What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2025-11-06 · 168 added, 181 removed, 331 unchanged (51% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Current assets:

7 unchanged sentences

Operating lease right-of-use asset 17,922 19,002

Intangible asset, net 36,000 —

Other non-current assets 26,220 25,939

3 unchanged sentences

Accounts payable $ 40,380 $ 505

Accrued compensation 18,358 24,728

Accrued clinical and other research and development costs 23,355 22,822

Accrued manufacturing costs 5,002 12,779

Operating lease liability, current 9,164 8,308

Deferred research and development funding liability, current 22,580 14,129

Other accrued costs and current liabilities 69,776 97,846

2 unchanged sentences

Finance lease liability, less current portion 5,508 5,532

Deferred research funding and development liability, less current portion 4,038 —

Liability related to the revenue participation right agreement 199,581 —

Total liabilities 339,925 131,093

2 unchanged sentences

Convertible preferred stock, $ 0.01 par value;

40,000,000 shares authorized as of September 30, 2025 and December 31, 2024;

0 shares issued and outstanding as of September 30, 2025 and December 31, 2024

40,000,000 shares authorized as of March 31, 2026 and December 31, 2025;

0 shares issued and outstanding as of March 31, 2026 and December 31, 2025

Common stock, $ 0.01 par value;

400,000,000 shares authorized as of September 30, 2025 and December 31, 2024;

146,625,722 shares and 144,220,986 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

400,000,000 shares authorized as of March 31, 2026 and December 31, 2025;

158,656,318 shares and 156,182,177 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital 3,104,838 3,062,715

Accumulated other comprehensive income 1,101 2,020

Accumulated other comprehensive income (loss) ( 682 ) 682

Accumulated deficit ( 2,179,971 ) ( 2,051,524 )

5 unchanged sentences

(In thousands, except share and per share amounts)

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

2025 2024 2025 2024

Three Months Ended March 31,

Operating expenses:

1 unchanged sentence

$ 103,846 $ 116,227

General and administrative 35,484 24,949 97,104 75,379

General and administration 33,511 29,353

Total operating expenses 137,357 145,580

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

Loss from operations ( 137,357 ) ( 145,580 )

1 unchanged sentence

Net loss $ ( 128,447 ) $ ( 132,970 )

Net loss per share, basic and diluted $ ( 0.74 ) $ ( 0.63 ) $ ( 2.24 ) $ ( 1.89 )

Weighted average number of shares outstanding, basic and diluted 172,421,492 169,456,988 171,702,183 162,589,325

Comprehensive loss

Net loss $ ( 126,902 ) $ ( 107,192 ) $ ( 383,991 ) $ ( 308,020 )

Other comprehensive income (loss):

1 unchanged sentence

Comprehensive loss $ ( 129,811 ) $ ( 132,953 )

Net loss per share, basic and diluted $ ( 0.69 ) $ ( 0.78 )

Weighted average number of shares outstanding, basic and diluted 186,636,978 171,222,030

See accompanying notes to unaudited condensed consolidated financial statements.

10 unchanged sentences

Net loss — — — — ( 132,970 ) ( 132,970 )

Other comprehensive loss — — — ( 919 ) — ( 919 )

Balance at September 30, 2025 146,625,722 $ 1,793 $ 2,846,278 $ 1,101 $ ( 1,922,975 ) $ 926,197

Balance at June 30, 2025 145,685,442 $ 1,783 $ 2,820,404 $ 939 $ ( 1,796,073 ) $ 1,027,053

Issuances under equity incentive plans 586,914 6 577 — — 583

Vesting of restricted stock units 353,366 4 ( 4 ) — — —

Stock-based compensation — — 25,301 — — 25,301

Net loss — — — — ( 126,902 ) ( 126,902 )

Other comprehensive income

— — — 17 — 17

Balance at September 30, 2025 146,625,722 $ 1,793 $ 2,846,278 $ 1,101 $ ( 1,922,975 ) $ 926,197

Balance at March 31, 2025 145,251,258 $ 1,778 $ 2,790,825 $ 2,037 $ ( 1,671,954 ) $ 1,122,686

Balance at December 31, 2025 156,182,177 $ 1,888 $ 3,062,715 $ 682 $ ( 2,051,524 ) $ 1,013,761

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

Issuance of common stock, net of issuance cost of $ 45

746,468 8 12,358 — — 12,366

3 unchanged sentences

Net loss — — — — ( 128,447 ) ( 128,447 )

Other comprehensive income — — — 4,886 — 4,886

Balance at September 30, 2024 143,840,029 $ 1,764 $ 2,735,433 $ 5,529 $ ( 1,424,231 ) $ 1,318,495

Balance at June 30, 2024 143,123,582 $ 1,757 $ 2,704,992 $ ( 2,659 ) $ ( 1,317,039 ) $ 1,387,051

Issuances under equity incentive plans

291,183 3 5,453 — — 5,456

Vesting of restricted stock units 425,264 4 ( 4 ) — — —

Stock-based compensation

Other comprehensive loss

— — — ( 1,364 ) — ( 1,364 )

Net loss — — — — ( 107,192 ) ( 107,192 )

Other comprehensive income — — — 8,188 — 8,188

Balance at September 30, 2024 143,840,029 $ 1,764 $ 2,735,433 $ 5,529 $ ( 1,424,231 ) $ 1,318,495

Balance at March 31, 2026 158,656,318 $ 1,913 $ 3,104,838 $ ( 682 ) $ ( 2,179,971 ) $ 926,098

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

7 unchanged sentences

Right-of-use asset amortization for finance lease

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

Other non-cash items

Changes in operating assets and liabilities:

9 unchanged sentences

Purchases of property and equipment ( 2,466 ) ( 5,078 )

Net cash provided by (used in) investing activities 234,513 ( 260,963 )

Net cash provided by investing activities 94,460 18,748

Financing activities

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

Proceeds from underwriter exercising option to purchase common stock, net of issuance costs 12,366 —

Proceeds from sale of revenue participation right 200,000 —

Proceeds from exercise of awards under equity incentive plans 6,695 595

Payments for finance lease right-of-use asset ( 17 ) ( 4,357 )

Net cash (used in) provided by financing activities ( 2,917 ) 488,472

Net decrease in cash, cash equivalents and restricted cash ( 82,466 ) ( 36,470 )

Net cash provided by (used in) financing activities 219,044 ( 3,762 )

Net increase (decrease) in cash, cash equivalents and restricted cash 182,300 ( 116,482 )

Cash, cash equivalents and restricted cash at beginning of period 208,432 176,535

1 unchanged sentence

Supplemental disclosures of cash flow information

Equity consideration received in the divestiture of small molecule programs (Note 10) $ — $ 15,000

Payment due on intangible asset acquired $ 36,000 $ —

See accompanying notes to unaudited condensed consolidated financial statements.

15 unchanged sentences

These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

During the nine months ended September 30, 2025 there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2024 Annual Report on Form 10-K.

During the three months ended March 31, 2026 the Company added significant accounting policies related to intangible assets and the liability related to the revenue participation right.

Aside from these new accounting policies, there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2025 Annual Report on Form 10-K.

For further information with regard to the Company’s Significant Accounting Policies, please refer to Note 1, "Significant Accounting Policies," to the Company’s Consolidated Financial Statements included in the 2025 Annual Report on Form 10-K.

17 unchanged sentences

The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and marketable securities and issuers of marketable securities to the extent recorded on the Condensed Consolidated Balance Sheets.

As of September 30, 2025 and December 31, 2024, the Company had no off-balance sheet concentrations of credit risk.

The Company is subject to a number of risks similar to other clinical-stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of current or future preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain regulatory and marketing approvals for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, protection of proprietary technology, the ability to make milestone, royalty or other payments due under any license or collaboration agreements, and the need to secure and maintain adequate manufacturing arrangements with third parties.

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, global pandemics, war and armed conflicts, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages.

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

As of March 31, 2026 and December 31, 2025, the Company had no off-balance sheet concentrations of credit risk.

The Company is subject to a number of risks similar to other early commercial-stage biopharmaceutical companies, including, but not limited to, the risk that its approved product, AVLAYAH TM (tividenofusp alfa-eknm), may not achieve expected levels of market acceptance or commercial success;

the need to obtain adequate additional funding to continue as a going concern;

its history of significant losses and expectation of continued losses;

possible failure or delay of current or future preclinical testing or clinical trials;

its reliance on third parties to conduct its clinical trials, manufacture product, and support commercialization;

the need to successfully develop, commercialize, and gain market acceptance of its product candidates;

competitors developing new technological innovations;

its rights to develop and commercialize its product candidates pursuant to the terms and conditions of licenses granted to the Company;

protection of proprietary technology;

the ability to make milestone, royalty or other payments due under license or collaboration agreements;

the need to enforce its intellectual property rights;

and the need to scale internal manufacturing and/or secure and maintain adequate manufacturing arrangements with third parties.

If the Company does not successfully commercialize AVLAYAH or its other product candidates, it may be unable to generate sufficient product revenue or achieve profitability.

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

The Company holds an equity investment in a venture-backed privately held company.

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

4 unchanged sentences

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 three and nine months ended September 30, 2025 and 2024.

There were no impairments during the three months ended March 31, 2026 and 2025.

Cash, Cash Equivalents and Restricted Cash

1 unchanged sentence

Cash equivalents are reported at fair value.

Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Condensed Consolidated Balance Sheets and restricted cash of $ 3.1 million and $ 1.6 million as of September 30, 2025 and December 31, 2024, respectively, which is included within other non-current assets in the Condensed Consolidated Balance Sheets.

Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Condensed Consolidated Balance Sheets and restricted cash of $ 3.1 million as of March 31, 2026 and December 31, 2025, which is included within other non-current assets in the Condensed Consolidated Balance Sheets.

Restricted cash relates to letters of credit supporting the Company’s headquarters building lease and a letter of credit supporting the Company’s credit card program.

Marketable Securities

11 unchanged sentences

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

Intangible Assets

Milestone payments made to acquire or maintain rights to intellectual property associated with an approved product are capitalized when the related contingency is resolved and the payment becomes probable and payable.

Amounts capitalized are recorded as intangible assets and generally amortized on a straight-line basis over the estimated useful life of the underlying intellectual property.

The Company evaluates such intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company leases real estate and certain equipment for use in its operations.

9 unchanged sentences

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

Liability Related to the Revenue Participation Right

The Company accounts for the synthetic royalty funding agreement with Royalty Pharma Investments 2023 ICAV ("Royalty Pharma") pursuant to which Royalty Pharma agreed to provide up to $ 275.0 million in funding to the Company in exchange for a 9.25 % royalty on worldwide net sales of AVLAYAH as a debt financing under ASC Topic 470, Debt (ASC 470).

The $ 200.0 million of proceeds received in March 2026 are recorded as a liability on the Company's Condensed Consolidated Balance Sheets, net of transaction costs.

The liability will be amortized under the effective interest method based on the Company's estimates of future royalty payments to Royalty Pharma over the life of the agreement.

The resulting non-cash interest expense is recognized in Interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The liability related to the revenue participation right and related interest expense are based on current estimates of the amount and timing of projected royalty payments, which are based on estimates of future AVLAYAH net sales.

The Company periodically assesses the forecasted net sales and to the extent the amount or timing of estimated royalty payments are materially different than previous estimates, the Company will account for any such change by adjusting the liability related to the sale of future revenues and prospectively recognizing the related non-cash interest expense.

The Company classifies the portion of the liability related to the revenue participation right that is expected to be amortized or settled within twelve months of the reporting date as current, with the remainder classified as non-current.

Classification is based on forecasted royalty payments and the related recognition of interest and principal under the effective interest method.

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 September 30, 2025 and September 30, 2024 include 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 7 - " Common Stock ".

The weighted-average common shares outstanding as of March 31, 2026 include the pre-funded warrants to purchase shares of common stock that were issued in connection with the February 2024 private placement and December 2025 public offering, as discussed further in Note 10.

Recently Issued Accounting Pronouncements

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

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.

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 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.

7 unchanged sentences

Assets and liabilities measured at fair value at each balance sheet date are as follows (in thousands):

September 30, 2025

March 31, 2026

Level 1 Level 2 Level 3 Total

5 unchanged sentences

Long-term marketable securities:

government treasuries 40,308 — — 40,308

Corporate debt securities — 23,477 — 23,477

4 unchanged sentences

Money market funds $ 149,874 $ — $ — $ 149,874

Commercial paper — 24,899 — 24,899

Short-term marketable securities:

1 unchanged sentence

Corporate debt securities — 62,469 — 62,469

Commercial paper — 6,572 — 6,572

Long-term marketable securities:

4 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 for the nine months ended September 30, 2025 or for the year ended December 31, 2024.

The Company has not transferred any assets or liabilities between the fair value measurement levels for the three months ended March 31, 2026 or for the year ended December 31, 2025.

Marketable Securities

All marketable securities were considered available-for-sale at September 30, 2025 and December 31, 2024.

All marketable securities were considered available-for-sale at March 31, 2026 and December 31, 2025.

On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs as discussed in Note 2, "Fair Value Measurements".

The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below (in thousands):

September 30, 2025

March 31, 2026

Amortized Cost Unrealized Holding Gains Unrealized Holding Losses Aggregate Fair Value

7 unchanged sentences

Long-term marketable securities:

government treasuries

40,396 — ( 88 ) 40,308

Corporate debt securities

10 unchanged sentences

62,407 71 ( 9 ) 62,469

Commercial paper

6,572 — — 6,572

Total short-term marketable securities

8 unchanged sentences

$ 759,841 $ 1,054 $ ( 20 ) $ 760,875

As of September 30, 2025 and December 31, 2024, 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 September 30, 2025 or December 31, 2024.

As of March 31, 2026 and December 31, 2025, 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 March 31, 2026 or December 31, 2025.

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.

2 unchanged sentences

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 September 30, 2025, all of the Company’s marketable securities have an effective maturity of less than two years .

As of March 31, 2026, all of the Company’s marketable securities have an effective maturity of less than two years .

Intangible Asset

In connection with the May 2018 acquisition of F-star Gamma Limited ("F-star Gamma") and related license arrangements, the Company is obligated to make contingent payments upon the achievement of specified preclinical, clinical, regulatory and commercial milestones.

Additional information regarding these arrangements is included in Note 4, “Acquisition, License Agreement and Research and Development Funding Collaboration Agreement,” to the consolidated financial statements included in the Company’s 2025 Annual Report on Form 10-K.

In March 2026, following the U.S.

Food and Drug Administration’s accelerated approval of AVLAYAH, a $ 36.0 million milestone payment became due under this arrangement.

The amount was capitalized as an intangible asset and will be amortized on a straight-line basis over its estimated useful life.

The amount is included in accounts payable in the Condensed Consolidated Balance Sheet as of March 31, 2026, and is expected to be fully paid by Q3 2026.

In addition to the U.S.

regulatory milestone described above, the Company may be required to make additional contingent consideration payments of up to $ 174.0 million, composed of $ 24.0 million due upon regulatory approval of AVLAYAH in the European Union, and up to $ 150.0 million in commercial contingent payments.

Research and Development Funding Collaboration 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 in 2024, with a further $ 25.0 million triggered and received in March and April 2025, respectively.

The remaining $ 25.0 million will trigger 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 an offset to research and development expenses of $ 3.7 million and $ 12.5 million in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025, respectively, and $ 2.5 million and $ 4.8 million for the three and nine months ended September 30, 2024, respectively.

The Company recorded current and non-current deferred research and development funding liabilities of $ 22.6 million and $ 4.0 million, respectively on the Condensed Consolidated Balance Sheet as of September 30, 2025.

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.

In January 2024, the Company entered into a Collaboration and Development Funding Agreement with an unrelated third party, which obligates third party to 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.

This arrangement is further described in Note 4, " Acquisition, License Agreement and Research and Development Funding Collaboration Agreement", to the consolidated financial statements in the 2025 Annual Report on Form 10-K.

Under this arrangement, the Company recognized an offset to research and development expenses of $ 6.0 million and $ 5.1 million in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and 2025, respectively.

The Company recorded current deferred research and development funding liabilities of $ 15.1 million and $ 21.1 million on the Condensed Consolidated Balance Sheet as of March 31, 2026 and December 31, 2025, respectively.

Collaboration Agreements

1 unchanged sentence

(“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”).

The details of the Biogen Collaboration Agreement, the August 2023 amendment to the ROFN and Option Agreement, and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the 2024 Annual Report on Form 10-K.

On July 26, 2024, Denali and Biogen executed a Side Letter to the ROFN and Option Agreement, pursuant to which, effective as of the date of the Side Letter, Biogen terminated its license to the ATV:Abeta program enabled by Denali’s TfR-targeting technology against amyloid beta for the potential treatment of Alzheimer's disease, and granted Denali rights to data generated during the collaboration.

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

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

There were no changes to the terms of the LRRK2 Agreement during the three and nine months ended September 30, 2025 or 2024.

The Company has no remaining performance obligations under the Biogen Collaboration Agreement, and therefore no contract liability remained on the Condensed Consolidated Balance Sheets as of September 30, 2025 or December 31, 2024 .

As of September 30, 2025, the Company had no t recorded milestone revenue or product sales under the Biogen Collaboration Agreement.

The details of the Biogen Collaboration Agreement, the August 2023 amendment and July 2024 side letter to the ROFN and Option Agreement, and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the 2025 Annual Report on Form 10-K.

As of March 31, 2026, the Company had no t recorded milestone revenue or product sales under the Biogen Collaboration Agreement.

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.

The details of the Sanofi Collaboration Agreement and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2024 Annual Report on Form 10-K.

The Company has no remaining performance obligations under the Sanofi Collaboration Agreement, and therefore no contract liability remains on the Condensed Consolidated Balance Sheets as of September 30, 2025 or December 31, 2024 .

On February 24, 2025, Denali and Sanofi executed a side letter terminating Sanofi's license to the central nervous system ("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 details of the Sanofi Collaboration Agreement, the February 2025 side letter, and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

Under the Sanofi Collaboration Agreement, the Company is eligible to receive milestone payments totaling up to approximately $ 495.0 million upon achievement of certain clinical, regulatory and sales milestone events for Peripheral Products, and variable royalties on worldwide net sales.

As of September 30, 2025, the Company had earned milestone payments of $ 100.0 million and had no t recorded any product sales under the Sanofi Collaboration Agreement.

As of March 31, 2026, the Company had earned milestone payments of $ 100.0 million and had no t recorded any product sales under the Sanofi Collaboration Agreement.

In January 2018, the Company entered into a Collaboration and Option Agreement ("Takeda Collaboration Agreement") with Takeda Pharmaceutical Company Limited ("Takeda").

2 unchanged sentences

The opt-in by Takeda on the PTV:PGRN and ATV:TREM2 programs represented two new contracts with a customer for accounting purposes (the "PTV:PGRN Collaboration Agreement" and the "ATV:TREM2 Collaboration Agreement"), both of which became effective in December 2021.

The details of the PTV:PGRN Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2024 Annual Report on Form 10-K.

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

The ATV:TREM2 program termination became effective 60 days following the notice date, and subsequently, there are no future milestones, cost, or profit sharing related to this agreement.

As of September 30, 2025, the Company had earned an aggregate of $ 10.0 million in option fee payments and $ 10.0 million in milestone payments from Takeda under the PTV:PGRN and ATV:TREM2 Collaboration Agreements, and had no t recorded any product sales under either agreement.

The February 2025 ATV:TREM2 discontinuation and the PTV:PGRN Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

In April 2026, Takeda notified the Company of its decision to terminate the collaboration agreement related to PTV:PGRN.

As a result, the Company will regain full rights to DNL593 and the related intellectual property portfolio.

Subsequent to the effective date of the termination of the PTV:PGRN Collaboration Agreement, there are no future milestones, cost, or profit sharing related to this agreement.

As of March 31, 2026, the Company had earned an aggregate of $ 10.0 million in option fee payments and $ 10.0 million in milestone payments from Takeda under the PTV:PGRN and ATV:TREM2 Collaboration Agreements, and had no t recorded any product sales under either agreement.

Cost Sharing Payments and Reimbursements

Cost sharing payments to collaboration partners recorded as expenses in research and development expenses in the Condensed 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 Condensed Consolidated Statements of Operations and Comprehensive Loss are as follows (in thousands):

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

2025 2024 2025 2024

Three Months Ended March 31,

Takeda Collaboration Agreement:

6 unchanged sentences

LRRK2 cost sharing payments (2)

4,100 4,965 12,980 14,194

Net cost sharing payments (reimbursements) $ 2,246 $ 2,988

_________________________________

(1) Cost sharing reimbursements of $ 1.9 million and $ 1.5 million were recorded as a receivable within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024, respectively.

(2) Cost sharing payments due to Biogen of $ 4.1 million and $ 2.5 million were recorded within accounts payable on the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024, respectively.

(1) Cost sharing reimbursements of $ 1.6 million and $ 1.6 million were recorded as a receivable within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.

(2) Cost sharing payments due to Biogen of $ 3.9 million and $ 2.8 million were recorded within other accrued costs and current liabilities on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.

Balance Sheet Components

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following (in thousands):

March 31, 2026 December 31, 2025

Accrued compensation $ 9,218 $ 32,179

Accrued clinical and other research & development costs

21,475 22,283

Accrued manufacturing costs 9,031 5,336

Operating lease liability, current 9,769 9,463

Finance lease liability, current

Deferred research and development funding liability, current 15,116 21,101

Other accrued costs and current liabilities 5,077 7,401

Total accrued expenses and other current liabilities $ 69,776 $ 97,846

Liability Related to the Revenue Participation Right

In December 2025, the Company entered into a synthetic royalty funding agreement (the “Royalty Agreement”) with Royalty Pharma.

Pursuant to the Royalty Agreement, Royalty Pharma agreed to provide up to $ 275.0 million in funding to the Company in exchange for a 9.25 % royalty on worldwide net sales of AVLAYAH ("Revenue Participation Right").

The Company received $ 200.0 million in gross proceeds in March 2026 triggered by the U.S.

Food and Drug and Administration’s accelerated approval of AVLAYAH.

The Company is entitled to receive an additional $ 75.0 million upon approval of AVLAYAH by the European Medicines Agency ("EMA") on or before December 31, 2029.

The Company retains all worldwide development and commercialization rights to AVLAYAH.

The royalty obligation to Royalty Pharma will cease upon cumulative royalty payments reaching a cap of 3.0 times the total funding received, or 2.5 times the funding received if such cap is reached in respect of sales that occur on or before the end of the first quarter of 2039.

The $ 200.0 million, net of transaction costs of approximately $ 0.4 million, is recorded as a non-current liability on the Company's Condensed Consolidated Balance Sheet as of March 31, 2026 based on the estimated timing of future royalty payments.

The royalty payments to Royalty Pharma will be recorded as a reduction of the liability.

The additional $ 75.0 million contingent upon EMA approval of AVLAYAH has not been recognized as a liability as of March 31, 2026, as the receipt is contingent upon a future regulatory event.

Upon receipt, the additional proceeds will be recorded as an increase to the liability, net of any incremental transaction costs, and the effective interest rate will be adjusted prospectively.

As of March 31, 2026, the Company's estimate of total future royalty payments resulted in an effective annual interest rate of approximately 11 %.

No royalty payments and non-cash interest expense were recognized during the three months ended March 31, 2026.

As of March 31, 2026, the carrying value of the liability approximates its estimated fair value.

The Company’s projections of future royalty payments are subject to estimation uncertainty and are based on various assumptions underlying projected net product sales over the term of the agreement.

These inputs are considered to be Level 3 inputs in the fair value hierarchy, as they involve unobservable inputs and judgment.

Changes in these assumptions could have a material impact on the effective interest rate.

Commitments and Contingencies

Lease Obligations

In May 2018, the Company entered into an operating lease for its corporate headquarters in South San Francisco (the "Headquarters Lease").

In April 2023, the Company entered into a finance lease for its clinical manufacturing site in Salt Lake City (the "SLC Lease").

In May 2018, the Company entered into an operating lease for its corporate headquarters in South San Francisco (the "Headquarters Lease"), and in April 2023, the Company entered into a finance lease for its clinical manufacturing site in Salt Lake City (the "SLC Lease").

Both leases are further described in Note 7, "Commitments and Contingencies," to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

Upon completion of construction in the second quarter of 2025, the Company recorded total assets of approximately $ 47.4 million within the Finance lease ROU asset, which were purchased by the Company but are considered to be owned by the landlord.

The current finance lease liability is included in other accrued costs and current liabilities in the Condensed Consolidated Balance Sheet as of September 30, 2025 .

There were no changes to the terms of the leases recognized under ASC 842 during the three and nine months ended September 30, 2025 or 2024.

Operating lease costs, excluding variable lease costs, were $ 1.9 million and $ 5.7 million for the three and nine months ended September 30, 2025, respectively, and $ 1.9 million and $ 5.8 million for the three and nine months ended September 30, 2024, respectively.

Variable lease costs related to the operating lease were $ 1.5 million and $ 4.1 million for the three and nine months ended September 30, 2025, respectively, and $ 1.6 million and $ 3.9 million for the three and nine months ended September 30, 2024, respectively.

Finance lease costs representing amortization of ROU assets and interest on lease liability were $ 0.9 million and $ 0.2 million, respectively, for the three months ended September 30, 2025, and $ 2.7 million and $ 0.5 million, respectively, for the nine months ended September 30, 2025.

Finance lease costs representing amortization of ROU assets and interest on lease liability were $ 0.4 million and $ 0.1 million, respectively, for both the three and nine months ended September 30, 2024.

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

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

2025 2024 2025 2024

Operating cash flows from operating lease $ 2,980 $ 2,885 $ 8,813 $ 8,532

As of September 30,

Weighted-average remaining lease term (in years):

Operating lease

3.6 years 4.6 years

Finance lease

13.5 years 14.5 years

Weighted-average discount rate applied (%):

Operating lease 9.0 % 9.0 %

Finance lease 13.7 % 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 Condensed Consolidated Balance Sheet as of September 30, 2025 (in thousands):

Year Ended December 31:

Operating Lease

Finance Lease

2025 (three months) $ 2,980 $ 195

2026 12,182 794

2027 12,584 811

There were no changes to the terms of the leases recognized under ASC 842 during the three months ended March 31, 2026 or 2025.

The following table summarizes lease costs recognized for the periods presented (in thousands):

Three Months Ended March 31,

Operating lease cost

$ 1,853 $ 1,893

Finance lease cost:

Amortization of ROU assets

Variable lease cost

Total lease costs

$ 3,988 $ 4,314

Thereafter — 8,814

Total undiscounted lease payments 45,128 12,291

present value adjustment ( 6,278 ) —

imputed interest — ( 6,661 )

Total future minimum lease payments $ 38,850 $ 5,630

Operating cash flows for operating leases were $ 3.0 million and $ 2.9 million for the three months ended March 31, 2026 and 2025, respectively.

Indemnification

2 unchanged sentences

No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s Condensed Consolidated Balance Sheets , Condensed Consolidated Statements of Operations and Comprehensive Loss , or Condensed Consolidated Statements of Cash Flows .

Effective September 2017, the Company entered into a Development and Manufacturing Services Agreement as amended (“DMSA”) with Lonza Sales AG (“Lonza”) for the development and manufacture of biologic products.

Under the DMSA, the Company will execute purchase orders based on project plans authorizing Lonza to provide development and manufacturing services with respect to certain of the Company's antibody and enzyme products, and will pay for the services provided and batches delivered in accordance with the DMSA and project plan.

Unless earlier terminated, the DMSA will expire when all development and manufacturing services are completed, which is not expected to be before January 2028.

As of September 30, 2025 and December 31, 2024, the Company had total non-cancellable purchase commitments under the DMSA of $ 7.5 million and $ 36.7 million, respectively.

During the three months ended September 30, 2025 and 2024, the Company incurred costs of $ 0.7 million and $ 6.0 million, respectively, and made payments of $ 1.0 million and $ 1.9 million, respectively, for the development and manufacturing services rendered under the DMSA.

During the nine months ended September 30, 2025 and 2024, the Company incurred costs of $ 4.6 million and $ 28.6 million, respectively, and made payments of $ 11.9 million and $ 32.2 million, respectively, for the development and manufacturing services rendered under the DMSA.

In the normal course of business, the Company enters into other firm purchase commitments primarily related to research and development activities.

The Company had contractual obligations under certain clinical and manufacturing agreements other than the DMSA of $ 31.9 million and $ 24.1 million, as of September 30, 2025 and December 31, 2024, respectively, with certain amounts subject to cost sharing with Takeda.

In the normal course of business, the Company enters into firm purchase commitments primarily related to supply of commercial product, certain research and development services, and clinical manufacturing activities.

The Company had contractual obligations of $ 109.1 million as of March 31, 2026, of which $ 91.8 million relates to supply of commercial product, and $ 44.3 million as of December 31, 2025.

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 September 30, 2025.

In December 2025, the Company entered into a public offering of 9,142,857 shares of the Company’s common stock and Pre-Funded Warrants to purchase 2,285,714 shares of Common Stock.

This public offering and the Pre-Funded Warrants are both further described in Note 8, "Common Stock," to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

In January 2026, the underwriters of the Company’s December 2025 public offering exercised their option to purchase an additional 746,468 shares of common stock, resulting in aggregate net proceeds to the Company of approximately $ 12.4 million.

As of March 31, 2026, 28,331,779 shares of pre-funded warrants remained outstanding, and no pre-funded warrants were exercised during the three months ended March 31, 2026.

These warrants are classified as permanent equity because 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.

Stock-Based Awards

1 unchanged sentence

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2025:

The following table summarizes stock option activity for the three months ended March 31, 2026:

Number of Options

6 unchanged sentences

( 102,577 ) 33.05

Balance at September 30, 2025 21,442,215 $ 26.37

Vested and expected to vest at September 30, 2025 21,442,215 $ 26.37

Exercisable at September 30, 2025 13,292,134 $ 29.41

Balance at March 31, 2026 22,547,509 $ 25.77

Vested and expected to vest at March 31, 2026 22,547,509 $ 25.77

Exercisable at March 31, 2026 14,509,636 $ 29.32

The estimated fair value of stock options granted to employees were calculated using the Black-Scholes option-pricing model using the following assumptions:

Nine Months Ended September 30,

Three Months Ended March 31,

Expected term (in years)

6 unchanged sentences

Restricted Stock Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2025:

The following table summarizes restricted stock unit ("RSU") activity for the three months ended March 31, 2026:

Number of RSU shares Weighted-Average Fair Value at Date of Grant per Share

3 unchanged sentences

Forfeited ( 328,049 ) 20.26

Unvested and expected to vest at September 30, 2025 5,177,362 $ 21.97

Unvested and expected to vest at March 31, 2026 6,876,009 $ 18.74

Stock-Based Compensation Expense

The Company’s results of operations include expenses relating to stock-based compensation as follows (in thousands):

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

2025 2024 2025 2024

Three Months Ended March 31,

Research and development

2 unchanged sentences

$ 23,087 $ 25,160

$ 25,135 $ 24,860 $ 75,682 $ 77,800

Net Loss Per Share

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.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share amounts):

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

2025 2024 2025 2024

Three Months Ended March 31,

Net loss $ ( 128,447 ) $ ( 132,970 )

2 unchanged sentences

158,305,199 145,175,965

Private placement pre-funded warrants

Pre-funded warrants

28,331,779 26,046,065

1 unchanged sentence

Net loss per share $ ( 0.69 ) $ ( 0.78 )

Potentially dilutive securities, including options issued and outstanding, Employee Stock Purchase Plan (“ESPP”) shares issuable, and restricted shares subject to future vesting that were not included in the diluted per share calculations for the periods presented because they would be anti-dilutive totaled approximately 27.4 million and 22.7 million shares as of September 30, 2025 and 2024, respectively.

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.

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 Condensed Consolidated Statements of Operations and Comprehensive Loss during the nine months ended September 30, 2024, representing the difference between the fair value of the consideration received and the carrying amount of the Divested Assets.

Potentially dilutive securities, including options issued and outstanding, Employee Stock Purchase Plan (“ESPP”) shares issuable, and restricted shares subject to future vesting that were not included in the diluted per share calculations for the periods presented because they would be anti-dilutive totaled approximately 30.0 million and 27.4 million shares as of March 31, 2026 and 2025, respectively.

Non-Marketable Equity Investment

In March 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 Therapeutics, Inc.

This arrangement is further described in Note 13, "Divestiture of Preclinical Small Molecule Programs", to the consolidated financial statements in the 2025 Annual Report on Form 10-K.

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 Condensed Consolidated Balance Sheets as of both September 30, 2025 and December 31, 2024.

Segment Information

1 unchanged sentence

There have been no material changes to the Company's segment structure, the basis of segmentation, or the measurement basis for segment profit or loss or segment assets, compared to those disclosed in Note 14, "Segment Information", to the consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.

The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2025 and 2024 (in thousands):

The following table presents selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2026 and 2025 (in thousands):

Therapeutics Segment

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

2025 2024 2025 2024

Three Months Ended March 31,

External research and development expenses - TV programs, including cost sharing $ 38,464 $ 41,987

External research and development expenses - small molecule programs, including cost sharing 2,048 12,227 13,689 37,944

Other research and development expenses 23,008 15,257 65,714 45,643

Other research and development expenses, including small molecule programs

$ 23,554 $ 33,971

Personnel related research and development expenses

7 unchanged sentences

Segment operating expenses 137,357 145,580

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

Segment loss from operations ( 137,357 ) ( 145,580 )

Segment interest and other income, net 8,910 12,610

Segment loss before income taxes $ ( 126,902 ) $ ( 107,192 ) $ ( 383,991 ) $ ( 308,020 )

There is no difference between the segment loss before income taxes and total consolidated loss before income taxes for the three and nine months ended September 30, 2025 and 2024.

Segment net loss

$ ( 128,447 ) $ ( 132,970 )

There is no difference between the segment net loss and total consolidated net loss for the three months ended March 31, 2026 and 2025.

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 1. Financial Statements