What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-06 · 87 added, 182 removed, 173 unchanged (61% of the section changed)

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Forward-looking statements include, but are not limited to, statements about:

• the progress, success, cost, and timing of our development activities, preclinical studies, and clinical trials, and in particular the development of our blood-brain barrier (“BBB”) platform technology, programs, and biomarkers, including the initiation and completion of studies or trials and related preparatory work, enrollment in such trials, the timing of when data from clinical trials will become available, the advancement of new molecule entities into clinical development and related timing, and the filing of investigational new drug applications or clinical trial applications;

• the progress, success, cost, and timing of our development activities, preclinical studies, and clinical trials, and in particular the development of our blood-brain barrier (“BBB”) platform, programs, and biomarkers, including the initiation and completion of studies or trials and related preparatory work, enrollment in such trials, the timing of when data from clinical trials will become available, the advancement of new molecule entities into clinical development and related timing, and the filing of investigational new drug applications or clinical trial applications;

• the impact of preclinical findings on our ability to achieve exposures of our product candidates that allow us to explore a robust pharmacodynamic range of these candidates in humans;

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• the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

• the terms and conditions of licenses granted to us and our ability to license and/or acquire additional intellectual property relating to our product candidates and BBB platform technology;

• the terms and conditions of licenses granted to us and our ability to license and/or acquire additional intellectual property relating to our product candidates and Transport Vehicle ("TV");

• our ability to obtain funding for our operations, including funding necessary to develop and commercialize our current and potential future product candidates;

• our plans and ability to establish sales, marketing, and distribution infrastructure to commercialize any product candidates for which we obtain approval;

• our plans and ability to establish sales, marketing, manufacturing, and distribution infrastructure to commercialize any product candidates for which we obtain approval;

• future agreements with third parties in connection with the commercialization of our product candidates;

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• our ability to enhance operational, financial, and information management systems;

• the impact of adverse economic conditions such as instability in the financial services sector, rising interest rates, rising inflation, and increased labor market competition;

• the impact of increased geopolitical uncertainty, a pandemic or other global health emergency, and related global economic disruptions and social conditions on our business;

• expectations regarding the intended use of proceeds from our February 2024 Private Investment in Public Equity ("PIPE") financing;

• the impact of adverse economic conditions such as instability in the financial services sector, rising interest rates, rising inflation, changes in currency exchange rates and currency controls, and increased labor market competition;

• the impact of increased geopolitical uncertainty, the global pandemic, tariffs and trade barriers, and related global economic disruptions and social conditions on our business;

• our financial performance.

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Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events, or otherwise.

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

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

• Degenogenes:

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

• Brain Delivery:

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

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

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

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

Ou r late and mid-stage clinic al programs are as follows:

• Tividenofusp alfa (DNL310, ETV:IDS), our lead enzyme replacement therapy ("ERT") program enabled by our Enzyme Transport Vehicle ("ETV"), is designed to cross the BBB and restore Iduronate 2-sulfatase ("IDS") and reduce glycosaminoglycans ("GAGs"), both peripherally and in the brain, in individuals with mucopolysaccharidosis II ("MPS II" or "Hunter syndrome");

• DNL343, our eukaryotic initiation factor 2 B ("eIF2B") activator program to address diseases such as amyotrophic lateral sclerosis ("ALS") and frontotemporal dementia ("FTD");

• BIIB122/DNL151, our leucine-rich repeat kinase 2 ("LRRK2") inhibitor program, being developed in collaboration with Biogen, to address Parkinson’s disease ("PD");

• Eclitasertib (SAR443122/DNL758), a peripheral and non-CNS penetrant RIPK1 inhibitor, being developed in collaboration with Sanofi, to address peripheral inflammatory diseases such as ulcerative colitis ("UC").

Ou r early-stage clinic al programs are as follows:

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

• TAK-594/DNL593 (PTV:PGRN), our recombinant progranulin ("PGRN") biotherapeutic enabled by our Protein Transport Vehicle ("PTV"), being developed in collaboration with Takeda, to address frontotemporal dementia-granulin ("FTD-GRN"), or frontotemporal dementia due to loss of function mutations in the GRN gene.

Key elements of our strategy include:

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

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

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

Ou r clinical programs are as follows:

• Tividenofusp alfa (DNL310, ETV:IDS), composed of iduronate-2-sulfatase ("IDS") fused to TV, is designed to deliver IDS into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II (Hunter syndrome) ;

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

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

• BIIB122/DNL151, a small molecule LRRK2 inhibitor, is being developed in collaboration with Biogen for the potential treatment of Parkinson's disease ("PD");

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

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

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Hunter syndrome (MPS II) Denali

eIF2B DNL343 Ph 1b ALS Denali

Ph 2/3 ALS Joint with Healey Center

LRRK2 BIIB122/DNL151 Ph 2a

Parkinson's disease Denali

Joint with Biogen

RIPK1 (Peripheral) eclitasertib, or SAR443122/DNL758

ETV:SGSH DNL126 Ph 1/2

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Joint with Takeda

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

LRRK2 BIIB122/DNL151 Ph 2a

Parkinson's disease Denali

Joint with Biogen

RIPK1 (Peripheral) eclitasertib, or SAR443122/DNL758

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

Key operational and financing milestones in 2025 to date include:

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

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

neurofilament light), and improvements and stabilization of multiple clinical outcomes measures over two years of treatment.

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

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

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

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

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

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

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

In the second quarter of 2024, we finalized the protocol amendment for the Phase 1/2 study and screening of participants for Cohort B2 is ongoing ;

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

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

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

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

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

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

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

The safety profile supports continued development.

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

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

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

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

In October 2024, we were informed by Sanofi that the K2 Phase 2 study evaluating the safety and efficacy of SAR443820/DNL788 on serum neurofilament light chain levels in participants with multiple sclerosis was discontinued based on not meeting the primary and key secondary endpoints;

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

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

The private placement closed on February 29, 2024, subject to customary closing conditions;

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

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

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

Denali has initiated screening of participants for the global Phase 2a study to evaluate safety and biomarkers associated with BIIB122/DNL151 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2.

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

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

• In May 2024, the Sean M.

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

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

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

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

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

• In January 2025, we announced topline results that the primary endpoint was not met in Regimen G of the Phase 2/3 HEALEY ALS Platform Trial evaluating DNL343 in the treatment of ALS.

In March 2025, we provided an update that additional analyses did not demonstrate a treatment effect on neurofilament light ("NfL"), a biomarker of neuronal damage, over the 24-week, double-blind period and in a subset of participants that completed an additional 28 weeks in the open-label active treatment extension.

Based on these outcomes, the active treatment extension in Regimen G was discontinued.

Overall, DNL343 was found to be generally well tolerated;

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

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

In February 2025, at the WORLD Symposium conference, we presented the primary analysis of the Phase 1/2 study in 47 participants with Hunter syndrome in the 24-week treatment period and additional long-term follow-up.

In May 2025, we completed a rolling submission of a Biologics License Application ("BLA") for tividenofusp alfa under the accelerated approval pathway;

• In February 2025, we and Sanofi executed a side letter terminating Sanofi's license to the CNS Products program including SAR443820/DNL788;

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

The ATV:TREM2 program termination became effective in April 2025;

• In March 2025, we officially opened our clinical biomanufacturing facility in Salt Lake City, Utah, expanding U.S.

manufacturing capabilities and strengthening supply chain control and operational efficiency;

• In April 2025, we announced productive collaboration and discussions with the FDA under the START program (“Support for clinical Trials Advancing Rare Disease Therapeutics”) around the potential for an accelerated development and approval path for DNL126 in the treatment of Sanfilippo syndrome;

• In May 2025, Biogen announced completion of enrollment in the Phase 2b LUMA study for early-stage Parkinson's disease with a readout expected in 2026.

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

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

We had net losses of $107.2 million and $308.0 million for the three and nine months ended September 30, 2024, respectively, and net losses of $99.4 million and $25.8 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, we had an accumulated deficit o f $1.42 billion.

We had net losses of $133.0 million and $101.8 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit o f $1.67 billion.

Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candida tes.

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

broaden and improve our BBB platform technology;

broaden and improve our TV platform;

acquire, discover, validate and develop additional product candidates;

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Components of Operating Results

Collaboration Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future.

All revenue recognized to date has been collaboration and license revenue from our collaboration agreements with Takeda, Sanofi and Biogen.

Future revenue may be recognized from the Takeda Collaboration Agreement, Sanofi Collaboration Agreement, and Biogen Collaboration Agreement, and may be generated from product sales or milestone payments, royalties and profit sharing reimbursement from other collaboration agreements, strategic alliances and licensing arrangements.

We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of license fees, option exercise fees, milestone payments, profit sharing reimbursement, other payments and product sales, to the extent any are successfully commercialized.

If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

Operating Expenses

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We record research and development expenses as incurred.

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

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

• external research and development expenses, including:

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We also track external expenses associated with our TV platform.

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

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

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

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

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

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

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

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General and Administrative

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

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

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

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

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

Gain from divestiture of small molecule programs

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Interest and Other Income, Net

Interest and other income, net , consists pr imarily of interest income and investment income earned on our cash, cash equivalents, and marketable securities, as well as sublease income and interest on our finance lease liability.

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

Results of Operations

Comparison of the three and nine months ended September 30, 2024 and 2023

Comparison of the three months ended March 31, 2025 and 2024

The following table sets forth the significant components of our results of operations (in thousands):

Three Months Ended September 30, Change

2024 2023 $ %

Collaboration revenue:

Collaboration revenue from customers

$ — $ 1,267 $ (1,267) * %

Total collaboration revenue

— 1,267 (1,267) *

Operating expenses:

Research and development

98,238 89,737 8,501 9

General and administrative

24,949 25,325 (376) (1)

Total operating expenses

123,187 115,062 8,125 7

Loss from operations (123,187) (113,795) (9,392) 8

Interest and other income, net

15,995 14,442 1,553 11

Net loss $ (107,192) $ (99,353) $ (7,839) 8 %

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* Percentage is not meaningful.

Nine Months Ended September 30, Change

2024 2023 $ %

Collaboration revenue:

Collaboration revenue from customers

$ — $ 330,531 $ (330,531) * %

Total collaboration revenue

Three Months Ended March 31, Change

2025 2024 $ %

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* Percentage is not meaningful.

Collaboration revenue.

There was no collaboration revenue for three and nine months ended September 30, 2024, and $1.3 million and $330.5 million for three and nine months ended September 30, 2023, respectively.

The decrease for the three months ended September 30, 2024 compared to September 30, 2023 was primarily due to activities under the Biogen Collaboration Agreement.

The decrease for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to a decrease of $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program, as well as decreases of revenue earned under the Takeda of $10.0 million and Sanofi Collaboration Agreements of $25.0 million received due to clinical milestones.

Research and development expen ses.

Research and development expenses were $98.2 million and $296.7 million for the three and nine months ended September 30, 2024, compared to $89.7 million and $316.1 million for the three and nine months ended September 30, 2023, respectively.

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

Three Months Ended September 30, Nine Months Ended September 30,

Research and development expenses were $116.2 million and $107.0 million for the three months ended March 31, 2025 and 2024, respectively.

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

Three Months Ended March 31, Change

2025 2024 $ %

ETV:IDS program external expenses $ 22,840 $ 20,388 $ 73,639 $ 87,674

ETV:SGSH program external expenses 3,435 1,792 10,474 6,417

PTV:PGRN program external expenses 2,500 1,889 6,145 8,107

TV platform and other program external expenses

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

$ 41,987 $ 35,684 $ 6,303 18 %

LRRK2 program external expenses 2,051 1,049 4,133 3,867

eIF2B program external expenses 7,702 4,971 24,219 14,866

Other external research and development expenses

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

8,854 13,121 (4,267) (33)

Other research and development expenses 25,117 15,881 9,236 58

Personnel related expenses (1)

40,269 42,330 (2,061) (5)

Other unallocated research and development expenses

11,291 10,931 31,823 38,693

Net cost sharing and research and development funding payments (2)

1,028 583 4,923 5,105

Total research and development expenses $ 116,227 $ 107,016 $ 9,211 9 %

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(1) Personnel related expenses include stock-based compensation expense of $14.1 million and $44.8 million for the three and nine months ended September 30, 2024, respectively, and $15.8 million and $47.8 million for the three and nine months ended September 30, 2023, respectively, reflecting decreases of $1.7 million and $3.0 million, respectively.

(2) The breakdown of net cost sharing, and research and development funding payments is shown in the table below.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

net reimbursements for PTV:PGRN program $ (1,211) $ (1,777) $ (3,549) $ (5,120)

net reimbursements for ATV:TREM2 program

(208) (1,018) (936) (4,279)

net payments for LRRK2 program

4,965 3,378 14,194 14,504

LRRK2 research and development funding

(2,518) — (4,786) —

Net cost sharing payments and research and development funding payments

$ 1,028 $ 583 $ 4,923 $ 5,105

The increase in research and development expenses of approximately $8.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, was primarily attributable to the following:

• Increases in costs in various clinical stage programs, including of eIF2B ($2.7 million), ETV:IDS ($2.5 million), ETV:SGSH ($1.6 million), LRRK2 ($1.0 million) and PTV:PGRN ($0.6 million) reflecting the continued progress of these programs in clinical trials;

• An increase of $6.4 million in TV platform and other program external expenses, reflecting our continued investment in our TV-enabled product candidates.

These increases were partially offset by a decrease $4.3 million in personnel related expenses due to decreases in salary and stock-based compensation expenses due to decreased headcount, primarily as a result of the divestiture of our preclinical small molecule programs in March 2024, and a decrease of $2.9 million in other external research and development expenses associated with the divestiture of our preclinical small molecule programs.

The decrease in research and development expenses of approximately $19.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, was primarily attributable to the following:

• a decrease of $14.0 million in ETV:IDS program external expenses due to $30.0 million in milestone-related expense in the first quarter of 2023 pursuant to our acquisition of F-star Gamma, which was triggered by a clinical milestone for the ETV:IDS program.

This decrease was partially offset by increased spend in 2024 related to our ongoing Phase 1/2 study and our potentially registrational Phase 2/3 study;

• decreases of $7.9 million and $6.9 million in personnel related expenses and other unallocated research and development expenses, respectively, primarily as a result of the divestiture of our preclinical small molecule programs in March 2024;

• a decrease of $2.0 million in PTV:PGRN program external expenses as the TAK-594/DNL593 (PTV:PGRN) Phase 1/2 study was previously voluntarily paused;

• a decrease of $6.7 million in other external research and development expenses primarily due to elevated facility costs in the nine months ended September 30, 2023 as a result of accelerated depreciation on leasehold improvements associated with the termination of the former SLC Lease.

These decreases were partially offset by increases of $9.4 million and $4.1 million in eIF2B and ETV:SGSH program external expenses, respectively, reflecting the continued progress of these programs in clinical trials, and an increase of $4.6 million in TV platform and other program external expenses, reflecting our continued investment in our TV-enabled product candidates.

(1) Personnel related expenses include stock-based compensation expense of $15.1 million and $16.3 million for the three months ended March 31, 2025 and 2024, respectively, reflecting a decrease of $1.2 million.

The increase in research and development expenses of approximately $9.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, was primarily attributable to an increase of $6.3 million related to our TV programs, driven by increased spend on both clinical programs such as DNL126 and preclinical programs, such as our OTV franchise, as well as an increase of $9.2 million in other research and development expenses, including lab consumables, consultants and general facilities costs, driven in part by the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah.

These increases were partially offset by a $2.1 million decrease in personnel-related expenses, including lower salaries and stock-based compensation, and a reduction in expenses related to small molecule programs.

The decline in small molecule program expenses was primarily due to the Collaboration and Development Funding Agreement entered into with an unrelated third party, under which, starting in the second quarter of 2024, funding earned offsets LRRK2 program expenses.

General and administrative expenses.

General and administrative expense was $24.9 million for the three months ended September 30, 2024, and $25.3 million for the same period in 2023.

General and administrative expenses were $75.4 million for the nine months ended September 30, 2024 compared to $78.6 million for the nine months ended September 30, 2023.

The decrease of $3.2 million was primarily attributable to $2.5 million of combined decreases in professional services and facilities costs, and $1.8 million of decreased personnel-related expenses consisting of employee compensation and stock-based compensation expenses as a result of the divestiture of our preclinical small molecule programs in March 2024, partially offset by an increase of $1.1 million in other corporate costs.

General and administrative expense was $29.4 million and $25.2 million for the three months ended March 31, 2025, and 2024, respectively.

The increase of $4.1 million was primarily driven by activities related to the submission of the BLA for tividenofusp alfa, which was completed in May 2025, and preparations for a commercial launch.

Gain from divestiture of small molecule programs.

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Sources of Liquidity

As of September 30, 2024, we had cash, cash equivalents and marketable securities in the amount of $1.28 billion.

As of March 31, 2025, we had cash, cash equivalents and marketable securities in the amount of $1.05 billion.

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

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

Through September 30, 2024 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022.

Under stock purchase agreements with collaboration partners we have received a further $575.0 million through September 30, 2024 .

Through March 31, 2025 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022.

Under stock purchase agreements with collaboration partners we have received a further $575.0 million through March 31, 2025 .

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

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

LLC, Leerink Partners LLC (formerly SVB Securities LLC) and Cantor Fitzgerald & Co.

as sales agents.

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

Pursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, through September 30, 2024 we have received upfront, option and milestone payments of $115.0 million , $225.0 million, $565.0 million and $25.0 million, respectively, and have also received $47.2 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi.

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

LLC and Leerink Partners LLC as sales agents.

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

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

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

Through March 31, 2025, we have received $115.0 million , $225.0 million, $565.0 million and $25.0 million, p ursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, respectively.

These payments include upfront, option and milestone payments.

Additionally, we have received $50.0 million and $16.2 million in gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi.

Future Funding Requirements and Commitments

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

We have an accumulated deficit of $1.42 billion through September 30, 2024.

We have an accumulated deficit of $1.67 billion as of March 31, 2025.

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

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

As of September 30, 2024, the operating lease liability was $46.9 million and the finance lease liability was $5.7 million.

Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of September 30, 2024 of $49.0 million, with certain amounts subject to cost sharing with Takeda.

As of March 31, 2025, we had total undiscounted lease payment obligations of $66.6 million.

Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of March 31, 2025 of $68.7 million, with certain amounts subject to cost sharing with Takeda.

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

These commitments are more fully described in Note 6 - Commitments and Contingencies of our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q .

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

These commitments are more fully described in Note 6 "Commitments and Contingencies" of our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and in Note 4, "Acquisition, License Agreement and Research and Development Funding Collaboration Agreement" and Note 7, "Commitments and Contingencies" to the consolidated financial statements included in Item 8.

of our Annual Report on Form 10-K filed on February 27, 2025 .

Our future funding requirements, including changes to and new commitments, will depend on many factors, including:

• our ability to obtain regulatory approval for our product candidates, establish sales and marketing capabilities, and successfully market such approved product candidates;

• the timing and progress of preclinical and clinical development activities;

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• our ability to maintain our current research and development programs and to establish new research and development, license or collaboration arrangements;

• our ability and success in securing manufacturing relationships with third parties or in establishing and operating a manufacturing facility;

• our ability and success in securing manufacturing relationships with third parties or in operating a manufacturing facility;

• the costs involved in prosecuting, defending and enforcing patent claims and other intellectual property claims;

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The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities $ (131,468) $ (113,620)

Net cash (used in) provided by investing activities (260,963) 176,261

Net cash provided by financing activities 488,472 13,115

Net cash provided by (used in) investing activities 18,748 (453,187)

Net cash (used in) provided by financing activities (3,762) 500,275

Net decrease in cash, cash equivalents and restricted cash $ (116,482) $ (66,532)

Net Cash Used In Operating Activities

During the nine months ended September 30, 2024, net cash used in operating activities was $264.0 million, which consisted of a net loss of $308.0 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, non-cash rent expenses, and the non-cash gain on divestiture of small molecule programs.

During the three months ended March 31, 2025, net cash used in operating activities was $131.5 million, which consisted of a net loss of $133.0 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, and non-cash rent expenses.

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

Net Cash (Used In) Provided By Investing Activities

During the nine months ended September 30, 2024, net cash used in investing activities was $261.0 million, which consisted of $1.06 billion of purchases of marketable securities and $10.8 million of capital expenditures to purchase property and equipment, partially offset by $806.1 million in proceeds from maturities and sales of marketable securities.

Net Cash Provided By Financing Activities

During the nine months ended September 30, 2024, cash provided by financing activities was $488.5 million which consisted of $499.3 million of net proceeds from issuance of common stock and pre-funded warrants in a private placement in February 2024 and $13.2 million in proceeds from the exercise of stock options and the Company's ESPP, partially offset by an aggregate of $24.0 million of payments related to our finance lease.

Net Cash Provided By (Used In) Investing Activities

During the three months ended March 31, 2025, net cash provided by investing activities was $18.7 million, which consisted of $161.8 million in proceeds from the maturities of marketable securities, partially offset by $137.9 million of purchases of marketable securities and $5.1 million capital expenditures to purchase property and equipment.

Net Cash (Used In) Provided By Financing Activities

During the three months ended March 31, 2025, cash used in financing activities was $3.8 million which consisted of the aggregate of $4.4 million of payments related to our finance lease, partially offset by the $0.6 million in proceeds from the exercise of stock options and the Company's ESPP.

Critical Accounting Estimates

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In our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025, we described the accounting estimates that we believe involve a significant level of estimation uncertainty which could have a material impact on our financial condition or results of operations.

There have been no material changes to these critical accounting estimates during the nine months ended September 30, 2024.

There have been no material changes to these critical accounting estimates during the three months ended March 31, 2025.

Recent Accounting Pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2024 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 28, 2024, that are of significance or potential significance to us.

There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2025 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025, that are of significance or potential significance to us.

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-Q

Item 2. Management’s Discussion and Analysis