating the standalone selling price of identified performance obligations, and allocating on a relative value basis.

The estimate of standalone selling price includes several assumptions that cannot be observed, which may include forecasted revenue (for products not yet on the market), development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

The standalone selling price of performance obligations can be very sensitive to many of these underlying assumptions, which are based on management estimates since they cannot be observed.

This is a point-in-time assessment performed at the outset of a collaboration arrangement.

• Recognition of revenue when (or as) we satisfy each performance obligation - determining the timing of revenue recognition includes varying levels of judgment.

For revenue types recognized at a point in time, such as functional IP, there can be some judgment as to when the performance obligation has been satisfied.

For revenue recognized over time, this is often based on an underlying measure deemed to approximate the progress towards satisfaction of performance obligations.

These underlying measures, such as costs incurred to date compared with total forecasted costs for a service, may include inherent estimates, which in turn can impact the timing of revenue recognition.

The satisfaction of performance obligations assessment is performed at each reporting period.

To date, there have been no material true ups to revenue as a result of changes in the satisfaction of performance obligations.

Significant judgment is required to apply the authoritative accounting guidance at the outset of a collaboration arrangement, and over time, and the determinations including judgment are highly subjective and can differ between arrangement based on specific contractual terms.

To date, there have been no material true ups to revenue as a result of changes in the key judgments detailed below.

The key areas of judgment identified are:

(1) Identification of performance obligations at the outset of a collaboration arrangement (identifying the promised goods or services and determining whether these are distinct in the context of the contract);

(2) Measurement of the transaction price at the outset of a collaboration arrangement and at each reporting period (estimating valuation of share premium payments, constraint of future variable consideration);

(3) Allocation of the transaction price to the performance obligations at the outset of a collaboration arrangement ( estimating the standalone selling price of identified performance obligations);

and (4) Recognition of revenue when (or as) we satisfy each performance obligation, assessed at each reporting period (when the performance obligation has been satisfied for point-in time recognition, the extent of satisfaction of an obligation for recognition over time).

Research and Development Expenses

A significant portion of our research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss are external costs, which we track on a program-specific basis once a program has commenced a late-stage IND-enabling study.

A significant portion of our research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss are external costs.

These research and development expenses include the conduct of preclinical studies and clinical trials, contract manufacturing activities and consulting services.

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The level of judgment required to estimate research and development expenses varies based on the nature of the services being performed and the underlying support obtained.

We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.

We estimate the amount of work completed based on information received from internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services.

As actual costs become known, we adjust our accrued estimates.

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To date, there have been no material true ups from estimated to actual reimbursements owed or owing.

Where the company has entered into an R&D funding arrangement, payments received will be recorded as a liability, and recognized an offset to research and development expenses as the underlying research and development costs are incurred.

The determination of whether an arrangement meets the definition of an R&D funding arrangement under ASC730 requires judgment, including an assessment of the nature of the arrangement, the funding party’s rights and exposure to research and development risks.

Further, the timing of recognition of the funding is also subject to the judgments of the underlying research and development costs.

To date, there have been no material true ups to R&D funding recognition.

Recent Accounting Pronouncements

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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 7. Management’s Discussion and Analysis