What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 118 added, 139 removed, 167 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, 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 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 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 Transport Vehicle ("TV");

• 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 TM ("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, manufacturing, and distribution infrastructure to commercialize any product candidates for which we obtain approval;

• our ability to successfully market, manufacture, and commercialize AVLAYAH and any other products for which we obtain marketing approval;

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

• the size and growth potential of the markets for our product candidates, if approved for commercial use, and our ability to serve those markets;

• the size and growth potential of the markets for AVLAYAH and any other product candidates and our ability to serve those markets;

• the rate and degree of market acceptance of our product candidates;

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• our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

• our plans and ability to develop our own manufacturing facilities;

• the pricing and reimbursement of our product candidates, if approved and commercialized;

• our ability to successfully conduct in-house manufacturing;

• the pricing and reimbursement of AVLAYAH and any other product candidates that receive approval;

• the success of competing products or platform technologies that are or may become available;

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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, 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;

• 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 and related global economic disruptions and social conditions on our business;

• our financial performance.

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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.

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

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.

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;

We currently have one approved product.

Our commercial product, AVLAYAH TM (tividenofusp alfa-eknm) received U.S.

Food and Drug Administration ("FDA") approval on March 24, 2026 and is approved for the treatment of neurologic manifestations in patients with Hunter syndrome or mucopolysaccharidoses II (MPS II) when initiated in presymptomatic or symptomatic pediatric patients weighing at least 5 kg prior to advanced neurologic impairment.

Continued approval for this indication may be contingent upon verification of clinical benefit in a confirmatory trial.

We began commercial distribution of AVLAYAH in April 2026.

The approval of AVLAYAH is based on the reduction of a key disease biomarker, cerebrospinal fluid heparan sulfate (CSF HS), as a surrogate endpoint reasonably likely to predict clinical benefit in the treatment of neurologic manifestations of Hunter syndrome.

In a Phase 1/2 clinical trial, AVLAYAH demonstrated a 91% (95% CI:

89%, 92%) reduction in CSF HS levels from baseline by week 24 of treatment.

At week 24, 93% (41 of 44) of AVLAYAH-treated patients had CSF HS levels within the range of individuals without Hunter syndrome.

The most common adverse reaction in the study was infusion-related reactions.

The ongoing global Phase 2/3 COMPASS study is designed to generate confirmatory evidence and support global regulatory submissions for AVLAYAH.

This study includes young adults living with Hunter syndrome.

In connection with the approval of AVLAYAH, the FDA granted us a Rare Pediatric Disease Priority Review Voucher ("PRV").

This voucher may be used to obtain priority review for a future marketing application or transferred to another sponsor.

Ou r clinical-stage programs are as follows:

• 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 type A);

• 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.

• DNL952 (ETV:GAA), composed of a cid alpha-glucosidase ("GAA") fused to TV and engineered to replace GAA in all tissues, with the goal of treating Pompe disease;

• DNL628 (OTV:MAPT), composed of an antisense oligonucleotide ("ASO") against MAPT fused to TV, is designed to suppress gene expression of MAPT encoding the tau protein with the goal of treating Alzheimer's disease ("AD");

• 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");

• DNL628 (OTV:MAPT), composed of an antisense oligonucleotide ("ASO") against MAPT fused to TV, designed to suppress gene expression of MAPT encoding the tau protein with the goal of treating Alzheimer's disease ("AD");

• DNL952 (ETV:GAA), composed of a cid alpha-glucosidase ("GAA") fused to TV and engineered to replace GAA in all tissues, with the goal of treating Pompe disease.

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

The following table summarizes key information about our ongoing clinical studies for our approved product and clinical-stage programs:

Program Product Candidate Clinical Study(ies) Indication Operational Control

ETV:IDS tividenofusp alfa, or DNL310

ETV:IDS tividenofusp alfa

Hunter syndrome (MPS II) Denali

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Sanfilippo syndrome Type A (MPS IIIA) Denali

TAK-594/DNL593 Ph 1/2

Joint with Takeda

Ph 1 (planned)

Pompe disease

Alzheimer’s disease

LRRK2 BIIB122/DNL151 Ph 2a

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RIPK1 (Peripheral) eclitasertib, or SAR443122/DNL758

DNL628* Ph 1b planned Alzheimer’s disease

Pompe disease

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* Regulatory application has been submitted to begin clinical testing

* Regulatory application to begin clinical testing has been approved by Health Authorities.

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 milestones in 2025 to date include:

• 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;

• In July 2025, we announced that the FDA accepted our BLA for tividenofusp alfa for priority review, assigning a Prescription Drug User Fee Act (PDUFA) target action date of January 5, 2026;

• In August 2025, we announced we reached alignment with the FDA that cerebrospinal fluid heparan sulfate (CSF HS) may be considered a reasonably likely surrogate endpoint to predict clinical benefit and may therefore be used to support accelerated approval of DNL126 for MPS IIIA.

Additional 49-week data from the ongoing open-label Phase 1/2 study are consistent with previously announced 25-week data, demonstrating a significant reduction in CSF HS from baseline, including normalization, and a safety profile that supports continued development;

• In September 2025, we completed enrollment in the ongoing Phase 1/2 study of DNL126 to support an accelerated approval pathway in MPS IIIA, and a global Phase 3 confirmatory study is being planned;

• In October 2025, we announced that the FDA has extended its review timeline of the BLA seeking accelerated approval of tividenofusp alfa.

The PDUFA target date has been extended from January 5, 2026, to April 5, 2026.

We continue to prepare for commercial launch;

• In October 2025, we submitted a Clinical Trial Application ("CTA") for DNL628 (OTV:MAPT) to initiate clinical studies in Alzheimer’s disease;

• In October 2025, we submitted an Investigational New Drug ("IND") application for DNL952 (ETV:GAA) to begin clinical studies in Pompe disease.

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

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

Key operational and financing milestones in 2026 to date include:

• In January 2026, we announced that the FDA has lifted the clinical hold on the IND application for DNL952, and we are proceeding with the Phase 1 study;

• In January 2026, we announced that the Clinical Trial Application ("CTA") for DNL628 (OTV:MAPT) to initiate a Phase 1b study in Alzheimer’s disease was approved.

In March 2026, the first patient was dosed in the Phase 1b study of DNL628, which is an investigational therapy enabled by Denali’s Oligonucleotide TransportVehicle™ (OTV);

• In February 2026, we presented preliminary open-label Phase 1/2 data for DNL126 study at the 2026 WORLD Symposium demonstrating substantial reductions in CSF HS, including normalization from baseline, and in urine HS with a safety profile consistent with other enzyme replacement therapies.

The Phase 1/2 study remains on track for completion in 2026, supporting a potential accelerated approval pathway and commercial launch by the second half of 2027, with planning for a global Phase 3 confirmatory study underway;

• In March 2026, we announced the FDA granted accelerated approval for AVLAYAH, the first FDA-approved biologic specifically designed to cross the blood-brain barrier and reach the whole body, including the brain.

We began commercial distribution of AVLAYAH in April 2026.

In connection with the approval of AVLAYAH, the FDA granted us a Rare Pediatric Disease PRV;

• In March 2026, we received $200.0 million in gross proceeds in connection with the closing of the synthetic royalty funding agreement with Royalty Pharma Investments 2023 ICAV (“Royalty Pharma”);

• In April 2026, we announced we received notification from Takeda of its decision to terminate the collaboration agreement to co-develop and co-commercialize DNL593 (PTV:PGRN) for Frontotemporal Dementia (FTD-GRN).

The termination will become effective 60 days following the notice date, at which time all rights in the DNL593 program will revert to Denali.

Takeda’s decision to terminate the collaboration agreement for DNL593 was driven by strategic considerations and not related to efficacy or safety data.

Data from the ongoing Phase 1/2 study of DNL593, including biomarker results, are expected by the end of 2026.

Until March 2026, we had no clinical products approved for commercial sale and thus had not generated any revenue from product candidates that are or were under development.

Subsequent to receiving FDA approval for AVLAYAH, we began commercial distribution in April 2026.

We expect it to take time to generate sufficient revenue to offset our expenses, and we can provide no assurance as to when, if ever, this will occur.

Through March 31, 2026 , we have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock and pre-funded warrants to purchase shares of our common stock in public offerings and private placements, and payments received from our collaboration, synthetic royalty and other funding agreements with Takeda, Sanofi, Biogen, Royalty Pharma and other third parties.

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 $126.9 million and $384.0 million for the three and nine months ended September 30, 2025, respectively, and $107.2 million and $308.0 million for the three and nine months ended September 30, 2024.

As of September 30, 2025, we had an accumulated deficit o f $1.92 billion.

We had net losses of $128.4 million and $133.0 million for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, we had an accumulated deficit o f $2.18 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;

We e xpect to continue to incur significant expenses and operating losses as we advance our approved product AVLAYAH to full US and broader global approval;

advance our current clinical stage programs through healthy volunteer and patient trials;

broaden and improve our TV platform;

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and hire additional personnel.

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

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

manufacturing capabilities and strengthening supply chain control and operational efficiency.

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

We currently use third-party contract manufacturers to supply commercial product of AVLAYAH, and expect to continue to do so for the foreseeable future.

Components of Operating Results

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

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

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

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

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

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

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

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

Outside professional services consist of legal, accounting and audit services and other consulting fees, including those associated with our commercial organization.

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

Gain from divestiture of small molecule programs

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

We have increased our administrative headcount to support the commercialization of AVLAYAH and may continue to increase headcount to support our commercial and research and development activities, which we expect will increase general and administrative expenses.

Interest and Other Income, Net

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Results of Operations

Comparison of the three and nine months ended September 30, 2025 and 2024

Comparison of the three months ended March 31, 2026 and 2025

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

Three Months Ended September 30, Change

2025 2024 $ %

Operating expenses:

Research and development

$ 101,950 $ 98,238 $ 3,712 4 %

General and administrative

35,484 24,949 10,535 42

Total operating expenses

137,434 123,187 14,247 12

Loss from operations (137,434) (123,187) (14,247) 12

Interest and other income, net

10,532 15,995 (5,463) (34)

Net loss $ (126,902) $ (107,192) $ (19,710) 18 %

Nine Months Ended September 30, 2025 Change

Three Months Ended March 31, Change

2026 2025 $ %

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137,357 145,580 (8,223) (6)

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

Loss from operations (137,357) (145,580) 8,223 (6)

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Research and development expen ses.

Research and development expenses were $102.0 million and $320.9 million for the three and nine months ended September 30, 2025, compared to $98.2 million and $296.7 million for the three and nine months ended September 30, 2024, respectively.

Research and development expenses were $103.8 million and $116.2 million for the three months ended March 31, 2026 and 2025, respectively.

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

Three Months Ended September 30, Change

Three Months Ended March 31, Change

2026 2025 $ %

External research and development expenses - TV programs, including cost sharing $ 38,464 $ 41,987 $ (3,523) (8) %

External research and development expenses - small molecule programs, including cost sharing 2,048 12,227 (10,179) (83)

Other research and development expenses 23,008 15,257 7,751 51

Personnel related expenses (1)

41,737 35,318 6,419 18

Total research and development expenses $ 101,950 $ 98,238 $ 3,712 4 %

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(1) Personnel related expenses include stock-based compensation expense of $15.2 million and $14.1 million for the three months ended September 30, 2025 and 2024, respectively, reflecting an increase of $1.1 million.

The increase in research and development expenses of approximately $3.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, was primarily attributable to the following:

• an increase of $7.8 million in other research and development expenses, including lab consumables, consultants and general facilities costs, driven by the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah;

• an increase of $6.4 million in personnel-related expenses, including salaries and stock-based compensation, primarily driven by higher headcount related to the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah.

These increases were partially offset by a $10.2 million decrease in small molecule external research and development expenses, primarily due to the winding down of activities related to the Phase 2/3 HEALEY ALS Platform Trial in 2025.

Nine Months Ended September 30, 2025 Change

Other research and development expenses, including small molecule programs

23,554 33,971 (10,417) (31)

External research and development expenses - TV programs, including cost sharing $ 119,209 $ 101,367 $ 17,842 18 %

External research and development expenses - small molecule programs, including cost sharing 13,689 37,944 (24,255) (64)

Other research and development expenses 65,714 45,643 20,071 44

Personnel related expenses (1)

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(1) Personnel related expenses include stock-based compensation expense of $45.5 million and $44.8 million for the nine months ended September 30, 2025 and 2024, respectively, reflecting an increase of $0.7 million.

The increase in research and development expenses of approximately $24.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, was primarily attributable to the following:

• an increase of $17.8 million in TV program external research and development expenses, primarily attributable to increased spend on multiple preclinical programs including OTV:MAPT and ETV:GAA, as well as an increase in expenses of $4.9 million on our DNL126 program.

These increases were partially offset by a decrease in expenses related to our DNL310 program of $6.5 million;

• an increase of $20.1 million in other research and development expenses, including lab consumables, consultants and general facilities costs, driven by the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah;

• an increase of $10.6 million in personnel-related expenses, including salaries and stock-based compensation, primarily driven by higher headcount related to the commencement of operations at our large molecule manufacturing facility in Salt Lake City, Utah.

These increases were partially offset by a $24.3 million decrease in small molecule external research and development expenses primarily attributable to the following:

• a decrease of $16.3 million related to the winding down of activities related to our DNL343 program including the Phase 2/3 HEALEY ALS Platform Trial in 2025;

• a decrease of $7.8 million for our LRRK2 program related to the R&D funding from our Collaboration and Development Funding Agreement with an unrelated third party, under which, starting in the second quarter of 2024, program expenses were offset;

• the divestiture of our preclinical small molecule programs in March 2024.

(1) Personnel related expenses include stock-based compensation expense of $13.6 million and $15.1 million for the three months ended March 31, 2026 and 2025, respectively, reflecting a decrease of $1.5 million.

The decrease in research and development expenses of approximately $12.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, was primarily attributable to the following:

• a decrease of $3.5 million in TV program external research and development expenses driven by decreased manufacturing costs related to our tividenofusp alfa program, partially offset by increased spending in clinical programs including DNL126, and multiple preclinical programs;

• a decrease of $10.4 million in other research and development expenses, comprising external costs related to small molecule programs, lab and internal manufacturing consumables, general facilities costs, and consultant costs.

The decrease was primarily due to the wind-down of activities related to our DNL343 program subsequent to the first quarter of 2025, and due to lower consultant costs related to preparation of the tividenofusp alfa regulatory filing in the prior-year period, partially offset by increased manufacturing consumables for our large molecule manufacturing facility in Salt Lake City, Utah.

These decreases were partially offset by an increase of $1.6 million in personnel-related expenses, primarily due to higher salaries associated with increased headcount to support the expansion of operations at our large molecule manufacturing facility.

General and administrative expenses.

General and administrative expense was $35.5 million and $24.9 million for the three months ended September 30, 2025, and 2024, respectively, and $97.1 million and $75.4 million for the nine months ended September 30, 2025, and 2024, respectively.

The increases of $10.6 million for the three month period, and $21.7 million for the nine months ended , were both primarily driven by activities related to preparations for a potential commercial launch for tividenofusp alfa.

Gain from divestiture of small molecule programs.

For a full description, see Item 2.

Components of Operating Results included in this Quarterly Report on Form 10-Q.

General and administrative expense was $33.5 million and $29.4 million for the three months ended March 31, 2026, and 2025, respectively.

The increase of $4.1 million for the three month period was primarily driven by higher personnel-related costs due to increased headcount in the first quarter of 2026, reflecting headcount additions made throughout 2025 to support post-launch activities for AVLAYAH.

Liquidity and Capital Resources

Sources of Liquidity

As of September 30, 2025, we had cash, cash equivalents and marketable securities in the amount of $872.9 million.

As of March 31, 2026, 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, and we expect product sales to contribute to funding our operations following the commercial launch of AVLAYAH, although such revenues are not expected to be sufficient to offset our expenses in the near term.

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, 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 September 30, 2025 .

Through March 31, 2026 we have obtained aggregate net proceeds of approximately $956.1 million from public offerings of our common stock, including $12.4 million obtained through the sale of 746,468 shares of common stock in January 2026.

In March 2026, we received $200.0 million in gross proceeds in connection with the closing of the synthetic royalty funding agreement with Royalty Pharma, triggered by the U.S.

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

Under stock purchase agreements with collaboration partners we have received a further $575.0 million through March 31, 2026.

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 .

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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 September 30, 2025, we have received $115.0 million , $225.0 million, $565.0 million and $50.0 million, p ursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, respectively.

Through March 31, 2026, we have received $115.0 million , $225.0 million, $565.0 million and $50.0 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.

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Future Funding Requirements and Commitments

To date, we have not generated any product revenue.

We do not expect to generate any product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if, either will occur.

We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we expand our research and development activities and continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products.

Further, we expect general and administrative expenses to increase as we continue to incur additional costs associated with supporting our growing operations.

We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

Prior to the FDA approval of AVLAYAH, we had not generated any product revenue.

Following the FDA approval of AVLAYAH, we commenced commercialization in April 2026 and expect to begin generating product revenue;

however, we expect it to take time to generate sufficient revenue to offset our expenses, and we can provide no assurance as to when, if ever, this will occur.

We do not expect to generate any product revenue from our other product candidates unless and until we obtain regulatory approval for those product candidates, and we do not know when, if ever, this will occur.

Further, we expect general and administrative expenses to increase as we continue to incur additional costs associated with supporting our growing operations, including commercialization activities.

We are subject to all of the risks typically related to the development of new product candidates, as well as risks associated with the commercialization of an approved product, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from our existing collaboration agreements, or future agreements with other third parties, if ever, we expect to finance our future cash needs through public or private equity or debt financings.

Until we can generate sufficient revenue from the commercialization of AVLAYAH and any future approved products, or from our existing collaboration agreements, or future agreements with other third parties, if ever, we expect to finance our future cash needs through public or private equity, debt or other alternative financings.

Additional capital may not be available on reasonable terms, if at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates.

If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock.

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

We have an accumulated deficit of $1.92 billion as of September 30, 2025.

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

We have an accumulated deficit of $2.18 billion as of March 31, 2026.

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

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to enable us to fund our projected operations through at least the twelve months following the filing date of this Quarterly Report on Form 10-Q, including our existing commitments as outlined below.

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In the longer term, we anticipate that we will need substantial additional resources to fund our operations and meet future commitments.

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, 2025, we had total undiscounted lease payment obligations of $57.4 million.

Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments as of September 30, 2025 of $39.4 million.

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.

Our existing commitments primarily relate to our obligations under existing lease agreements, certain commercial product, clinical and manufacturing agreements.

As of March 31, 2026, we had total undiscounted lease payment obligations of $51.1 million.

We had total non-refundable purchase commitments of $109.1 million as of March 31, 2026.

While the lease obligations span multiple years, the majority of the purchase commitments are due within the upcoming twelve months.

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.

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of our Annual Report on Form 10-K filed on February 26, 2026.

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;

In March 2026, we received $200.0 million in gross proceeds under the Royalty Agreement with Royalty Pharma, which is recorded as a liability related to the revenue participation right on our Condensed Consolidated Balance Sheet as of March 31, 2026.

Under the Royalty Agreement, we may receive an additional $75.0 million upon approval of AVLAYAH by the EMA on or before December 31, 2029.

In exchange, Royalty Pharma is entitled to a 9.25% royalty on worldwide net sales of AVLAYAH until cumulative royalty payments reach a cap of 3.0 times the total funding received, or 2.5 times the total funding received if such cap is reached on or before the first quarter of 2039.

These obligations are described in this Quarterly Report on Form 10-Q in Note 8, “Liability Related to the Revenue Participation Right”.

Our future funding requirements, including any changes to existing commitments or the establishment of 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, including the successful commercialization of AVLAYAH;

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

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• the costs and ongoing investments to in-license and/or acquire additional technologies.

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

A change in the outcome of any of these or other variables with respect to the development and delivery of any of our product candidates could significantly change the costs and timing associated with the development and delivery of that product candidate.

Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

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 $ (131,204) $ (131,468)

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

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 investing activities 94,460 18,748

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)

Net Cash Used In Operating Activities

During the nine months ended September 30, 2025, net cash used in operating activities was $314.1 million, which consisted of a net loss of $384.0 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.

During the three months ended March 31, 2026, net cash used in operating activities was $131.2 million, which consisted of a net loss of $128.4 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 Provided By (Used In) Investing Activities

During the nine months ended September 30, 2025, net cash provided by investing activities was $234.5 million, which consisted of $431.0 million in proceeds from the maturities of marketable securities, partially offset by $188.6 million of purchases of marketable securities and $8.0 million capital expenditures to purchase property and equipment.

Net Cash (Used In) Provided By Financing Activities

During the nine months ended September 30, 2025, cash used in financing activities was $2.9 million which consisted of the aggregate of $8.2 million of payments related to our finance lease, partially offset by the $5.2 million in proceeds from the exercise of stock options and the Company's ESPP.

Net Cash Provided By Investing Activities

During the three months ended March 31, 2026, net cash provided by investing activities was $94.5 million, which consisted of $220.0 million in proceeds from the maturities of marketable securities, partially offset by $123.1 million of purchases of marketable securities and $2.5 million capital expenditures to purchase property and equipment.

Net Cash Provided By Financing Activities

During the three months ended March 31, 2026, cash provided by financing activities was $219.0 million which consisted of $200.0 million gross proceeds related to the sale of the revenue participation right under the synthetic royalty funding agreement with Royalty Pharma, $12.4 million of proceeds from public offerings of our common stock, and $6.7 million in proceeds from the exercise of stock options.

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, 2025, as filed with the SEC on February 26, 2026, 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, 2025.

There have been no material changes to these critical accounting estimates during the three months ended March 31, 2026.

Recent Accounting Pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 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.

There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2026 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 26, 2026, 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