What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-28 · 279 added, 233 removed, 655 unchanged (44% of the section changed)

32 unchanged sentences

Accrued and prepaid research and development costs

Description of the Matter As more fully described in Note 1 to the consolidated financial statements, the Company records accrued liabilities for estimated costs of research and development (R&D) activities and prepaid research and development costs based upon the estimated cost of services provided.

As of December 31, 2024, accrued clinical and other R&D costs were $18.1 million and prepaid clinical R&D costs were $6.5 million.

The accrued and prepaid R&D costs (“Accrued and Prepaid R&D Costs”) are based on estimated clinical trial and other R&D costs incurred under service agreements with organizations that conduct R&D activities on behalf of the Company.

The Company recognizes these costs based on several factors, such as information obtained from vendors and estimates of the work completed under the service agreements.

Auditing the Company's accounting for Accrued and Prepaid R&D Costs was complex because the Company’s analyses are dependent upon data obtained from external third-party service providers who often act as intermediaries to those performing the underlying services.

The determination of the balances when the Company has either not been invoiced or has not received information regarding actual costs incurred requires evaluation of the stage of completion of the services.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s process for accounting for Accrued & Prepaid R&D Costs, including management’s controls over completeness and accuracy of data used in determining these costs as well as management’s process for estimating work completed under the service agreements.

To test the Accrued & Prepaid R&D Costs, our audit procedures included, among others, i) confirming the completeness of the terms and conditions of significant R&D service agreements directly with the vendor;

The accrued and prepaid R&D costs (“Accrued and Prepaid R&D Costs”) are based on an estimate of the clinical trial and related R&D costs incurred under service agreements with organizations that conduct R&D activities on behalf of the Company.

The Company expenses costs incurred based on several factors, such as information obtained from vendors and estimates of the work completed by the vendors.

Auditing the Company's accounting for Accrued and Prepaid R&D Costs was complex because the Company’s analyses are dependent upon data obtained from external third-party service providers who directly perform services but also often act as intermediaries to those performing the underlying services.

The determination of the balances when the Company has either not been invoiced or has not received information regarding actual costs incurred requires estimation of the stage of completion of certain services.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s process for accounting for Accrued and Prepaid R&D Costs, including management’s controls over completeness and accuracy of data used in determining these costs as well as management’s process for estimating work completed under the service agreements.

To test the Accrued and Prepaid R&D Costs, our audit procedures included, among others, i) confirming the completeness of the terms and conditions of significant R&D service agreements directly with the vendors;

ii) testing the completeness and accuracy of the underlying inputs used in the Company’s analyses through verification of significant inputs, such as costs incurred and invoices paid, to the terms and conditions of the underlying agreements and information from the Company’s internal personnel and vendors;

14 unchanged sentences

Total current assets 864,436 1,064,137

Long-term marketable securities 359,373 —

Property and equipment, net 55,236 45,589

Finance lease right-of-use asset 47,533 —

Operating lease right-of-use asset

5 unchanged sentences

Accounts payable $ 11,137 $ 9,483

Cost sharing payments due to related party — 4,388

Accrued expenses and other current liabilities 91,071 68,499

Related party contract liability, current — 290,053

Total current liabilities 102,208 77,982

Related party contract liability, less current portion — 479

Operating lease liability, less current portion

36,673 44,981

Other non-current liabilities — 379

Finance lease liability, less current portion 5,615 —

Total liabilities 144,496 122,963

8 unchanged sentences

Additional paid-in capital 2,764,880 2,144,811

Accumulated other comprehensive income (loss)

643 ( 6,886 )

Accumulated other comprehensive income

Accumulated deficit ( 1,538,984 ) ( 1,116,211 )

17 unchanged sentences

Total operating expenses 501,878 527,230 449,207

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

Loss from operations ( 487,341 ) ( 196,699 ) ( 340,744 )

1 unchanged sentence

Loss before income taxes ( 422,705 ) ( 145,194 ) ( 325,970 )

Income tax benefit (expense) ( 30 ) ( 21 ) 575

Income tax expense ( 68 ) ( 30 ) ( 21 )

Net loss ( 422,773 ) ( 145,224 ) ( 325,991 )

5 unchanged sentences

__________________________________________________

(1) Includes related-party collaboration revenue from customers of $ 295.5 million, $ 3.2 million, and $ 3.7 million for the years ended December 31, 2023, 2022 and 2021 respectively.

(2) Includes expense for cost sharing payments to a related party of $ 17.7 million and $ 8.2 million for the years ended December 31, 2023 and 2022, respectively, and an offset to expense from related-party cost reimbursements of $ 6.5 million for the year ended December 31, 2021.

(1) Includes related-party collaboration revenue from customers of $ 295.5 million, and $ 3.2 million for the years ended December 31, 2023 and 2022, respectively.

(2) Includes expense for cost sharing payments to a related party of $ 17.7 million and $ 8.2 million for the years ended December 31, 2023 and 2022, respectively.

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Balance at December 31, 2021 122,283,305 $ 1,548 $ 1,608,238 $ ( 2,499 ) $ ( 644,996 ) $ 962,291

Issuance of common stock in follow-on offering, net of issuance costs of $ 1,060

11,933,962 120 296,095 — — 296,215

Issuances under equity incentive plans 911,555 10 14,445 — — 14,455

4 unchanged sentences

Balance at December 31, 2022 135,965,918 $ 1,686 $ 2,018,617 $ ( 6,886 ) $ ( 970,987 ) $ 1,042,430

Issuance of common stock in follow-on offering, net of issuance costs of $ 1,060

11,933,962 120 296,095 — — 296,215

Issuances under equity incentive plans 1,232,526 12 17,808 — — 17,820

2 unchanged sentences

Net loss — — — — ( 145,224 ) ( 145,224 )

Other comprehensive loss — — — ( 4,387 ) — ( 4,387 )

Other comprehensive income — — — 7,529 — 7,529

Balance at December 31, 2023 138,385,498 $ 1,711 $ 2,144,811 $ 643 $ ( 1,116,211 ) $ 1,030,954

Issuance of common stock and pre-funded warrants, net of issuance costs of $ 480

3,244,689 32 499,221 — — 499,253

Issuances under equity incentive plans 1,288,609 13 17,376 — — 17,389

11 unchanged sentences

Operating activities

$ ( 145,224 ) $ ( 325,991 ) $ ( 290,581 )

Net loss $ ( 422,773 ) $ ( 145,224 ) $ ( 325,991 )

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Stock-based compensation expense 102,878 108,102 99,847

Net amortization of premiums and (discounts) on marketable securities ( 43,952 ) ( 1,637 ) 8,748

Net accretion of discounts on marketable securities

( 35,117 ) ( 43,952 ) ( 1,637 )

Non-cash adjustment to operating lease expense ( 4,074 ) ( 3,719 ) ( 3,351 )

Right-of-use asset amortization for finance lease 1,197 — —

Non-cash gain from divestiture of small molecule programs ( 14,537 ) — —

Other non-cash items — 2 63

1 unchanged sentence

Prepaid expenses and other assets ( 2,480 ) ( 4,094 ) ( 2,760 )

Other non-current assets

Accounts payable 1,437 2,431 2,274

2 unchanged sentences

Related party contract liability

— ( 290,532 ) ( 3,149 )

Other non-current liabilities — ( 379 ) —

Net cash used in operating activities ( 347,694 ) ( 357,991 ) ( 244,716 )

( 357,991 ) ( 244,716 ) ( 211,389 )

Investing activities

Maturities of marketable securities

1,157,120 2,075,947 991,486

Purchases of marketable securities ( 1,229,964 ) ( 1,813,700 ) ( 1,115,040 )

Purchases of property and equipment ( 15,912 ) ( 12,939 ) ( 17,833 )

Maturities and sales of marketable securities 2,075,947 991,486 1,409,812

Net cash provided by (used in) investing activities

1 unchanged sentence

Financing activities

Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs of $ 480

Proceeds from public offering of common stock, net of issuance costs — — 296,215

Proceeds from exercise of awards under equity incentive plans 17,389 17,820 14,455

Payments for finance lease right-of-use asset ( 32,338 ) — —

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

Net decrease in cash, cash equivalents and restricted cash

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

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

2 unchanged sentences

Supplemental disclosures of cash flow information

Cash paid during the year for income taxes $ 3 $ 47 $ 210

Issuance costs incurred but not yet paid $ — $ 224 $ —

Equity consideration received in the divestiture of small molecule programs (Note 13) $ 15,000 $ — $ —

Increase in right-of-use asset due to lessor assets $ 7,051 $ — $ —

Right-of-use asset obtained in exchange for new finance lease liabilities

$ 9,358 $ — $ —

Property and equipment purchases accrued but not yet paid $ 1,192 $ 553 $ 1,464

Cash paid for finance lease interest

$ 302 $ — $ —

Issuance costs incurred but not yet paid $ — $ — $ 224

Cash paid during the year for income taxes $ — $ 3 $ 47

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Denali Therapeutics Inc.

("Denali" or the “Company”) is a biopharmaceutical company, incorporated in Delaware, that discovers and develops therapeutics to defeat neurodegenerative diseases.

("Denali" or the “Company”) is a biopharmaceutical company, incorporated in Delaware, that discovers and develops therapeutics to defeat neurodegenerative diseases and lysosomal storage diseases.

The Company is headquartered in South San Francisco, California.

23 unchanged sentences

If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability.

Further, the company is also subject to broad market risks and uncertainties resulting from recent events, such as bank failures or instability in the financial services sector, the COVID-19 pandemic, war and armed conflicts, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages.

Further, the company is also subject to broad market risks and uncertainties resulting from recent events, such as bank failures or instability in the financial services sector, global pandemics, war and armed conflicts, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages.

Convertible Preferred Stock

1 unchanged sentence

As of December 31, 2024 and 2023 , the Company had no shares of preferred stock issued or outstanding.

The Company has one operating segment.

The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources.

The Company holds an equity investment in a venture-backed privately held company, Tenvie Therapeutics, Inc.

The privately held company is a Variable Interest Entity ("VIE"), but the Company is not the primary beneficiary.

The Company does not have the power to direct the activities that most significantly impact the economic performance of the investee.

The Company’s maximum exposure to loss from this VIE is limited to the value of the equity investment.

The equity investment held by the Company lacks a readily determinable fair value and therefore the securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar equity securities of the same issuer.

The Company reviews the carrying value of its equity investment for impairment whenever events or changes in business circumstances indicate the carrying amount of such asset may not be fully recoverable.

Impairments, if any, are based on the excess of the carrying amount over the recoverable amount of the asset.

There were no impairments during the year ended December 31, 2024.

Fair Value of Financial Instruments

14 unchanged sentences

Cash equivalents are reported at fair value.

Cash, cash equivalents, and restricted cash reported within the Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Consolidated Balance Sheets and $ 1.6 million and $ 1.5 million of restricted cash for the letter of credit for the Company’s headquarters building lease which is included within other non-current assets in the Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively.

Cash, cash equivalents and restricted cash reported within the Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Consolidated Balance Sheets and $ 1.6 million of restricted cash for the letter of credit for the Company’s headquarters building lease which is included within other non-current assets in the Consolidated Balance Sheets as of December 31, 2024 and 2023.

Marketable Securities

The Company generally invests its excess cash in money market funds and investment grade short to intermediate-term fixed income securities.

Such investments are included in cash and cash equivalents, or short-term marketable securities on the Consolidated Balance Sheets, are considered available-for-sale, and are reported at fair value with net unrealized gains and losses included as a component of stockholders’ equity.

Such investments are included in cash and cash equivalents, or short-term marketable securities or long-term marketable securities on the Consolidated Balance Sheets, are considered available-for-sale, and are reported at fair value with net unrealized gains and losses included as a component of stockholders’ equity.

The Company classifies investments in securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments.

7 unchanged sentences

Accounts receivable are included within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The accounts receivable balance represents amounts receivable from the Company's collaboration partners, excluding related parties, net of an allowance for credit losses, if required.

The accounts receivable balance represents amounts receivable from the Company's collaboration partners net of an allowance for credit losses, if required.

Property and Equipment, Net

16 unchanged sentences

A determination is made as to whether an arrangement is a lease at inception.

Right-of-use (“ROU”) assets and operating lease liabilities are recognized for identified operating leases in the Consolidated Balance Sheets.

The changes in operating lease ROU assets and operating lease liabilities are presented net within non-cash adjustment to operating lease expense in the Consolidated Statements of Cash Flows.

ROU assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments due over the lease term, with the ROU assets adjusted for lease incentives received.

The Company recognizes finance and operating lease right-of-use ("ROU") assets, and finance and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date.

The Company adjusts ROU assets as needed for any lease incentives it receives and for assets it purchases that are regarded as landlord-owned.

When determining the present value of lease payments, the Company uses its incremental borrowing rate on the date of lease commencement, or the rate implicit in the lease, if known.

The Company does not assume renewals in its determination of the lease term unless the renewals are deemed by management to be reasonably certain at lease inception.

The Company recognizes amortization of the ROU assets and interest on the lease liabilities for its finance lease.

Finance lease ROU assets are amortized on a straight-line basis from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Operating lease expense is recognized on a straight-line basis over the lease term.

Leases with an initial term of twelve months or less are not recorded on the balance sheet, unless they include an option to purchase the underlying asset that the Company is reasonably certain to exercise.

The Company recognizes lease expenses on a straight-line basis over the lease term.

The Company has leases with lease and non-lease components, which the Company has elected to account for as a single lease component.

2 unchanged sentences

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.

This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement.

For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606.

For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606.

The accounting treatment pursuant to Topic 606 is outlined below.

The terms of license, option and collaboration agreements entered into typically include payment of one or more of the following:

non-refundable, up-front license fees;

option exercise fees;

development, regulatory and commercial milestone payments;

payments for manufacturing supply and research and development services and royalties on net sales of licensed products.

Each of these payments results in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenue.

The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services.

Each of these Payments received under license, option and collaboration agreements result in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenue.

The Company may also receive reimbursement or make payments to a collaboration partner to satisfy cost sharing requirements.

These payments are accounted for pursuant to ASC 808 and are recorded as an offset or increase to research and development expenses, respectively.

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations based on estimated selling prices;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Amounts received prior to satisfying the revenue recognition criteria are recorded as contract liabilities in the Company’s Consolidated Balance Sheets.

If the related performance obligation is expected to be satisfied within the next twelve months this will be classified in current liabilities.

Amounts recognized as revenue prior to the Company having an unconditional right (other than a right that is conditioned only on the passage of time) to receipt are recorded as contract assets in the Company's Consolidated Balance Sheets.

If the Company expects to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets.

A net contract asset or liability is presented for each contract with a customer.

At contract inception, the Company assesses the goods or services promised in a contract with a customer and identifies those distinct goods and services that represent a performance obligation.

A promised good or service may not be identified as a performance obligation if it is immaterial in the context of the contract with the customer, if it is not separately identifiable from other promises in the contract (either because it is not capable of being separated or because it is not separable in the context of the contract), or if the promised good or service does not provide the customer with a material right.

The Company considers the terms of the contract to determine the transaction price.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer.

The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Variable consideration will only be included in the transaction price when it is not considered constrained, which is when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices ("SSP").

The relative SSP for each deliverable is estimated using external sourced evidence if it is available.

If external sourced evidence is not available, the Company uses its best estimate of the SSP for the deliverable.

Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring a promised good or service to a customer.

The Company recognizes revenue as it fulfills its obligations under each of its agreements.

An asset is transferred when, or as, the customer obtains control of that asset, which for a service is considered to be as the services are received and used.

The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the nature of the service promised to the customer.

After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events.

Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception, or to a single performance obligation as applicable.

The Company accounts for the exercise of a material right as either a contract modification or as a continuation of the existing contract, as is most appropriate based on the facts and circumstances.

Management may be required to exercise considerable judgment in estimating revenue to be recognized.

Judgment is required in identifying performance obligations, estimating the transaction price, estimating the SSP of identified performance obligations, which may include forecasted revenue, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success, and estimating the progress towards satisfaction of performance obligations.

Amounts received prior to satisfying the revenue recognition criteria are recorded as current or non-current contract liabilities in the Company’s Consolidated Balance Sheets, depending on when the performance obligation is expected to be satisfied.

Research and Development Expenses

2 unchanged sentences

Where the Company shares costs with collaboration partners, such as in the Biogen Collaboration Agreement and the Takeda Collaboration Agreement, research and development expenses may include cost sharing reimbursements from or payments to the collaboration partner, respectively.

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.

Nonrefundable advance payments for goods and services that will be used or received in future research and development activities are deferred and recognized as expense in the period in which the related goods are delivered or services are performed.

6 unchanged sentences

These estimates are inherently more judgmental since the quality and availability of the underlying data may vary.

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.

The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties.

11 unchanged sentences

The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income, and a valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized.

The Company recognizes and measures uncertain tax positions using a two–step approach.

The first step is to evaluate the tax position taken or expected to be taken by determining whether the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

Significant judgment is required to evaluate uncertain tax positions.

The Company evaluates uncertain tax positions on a regular basis.

The evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and effective settlement of audit issues.

Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The calculation of our current provision for income taxes involves the use of estimates, assumptions and judgments while taking into account current tax laws, interpretation of current tax laws and possible outcomes of future tax audits.

The Company has established reserves to address potential exposures related to tax positions that could be challenged by tax authorities.

Any changes in tax law or interpretation of tax law and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.

Comprehensive Loss

3 unchanged sentences

Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.

The weighted-average common shares outstanding as of December 31, 2024 includes pre-funded warrants to purchase shares of common stock that were issued in connection with the February 2024 private placement, as discussed further in Note 8 - "Common Stock".

Recently Issued Accounting Pronouncements

3 unchanged sentences

The amendments in this Update are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.

The Company adopted this accounting standard update retrospectively on December 31, 2024.

Newly required disclosures has been included in Note 14 - "Segment Information" .

In December 2023, the FASB issued Accounting Standards Update No.

2 unchanged sentences

The amendments in this Update are effective to be applied prospectively for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of the new standard on its income tax disclosures.

The Company has not early adopted this update, and is currently evaluating the impact of the new standard on its income tax disclosures.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

D isaggregation of Income Statement Expenses , which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments can be applied either prospectively or retrospectively.

The Company has not early adopted this update, and is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

Fair Value Measurements

6 unchanged sentences

government treasuries 629,400 — — 629,400

government agency securities — 7,086 — 7,086

Corporate debt securities — 21,399 — 21,399

Commercial paper — 6,572 — 6,572

Long-term marketable securities:

government treasuries 334,892 — — 334,892

Corporate debt securities — 24,481 — 24,481

Total $ 1,091,020 $ 52,452 $ — $ 1,143,472

3 unchanged sentences

Money market funds $ 121,034 $ — $ — $ 121,034

government treasuries 43,781 — — 43,781

Commercial paper — 9,948 — 9,948

Short-term marketable securities:

1 unchanged sentence

government agency securities — 7,086 — 7,086

Corporate debt securities — 54,215 — 54,215

Commercial paper — 31,147 — 31,147

2 unchanged sentences

The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.

The Company has not transferred any assets or liabilities between the fair value measurement levels during the years ended December 31, 2023 or 2022.

The Company did not transfer any assets or liabilities between the fair value measurement levels during the years ended December 31, 2024 or 2023.

Marketable Securities

7 unchanged sentences

$ 627,809 $ 1,618 $ ( 27 ) $ 629,400

government agency securities (1)

7,089 — ( 3 ) 7,086

Corporate debt securities 21,337 62 — 21,399

Commercial paper 6,572 — — 6,572

Total short-term marketable securities 655,718 1,680 ( 27 ) 657,371

Long-term marketable securities:

government treasuries (2)

334,300 788 ( 196 ) 334,892

Corporate debt securities 24,354 127 — 24,481

Total long-term marketable securities 358,654 915 ( 196 ) 359,373

Total $ 1,014,372 $ 2,595 $ ( 223 ) $ 1,016,744

1 unchanged sentence

(1) Unrealized holding losses on 3 securities with an aggregate fair value of 64.0 million.

(2) Unrealized holding losses on 4 securities with an aggregate fair value of 114.0 million

December 31, 2023

4 unchanged sentences

government agency securities 7,089 — ( 3 ) 7,086

Corporate debt securities (2)

54,571 — ( 356 ) 54,215

Commercial paper 31,147 — — 31,147

2 unchanged sentences

(1) Unrealized holding losses on 2 securities with an aggregate fair value of $ 7.1 million.

(2) Unrealized holding losses on 16 securities with an aggregate fair value of $ 54.2 million.

As of December 31, 2024 and 2023, some of the Company's marketable securities were in an unrealized loss position.

The Company has no t recognized an allowance for credit losses as of December 31, 2023 or 2022.

The Company had no t recognized an allowance for credit losses as of December 31, 2024 or 2023.

The Company determined that it had the ability and intent to hold all marketable securities that have been in a continuous loss position until maturity or recovery.

Further, a majority of these securities are held in U.S.

Further, a majority of the Company's investments were held in U.S.

government securities, and the remainder were held with investment grade, high credit quality institutions.

All marketable securities with unrealized losses as of each balance sheet date have been in a loss position for less than twelve months or the loss is not material.

As of December 31, 2023 all of the Company’s marketable securities have an effective maturity of less than one year .

In August 2016, the Company entered into a License and Collaboration Agreement (“F-star Collaboration Agreement”) with F-star Gamma Limited (“F-star Gamma”), F-star Biotechnologische Forschungs-und Entwicklungsges M.B.H ("F-star GmbH") and F-star Biotechnology Limited ("F-star Ltd") (collectively, “F-star”) to leverage F-star’s modular antibody technology and the Company’s expertise in the development of therapies for neurodegenerative diseases.

Under the F-star Collaboration Agreement, the Company made payments to F-star totaling $ 11.5 million.

In connection with the entry into the F-star Collaboration Agreement, the Company also purchased an option for an upfront option fee of $ 0.5 million (the “buy-out-option”), to acquire all of the outstanding shares of F-star Gamma pursuant to a pre-negotiated buy-out option agreement (the “Option Agreement”).

In May 2018, the Company exercised the Option Agreement and entered into a Share Purchase Agreement (the “Purchase Agreement”) with the shareholders of F-star Gamma and Shareholder Representative Services LLC, pursuant to which the Company acquired all of the outstanding shares of F-star Gamma (the “Acquisition”).

All marketable securities with unrealized losses as of each balance sheet date had been in a loss position for less than twelve months or the loss is not material.

As of December 31, 2024 all of the Company’s marketable securities had an effective maturity of less than two years .

Acquisition, License Agreement and Research and Development Funding Collaboration Agreement

Acquisition of F-star Gamma

In May 2018, the Company exercised an option to acquire all of the outstanding shares of F-star Gamma Limited ("F-Star Gamma") pursuant to a prenegotiated buy-out option agreement (the "Acquisition").

As a result of the Acquisition, F-star Gamma became a wholly-owned subsidiary of the Company and the Company changed the entity’s name to Denali BBB Holding Limited.

In addition, the Company became a direct licensee of certain intellectual property of F-star Ltd by way of the Company’s assumption of F-star Gamma’s license agreement with F-star Ltd, dated August 24, 2016, (the “F-star Gamma License”).

The Company made initial exercise payments under the Purchase Agreement and the F-star Gamma License, in the aggregate, of $ 17.8 million.

In addition, the Company is 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 Company concluded that the assets acquired and liabilities assumed upon the exercise of the Option Agreement did not meet the accounting definition of a business, and as such, the acquisition was accounted for as an asset purchase.

As the transaction was accounted for as an asset purchase rather than a business combination, the Company did no t recognize any contingent consideration liability on the acquisition date.

To date, the Company has paid consideration of $ 49.8 million in the aggregate, consisting of up-front and preclinical contingent consideration, all of which was recorded as research and development expense as incurred.

This amount includes a $ 30.0 million contingent consideration payment which was triggered and recorded as research and development expense in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.

This contingent consideration payment fully satisfies the Company's clinical contingent consideration obligations under the Purchase Agreement.

In addition, the Company became a direct licensee of certain intellectual property of F-star Biotechnology Limited (“F-Star Ltd”) by way of the Company’s assumption of F-star Gamma’s license agreement with F-star Ltd, dated August 24, 2016, (the “F-star Gamma License”).

The transaction was accounted for as an asset acquisition.

The Acquisition obligates the Company to make certain contingent payments to former shareholders and under the F-star Gamma license.

In 2023, the Company incurred $ 30.0 million in R&D expenses associated with the achievement of a clinical milestone.

There was no contingent consideration expense recognized for the years ended December 31, 2024 or 2022.

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

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

The Company has not recognized research and development expense related to the funding of F-star Ltd activities under development plans during the years ended December 31, 2023 or 2022, respectively, and recognized $ 0.1 million in research and development expense during the year ended December 31, 2021.

Under this arrangement, the Company may be required to make additional contingent consideration payments of up to $ 210.0 million, consisting of up to $ 60.0 million in regulatory contingent payments and up to $ 150.0 million in commercial contingent payments.

Genentech License Agreement

In June 2016, the Company entered into an Exclusive License Agreement with Genentech, Inc.

(“Genentech”), giving the Company access to Genentech’s LRRK2 inhibitor small molecule program for Parkinson's disease.

The Company 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, including 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 addition, the Company may owe royalties on net sales of licensed products ranging from low to high single-digit percentages.

The Company has 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.

The Company has 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.

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

Collaboration and Development Funding Agreement

On January 29, 2024, the Company entered into a Collaboration and Development Funding Agreement with an unrelated third party, pursuant to which this third party will provide up to $ 75.0 million of funding and collaborate with the Company to conduct a global Phase 2a study of BIIB122/DNL151 in patients with Parkinson’s disease and confirmed pathogenic variants of LRRK2.

Pursuant to this agreement, the Company received payments totaling $ 25.0 million during the year ended December 31, 2024, with the remainder to be paid upon achievement of operational milestones in the study.

After the full $ 75.0 million in consideration has been paid, the third party will be eligible to receive low single-digit royalties from the Company on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease.

The Company determined that this arrangement is an R&D funding arrangement under ASC 730.

As the third party is sharing in the risk associated with research and development activities with the Company, the development funding is recognized as an obligation to perform contractual services.

Accordingly, payments received will be recorded as a liability, and recognized by the Company as a reduction to research and development expenses over the estimated Phase 2a study period as the underlying research and development costs are incurred.

Under this arrangement, the Company recognized a $ 10.9 million offset to research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2024.

The Company recorded a current deferred research and development funding liability of $ 14.1 million on the Consolidated Balance Sheet as of December 31, 2024.

Collaboration Agreements

In August 2020, the Company 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 the Company granted Biogen a license to co-develop and co-commercialize Denali’s small molecule LRRK2 inhibitor program (the “LRRK2 Program”), an option in respect of each of (i) the Company’s amyloid beta program utilizing the Company's Transport Vehicle ("TV") technology platform to cross the blood-brain barrier ("BBB") and (ii) one other unnamed program also utilizing the Company's 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, amyotrophic lateral sclerosis ("ALS") and multiple sclerosis ("MS") utilizing the Company's TV technology platform (the “ROFN Programs”), should the Company 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 the Company granted Biogen a license to co-develop and co-commercialize Denali’s small molecule LRRK2 inhibitor program (the “LRRK2 Program”), an option in respect of each of (i) the Company’s amyloid beta program utilizing the Company's TransportVehicle TM ("TV") technology to cross the blood-brain barrier ("BBB") and (ii) one other unnamed program also utilizing the Company's 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, amyotrophic lateral sclerosis ("ALS") and multiple sclerosis ("MS") utilizing the Company's TV technology platform (the “ROFN Programs”), should the Company decide to seek a collaboration with a third party for such programs.

The Provisional Biogen Collaboration Agreement was a binding agreement, which became effective on the closing of the Common Stock Purchase Agreement ("SPA"), as described further below.

1 unchanged sentence

Biogen made an upfront payment of $ 560.0 million upon execution of the Biogen Collaboration Agreement in October 2020, which was included in the transaction price at inception.

In August 2023, the Company and Biogen executed an Amendment (the “Biogen Amendment”) to the LRRK2 Agreement and ROFN and Option Agreement.

In August 2023, the Company and Biogen executed an Amendment (the “Biogen Amendment”) to the LRRK2 Agreement and ROFN and Option Agreement, pursuant to which Biogen waived its option to the second option program and its ROFN rights.

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 Company's amyloid beta program utilizing the Company's TV technology platform , 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 ROFN and Option Agreement.

LRRK2 Agreement

16 unchanged sentences

The shares of common stock owned by Biogen as of December 31, 2022 and through September 30, 2023, represented approximately 10 % of the voting interest of the Company, and as such, Biogen was considered a related party as defined in ASC 850.

As of December 31, 2023, the percentage voting interest has declined such that Biogen is no longer considered a related party as defined in ASC 850.

ROFN and Option Agreement

Under the ROFN and Option Agreement, Biogen received an exclusive option to license two preclinical programs enabled by the Company's TV technology platform, which platform aims to improve brain uptake of biotherapeutics, including its ATV-enabled anti-amyloid beta program ("ATV:Abeta program") and a second program utilizing the Company's TV technology for an unnamed target ("TV program").

In the quarter ended December, 2023, the percentage voting interest had declined such that Biogen was no longer considered a related party as defined in ASC 850.

Biogen Collaboration Agreement

In April 2023, Biogen exercised its option to license the Company's ATV:Abeta program and made a $ 5.0 million option exercise fee payment.

Further, in August 2023, Biogen waived its option to the second option program upon execution of the Biogen Amendment.

Further, Biogen had the right of first negotiation ("ROFN") on two additional TV-enabled therapeutics within Alzheimer’s disease, Parkinson’s disease, ALS and MS should the Company decide to seek a collaboration with a third party for such programs, but this did not include any of the Company’s small molecule, AAV or oligonucleotide programs.

In August 2023, Biogen waived its ROFN rights upon execution of the Biogen Amendment.

Under the amended ROFN and Option Agreement, w ith respect to the ATV:Abeta license granted by the Company to Biogen, Biogen is obligated to pay an aggregate of up to $ 142.5 million in development milestone payments, an aggregate of up to $ 180.0 million upon first commercial sale, and up to $ 190.0 million of net sales-based milestone payments, following the achievement of certain prespecified milestone events.

Furthermore, Biogen is obligated to pay royalties in the mid-single digit percentages, upon the achievement of certain sales thresholds.

The Biogen Collaboration Agreement was considered to be a contract modification to the Provisional Biogen Collaboration Agreement and was accounted for as a termination of the provisional agreement and commencement of a new contract.

8 unchanged sentences

Since ASC 808 does not address recognition and measurement, the Company looked to other accounting literature for guidance where the performance obligation does not fall under ASC 606, and determined that for the interim LRRK2 development activities subject to cost sharing provisions, the guidance in ASC 730, Research and Development should be applied.

The Company identified the LRRK2 Program license, the research services for the ATV:Abeta and TV programs (“Option Research Services”) and a material right for an option under the ROFN and Option Agreement as distinct performance obligations associated with the Biogen Collaboration Agreement.

Further, the LRRK2 Development Activities was identified as a unit of account under ASC 808.

The respective standalone value for each of the performance obligations was determined at inception by applying the SSP method and the transaction price of $ 604.9 million at inception was allocated based on the relative SSP method with revenue recognition timing to be determined either by delivery, resolution of an option, or the provision of services.

The Company used an adjusted market assessment approach to estimate the selling price for the LRRK2 Program license, an expected cost plus margin approach for estimating the Option Research Services and estimated the intrinsic value of the material right for the option, taking into account the likelihood that an option would be exercised.

The LRRK2 Program license was delivered on or around the effective date of the Biogen Collaboration Agreement and the revenue allocated to this performance obligation was recognized during the year ended December 31, 2020 .

The Option Research Services were delivered over time as the services are performed, with revenue being recognized over time based on costs incurred to perform the services.

As of December 31, 2023 , all revenue allocated to the Option Research Services has been recognized since, after Biogen's ATV:Abeta option exercise, and the waiving of the second option right in the Biogen Amendment, the underlying performance obligations have been fully satisfied.

The $ 288.9 million of revenue allocated to the material right for an option under the ROFN and Option Agreement was initially deferred as a contract liability, and was recognized in full during the year ended December 31, 2023 , upon Biogen's ATV:Abeta option exercise, along with the $ 5.0 million option exercise fee which was fully allocated to the material right.

As of December 31, 2023 , all revenue allocated to the Option Research Services had been recognized.

The $ 288.9 million of revenue allocated to the material right for an option under the ROFN and Option Agreement was initially deferred as a contract liability, and was recognized in full during the year ended December 31, 2023, upon Biogen's ATV:Abeta option exercise, along with the $ 5.0 million option exercise fee paid upon opt in, which was fully allocated to the material right.

The LRRK2 Development Activities cost sharing reimbursements or expenses are being recognized over time as earned or incurred, since this is believed to directly correlate to the value of the services performed.

No related-party contract liability remains on the Consolidated Balance Sheet as of December 31, 2023 .

A related-party contract liability of $ 290.5 million was recorded on the Consolidated Balance Sheet as of December 31, 2022.

The Company recorded $ 17.7 million and $ 8.2 million of cost sharing payments to Biogen for LRRK2 development activities in research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023 , and 2022, respectively, of which $ 3.2 million was recorded as cost sharing payments included within accounts payable on the Consolidated Balance Sheet as of December 31, 2023, and $ 4.4 million was recorded as cost sharing payments due to related party on the Consolidated Balance Sheet as of December 31, 2022.

The Company recorded $ 6.5 million of cost sharing reimbursements for LRRK2 Development Activities as an offset to research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2021.

In assessing the Biogen Collaboration Agreement, management exercised considerable judgment in estimating revenue to be recognized, specifically related to estimating the discount for lack of marketability associated with the stock issuance, determining the separate performance obligations under the Biogen Collaboration Agreement, and estimating the standalone selling price of those performance obligations.

1 unchanged sentence

In October 2018, the Company entered into a Collaboration and License Agreement ("Sanofi Collaboration Agreement") with Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A.

("Sanofi") pursuant to which certain small molecule CNS and peripheral receptor interacting serine/threonine protein kinase 1 ("RIPK1") inhibitors contributed by Sanofi and by the Company will be developed and commercialized.

The Sanofi Collaboration Agreement became effective in November 2018 at which time Sanofi paid the Company an upfront payment of $ 125.0 million which was included in the transaction price at inception.

Under the Sanofi Collaboration Agreement, the Company is eligible to receive milestone payments from Sanofi 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, Europe and Japan for three indications.

The Company 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.

The Company and Sanofi are jointly developing CNS Products pursuant to a global development plan.

The Company is responsible, at its own cost, for conducting Phase 1 and Phase 2 trials for CNS Products in Alzheimer’s disease and any activities required to support such clinical trials and specific for Alzheimer’s disease ("Denali CNS Development Activities").

Other than the Denali CNS Development Activities, Sanofi is responsible, at its cost, for all other Phase 1 and Phase 2 trials for CNS Products, including ALS and MS.

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

Sanofi will also lead the commercialization activities globally for CNS Products, subject to certain options that the Company has to conduct co-commercialization activities with respect to each CNS Product in the United States and China.

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 totaling up to approximately $ 495.0 million upon achievement of certain clinical, regulatory and sales milestone events for the Peripheral Products.

Such milestone payments 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, Europe and in Japan for three indications.

Sanofi has made payments of $ 35.0 million for Peripheral Product clinical milestones through December 31, 2024, and payments of $ 65.0 million for CNS Product clinical milestones through the sale date.

On February 24, 2025, Denali and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788.

Subsequent to this side letter, the Company expects to receive no future milestone or royalty payments from Sanofi related to the CNS Products program.

The Company will receive variable royalties on net sales for Peripheral Products sold worldwide, each as further described below.

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

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

The Company identified the following distinct performance obligations associated with the Sanofi Collaboration Agreement upon inception:

the CNS program license, the Peripheral program license, the Phase 1 and Phase 2 trials for CNS Products for Alzheimer’s disease ("Alzheimer's Disease Services"), and the Phase 1b trial for DNL747 for ALS and associated activities ("Retained Activities").

The Company believes that the Sanofi Collaboration Agreement is a collaboration arrangement as defined in ASC 808, Collaborative Arrangements.

The Company also believes that Sanofi meets the definition of a customer as defined in ASC 606, Revenue From Contracts With Customers for three of the performance obligations identified at inception, but does not meet the definition of a customer for the Alzheimer's Disease Services.

Further, Sanofi does not meet the definition of a customer for all Phase 3 and later stage development trials for CNS Products led by Sanofi for which the Company will fund 30 % of total costs.

Since ASC 808 does not address recognition and measurement, the Company looked to other accounting literature for guidance where the performance obligation does not fall under ASC 606, and determined that for the Alzheimer's Disease Services, the guidance in ASC 606 should be analogized for the recognition, measurement and reporting of this performance obligation, and for the cost sharing provisions, the Company determined that the guidance in ASC 730, Research and Development should be applied.

The respective standalone value for each of the performance obligations was determined by applying the SSP method and the transaction price at inception was allocated based on the relative SSP method with revenue recognition timing to be determined either by delivery or the provision of services.

During the year ended December 31, 2023 , a $ 25.0 million milestone payment was triggered upon the commencement of dosing in a Phase 2 study of SAR443820/DNL788, in individuals with MS.

During the years ended December 31, 2022 and 2021, the Company earned clinical milestones of $ 50.0 million and $ 15.0 million, respectively.

These milestones were recognized in collaboration revenue from customers in the Consolidated Statement of Operations and Comprehensive Loss during for the years ended December 31, 2023 , 2022 and 2021, respectively, s ince the associated performance obligation has been satisfied .

The Company used an adjusted market assessment approach to estimate the selling price for the program licenses, and an expected cost plus margin approach for estimating the Alzheimer’s Disease Services and the Retained Activities.

The Company also believes that Sanofi meets the definition of a customer as defined in ASC 606, Revenue From Contracts With Customers for all of the performance obligations identified at inception except for the Alzheimer's Disease Services.

The Company identified the CNS program license, the Peripheral program license, the Phase 1 and Phase 2 trials for CNS Products for Alzheimer’s disease ("Alzheimer's Disease Services"), and the Phase 1b trial for DNL747 for ALS and associated activities ("Retained Activities") as distinct performance obligations associated with the Sanofi Collaboration Agreement.

The respective standalone value for each of the performance obligations was determined at inception by applying the SSP method and the transaction price at inception was allocated based on the relative SSP method with revenue recognition timing to be determined either by delivery or the provision of services.

The program licenses and existing know-how were delivered on the effective date of the Sanofi Collaboration Agreement, and as such upfront revenue allocated to these performance obligations were recognized at this time.

3 unchanged sentences

For the Retained Activities, revenue was recognized over time using the output method, based on amounts invoiced to Sanofi, since this is believed to directly correlate to the value of the services performed.

During the years ended December 31, 2023 and 2022, the Company earned clinical milestones of $ 25.0 million and $ 50.0 million, respectively.

These milestones were recognized in collaboration revenue from customers in the Consolidated Statement of Operations and Comprehensive Loss during for the years ended December 31, 2023 and 2022, respectively, s ince the associated performance obligation has been satisfied .

There were no milestones recognized in collaboration revenue from customers in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2024 .

The Company has no remaining performance obligations under the Sanofi Collaboration Agreement, and no contract liability remains on the Consolidated Balance Sheets as of December 31, 2024 or 2023 .

7 unchanged sentences

The Takeda Collaboration Agreement became effective in February 2018, at which time Takeda paid the Company an upfront payment of $ 40.0 million.

In February 2019, the agreem ent was amended to replace the ATV:BACE1/Tau program with the ATV:Tau program.

The amendment did not have a material impact to the consolidated financial statements.

In March 2022, Takeda and the Company agreed to terminate activity on the ATV:Tau program over which Takeda had an option to develop and commercialize jointly with the Company.

In February 2019, the agreem ent was amended to replace the ATV:BACE1/Tau program with the ATV:Tau program, and in March 2022, Takeda and the Company agreed to terminate activity on the ATV:Tau program.

Subsequent to the ATV:Tau termination, total preclinical milestone payments that Takeda owed under the Takeda Collaboration Agreement was $ 55.0 million for all three programs, all of which had been earned and received as of December 31, 2022 .

Pursuant to the terms of the Takeda Collaboration Agreement, the Company entered into a common stock purchase agreement with Takeda on January 3, 2018, pursuant to which Takeda purchased 4,214,559 shares of the Company’s common stock on February 23, 2018 for an aggregate purchase price of $ 110.0 million, which included a $ 15.6 million stock premium.

Under the Takeda Collaboration Agreement and unless otherwise agreed jointly between both parties, the Company was responsible, at its cost, for conducting activities relating to pre-IND development of biologic products directed to the three identified targets and enabled by its BBB delivery technology targeting TfR during the applicable research period.

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 the Company, a specified number of biologic products enabled by its BBB delivery technology that were developed during the research period and which are directed to the relevant target, and the Company grants to Takeda a co-exclusive license under the intellectual property the Company controls related to those biologic products.

The Company believes that the Takeda Collaboration Agreement is a collaboration arrangement as defined in ASC 808, Collaborative Arrangements.

Further, during the research period, the Company believes that the arrangement was a contract with a customer as defined in ASC 606, Revenue From Contracts With Customers .

The Takeda Collaboration Agreement and the Stock Purchase Agreement were accounted for as one arrangement because they were entered into at the same time with interrelated financial terms.

The Company identified performance obligations during the research period consisting of the license, the development options, and joint steering committee ("JSC") participation together with the research services for each collaboration program.

The license rights, JSC involvement, option and research services were considered to be a single performance obligation for each program since the research services were highly interrelated with the option and JSC involvement and significantly modify the license.

The performance obligations under each of the three programs are separate since the activities and risks under the programs are distinct.

The Company determined that all other goods or services which were contingent upon Takeda exercising its option for each program were not performance obligations at the inception of the Takeda Collaboration Agreement.

The transaction price at inception included fixed consideration consisti ng of the upfron t fee of $ 40.0 million, the $ 15.6 million premium on the sale of common stock, and the first preclinical milestone payment of $ 5.0 million .

The transaction price also included variable consideration of $ 26.0 million relating to future milestones that were not constrained upon inception and have since all been met and received.

Transaction price has also subsequently increased by $ 24.0 million since inception pertaining to further preclinical milestones earned that had previously been constrained.

Revenue was recognized over time using the input method, based on costs incurred to perform the research services, and all revenue under the Takeda Collaboration Agreement was recognized prior to December 31, 2022.

The Company did no t record any product sales and there are no remaining performance obligations under the initial Takeda Collaboration Agreement.

The Company did not record any product sales and there are no remaining performance obligations under the initial Takeda Collaboration Agreement.

The Takeda Collaboration Agreement was superseded by the PTV:PGRN and ATV:TREM2 Collaboration Agreements subsequent to opt-in for the two programs, recognition of all preclinical milestones, and termination of the ATV:Tau program.

PTV:PGRN and ATV:TREM2 Collaboration Agreements

In November and December 2021, Takeda exercised its options to jointly develop and commercialize the PTV:PGRN and ATV:TREM2 programs, respectively, triggering the option fee of $ 5.0 million for each program, which formed the transaction price at contract inception for each contract, all of which was allocated to the underlying Technology License in each Collaboration Agreement which was delivered on or around the effective date of the respective Collaboration Agreement.

Management determined that the opt-in by Takeda on the PTV:PGRN and ATV:TREM2 programs represent two new contracts with a customer for accounting purposes (the "PTV:PGRN Collaboration Agreement" and the "ATV:TREM2 Collaboration Agreement"), both effective in December 2021 upon payment of the respective option fees.

From inception of the PTV:PGRN Collaboration Agreement and the ATV:TREM2 Collaboration Agreement through December 31, 2024, there was no change to the terms of either agreement;

For each contract, the Company identified a single performance obligation under ASC 606, and initially one unit of account under ASC 808 associated with each of the PTV:PGRN and ATV:TREM2 Collaboration Agreements.

The performance obligation is the delivery of a co-exclusive license under the intellectual property the Company controls related to the PTV:PGRN or ATV:TREM2 program ("PTV:PGRN Technology License" or "ATV;TREM2 Technology License"), and the unit of account is the obligation to share in responsibility and costs for global development of PTV:PGRN or ATV:TREM2 Products pursuant to a mutually agreed upon development plan and budget ("PTV:PGRN Development Activities" or "ATV:TREM2 Development Activities"), which both include JSC involvement.

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.

For each contract, upon option exercise, the Company identified a single performance obligation under ASC 606, and initially one unit of account under ASC 808 associated with each of the PTV:PGRN and ATV:TREM2 Collaboration Agreements.

The performance obligation was the delivery of a co-exclusive license under the intellectual property the Company controls related to the PTV:PGRN or ATV:TREM2 program ("PTV:PGRN Technology License" or "ATV;TREM2 Technology License"), and the unit of account is the obligation to share in responsibility and costs for global development of PTV:PGRN or ATV:TREM2 Products pursuant to a mutually agreed upon development plan and budget ("PTV:PGRN Development Activities" or "ATV:TREM2 Development Activities"), which both include JSC involvement.

The PTV:PGRN Development Activities and JSC participation, and the ATV:TREM2 Development Activities and JSC participation are each considered to be single units of account since the activities are highly interrelated with the JSC involvement and these are not distinct in the context of the contract.

2 unchanged sentences

Since ASC 808 does not address recognition and measurement, the Company looked to other accounting literature for the PTV:PGRN Development Activities and ATV:TREM2 Development Activities units of account, and determined that the guidance in ASC 730, Research and Development should be applied.

Takeda may be obligated to pay the Company 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.

Takeda may also be obligated to pay the Company 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 this milestone.

The entire transaction price of $ 5.0 million on inception was allocated to the underlying Technology License in each Collaboration Agreement, which was delivered on or around the effective date of the respective Collaboration Agreement, with the revenue allocated to this performance obligation recognized during the year ended December 31, 2021.

During the year ended December 31, 2023, a $ 10.0 million milestone was triggered upon achievement of a specified clinical milestone in the Phase 1/2 clinical trial of TAK-594/DNL593 in patients with FTD-GRN, which was recognized in collaboration revenue from customers in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2023 since the associated performance obligation has been satisfied.

The Development Activities cost sharing reimbursements or expenses will be recognized over time as earned or incurred, since this is believed to directly correlate to the value of the services performed.

The Company recorded $ 7.1 million, $ 11.3 million, and $ 7.7 million of cost sharing reimbursements for PTV:PGRN, and $ 5.1 million, $ 6.9 million, $ 6.0 million of cost sharing reimbursements for ATV:TREM2 Development Activities for the years ended December 31, 2023, 2022, and 2021 respectively, as offsets to research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Cost sharing reimbursements of $ 2.7 million and $ 8.9 million are recorded as receivables on the Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively.

Under the PTV:PGRN Collaboration Agreement, Takeda may be obligated to pay the Company up to $ 140.0 million upon achievement of certain clinical milestone events and up to $ 100.0 million in regulatory milestone events relating to receipt of regulatory approval in the United States, certain European countries and Japan.

Takeda may also be obligated to pay the Company up to $ 75.0 million upon achievement of a certain sales-based milestone.

Further, the Company and Takeda share equally the development and commercialization costs, and, if applicable, the profits, for the PTV:PGRN program.

Subsequent to the effective date of the termination of the ATV:TREM2 Collaboration Agreement, there will be no future milestones, cost, or profit sharing related to this agreement.

A $ 10.0 million milestone was triggered under the PTV:PGRN Collaboration Agreement upon achievement of a specified clinical milestone and recognized in collaboration revenue from customers in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2023.

No product sales have been recorded under either agreement.

In assessing the Takeda Collaboration Agreement and the PTV:PGRN and the ATV:TREM2 Collaboration Agreements, management was required to exercise considerable judgment in estimating revenue to be recognized.

Management applied judgment in determining whether opt-in resulted in a modification to an existing contract or a new contract, in determining the separate performance obligations in the research period, and estimating variable consideration.

As of December 31, 2023, the Company had earned $ 10.0 million in option fee payments and $ 10.0 million in milestone payments from Takeda under the PTV:PGRN and the ATV:TREM2 Collaboration Agreements, and had no t recorded any product sales under either agreement.

Collaboration Revenue

6 unchanged sentences

PTV:PGRN Collaboration Agreement — 10,000 —

ATV:TREM2 Collaboration Agreement — — 5,000

Total Takeda Collaboration Revenue — 10,000 51,916

11 unchanged sentences

_________________________________________________

(1) Revenue of $ 27.9 million and $ 15.9 million for the years ended December 31, 2022 and 2021 was included in the contract liability balance at the beginning of the year.

(2) Revenue for all periods presented was included in the contract liability balance at the beginning of the respective year.

(1) Revenue of $ 27.9 million for the year ended December 31, 2022 was included in the contract liability balance at the beginning of the year.

(2) Revenue was included in the contract liability balance at the beginning of the year.

(3) Revenue of $ 288.9 million for the year ended December 31, 2023 was included in the related-party contract liability balance at the beginning of the period.

License Agreements

In June 2016, the Company entered into an Exclusive License Agreement with Genentech, Inc.

(“Genentech”).

This agreement gives the Company access to Genentech’s LRRK2 inhibitor small molecule program for Parkinson's disease.

Under the agreement, Genentech granted the Company (i) an exclusive, worldwide, sublicensable license under Genentech’s rights to certain patents and patent applications directed to small molecule compounds which bind to and inhibit LRRK2 and (ii) a non-exclusive, worldwide, sublicensable license to certain related know-how, in each case, to develop and commercialize certain compounds and licensed products incorporating any such compound.

The Company 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 addition, the Company may owe royalties on net sales of licensed products ranging from low to high single-digit percentages.

I n the year ended December 31, 2022, the Company paid Genentech two clinical milestone payments of $ 7.5 million and $ 5.0 million, triggered upon the commencement of dosing in the global Phase 2b LUMA study to evaluate the efficacy and safety of BIIB122/DNL151, and the commencement of dosing in the g lobal Phase 3 LIGHTHOUSE study to evaluate the efficacy and safety profile of BIIB122/DNL151, respectively, by the Company's collaboration partner Biogen.

Biogen is responsible for 50 % of any payment obligation to Genentech under the Biogen Collaboration Agreement, including these clinical milestones, and accordingly $ 6.3 million of research and development expense was recognized in the year ended December 31, 2022 in the Consolidated Statements of Operations and Comprehensive Loss.

No expenses were recognized under the Genentech License Agreement in the years ended December 31, 2023 or 2021.

To date, the Company has made payments to Genentech of $ 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.

Cost Sharing Payments and Reimbursements

Cost sharing payments to collaboration partners recorded as expenses in research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss, and cost sharing reimbursements from collaboration partners recorded as an offset to expense in research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss are as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Takeda Collaboration Agreement:

PTV:PGRN cost sharing (reimbursements)

$ ( 4,789 ) $ ( 7,065 ) $ ( 11,276 )

ATV:TREM2 cost sharing (reimbursements)

( 1,147 ) ( 5,100 ) ( 6,954 )

Total Takeda cost sharing (reimbursements) (1)

( 5,936 ) ( 12,165 ) ( 18,230 )

Biogen Collaboration Agreement:

LRRK2 cost sharing payments (2)

16,742 17,678 8,187

Net cost sharing payments (reimbursements)

$ 10,806 $ 5,513 $ ( 10,043 )

________________________________________________

(1) Cost sharing reimbursements of $ 1.5 million and $ 2.7 million were recorded as a receivable within prepaid expenses and other current assets on the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.

(2) Cost sharing payments due to Biogen of $ 2.5 million and $ 3.2 million were recorded within accounts payable on the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.

Balance Sheet Components

31 unchanged sentences

Operating lease liability, current 8,308 7,260

Finance lease liability, current

Deferred research and development funding liability, current 14,129 —

Other accrued costs and current liabilities 4,579 5,152

3 unchanged sentences

In May 2018, the Company entered into an operating lease for its corporate headquarters in South San Francisco (the "Headquarters Lease"), a 148,020 rentable square feet building in South San Francisco, California (the "Headquarters").

The Headquarters Lease has a contractual term of 10 years from the legal commencement date, which was April 1, 2019 when the building was ready for occupancy.

For accounting purposes, the lease commencement date was determined to be August 1, 2018, which was the date at which the Company was deemed to have obtained control over the property.

The Company has an option to extend the lease term for a period of ten years by giving the landlord written notice of the election to exercise the option at least nine months , but not more than twelve months , prior to the expiration of the Headquarters Lease Amendmen t lease term.

The Headquarters Lease has a contractual term of 10 years which ends on March 31, 2029, after which the Company has an option to extend the lease term for a further ten years .

The Company determined that this renewal was not reasonably certain at lease inception.

T he accounting lease commencement date was determined to be August 1, 2018.

The Headquarters Lease provides for monthly base rent amounts escalating over the term of the lease.

5 unchanged sentences

The lease had not commenced for accounting purposes.

In April 2023, the Company entered into a new operating lease in Salt Lake City for a 59,336 square foot laboratory, office and warehouse premises (the "SLC Lease") with a contractual term of approximately 15 years upon commencement, and future undiscounted lease payments of approximately $ 13.4 million, which was subsequently amended in October 2023.

In April 2023, the Company entered into a new lease in Salt Lake City (the "SLC Lease") for a 59,336 square foot laboratory, office and warehouse premises with a contractual term of approximately 15 years, and undiscounted lease payments of approximately $ 13.4 million, which was subsequently amended in October 2023.

The Company has the option to extend the lease term for a period of ten years at the end of the lease term.

For accounting purposes, the SLC Lease, as amended, had not commenced as of December 31, 2023 since the landlord had not yet made the underlying asset available for use by the Company, and as such, no lease liability or ROU asset has been recorded on the Consolidated Balance Sheet as of December 31, 2023, and no operating lease expense has been recorded for the year ended December 31, 2023.

Management exercised judgment in applying the requirements of ASC 842, including the determination as to whether certain contracts contain a lease, the lease consideration, and the commencement date of the lease, and for leases identified under the standard, the discount rate used to determine the measurement of the lease liability.

The discount rates of our operating leases are an approximation of the Company's incremental borrowing rate and are dependent upon the term and economics of the agreement.

To estimate the incremental borrowing rate, management considers observable debt yields of comparable market instruments, as well as benchmarks within the lease agreement that may be indicative of the rate implicit in the lease.

The accounting lease commencement date was determined to be August 1, 2024, the date the Company was deemed to have obtained control over the property, at which time the lease was determined to be a finance lease and the lease liability and ROU asset were recorded on the Consolidated Balance Sheets.

Included in the ROU asset as of December 31, 2024 are $ 41.6 million of assets purchased by the Company, which are considered to be owned by the landlord.

Management exercised judgment in applying the requirements of ASC 842, including the determination as to whether certain contracts contain a lease, lease classification, the lease consideration, and the commencement date of the leases, and for leases identified under the standard, the discount rate used to determine the measurement of the lease liability.

The discount rates of the Company's operating and finance leases are an approximation of the Company's incremental borrowing rate and are dependent upon the term and economics of the agreement.

To estimate the incremental borrowing rates, management considered observable debt yields of comparable market instruments, as well as benchmarks within the lease agreement that may be indicative of the rate implicit in the lease.

There were no changes to the terms of the leases recognized under ASC 842 during the year ended December 31, 2024.

Operating lease costs, including variable l ease costs recognized under ASC 842, were $ 12.4 million, $ 12.0 million, and $ 11.0 million for the years ended December 31, 2023 , 2022 and 2021 , respectively.

The following table contains a summary of other information pertaining to the Company’s operating leases for the periods presented (in thousands):

Operating lease costs, including variable lease costs recognized under ASC 842, were $ 7.2 million for the year ended December 31, 2024 and $ 8.0 million for each of the years ended December 31, 2023 and 2022.

Variable lease costs were $ 5.1 million, $ 4.4 million and $ 4.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Finance lease costs representing amortization of ROU assets and interest on lease liability were $ 1.2 million and $ 0.3 million, respectively, for the year ended December 31, 2024.

There were no finance lease costs for the years ended December 31, 2023 and 2022 .

The following table contains a summary of other information pertaining to the Company’s leases for the periods presented (in thousands):

Year Ended December 31,

2024 2023 2022

Cash paid for amounts included in measurement of lease liabilities $ 11,345 $ 11,189 $ 10,336

Operating cash flows from operating lease

$ 11,417 $ 11,345 $ 11,189

As of December 31,

2024 2023 2022

Weighted average remaining lease term 5.3 years 6.2 years 7.3 years

Weighted average discount rate 9.0 % 8.9 % 9.0 %

The following table reconciles the undiscounted lease payments under our operating leases to the operating lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2023 (in thousands):

Weighted-average remaining lease term (in years):

Operating lease

4.3 years 5.3 years 6.2 years

Finance lease

14.3 years — —

Weighted-average discount rate applied (%):

Operating lease 9.0 % 9.0 % 8.9 %

Finance lease 13.7 % — % — %

The following table reconciles the undiscounted cash flows for the next five years and total of the remaining years to the operating and finance lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2024 (in thousands):

Year Ended December 31:

Operating Lease

Finance Lease

2025 $ 11,793 $ 4,446

2026 12,182 794

2027 12,584 811

2028 13,001 829

2029 4,381 848

Thereafter — 8,814

1 unchanged sentence

present value adjustment ( 8,960 ) —

Net operating lease liabilities $ 52,241

imputed interest — ( 7,201 )

Total future minimum lease payments $ 44,981 $ 9,341

Indemnification

9 unchanged sentences

The Company had contractual obligations under certain clinical and manufacturing agreements other than the DMSA of $ 24.1 million and $ 34.8 million, as of December 31, 2024 and 2023, respectively, with certain amounts subject to cost sharing with Takeda.

Further, the Company had other commitments of $ 1.6 million as of both December 31, 2023 and 2022, respectively, and a purchase commitment related to manufacturing equipment for the SLC Facility of $ 5.6 million as of December 31, 2022.

There is no purchase commitment related to manufacturing equipment for the SLC Facility as of December 31, 2023.

Further, the Company had other commitments of $ 2.2 million and $ 1.6 million as of both December 31, 2024 and 2023, respectively.

Contingencies

1 unchanged sentence

The Company records accruals for loss contingencies to the extent that the Company concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated.

On February 27, 2024, the Company entered into a securities purchase agreement (the "Purchase Agreement") with certain investors for the private placement of (i) 3,244,689 shares of Denali's common stock at a price of $ 17.07 per share and (ii) pre-funded warrants to purchase an aggregate of 26,046,065 shares of Denali's common stock (the "Pre-Funded Warrants") at a purchase price of $ 17.06 per Pre-Funded Warrant, which represents the per share price for the common stock less the $ 0.01 exercise price.

The private placement closed on February 29, 2024, at which time the Company received aggregate net proceeds of approximately $ 499.3 million, after deducting issuance costs of approximately $ 0.5 million.

The Pre-Funded Warrants were classified as a component of permanent equity in the Company’s consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its shares and permit the holders to receive a fixed number of shares of common stock upon exercise.

All of the Pre-Funded Warrants issued in the private placement were outstanding as of December 31, 2024.

Stock-Based Awards

7 unchanged sentences

The 2017 Plan provides that the number of shares reserved and available for issuance under the 2017 Plan will automatically increase each January 1, beginning on January 1, 2019, by the lesser of (i) 10.0 million shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator of the 2017 Plan.

In January 2023, common stock available for issuance under the 2017 Plan was increased by approximately 6.8 million shares as a result of this automatic increase provision.

In 2024, common stock available for issuance under the 2017 Plan was increased by approximately 6.8 million shares as a result of this automatic increase provision.

As of December 31, 2024 and 2023, there were approxim ately 14.3 million and 12.5 million common shares available for the Company to grant under the 2017 Plan, respectively.

4 unchanged sentences

Balance at December 31, 2023 16,490,551 $ 27.34 5.97 $ 61,982

14,673,717 $ 27.03 6.24 $ 127,865

Granted 4,902,211 20.82

2 unchanged sentences

Balance at December 31, 2024 18,660,150 $ 25.99 5.94 $ 48,266

16,490,551 $ 27.34 5.97 $ 61,982

Vested and expected to vest at December 31, 2024 17,850,279 $ 27.14 6.19 $ 32,311

15,680,680 $ 28.72 6.23 $ 45,153

Exercisable at December 31, 2024 11,650,342 $ 28.61 4.84 $ 31,781

10,918,798 $ 25.93 5.14 $ 45,085

Aggregate intrinsic value represents the difference between the fair value of the Company's common stock and the exercise price of outstanding options.

12 unchanged sentences

The expected dividend rate is zero as the Company currently has no history or expectation of declaring cash dividends on the Company’s common stock.

The following assumptions were used in estimating the fair value of grants during the:

Year Ended December 31,

The following assumptions were used in estimating the fair value of grants during the year ended:

2024 2023 2022

31 unchanged sentences

There was no tax benefit realized related to awards vested or exercised during the years ended December 31, 2024, 2023 and 2022.

There is no tax benefit on total stock-based compensation expense for the years ended December 31, 2023 , 2022 and 2021 since the company has recorded a full valuation allowance on all deferred tax assets.

There is no deferred tax benefit on total stock-based compensation expense for the years ended December 31, 2024 , 2023 and 2022 since the company has recorded a full valuation allowance on all deferred tax assets.

Defined Contribution Plan

7 unchanged sentences

Federal $ — $ — $ —

State — 7 ( 576 )

Foreign 68 30 14

3 unchanged sentences

Total deferred $ — $ — $ —

Total provision for income taxes

$ 68 $ 30 $ 21

The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows:

20 unchanged sentences

Research expense capitalization 176,094 119,349

Contract liabilities — 70,824

Operating lease liabilities 12,663 14,712

Lease liabilities

11,760 12,663

Stock-based compensation 57,766 53,226

5 unchanged sentences

Property and equipment — ( 5,663 )

Operating lease right-of-use assets ( 6,314 ) ( 7,419 )

Lease right-of-use assets

( 16,343 ) ( 6,314 )

Net deferred tax assets $ — $ —

17 unchanged sentences

Additions for tax positions taken in a prior year

168 135 1,042

Additions for tax positions taken in the current year

13 unchanged sentences

2024 2023 2022

Net loss $ ( 422,773 ) $ ( 145,224 ) $ ( 325,991 )

Weighted average number of:

Common stock shares outstanding

142,626,390 137,370,897 125,530,703

Weighted average number of shares outstanding, basic and diluted

Private placement pre-funded warrants

21,847,382 — —

Net loss per share, basic and diluted

164,473,772 137,370,897 125,530,703

Net loss per share

$ ( 2.57 ) $ ( 1.06 ) $ ( 2.60 )

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

Potentially dilutive securities, including all options issued and outstanding, ESPP shares issuable, and restricted shares subject to future vesting, that were not included in the diluted per share calculations for all periods presented because they would be anti-dilutive totaled approximately 23.2 million, 20.5 million, and 18.2 million shares as of December 31, 2024, 2023, and 2022, respectively.

Subsequent events

Collaboration and Development Funding Agreement

In January 2024, the Company entered into a Collaboration and Development Funding Agreement with an unrelated third party, pursuant to which this third party will provide $ 75.0 million of funding and collaborate with the Company to conduct a global Phase 2a study of BIIB122/DNL151 in patients with Parkinson’s disease and confirmed pathogenic variants of LRRK2.

Pursuant to this agreement, an upfront payment of $ 12.5 million was received in January 2024, with the remainder to be paid based on time and operational milestones in the study.

After the full $ 75.0 million investment has been made, 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.

Private Investment in Public Equity ("PIPE") financing

On February 27, 2024, the Company entered into a securities purchase agreement with certain investors for the private placement of (i) 3,244,689 shares of Denali's common stock at a price of $ 17.07 per share and (ii) pre-funded warrants to purchase an aggregate of 26,046,065 shares of Denali's common stock at a purchase price of $ 17.06 per pre-funded warrant, which represents the per share price for the common stock less the $ 0.01 exercise price.

Divestiture of Preclinical Small Molecule Programs

On March 1, 2024, the Company divested certain assets, including specified intellectual property, tangible assets, and equipment used to conduct early stage small molecule drug discovery ("Divested Assets") through an Asset Purchase and License Agreement (the "Asset Purchase Agreement") executed with Tenvie.

Additionally, certain of the Company’s employees terminated their employment with the Company and became employees of Tenvie.

In exchange for the Divested Assets, the Company received equity consideration of $ 15.0 million in the form of a simple agreement for future equity (“SAFE”).

In December 2024, the SAFE converted into 15.0 million shares of Tenvie's Series A Preferred Stock, par value $ 0.0001 per share, with a fair value of $ 15.0 million.

Under the terms of the Asset Purchase Agreement, the Company is eligible to receive certain market valuation, development and sales based milestone payments up to approximately $ 1.2 billion in the form of either cash or equity at the election of Tenvie.

The Company will also be entitled to receive future royalties on aggregate net sales of certain products, on a product-by-product and country-by-country basis during the periods of time commencing at the time of the first commercial sale of such product in such country, until the later of (i) the expiration of certain related patents, (ii) the expiration of Regulatory Exclusivity, or (iii) ten years after such first commercial sale.

In March 2024, Tenvie and the Company also entered into a sublease for approximately 12,000 square feet of office and lab space within the Company's corporate headquarters, and transition and research services agreement ("Service Agreements").

The sublease commenced in May 2024 and continues through September 2025, with one optional six month extension period.

The Service Agreements provides access to the Company's equipment and the provision of certain specified administrative and research services to Tenvie for a period concurrent with the sublease term.

This divestiture did not meet the criteria for reporting discontinued operations as the sale does not represent a strategic shift in the Company’s business.

The Company recognized a gain on divestiture of approximately $ 14.5 million in the Consolidated Statements of Operations and Comprehensive Loss during the year ended December 31, 2024 , representing the difference between the fair value of the consideration received and the carrying amount of the Divested Assets.

The Company recorded the investment in the shares of Series A Preferred Stock at $ 15.0 million which represents the fair value of the shares on the date of issuance.

There have been no subsequent observable price changes in orderly transactions for the identical or similar equity securities of Tenvie, and as such, the measurement of this investment remains unchanged , with the $ 15.0 million included within other non-current assets in the Consolidated Balance Sheet as of December 31, 2024 .

Segment Information

The Company has one operating segment with the goal to discover, develop and commercialize therapeutics (“Therapeutics”).

The Company has not generated any revenue from product sales, and has no marketing or commercial product distribution costs.

All revenue to date has been collaboration and license revenue from the Company’s collaboration agreements.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources.

The CODM, in alignment with the Company's overall corporate strategy and goals, analyses a variety of data to guide segment resource allocation, including program and portfolio scientific data, product market information and projections, probability of regulatory and commercial success, and the competitive environment.

The CODM also reviews certain financial results included in the segment Loss from Operations which is reported on the Consolidated Statements of Operations and Comprehensive Loss as total Loss from Operations.

The measure of segment assets is reported on the Consolidated Balance Sheets as Total Assets.

The accounting policies of the Therapeutics segment are the same as those described in the summary of significant accounting policies.

The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Therapeutics Segment

Year Ended December 31,

Total collaboration revenue

$ — $ 330,531 $ 108,463

External research and development expenses - TV programs, including cost sharing 138,196 139,064 96,587

External research and development expenses - small molecule programs, including cost sharing 42,623 49,850 44,738

Other research and development expenses 62,715 74,518 73,390

Personnel related research and development expenses

152,906 160,444 144,017

Total research and development expenses 396,440 423,876 358,732

Personnel related general and administrative expenses

73,505 73,668 64,147

Other general and administrative expenses

31,933 29,686 26,328

Total general and administrative expenses 105,438 103,354 90,475

Segment operating expenses 501,878 527,230 449,207

Segment gain from divestiture of small molecule programs 14,537 — —

Segment loss from operations ( 487,341 ) ( 196,699 ) ( 340,744 )

Segment interest and other income, net 64,636 51,505 14,774

Segment loss before income taxes $ ( 422,705 ) $ ( 145,194 ) $ ( 325,970 )

There is no difference between the segment loss before income taxes and total consolidated loss before income taxes for the years ended December 31, 2024, 2023 and 2022.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data