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Item 1A. Risk Factors

2026-05-07 compared with 2025-11-06 · 254 added, 310 removed, 918 unchanged (38% of the section changed)

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Risks Related to Our Business, Financial Condition and Capital Requirements

• We are in the clinical stages of drug development and have a limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.

• We are a commercial-stage biopharmaceutical company in the initial stages of commercializing our product AVLAYAH, which may make it difficult for investors to evaluate our business and prospects.

• We have incurred significant net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.

• Drug development is a highly uncertain undertaking.

We have never generated any revenue from product sales, and may never do so.

• Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.

Risks Related to the Discovery, Development and Commercialization of Our Product Candidates

• We are heavily dependent on the successful development of our TV technology and the programs currently in our pipeline, which are in the preclinical and clinical development stages.

• We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products.

• We have concentrated a substantial portion of our efforts on the treatment of neurodegenerative and lysosomal storage diseases , fields that have seen limited success in drug development.

• We may encounter substantial delays in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

• We may encounter difficulties enrolling and/or retaining patients in our clinical trials, and our clinical development activities could thereby be delayed or otherwise adversely affected.

• Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of our product candidates, which would prevent, delay or limit the scope of regulatory approval and commercialization.

• We face significant competition and our operating results may suffer if we fail to compete effectively.

• If we are unable to establish sales and marketing capabilities or enter into agreements with third parties, we may not be successful in commercializing product candidates if and when they are approved.

• To the extent that AVLAYAH is not commercially successful, our business, financial condition and results of operations would be materially and adversely affected and the price of our common stock would decline.

• We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital if or when needed on acceptable terms, or at all, could harm our business.

• We may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Risks Related to the Discovery, Development and Commercialization of Our Product and Product Candidates

• We are heavily dependent on the successful development of our TV platform and the programs currently in our pipeline.

If we are unable to successfully and timely commercialize AVLAYAH or our other product candidates, our business could be harmed.

• Our estimated market opportunities are subject to numerous uncertainties and may prove to be inaccurate.

If we have overestimated the size of our market opportunities, our future growth may be limited.

• We may encounter substantial delays in our clinical trials or difficulties enrolling patients, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

• Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of AVLAYAH or our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.

• Interim, topline, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.

• We face significant competition in an environment of rapid technological and scientific change, and our operating results may suffer if we fail to compete effectively.

• We may fail to successfully manufacture our product candidates, operate our own manufacturing facility, or obtain regulatory approval to utilize or commercialize from our manufacturing facility.

• AVLAYAH and our other product candidates may not achieve adequate market acceptance necessary for commercial success.

• AVLAYAH and any other product candidates for which we receive approval may become subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives.

• Our biologic, or large molecule, product candidates for which we intend to seek approval may face competition sooner than anticipated.

• If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.

• If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

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• We currently conduct clinical trials outside the United States, and the FDA, EMA and applicable foreign regulatory authorities may not accept data from such trials.

• A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.

• Even if we obtain regulatory approval for a product candidate, our products will remain subject to extensive regulatory scrutiny.

• To the extent we seek orphan drug designation for any of our product candidates, we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status.

• Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.

• If we or our employees, contractors, partners, and vendors fail to comply with healthcare laws or regulatory requirements, we could face substantial penalties and our business could be adversely affected.

• Our business is subject to complex and evolving U.S.

and foreign laws and regulations, information security policies, and contractual obligations relating to privacy, data protection, and data security.

• If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs.

• Our business activities may be subject to the Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws, as well as U.S.

and certain foreign export controls, trade sanctions, and import laws and regulations.

• Inadequate funding for the FDA, USPTO, SEC, and other government agencies could hinder or result in the suspension of their operations, which could negatively impact our business.

Risks Related to Our Reliance on Third Parties

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• We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily.

• Our reliance on third parties for the manufacture of the significant majority of the materials for our research programs, preclinical studies and clinical trials.

This reliance on third parties may increase the risk that we will not have sufficient quantities of such materials or product candidates.

• Our reliance on third parties for the manufacture of the significant majority of the materials for our research programs, preclinical studies, and clinical trials may increase the risk that we will not have sufficient quantities of such materials or product candidates.

• We depend on third-party suppliers for key raw materials used in our manufacturing, and the loss of these suppliers or their inability to supply us with adequate raw materials could harm our business.

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• If any of our owned or in-licensed patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively.

• If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and product candidates would be adversely affected.

• Our rights to develop and commercialize our TV technology and product candidates are subject, in part, to the terms of licenses granted to us by others or licenses granted by us to others.

• If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

• We may not be able to protect our intellectual property and proprietary rights throughout the world.

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• Changes in U.S.

patent law could impair our ability to protect our products.

patent law could im pair our ability to protect our products.

• Issued patents covering our TV technology, product candidates and other technologies could be found invalid or unenforceable if challenged.

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• Third-party intellectual property claims against us, our licensors or our collaborators may prevent or delay the development of our TV platform, product candidates and other technologies.

• We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming, and unsuccessful.

• If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Risks Related to Our Operations

• If we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

• We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

• We have engaged in and may in the future engage in acquisitions or strategic partnerships, which may increase our capital requirements, dilute our stockholders, or cause us to incur debt or assume contingent liabilities.

• Our internal computer systems, or those used by our collaborators, CROs or other contractors, may fail or suffer security breaches or incidents that could compromise the confidentiality, integrity, and availability of such systems and data, expose us to liability, and affect our reputation.

• Our business is subject to risks associated with international operations.

• Business disruptions, including as a result of geopolitical events and global pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.

• Our business is subject to economic, political, regulatory, and other risks associated with international operations.

• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Risks Related to Ownership of Our Common Stock

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the price of our stock and trading volume could decline.

• Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could cause the market price of our common stock to decline significantly, even if our business is doing well.

• Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

• Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.

• If we are unable to maintain effective internal controls, our business, financial position and results of operations and growth prospects could be adversely affected.

• We do not expect to pay any dividends for the foreseeable future.

Investors may never obtain a return on their investment.

• Delaware law and provisions in our charter documents might prevent a change in control of our company or changes in our management, depressing the trading price of our common stock.

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Risks Related to Our Business, Financial Condition and Capital Requirements

We are in the clinical stages of drug development and have a limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our business and predict our future success and viability.

We are a clinical-stage biopharmaceutical company with a limited operating history, focused on developing therapeutics for neurodegenerative diseases, including Alzheimer’s disease and Parkinson’s disease, and lysosomal storage diseases , including Hunter syndrome and Sanfilippo syndrome.

We commenced operations in May 2015 , have no products approved for commercial sale, and have not generated any revenue from product sales.

Drug development is a highly uncertain undertaking and involves a substantial degree of risk.

Our clinical-stage programs are in various phases ranging from Phase 1 through Phase 3.

To date, we have not completed a pivotal clinical trial, obtained marketing approval for any product candidat es, manufactured a commercial scale product or arranged for a third party to do so on our behalf, or conducted sales and marketing activities necessary for successful product commercialization.

We are a commercial-stage biopharmaceutical company in the initial stages of commercializing our product AVLAYAH TM , which may make it difficult for investors to evaluate our current business and likelihood of success and viability.

We are a commercial-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects.

We commenced operations in May 2015 and received our first FDA product approval in March 2026 for AVLAYAH .

We are continuing to transition from a company with a research and development focus to a company capable of supporting commercial activities and we may not be successful in such transition.

We are still in the early stages of demonstrating our ability to arrange for a third party to manufacture at commercial scale, or conduct sales, marketing, and distribution activities necessary for successful product commercialization.

Our limited operating history makes any assessment of our future success and viability subject to significant uncertainty.

We will encounter risks and difficulties frequently experienced by clinical-stage biopharmaceutical companies, and we have not yet demonstrated an ability to successfully overcome such risks and difficulties.

If we do not address these risks and difficulties successfully, our business will suffer.

We will encounter risks and difficulties frequently experienced by biopharmaceutical companies in rapidly evolving fields and with recently approved therapies.

If we do not address these risks and difficulties or successfully make a commercial transition, our business will suffer.

We may not become profitable and may need to obtain additional funding to continue operations.

Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to obtain reimbursement at any price, and whether we own the commercial rights for that territory.

If the number of addressable patients is not as significant as we anticipate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice, or treatment guidelines, we may not generate significant revenue from product sales.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our pipeline of product candidates, or continue our operations and cause a decline in the value of our common stock, all or any of which may adversely affect our viability.

We have incurred significant net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.

We have incurred significant net losses since our inception.

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

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

Our net losses were $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 of $2.18 billion .

We have invested significant financial resources in research and development activities, including for our preclinical and clinical product candidates and our TV platform.

Our operations to date include organizing and staffing our company, business planning, raising capital, identifying potential product candidates, establishing licensing arrangements, undertaking various research and nonclinical studies, conducting clinical trials, establishing manufacturing and supply operations, and preparing for and launching commercialization activities.

The amount of our future net losses will depend, in part, on the level of our future expenditures and revenue.

Moreover, our net losses may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.

We expect to continue to incur significant expenses and increasingly higher operating losses for the foreseeable future.

We anticipate that our expenses will increase substantially if and as we:

• continue our research and discovery activities;

• progress our current and any future product candidates through preclinical and clinical development;

• manufacture product candidates at our manufacturing facility and with our contract manufacturers;

• change or add additional contract manufacturers or suppliers;

• seek regulatory approvals and marketing authorizations for our product candidates;

• establish sales, marketing and distribution infrastructure to commercialize any products for which we obtain approval;

• acquire or in-license product candidates, intellectual property and technologies;

• make milestone, royalty or other payments due under any license or collaboration agreements;

• obtain, maintain, protect, and enforce our intellectual property portfolio, including intellectual property obtained through license agreements;

• attract, hire, and retain qualified personnel and incur increased stock-based compensation, especially in light of a competitive compensation environment;

• provide additional internal infrastructure to support our continued research and development operations and commercialization efforts;

• implement additional internal systems and infrastructure related to cybersecurity;

• experience any delays or encounter other issues related to our operations;

• meet the requirements and demands of being a public company;

• defend against any product liability claims or other lawsuits related to our products.

Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.

Drug development is a highly uncertain undertaking and involves a substantial degree of risk.

We have never generated any revenue from product sales, and we may never generate product revenue or be profitable.

We have no products approved for commercial sale and have not generated any revenue from product sales.

To obtain revenue from the sales of our product candidates that are significant or large enough to achieve pr ofitability, we must succeed, either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing, and marketing therapies with significant commercial success.

Our ability to generate revenue and achieve profitability depends significantly on many factors, including:

• successfully prioritizing and completing research and preclinical and clinical development of our product candidates;

• obtaining regulatory approvals and marketing authorizations for product candidates for which we successfully complete clinical development and clinical trials;

• developing a sustainable and scalable manufacturing process for our product candidates, including those that utilize our TV platform, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand of our product candidates;

• identifying, assessing, acquiring and/or developing new product candidates;

• negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;

• launching and successfully commercializing product candidates for which we obtain regulatory and marketing approval, either by collaborating with a partner or, if launched independently, by establishing a sales, marketing and distribution infrastructure;

• obtaining and maintaining an adequate price for our product candidates, both in the United States and in foreign countries where our products are commercialized;

• obtaining adequate reimbursement for our product candidates from payors;

• obtaining market acceptance of our product candidates as viable treatment options;

• addressing any competing technological and market developments;

• receiving milestone and other payments under our current and any future collaboration arrangements;

• maintaining, protecting, expanding, and enforcing our portfolio of intellectual property rights;

• attracting, hiring, and retaining qualified personnel;

• general economic conditions;

• addressing any delays in our clinical trials or other impacts from a global emergency.

Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of our expenses, or when we will be able to generate any meaningful revenue or achieve or maintain profitability, if ever.

In addition, our expenses could increase beyond our current expectations if we are required by the FDA, or foreign regulatory agencies, to perform studies in addition to those that we currently anticipate, or if there are any delays in any of our current or our future collaborators’ clinical trials or the development of any of our product candidates.

Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate and ongoing compliance efforts.

Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether we own the commercial rights for that territory.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

If we fail to obtain additional financing, we may be unable to complete the development and, if approved, commercialization of our product candidates.

Our near-term revenues are highly dependent on the successful commercialization of AVLAYAH, which received marketing approval in March 2026 from the FDA.

To the extent that AVLAYAH is not commercially successful, our business, financial condition and results of operations would be materially and adversely affected and the price of our common stock would decline.

Our future success is highly dependent on our ability to timely complete successful clinical trials, obtain marketing authorization for, and then successfully commercialize, AVLAYAH and our other product candidates.

AVLAYAH is our only drug that has been approved for sale and it has only been approved for the treatment of neurologic manifestations in patients with Hunter syndrome (MPS II) when initiated in presymptomatic or symptomatic pediatric patients weighing at least 5 kg prior to advanced neurologic impairment.

Prior to AVLAYAH, we had not, as an organization, launched or commercialized a product, and there is no guarantee that we will be able to successfully commercialize AVLAYAH.

There are numerous examples of unsuccessful product launches and failures to meet high expectations of market potential.

If the commercialization of AVLAYAH is unsuccessful or perceived as disappointing, our stock price could decline and the long-term success of the product and our company could be harmed.

The success of AVLAYAH will depend on several factors, including the following:

• making arrangements with third-party manufacturers for both clinical and commercial supplies of AVLAYAH and ensuring a resilient, effective supply chain that produces supply capable of meeting demand;

• implementing marketing, pricing and reimbursement strategies, as well as adequate demand forecasts for supply and sales planning;

• establishing sales, marketing and distribution capabilities for AVLAYAH, whether alone or in collaboration with others in a market where promotional sales approaches are rapidly moving to digital platforms and access of sales representatives to major institutions remains uncertain;

• acceptance of AVLAYAH by patients, physicians, the medical community and third-party payors underpinned by adequate health economic data and a meaningful value proposition;

• obtaining and maintaining third-party payor coverage and adequate reimbursement in both public and private payor spaces across multiple countries;

• effectively competing with other therapies, including those that have not yet entered the market;

• effectively competing with other companies in the pharmaceutical and biotechnology industries, which are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates;

• obtaining appropriate support from patient advocacy organizations;

• effectively shaping the market in the early years following launch to help providers understand a new approach to identifying and treating eligible patients;

• whether our patents will be sufficient to prevent generic competition for AVLAYAH after our orphan drug exclusivity expires;

• the successful completion of any required or committed post-marketing studies and available funding to perform any such post-marketing requirements or post-marketing commitments;

• maintaining a continued acceptable safety profile of the products following approval.

Many of these factors are beyond our control, and if we cannot address any of them in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize AVLAYAH and our product candidates, which would materially harm our business.

Due to the ongoing commercialization of AVLAYAH and continued development of our product candidates, our capital requirements are difficult to predict and may change.

We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital if or when needed on acceptable terms, or at all, could harm our business.

We expect to continue to expend substantial resources in connection with our commercialization efforts, the development of our current product candidates, the maintenance and expansion of our business operations and capabilities, and the development or acquisition of additional product candidates.

Because the outcome of any nonclinical study or clinical trial is highly uncertain, we cannot reasonably estimate the actual amount of resources necessary to successfully complete the development and commercialization of any of our product candidates.

Similarly, due to the complexities of our recent transition to a commercial-stage company, it is challenging to estimate the actual amounts necessary to successfully commercialize any products approved for sale.

In addition to the uncertainties related to commercialization of AVLAYAH, our resource estimates will depend on a number of discovery- and development-related factors, including:

• our ability to successfully execute on our business plan and our internal projections and estimates of costs and execution timing;

• the scope, progress, results, and costs of developing product candidates and conducting nonclinical studies and clinical trials, including in connection with our current product candidates;

• suspensions or delays in enrollment of our ongoing and future clinical trials, issues with data collection, or changes to the number of subjects we decide to enroll in our clinical trials, including as a result of competing trials or otherwise;

• the number and scope of clinical programs we decide to pursue, and the number and characteristics of any product candidates we develop or acquire;

• the timing of, and the costs involved in, obtaining regulatory reviews and approvals for our product candidates;

• the cost of manufacturing any current and future products and product candidates and the costs associated with building out our supply chain;

• our ability to establish and maintain strategic collaborations, licensing, or other arrangements and the financial terms of any such agreements that we may enter into;

• the impact of any acquisitions or similar transactions or partnerships;

• the costs related to royalty payments due to Royalty Pharma, or any future collaboration or licensing partners upon the achievement of negotiated milestones;

• any product liability or other lawsuits related to our products;

• the expenses needed to attract and retain skilled personnel;

• the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing our intellectual property portfolio.

Our operations have required substantial amounts of cash since inception.

We currently fund our operations primarily with the proceeds from our follow-on offering completed in October 2022, payments received from our collaboration agreements with Biogen, Sanofi, Takeda, and a strategic private offering transaction completed in February 2024.

We have a diversified portfolio with numerous programs at various stages of research, discovery, preclinical, and clinical development .

Developing our product candidates is expensive, and we expect to continue to spend substa ntial amounts as we fund our early-stage research projects and advance our programs through preclinical and clinical development.

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

We currently fund our operations primarily with the proceeds from our follow-on offerings completed in October 2022 and December 2025, payments received from our collaboration agreements with Biogen, Sanofi, Takeda, a strategic private offering transaction completed in February 2024, and a royalty financing agreement with Royalty Pharma that closed in March 2026.

As of March 31, 2026, we had $1.05 billion in cash, cash equivalents and marketable securities.

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our projected operations through at least the next twelve months.

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We have no committed source of additional capital, and we cannot be certain that additional funding will be available when we need it, on terms acceptable to us or at all.

If adequate capital is not available to us on a timely basis, we may be required to significantly delay, scale back, or discontinue our research and development programs or the commercialization of any product candidates, if approved, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, which could materially affect our business, financial condition, results of operations, and growth prospects and cause the price of our common stock to decline.

If adequate capital is not available to us on a timely basis, we may be required to significantly delay, scale back, or discontinue our research and development programs or the commercialization of any product candidates, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, which could materially affect our business, financial condition, results of operations, and growth prospects and cause the price of our common stock to decline.

We may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Due to the significant resources required for the development of our programs, we must focus our programs on specific diseases and disease pathways and decide which product candidates to pursue and advance and the amount of resources to allocate to each.

Investment in biopharmaceutical product development involves significant risk that any product candidate will fail to demonstrate adequate efficacy, potency, or safety, obtain regulatory approval, or achieve commercial viability.

To date, we have invested substantially all of our efforts and financial resources to identifying, acquiring intellectual property for, and developing our TV platform and our programs, including conducting preclinical studies and clinical trials, and providing general and administrative support for these operations.

Our decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert resources away from better opportunities.

Similarly, our potential decisions to delay, terminate, divest, or collaborate with third parties in respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities.

If we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misread trends in the biopharmaceutical industry, in particular for neurodegenerative and lysosomal storage diseases , our business, financial condition, results of operations, and growth prospects could be materially adversely affected.

Risks Related to the Discovery, Development, and Commercialization of Our Product Candidates

We are heavily dependent on the successful development of our TV platform and the programs currently in our pipeline.

We cannot give any assurance that any of our product candidates will receive regulatory, including marketing, approval, which is necessary before they can be commercialized.

Investment in biopharmaceutical product development involves significant risk that any product candidate will fail to demonstrate adequate efficacy or potency or an acceptable safety profile, gain regulatory approval, or become commercially viable.

To date, we have invested substantially all of our efforts and financial resources to identify, acquire intellectual property for, and develop our TV platform and our programs, including conducting preclinical studies and clinical trials, and providing general and administrative support for these operations.

Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates, and we may fail to do so for many reasons, including the following:

• our product candidates may not successfully complete preclinical studies or clinical trials;

• our drug delivery platform technology may not be clinically viable;

• a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

• our competitors may develop therapeutics or platform technologies that render our product candidates or platform obsolete or less attractive;

• the product candidates and TV platform that we develop may not be sufficiently covered by intellectual property for which we hold exclusive rights;

• the product candidates and TV platform that we develop may be covered by third parties’ patents or other intellectual property or exclusive rights;

• the market for a product candidate may change so that the continued development of that product candidate is no longer reasonable or commercially attractive;

• a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;

• if a product candidate obtains regulatory approval, we may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate;

• a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which could have a material adverse effect on our business.

Similarly, our potential decisions to delay, terminate, divest, or collaborate with third parties in respect of certain programs may subsequently prove to be suboptimal and could cause us to miss valuable opportunities.

If we make incorrect determinations regarding the viability, indication size, or market potential of any of our programs or product candidates or misread trends in the biopharmaceutical industry, our business, financial condition, results of operations, and growth prospects could be materially adversely affected.

We have previously discontinued the development of certain molecules prior to completion of preclinical development because we did not believe they met our criteria for potential clinical success.

Further, we canno t be certain that any of our product candidates will be successful in clinical trials.

For instance, in January 2025, we announced that the Phase 2/3 HEALEY ALS Platform Trial evaluating DNL343 for ALS did not meet primary and key secondary endpoints.

We may in the future advance product candidates into clinical trials and terminate such trials prior to their completion.

We cannot provide any assurance that we will be able to successfully advance any of our product candidates through the development process or, if approved, successfully commercialize any of our product candidates.

We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products.

One of our strategies is to identify and pursue clinical development of additional product candidates.

We curren tly have several programs in the research, discovery and preclinical stages of development.

Identifying, developing, obtaining regulatory approval for, and commercializing additional product candidates for the treatment of neurodegenerative and lysosomal storage diseases will require substantial additional funding and is prone to the risks of failure inherent in drug development.

We cannot provide you any assurance that we will be able to successfully identify or acquire additional product candidates, advance any of these additional product candidates through the development process, successfully commercialize any such additional product candidates, if approved, or assemble sufficient resources to identify, acquire, develop or, if approved, commercialize additional product candidates.

Our product candidates are based on novel technology in fields that have seen limited success in drug development, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

We have focused our research and development efforts on addressing neurodegenerative and lysosomal storage diseases .

Collectively, efforts by biopharmaceutical companies in the fields of neurodegenerative and lysosomal storage diseases have seen limited success in drug development.

There are few effective therapeutic options available for patients with neurodegenerative diseases, such as Alzheimer’s disease and Parkinson’s disease, and lysosomal storage diseases , such as Hunter syndrome and Sanfilippo syndrome.

Our future success is highly dependent on the successful development of our TV platform and our product candidates for treating neurodegenerative and lysosomal storage diseases .

Developing and, if approved, commercializing our product candidates for treatment of neurodegenerative and lysosomal storage diseases subjects us to a number of challenges, including engineering product candidates to cross the BBB to enable optimal concentration of the therapeutic in the brain and obtaining regulatory approval from the FDA and other regulatory authorities who have only a limited set of precedents to rely on.

Our approach to the treatment of neurodegenerative and lysosomal storage diseases aims to identify and select targets with a genetic link to neurodegenerative and lysosomal storage diseases;

identify and develop molecules that engage the intended target;

identify and develop biomarkers, which are biological molecules found in blood, other bodily fluids, or tissues that are signs of a normal or abnormal process or of a condition or disease, to select the right patient population and demonstrate target engagement, pathway engagement, and impact on disease progression of our molecules;

and engineer our molecules to cross the BBB and act directly in the brain.

This strategy may not prove to be successful.

We may not be able to discover, develop, and utilize biomarkers to demonstrate target engagement, pathway engagement, and the impact on disease progression of our molecules.

We cannot be sure that our approach will yield satisfactory therapeutic products that are safe and effective, scalable, or profitable.

Moreover, public perception of drug safety issues, including adoption of new therapeutics or novel approaches to treatment, may adversely influence the willingness of subjects to participate in clinical trials, or if approved, of physicians to subscribe to novel treatments.

We may encounter substantial delays in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

Further, we cannot be certain that any of our product candidates will be successful in clinical trials.

For instance, in January 2025, we announced that the Phase 2/3 HEALEY ALS Platform Trial evaluating DNL343 for ALS did not m eet primary and key secondary endpoints.

We may also advance product candidates into clinical trials and later terminate those trials before completion.

In addition, we may decide at any time to discontinue development or commercialization of any product or product candidate for a variety of reasons, including the emergence of new technologies that render a product obsolete, competition from other products, or changes in, or our inability to comply with, applicable regulatory requirements.

If we terminate a program in which we have invested significant resources, we will not realize any return on that investment and may lose the opportunity to allocate those resources to potentially more productive uses.

Risks Related to the Discovery, Development, and Commercialization of Our Product and Product Candidates

Our estimated market opportunities are subject to numerous uncertainties and may prove to be inaccurate.

If we have overestimated the size of our market opportunities, our future growth may be limited.

Our estimated markets and market opportunities for our approved product, AVLAYAH, and product candidates are based on a variety of inputs, including data published by third parties, our own market insights and internal market intelligence, and internally generated data and assumptions.

Market opportunity estimates, whether obtained or derived from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate.

While we believe our market opportunity estimates are reasonable, such information is inherently imprecise.

If this third-party or internally generated data prove to be inaccurate or we make

errors in our assumptions based on that data, our actual market may be more limited than our estimates.

Particularly with respect to ultra-rare diseases, the size of potential markets is small and we must achieve significant market penetration of the product at a sufficient price to justify our product development costs.

An error in estimating the market size could cause us to misallocate capital and other critical business resources, which could harm our business.

The estimates of our market opportunities should not be taken as indicative of our ability to grow our business.

We may encounter substantial delays in our clinical trials or difficulties enrolling patients, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

Clinical testing is expensive, time consuming, and subject to uncertainty.

We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.

We cannot be sure that submission of an investigational new IND, or a CTA, will result in the FDA or EMA, as applicable, allowing clinical trials to begin in a timely manner, if at all.

Moreover, even if these trials begin, issues may arise that could suspend or terminate such clinical trials.

A failure of one or more clinical trials can occur at any stage of testing, and our future clinical trials may not be successful.

We cannot be sure that submission of an IND, or a clinical trial application ("CTA"), will result in the FDA or EMA, as applicable, allowing clinical trials to begin in a timely manner, if at all.

Clinical testing is difficult to design and implement, can take many years to complete and its ultimate outcome is uncertain.

Failure can occur at any time during the clinical trial processes and for any number of reasons, and, because our product candidates are in earlier stages of development, there is a high risk of failure and we may never succeed in developing marketable products.

Events that may prevent successful or timely initiation or completion of clinical trials include:

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• delays in reaching a consensus with regulatory agencies on trial design;

• delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

• delays in identifying, recruiting, and training suitable clinical investigators;

• delays in obtaining required Institutional Review Board ("IRB") approval at each clinical trial site;

• delays involving our clinical trial sites, including delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, delays in identifying, recruiting and training suitable clinical investigators, and delays in obtaining required IRB approval at each clinical trial site;

• imposition of a temporary or permanent clinical hold by regulatory agencies for a number of reasons, including after review of an IND or amendment, CTA or amendment, or equivalent application or amendment;

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or if the FDA or EMA finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;

• delays in identifying, recruiting, and enrolling suitable patients to participate in our clinical trials, and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up;

• delays in identifying, recruiting and enrolling suitable patients to participate in our clinical trials;

• difficulty collaborating with patient groups and investigators;

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• changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

• changes in the approval policies or regulations of the FDA or other regulatory authorities;

• delays due to changes in FDA staffing, priorities, or leadership;

• delays due to changes in the staffing, priorities, or leadership of the FDA or other regulatory authorities, or changes to regulatory approval policies or regulations;

• changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;

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Clinical trial delays could also shorten any periods during which our products have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

We could also encounter delays if a clinical trial is suspended or terminated by us or our collaborators, by the data safety monitoring board for such trial, or by any regulatory authority, or if the IRBs of the institutions in which such trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review.

Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions, developments in trials conducted by us or our competitors for related technology that raise regulatory concerns about risk to patients of the technology broadly, or lack of adequate funding to continue the clinical trial.

For example, in January 2022, we announced that the TAK-920/DNL919 (ATV:TREM2) IND application had been placed on clinical hold by the FDA.

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

We cannot assure you that we will ever resume the clinical program for TAK-920/DNL919, nor can we assure you that our other product candidates will not be subject to new, partial, or full clinical holds in the future, which may impact development plans.

We may also pause the advancement of lead molecules in favor of a backup molecule with a superior safety or efficacy profile, such as we did in our RIPK1 program, switching our focus from DNL747 to SAR443820/DNL788.

Delays in the completion of any clinical trial of our product candidates will increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue.

In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

We may encounter difficulties enrolling and/or retaining patients in our clinical trials, and our clinical development activities could thereby be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion.

We may experience difficulties in patient enrollment and retention in our clinical trials for a variety of reasons, including:

• public health crises;

• the size and nature of the patient population;

• the patient eligibility criteria defined in the protocol, including biomarker-driven identification and/or certain highly-specific criteria related to stage of disease progression, which may limit the patient populations eligible for our clinical trials to a greater extent than competing clinical trials for the same indication that do not have biomarker-driven patient eligibility criteria;

• the size of the study population required for analysis of the trial’s primary endpoints;

• the proximity of patients to a trial site;

• the design of the trial;

• our ability to recruit clinical trial investigators with the appropriate competencies and experience;

• competing clinical trials for similar therapies or targeting patient populations meeting our patient eligibility criteria;

• clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies and product candidates;

• our ability to obtain and maintain patient consents;

• the risk that patients enrolled in clinical trials will not complete such trials, for any reason.

Our inability to enroll and retain a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

Enrollment delays and retention challenges in our clinical trials may increase development costs for our product candidates, delay our ability to obtain clinical data, and jeopardize our ability to obtain marketing approval for the sale of our product candidates.

Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.

Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex, and expensive preclinical studies and clinical trials that our product candidates are both safe and effective for use in each target indication.

For those product candidates that are subject to regulation as biological drug products, we will need to demonstrate that they are safe, pure, and potent for use in their target indications.

Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

Failure can occur at any time during the clinical trial process.

The results of preclinical studies of our product candidates may not be predictive of the results of early-stage or later-stage clinical trials, and results of early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials.

The results of clinical trials in one set of patients or disease indications may not be predictive of those obtained in another.

In some instances, there can be significant variability in safety or efficacy or potency results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants.

Open-label extension studies may also extend the timing and increase the cost of clinical development substantially.

Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy or potency profile despite having progressed through preclinical studies and initial clinical trials.

A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or potency or unacceptable safety issues, notwithstanding promising results in earlier trials.

This is particularly true in neurodegenerative and lysosomal storage diseases , where failure rates historically have been higher than in many other disease areas.

Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.

We cannot be certain that our current clinical trials or any future clinical trials will be successful.

Additionally, any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Even if such clinical trials are successfully completed, we cannot guarantee that the FDA will approve the product candidates for the proposed indications, and more information or trials could be required before we submit our product candidates for approval.

For instance, although the FDA has accepted our biologics license application ("BLA") for accelerated approval of DNL310, our PDUFA target date was extended to enable the submission of updated clinical pharmacology information in response to an information request from the FDA.

It is also possible that the FDA could require us to conduct a confirmatory trial.

To the extent that the results of such trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.

Even if regulatory approval is secured for any of our product candidates, the terms of such approval, such as requiring us to narrow our indications to a smaller subset, may also limit its commercial potential.

Our product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences.

Adverse events or other undesirable side effects caused by our product candidates could cause us, our collaborators, or regulatory authorities to interrupt, delay, or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, EMA, or other comparable foreign regulatory authorities.

Our most advanced product candidates, DNL310, DNL126, BIIB122/DNL151, eclitasertib (SAR443122/DNL758), TAK-594/DNL593, DNL628, and DNL952 are currently our only clinical stage product candidates.

Adverse events and other side effects may result from higher dosing, repeated dosing, and/or longer-term exposure to our product candidates and could lead to delays and/or termination of the development of these product candidates.

For example, in August 2023, together with our collaboration partner Takeda, we made the strategic decision to discontinue clinical development of TAK-920/DNL919 in Alzheimer's disease following a clinical hold by the FDA.

Drug-related side effects could affect patient recruitment, the ability of enrolled patients to complete the trial, and/or result in potential product liability claims.

Additionally, if one or more of our product candidates receives marketing approval, and we or others, including our collaborators, later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

• regulatory authorities may withdraw approvals of such product and cause us to recall our product;

• regulatory authorities may require additional warnings on the label;

• we may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies;

• we may be required to create a Risk Evaluation and Mitigation Strategy plan to assure safe use;

• we could be sued and held liable for harm caused to patients;

• our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, financial condition, results of operations, and growth prospects.

We cannot predict whether our product candidates will cause toxicities in humans that would preclude or lead to the revocation of regulatory approval based on nonclinical studies or clinical trials.

Our product candidates have been subject to clinical holds in the past and we cannot assure you that others will not be subject to new, partial, or full clinical holds in the future.

For example, in December 2025, we announced that DNL952 was placed on clinical hold.

Although protocol amendments were implemented for DNL952 and the program resumed, there could be safety findings or concerns that result in additional pauses, protocol modifications, or permanent discontinuation of development.

Any clinical holds by the FDA, if not timely lifted, could impact our development plans.

We may be unable to obtain regulatory approval for an expansion of our product labels or approval of our product candidates under applicable regulatory requirements.

The denial or delay of any such approval would prevent or delay commercialization of additional indications of our product candidates and adversely impact our business.

To gain approval to expand the label of our products or market our product candidates, we must provide the FDA and/or foreign regulatory authorities with nonclinical and clinical data that adequately demonstrate the safety and efficacy, or as applicable, the safety, purity, and potency of the product for the intended indication applied for in the applicable regulatory filing.

There is significant regulatory risk involving our products and product candidates, and we cannot provide assurance that AVLAYAH or any future product candidates will gain an expanded label or that our product candidates will obtain regulatory approval for commercialization as expected, or at all.

The research, testing, manufacturing, labeling, approval, sale, marketing, and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, and such regulations differ from country to country.

We are not permitted to market expanded indications of our products or any product candidates in the United States or in any foreign countries until they receive the requisite approval from the applicable regulatory authorities of such jurisdictions, including pricing approval in the EU.

The FDA or foreign regulatory authorities may delay, limit, or deny approval of expanded labels for our products or product candidates for numerous reasons, including our inability to demonstrate safety, efficacy, purity, or potency to their satisfaction;

disagreement with the design, size, conduct, or interpretation of our clinical trials or nonclinical studies;

a determination that the clinical benefits do not outweigh safety risks or that trial results lack sufficient statistical significance or clinical meaningfulness;

requirements for additional studies, post-marketing commitments, or a patient registry;

deficiencies in our chemistry, manufacturing, and controls data or in the processes or facilities of our third-party manufacturers;

advisory committee recommendations against approval or in favor of additional conditions such as labeling limitations or distribution restrictions;

imposition of a Risk Evaluation and Mitigation Strategy ( REMS) or equivalent;

non-approval of our formulation, dosing, labeling, or specifications;

actions or protocol errors by the CROs we engage to conduct our trials;

or changes in approval policies or regulations that render our existing clinical data insufficient for approval.

Our clinical trials may reveal significant adverse events, toxicities, or other side effects and may fail to demonstrate substantial evidence of the safety and efficacy or potency of AVLAYAH or our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.

Clinical testing is expensive, time-consuming, and inherently uncertain, and failure can occur at any time during the development process.

Results of preclinical studies may not be predictive of clinical trial outcomes, and results of early-stage trials may not be predictive of later-stage trials.

Variability in safety or efficacy results across trials can arise from differences in patient populations, protocols, dosing adherence, and discontinuation rates.

Any safety concerns observed in one clinical trial could lead to delays, termination, or limited regulatory prospects across our pipeline.

Even if clinical trials are completed successfully, the FDA or foreign regulatory authorities may require additional data or trials before or after submission, and any approval we receive may be narrower in scope than anticipated, limiting commercial potential.

If we or our collaborators later identify undesirable side effects or adverse events following approval, regulatory authorities could withdraw approval, require a product recall, impose additional label warnings or post-approval studies, or restrict how the product is administered.

Any such outcomes could harm our reputation, business, financial condition, and growth prospects.

AVLAYAH has been administered to only a limited number of patients in clinical studies, and while the FDA granted accelerated approval, real-world safety and effectiveness may differ from what was observed in those studies.

Post-marketing data, adverse event reports, and ongoing clinical studies may cause regulatory authorities to withdraw approval of the product and require a recall, mandate additional label warnings, require changes to administration or additional clinical trials or post-approval studies, or require us to implement a REMS;

in addition, we could be sued and held liable for patient harm, and our reputation could suffer.

Interim, topline, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.

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Our competitors, either alone or with collaborative partners, may succeed in developing, acquiring, or licensing on an exclusive basis drug or biologic products that are more effective, safer, more easily commercialized, or less costly than our product candidates or may develop proprietary technologies or secure patent protection that we may need for the development of our technologies and products.

A number of large pharmaceutical and biotechnology companies are developing products for the treatment of the neurodegenerative and lysosomal storage disease indications for which we have research programs, including Alzheimer’s disease, Parkinson’s disease, Hunter syndrome, and Sanfilippo syndrome.

Companies that we are aware are developing therapeutics in the neurodegenerative and lysosomal storage disease areas include companies with significant financial resources.

Companies that we are aware are developing therapeutics in the neurodegenerative and lysosomal storage disease areas include companies with significant financial resources, established presence in the market, and expertise in research, development, manufacturing, and commercialization.

In addition to competition from other companies targeting neurodegenerative indications, any products we may develop may also face competition from other types of therapies, such as gene-editing therapies.

Many of our current or potential competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do.

Mergers and acquisitions may result in even more resources being concentrated among a smaller number of our competitors.

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Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials.

In order to conduct clinical trials of our product candidates, or supply commercial products, if approved, we will need to manufacture them in small and large quantities.

In order to conduct clinical trials of our product candidates, or supply commercial products, we will need to manufacture them in small and large quantities.

Our manufacturing partners may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all.

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The same risks would apply to our internal manufacturing facilities and capabilities.

Under a lease for approximately 60,000 rentable square feet of laboratory, office, and warehouse premises, we substantially completed the build-out of our Utah site and are in the process of establishing our clinical manufacturing capabilities for biologic therapeutics including the manufacture of materials for toxicology studies and drug substance for early human clinical studies.

Under a lease for approximately 60,000 rentable square feet of laboratory, office, and warehouse premises, we have completed the build-out of our Utah site and have begun to manufacture materials for toxicology studies and drug substance for human clinical studies.

There can be no assurance that our current and future efforts to scale our internal manufacturing capabilities will succeed.

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Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations and growth prospects.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates we may develop, we may not be successful in commercializing those product candidates if and when they are approved.

We have initiated the build-out of our sales and marketing infrastructure and may enter into arrangements with third parties for commercialization of DNL310 and future product candidates.

There are risks involved with both establishing our own commercial capabilities and entering into arrangements with third parties to perform these services.

For example, recruiting and training a sales force or reimbursement specialists is expensive and time consuming and could delay any product launch.

If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and other commercialization capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses.

This may be costly, and our investment would be lost if we cannot retain or reposition our commercialization personnel.

Factors that may inhibit our efforts to commercialize any approved product on our own include:

• our inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs, and other support personnel;

• the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future approved products;

• the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement, and other acceptance by payors;

• the inability to price our products at a sufficient price point to ensure an adequate and attractive level of profitability;

• restricted or closed distribution channels that make it difficult to distribute our products to segments of the patient population;

• the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines;

• unforeseen costs and expenses associated with creating an independent commercialization organization.

If we enter into arrangements with third parties to perform sales, marketing, commercial support, and distribution services, our product revenue or the profitability of product revenue may be lower than if we were to market and sell any products we may develop ourselves.

In addition, we may not be successful in entering into arrangements with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us.

We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively.

If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates if approved.

Even if any product candidates we develop receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial success.

The commercial success of any of our product candidates will depend upon its degree of market acceptance by physicians, patients, third-party payors, and others in the medical community.

Even if any product candidates we may develop receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors, and others in the medical community.

The degree of market acceptance of any product candidates we may develop, if approved for commercial sale, will depend on a number of factors, including:

Furthermore, if we receive commercial approval in the United States and intend to seek approval in other countries, we may rely on third-party distributors and other commercial partners outside the United States, such as local agents, wholesalers, importers and logistics providers, to market, distribute and support any potential commercial products, and our ability to enter and compete in non-U.S.

markets may depend on the performance of these third parties.

These partners are subject to complex and evolving foreign laws and regulatory regimes and may be required to obtain, maintain and renew various licenses, approvals and registrations and to comply with local requirements relating to importation, storage and handling, serialization and traceability, pharmacovigilance, recordkeeping and reporting, and promotional and marketing activities.

If any such third party fails to obtain or maintain required authorizations, violates applicable laws or industry codes, engages in misconduct or misrepresentations, or otherwise performs poorly (including through inadequate forecasting, inventory management, product storage or handling, documentation, complaint management or recall support), we could experience delayed market entry, interruption of supply, product seizures, import holds or other enforcement actions, and we may incur significant costs to investigate, remediate or transition to alternative partners.

In addition, we may have limited ability to monitor and control our foreign distributors’ activities, and we could be subject to regulatory scrutiny, civil or criminal penalties, reputational harm, reduced sales, or termination of our commercial agreements as a result of their acts or omissions.

AVLAYAH and our other product candidates may not achieve adequate market acceptance among physicians, healthcare professionals, patients or their families, healthcare payors and others in the medical community necessary for commercial success.

Our approved product other product candidates may not achieve adequate market acceptance among physicians, healthcare professionals, patients or their families, healthcare payors and others in the medical community necessary for commercial success globally.

The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including:

• the efficacy or potency and safety of such product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals;

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• the prevalence and severity of any side effects.

If any product candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenue, and we may not become profitable.

Even if we are able to commercialize any product candidates, such products may become subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives, which would harm our business.

If AVLAYAH or any product candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenue, and we may not become profitable.

AVLAYAH and any other product candidates for which we receive approval may become subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives, which would harm our business.

The regulations that govern marketing approvals, pricing, and reimbursement for new drugs vary widely from country to country.

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As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenue we are able to generate from the sale of the product in that country.

Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if any product candidates we may develop obtain marketing approval.

Our ability to successfully commercialize any products that we may develop also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations.

Adverse pricing limitations may hinder our ability to recoup our investment in AVLAYAH or any future product candidates that receive marketing approval.

Our ability to successfully commercialize AVLAYAH or any future product candidates for which we receive marketing approval also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.

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Government authorities currently impose mandatory discounts for certain patient groups, such as Medicare, Medicaid and Veterans Affairs ("VA"), hospitals, and may seek to increase such discounts at any time.

Future regulation may negatively impact the price of our products, if approved.

Future regulation may negatively impact the price of our products.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

We cannot be sure that reimbursement will be available for any product candidate that we commercialize and, if reimbursement is available, the level of reimbursement.

Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval.

Reimbursement may impact the demand for, or the price of, AVLAYAH or any product candidate for which we obtain marketing approval.

In order to get reimbursement, physicians may need to show that patients have superior treatment outcomes with our products compared to standard of care drugs, including lower-priced generic versions of standard of care drugs.

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Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for any approved products we may develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize product candidates, and our overall financial condition.

If any of our small molecule product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.

Under the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act"), a pharmaceutical manufacturer may file an abbreviated new drug application ("ANDA") seeking approval of a generic copy of an approved, small molecule innovator product.

Under the Hatch-Waxman Act, a manufacturer may also submit a new drug application ("NDA") under section 505(b)(2) that references the FDA’s prior approval of the small molecule innovator product.

A 505(b)(2) NDA product may be for a new or improved version of the original innovator product.

The Hatch-Waxman Act also provides for certain periods of regulatory exclusivity, which preclude FDA approval (or in some circumstances, FDA filing and reviewing) of an ANDA or 505(b)(2) NDA.

These include, subject to certain exceptions, the period during which an FDA-approved drug is subject to orphan drug exclusivity.

In addition to the benefits of regulatory exclusivity, an innovator NDA holder may have patents claiming the active ingredient, product formulation or an approved use of the drug, which would be listed with the product in the FDA publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” known as the “Orange Book.” If there are patents listed in the Orange Book, a generic or 505(b)(2) applicant that seeks to market its product before expiration of the patents must include in the ANDA a “Paragraph IV certification,” challenging the validity or enforceability of, or claiming non-infringement of, the listed patent or patents.

Notice of the certification must be given to the innovator, too, and if within 45 days of receiving notice the innovator sues to protect its patents, approval of the ANDA is stayed for 30 months, or as lengthened or shortened by the court.

Accordingly, if any of our small molecule product candidates are approved, competitors could file ANDAs for generic versions of our small molecule drug products or 505(b)(2) NDAs that reference our small molecule drug products, respectively.

If there are patents listed for our small molecule drug products in the Orange Book, those ANDAs and 505(b)(2) NDAs would be required to include a certification as to each listed patent indicating whether the ANDA applicant does or does not intend to challenge the patent.

We cannot predict which, if any, patents in our current portfolio or patents we may obtain in the future will be eligible for listing in the Orange Book, how any generic competitor would address such patents, whether we would sue on any such patents, or the outcome of any such suit.

We may not be successful in securing or maintaining proprietary patent protection for products and technologies we develop or license.

Moreover, if any of our owned or in-licensed patents that are listed in the Orange Book are successfully challenged by way of a Paragraph IV certification and subsequent litigation, the affected product could immediately face generic competition and its sales would likely decline rapidly and materially.

Should sales decline, we may have to write off a portion or all of the intangible assets associated with the affected product and our results of operations and cash flows could be materially and adversely affected.

See “Risks Related to Our Intellectual Property.”

Our biologic, or large molecule, product candidates for which we intend to seek approval may face competition sooner than anticipated.

Even if we are successful in achieving regulatory approval to commercialize a product candidate faster than our competitors, our large molecule product candidates may face competition from biosimilar products.

In the United States, our large molecule product candidates, including DNL310, are regulated by the FDA as biologic products.

We have sought approval for DNL310 pursuant to the biologics license application ("BLA") pathway and may do so for other large molecule product candidates in our pipeline.

In the United States, our large molecule product candidates, are regulated by the FDA as biologic products.

We sought and received approval for AVLAYAH pursuant to a BLA pathway and may do so for other large molecule product candidates in our pipeline.

The Biologics Price Competition and Innovation Act of 2009 (the "BPCIA"), created an abbreviated pathway for the approval of biosimilar and interchangeable biologic products.

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Under the Hatch-Waxman Act, a manufacturer may also submit a new drug application ("NDA") under section 505(b)(2) that references the FDA’s prior approval of the small molecule innovator product.

A 505(b)(2) NDA product may be for a new or improved version of the original innovator product.

If any of our small molecule product candidates obtain regulatory approval, competitors may file abbreviated new drug applications under the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act") seeking approval of generic versions, or submit 505(b)(2) new drug applications referencing our approved products.

Although the Hatch-Waxman Act provides certain periods of regulatory exclusivity and we may obtain patent protection eligible for listing in the FDA's Orange Book, we cannot predict which patents, if any, will be eligible for listing, whether generic applicants will challenge those patents through Paragraph IV certifications, or the outcome of any resulting litigation.

If any of our Orange Book-listed patents are successfully challenged, the affected product could immediately face generic competition and its sales would likely decline rapidly and materially, which could require us to write off a portion or all of the intangible assets associated with the affected product and could materially and adversely affect our results of operations and cash flows.

See "Risks Related to Our Intellectual Property."

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk when and if we commercialize any products.

For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties.

We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk with the sale of a commercial product.

For example, we may be sued if AVLAYAH causes or is perceived to cause injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale.

Any product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties.

Claims could also be asserted under state consumer protection acts.

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The regulatory approval processes of the FDA, EMA, and comparable foreign regulatory authorities are lengthy, time consuming, and inherently unpredictable.

If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed.

If we are ultimately unable to obtain regulatory approval for additional product candidates, we will be unable to generate sufficient product revenue and our business will be substantially harmed.

The time required to obtain approval by the FDA, EMA, and comparable foreign regulatory authorities is unpredictable, typically takes many years following the commencement of clinical trials, and depends upon numerous factors, including the type, complexity and novelty of the product candidates involved.

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This landmark Supreme Court decision may invite more companies and other stakeholders to bring lawsuits against the FDA to challenge longstanding decisions and policies of the FDA, including the FDA's statutory interpretations of market exclusivities and the "substantial evidence" requirements for drug approvals, which could undermine the FDA's authority, lead to uncertainties in the industry, and disrupt the FDA's normal operations, any of which could delay the FDA's review of our regulatory submissions.

We cannot predict the full impact of this decision, future judicial challenges brought against the FDA, or the nature or extent of government regulation that may arise from future legislation or administrative action.

Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies.

Moreover, regulatory authorities may fail to approve companion diagnostics that we contemplate using with our therapeutic product candidates.

We have not obtained regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Changes to the leadership and staffing at federal agencies may impact our clinical development and timelines.

It is possible that none of the product candidates in our development pipeline will ever obtain regulatory approval.

Changes to the leadership and staffing at federal agencies may also impact our clinical development and timelines.

Applications for our product candidates could fail to receive regulatory approval in an initial or subsequent indication for many reasons, including but not limited to the following:

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We currently and may in the future conduct clinical trials for our product candidates outside the United States, and the FDA, EMA, and applicable foreign regulatory authorities may not accept data from such trials.

We currently conduct clinical trials outside the United States, including in Europe, and may continue to do so in the future.

We currently conduct clinical trials outside the United States, and may continue to do so in the future.

The acceptance of data from clinical trials conducted outside the United States or another jurisdiction by the FDA, EMA, or applicable foreign regulatory authority may be subject to certain conditions.

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If the FDA, EMA, or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval or clearance for commercialization in the applicable jurisdiction.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, and a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others.

For example, even if the FDA or EMA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product candidate in those countries.

Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.

In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction.

In some cases, the price that we intend to charge for our products is also subject to approval.

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties, and costs for us and could delay or prevent the introduction of our products in certain countries.

If we or any partner we work with fail to comply with the regulatory requirements in international markets or fail to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

A significant portion of our international sales are made based on special access programs, and changes to these programs could adversely affect our product sales and revenues in these countries.

AVLAYAH is currently approved only in the United States, and we have no product approvals in other jurisdictions.

If we fail to comply with regulatory requirements in any market we decide to enter, or to obtain and maintain required approvals, or if regulatory approvals in the relevant markets are delayed, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

Marketing approval in one jurisdiction, such as in the United States, does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one jurisdiction may have a negative effect on the regulatory process in others.

Failure to obtain a marketing approval in countries in which we seek to market our products or any delay or setback in obtaining such approval would impair our ability to develop foreign markets for our product or product candidates.

Currently our initial international sales of AVLAYAH will be made through early access, special access, or named patient sales programs in markets that do not require prior regulatory approval to establish such programs.

These programs vary by country and generally require special approval from national competent authorities and, in some cases, patient-by-patient approval, supported by evidence of medical need.

These programs are subject to changes in requirements, funding by local governments, and disease classification, and governments may take unofficial measures to limit purchases, such as denying coverage, delaying orders, or withholding customs clearance.

If these programs are curtailed, we would need to seek full regulatory approval or official reimbursement, which can be costly and time-consuming, and may be economically infeasible in countries with very small patient populations.

Even if we obtain regulatory approval for a product candidate, our products will remain subject to extensive regulatory scrutiny.

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We could also be asked to conduct post-marketing clinical trials to verify the safety and efficacy of our non-biologic products or safety, purity, and potency for our biologic products, in general or in specific patient subsets.

We are seeking accelerated approval of DNL310.

If successful, we expect the FDA will require us to conduct a confirmatory study to verify the predicted clinical benefit and safety profile.

The results from the confirmatory study may not support the clinical benefit or safety profile, which would result in approval being withdrawn.

The Food and Drug Omnibus Reform Act reformed the accelerated approval pathway, such as requiring the FDA to specify conditions for post-approval study requirements and setting forth procedures for the FDA to withdraw a product on an expedited basis for non-compliance with post-approval requirements.

An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing, or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market.

If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things, issue warning letters, impose penalties, suspend regulatory approvals, or require a product recall.

The FDA granted accelerated approval for AVLAYAH, while requiring us to conduct a confirmatory study to verify the predicted clinical benefit and safety profile.

If this confirmatory study reveals previously unknown problems with AVLAYAH, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or if the FDA disagrees with the promotion, marketing, or labeling of AVLAYAH, it may impose restrictions on that product or us, including requiring withdrawal of the product from the market.

If we fail to comply with applicable regulatory requirements, the FDA may, among other things, issue warning letters, impose penalties, suspend regulatory approvals, or require a product recall.

Any of these actions by a regulatory agency could require us to expend significant time and resources, generate negative publicity, and adversely affect the value of our company.

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Once granted, orphan drug designation entitles a party to financial incentives and certain exclusivity protections.

In February 2019, the FDA granted orphan drug designation for our DNL310 program in Hunter syndrome.

In February 2019, the FDA granted orphan drug designation for tividenofusp alfa.

However, the FDA can still approve other drugs that have a different active ingredient for use in treating the same indication or disease, and can waive orphan exclusivity if we are unable to manufacture sufficient supply of our product.

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2021), the FDA clarified in a January 2023 notice that the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order – that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease or condition that have not yet been approved.

It is unclear how future litigation, legislation, agency decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

The Consolidated Appropriations Act of 2026, signed into law in February 2026, codified this longstanding FDA interpretation of the Orphan Drug Act, allowing the FDA to approve multiple versions of the same orphan drug for different subindications and subpopulations.

Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.

We may face difficulties from changes to current regulations and future legislation.

Current and future legislation may increase the difficulty and cost for us to commercialize our drugs, if approved, and affect the prices we may obtain, including changes in coverage and reimbursement policies in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates, if approved, profitably.

Current and future legislation may increase the difficulty and cost for us to commercialize our drugs, and affect the prices we may obtain, including changes in coverage and reimbursement policies in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates profitably.

Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.

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In August 2022, Congress passed the Inflation Reduction Act of 2022 ("IRA"), which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

Various industry stakeholders, including pharmaceutical companies, the U.S.

Chamber of Commerce, and the Pharmaceutical Research and Manufacturers of America, have initiated lawsuits against the federal government asserting that the price negotiation provisions of the Inflation Reduction Act ("IRA") are unconstitutional.

The impact of these judicial changes, future litigation brought in view of the Supreme Court’s overrule of the Chevron doctrine, legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the government on us and the pharmaceutical industry as a whole is unclear.

At the state level, a number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws once we begin commercialization after obtaining regulatory approval for any of our products.

Various industry stakeholders have initiated lawsuits against the federal government asserting that the price negotiation provisions of the IRA are unconstitutional.

Further, the current administration has issued executive orders focused on decreasing prescription drug prices, including directing the Secretary of HHS to establish a mechanism through which American patients can buy drugs directly from manufacturers who sell at a most-favored-nation price and directing the U.S.

Trade Representative and Secretary of Commerce to take action to ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States.

In November 2025, CMS announced a voluntary initiative called the GENEROUS Model (GENErating cost Reductions fOr U.S.

Medicaid Model) to introduce the option of most-favored-nation pricing to the Medicaid program, whereby a drug manufacturer may voluntarily offer supplemental rebates to participating state Medicaid programs for a manufacturer’s covered outpatient drugs.

Government agreements with pharmaceutical companies and other government measures that use most-favored-nation pricing targets for prescription drugs, including the use of international pricing reference to set drug prices in the United States, or that increase generic and biosimilar drug entry sooner than expected can have a material adverse effect on our industry, ability to set adequate pricing for new drugs to recover research and development costs, ability to attract potential investors and potential buyers in the future.

The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the government on us and the pharmaceutical industry as a whole is unclear.

At the state level, a number of states are considering or have recently enacted state drug price transparency and reporting laws which could substantially increase our compliance burdens and expose us to greater liability under such state laws as we continue to commercialize AVLAYAH and any future approved products.

Since its enactment, there have been executive, judicial and congressional challenges to certain aspects of the ACA and IRA.

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This could lower the price that we receive for any approved product.

Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain profitability or commercialize our product candidates, if approved.

In addition, increased scrutiny by the U.S.

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The laws that may impact our operations include the federal Anti-Kickback Statute, the False Claims Act, the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 ("HITECH"), the federal Physician Payment Sunshine Act, federal consumer protection and unfair competition laws, and analogous state and foreign laws and regulations.

If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase.

Now that we have obtained FDA approval of AVLAYAH and have begun commercializing it in the United States, our potential exposure under such laws has increased significantly, and our costs associated with compliance with such laws are also likely to increase.

In particular, the promotion, sales, and marketing of healthcare items and services is subject to extensive laws and regulations designed to prevent fraud, kickbacks, self-dealing, and other abusive practices.

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It is possible that these laws, regulations, or other actual or asserted obligations may be interpreted and applied in a manner that is inconsistent with our practices and our compliance efforts may be unsuccessful.

We cannot guarantee that we or our vendors may be in compliance with all applicable international laws and regulations as currently maintained and enforced or as they evolve.

Our actual or alleged non-compliance could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business.

In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations may be costly and require ongoing modifications to our policies, procedures and systems.

Our ongoing efforts to comply with evolving laws and regulations may be costly and require ongoing modifications to our policies, procedures and systems.

In addition, if we are unable to properly protect the privacy and security of protected health information, we could be alleged or found to have breached certain contractual obligations.

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therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA.

Recently the Securities and Exchange Commission (the "SEC"), and Department of Justice have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical companies.

There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws.

Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down of our facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business.

Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition.

In addition, if we enter a commercialization phase, our products may be subject to U.S.

Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, business, operating results, financial condition and international expansion efforts.

In addition, our products may be subject to U.S.

and foreign export controls, trade sanctions, and import laws and regulations.

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government shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical government employees and stop critical activities.

Agency staffing changes may disrupt normal operations of federal agencies, including the FDA.

Regulatory agency staffing changes may disrupt normal operations of federal agencies, including the FDA.

If a prolonged government shutdown or other disruption occurs, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, or to provide feedback on our clinical development plans, which could have a material adverse effect on our business.

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We anticipate seeking third-party collaborators for the research, development, and commercialization of certain of the product candidates we may develop.

For example, we have collaborations with F-star, Takeda, Sanofi, Biogen, and others to further our development of product candidates and to enhance our research efforts directed to better understanding neurodegenerative and lysosomal storage diseases.

For example, we have collaborations with F-star, Sanofi, Biogen, and others to further our development of product candidates and to enhance our research efforts directed to better understanding neurodegenerative and lysosomal storage diseases.

Our likely collaborators for any other collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies, biotechnology companies, and academic institutions.

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• we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us;

• collaborators may control certain interactions with regulatory authorities, which may impact on our ability to obtain and maintain regulatory approval of our products candidates;

• collaborators may control certain interactions with regulatory authorities, which may impact our ability to obtain and maintain regulatory approval of our products candidates;

• disputes may arise between the collaborators and us that result in the delay or termination of the research, development, or commercialization of our product candidates or research programs or that result in costly litigation or arbitration that diverts management attention and resources;

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We cannot be certain that our suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and quality requirements.

Further, we have in the past and may in the future experience delayed shipments of raw materials due to interruptions relating to the aforementioned events.

Further, we have in the past experienced and may in the future experience delayed shipments of raw materials due to interruptions relating to the aforementioned events.

We do not currently have arrangements in place for redundant supply for certain components of our product candidates.

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If such an event were to occur, it could have a material adverse effect on our business.

In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patentees that have citizenship or nationality in, are registered in, or predominately have primary place of business or profit-making activities in the United States and other countries that Russia has deemed unfriendly without consent or compensation.

Consequently, we may be unable to prevent third parties from practicing our inventions in Russia or from selling or importing products made using our inventions in and into Russia.

Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

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Ryan Watts, and our scientific and medical personnel.

The loss of the services provided by any of our executive officers, other key employees, and other scientific and medical advisors, and our inability to find suitable replacements, could result in delays in the development of our product candidates and harm our business.

The majority of our operations are conducted at our facility in South San Francisco, a region that is headquarters to many other biopharmaceutical companies and many academic and research institutions.

Competition for skilled personnel is intense and the turnover rate can be high, which may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.

We expect that we may need to recruit talent from outside of our region, and doing so may be costly and difficult.

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided restricted stock and stock option grants that vest over time.

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We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

As of September 30, 2025, we had approximately 517 emplo yees, all of whom were full-time.

As our development plans and strategies develop, we must add a significant number of additional managerial, operational, financial, and other personnel.

As of March 31, 2026, we had approximately 507 emplo yees, all of whom were full-time.

As our development plans and strategies develop, we must add additional managerial, operational, financial, and other personnel.

Future growth will impose significant added responsibilities on members of management, including recruiting, integrating, and retaining additional employees;

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and expanding our controls, reporting systems, and procedures.

Our future financial performance and our ability to continue to develop and, if approved, commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth.

Our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to manage these growth activities.

Our future financial performance and our ability to continue to develop and commercialize AVLAYAH and any future product candidates will depend, in part, on our ability to effectively manage any future growth.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors, and consultants to provide certain services.

There can be no assurance that the services of these independent organizations, advisors, and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.

In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed, or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business.

There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, if at all.

In addition, we may be unable to effectively manage our outsourced activities or the quality or accuracy of the services provided by consultants may be compromised for any reason.

If we are not able to effectively manage our growth, we may not be able to successfully implement the tasks necessary to further develop our product candidates and, accordingly, may not achieve our research, development, and commercialization goals.

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We have in the past engaged in acquisitions and strategic partnerships, and we may engage in various acquisitions and strategic partnerships in the future, including licensing or acquiring complementary products, intellectual property rights, technologies, or businesses as part of our business strategy.

For example, we have collaboration agreements with Takeda, Sanofi and Biogen, and issued stock in connection with entering into certain of those agreements in 2018 and 2020.

For example, we have collaboration agreements with Sanofi and Biogen, and issued stock in connection with entering into certain of those agreements in 2018 and 2020.

Any such transaction may entail numerous risks, including:

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In addition, if we undertake such a transaction, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.

In December 2025, we entered into a synthetic royalty funding agreement with Royalty Pharma.

This agreement makes available to us up to $275.0 million from two potential milestone payments.

Upon achieving the first milestone of FDA accelerated approval of AVLAYAH, we received $200.0 million in gross proceeds;

the remaining milestone payment will be subject to European Medicines Agency (EMA) approval of AVLAYAH by December 31, 2029.

Should we not satisfy this condition by the applicable deadline, or if we fail to meet our obligations or default under this agreement, we may not receive any additional milestone payments, or the payments to us could be substantially less than the maximum amounts available under the agreement.

Our internal computer systems, or those used by our third-party research institution collaborators, CROs, or other contractors or consultants, may fail or suffer other breakdowns, cyberattacks, or information security breaches or incidents that could compromise the confidentiality, integrity, and availability of such systems and data, expose us to liability, and affect our reputation.

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We also rely on third-party vendors and their information technology systems.

Commercialization has required the implementation of computer systems that are increasingly complex to install, secure, and maintain.

Despite the implementation of security measures, our internal computer systems and those of our collaborators, CROs, and other contractors and consultants may be vulnerable to damage, outages and interruptions resulting from computer viruses and other malicious code or unauthorized access, or breached, compromised, or otherwise subject to security incidents due to operator error, malfeasance, or other system disruptions.

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Any of the foregoing could result in financial, legal, business, or reputational harm to us.

We are increasing our use of artificial intelligence (AI) systems to enhance productivity and efficiency;

however, the use of AI presents operational, legal, regulatory, cybersecurity, and reputational risks.

Many AI systems generate probabilistic outputs based on patterns in training data rather than deterministic rules, and they may produce results that are inaccurate, incomplete, misleading, biased, or not explainable, including “hallucinations,” and their performance may vary based on inputs, updates, or changes in underlying data.

As a result, our use of AI could lead to inaccurate analyses, degraded data quality, improper actions or decisions, operational disruptions, or data loss.

Our use of AI may also raise ethical and legal challenges, including outcomes that reflect or amplify bias or discrimination, lack of transparency or traceability, and evolving compliance obligations under data protection, intellectual property, and laws and regulations specifically governing the development, deployment, and use of AI.

In addition, AI tools may increase the risk that confidential, proprietary, or personal data is exposed, misused, or inappropriately processed (including through training, retention, or sharing by third-party providers), and could increase cybersecurity threats such as unauthorized access, prompt-injection, data exfiltration, or other security incidents.

We may also face claims or investigations related to the use of AI, including alleged infringement or misappropriation of third-party intellectual property, or allegations that AI-generated outputs were relied upon inappropriately.

These risks could require additional expenditures, reduce the effectiveness of our operations, result in regulatory scrutiny, litigation, fines, contractual liability, or reputational harm, and could materially adversely affect our business, operating results, financial condition, and stock price.

If we do not adopt AI or other machine-learning technologies effectively or at an appropriate pace, we may also be less competitive relative to peers who do.

Business disruptions, including as a result of geopolitical events and global pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations, and those of our third-party research institution collaborators, CROs, CDMOs, suppliers, clinical trial sites, and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, public health crises, and other natural or man-made disasters or business interruptions, for which we are partly uninsured.

For example, the global pandemic caused a temporary disruption in our ability to recruit participants for our clinical trials in the calendar year 2020 and the first quarter of 2021.

Our operations, and those of our third-party research institution collaborators, CROs, CDMOs, suppliers, clinical trial sites, and other third-party partners, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, public health crises, and other natural or man-made disasters or business interruptions, for which we are partly uninsured.

In addition, we rely on our third-party research institution collaborators for conducting research and development of our product candidates, and they may be affected by bank failures or instability in the financial services sector, government shutdowns, or withdrawn funding.

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Our business is subject to risks associated with conducting business internationally.

In addition to a subsidiary located in Zurich, Switzerland, some of our suppliers and collaborative relationships are located outside the United States.

In addition to a subsidiary located in Zurich, Switzerland, we have suppliers and collaborative relationships located outside the United States.

Accordingly, our future results could be harmed by a variety of factors, including:

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• differing reimbursement regimes, including price controls;

• negative consequences from changes in tax laws;

• negative consequences from changes in tax laws or tariffs;

• compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;

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Under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended, (the "Code"), if a corporation undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.

We have experienced ownership changes in the past, and we may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership, including in connection with our October 2022 offering, some of which are outside our control.

Limitations may also apply under state law.

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• commencement or termination of collaborations for our product development and research programs;

• the timing and ability to obtain regulatory approval on our lead product candidates, including DNL310;

• the timing and ability to obtain regulatory approval on our product candidates;

• failure to achieve development, regulatory, or commercialization milestones under our collaborations;

• failure or discontinuation of any of our product development and research programs;

• failure to commercialize our TV platform;

• failure to successfully commercialize AVLAYAH or other product candidates;

• results of preclinical studies, clinical trials, or regulatory approvals of product candidates of our competitors, or announcements about new research programs, product candidates, or technologies of our competitors;

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We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Sales of our common stock by current stockholders may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, and make it more difficult for you to sell shares of our common stock.

Furthermore sales of our common stock by current stockholders may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, and make it more difficult for you to sell shares of our common stock.

Certain holders of shares of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

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We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances, and licensing arrangements.

For example, on February 27, 2024, we announced a strategic private offering transaction in which we sold 3,244,689 shares of our common stock and pre-funded warrants to purchase 26,046,065 shares of our common stock, resulting in net proceeds of approximately $499.3 million.

For example, in December 2025, we sold 9,142,857 shares of common stock and pre-funded warrants to purchase 2,285,714 shares of our common stock in an underwritten public offering.

In January 2026, in connection with the same offering, the underwriters exercised their option to purchase an additional 746,468 shares of common stock, on which date we received aggregate net proceeds of approximately $12.4 million.

Our security holders may be further diluted by the exercise of the pre-funded warrants issued.

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If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us.

In December 2025, for example, we announced a synthetic royalty funding agreement that, upon certain conditions including regulatory approval within specified timelines and payment of milestones, would entitle Royalty Pharma to 9.25% royalty on future net sales of AVLAYAH.

To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.

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In addition, any sales of our common stock or other securities under our shelf registration statement could put downward pressure on our stock price.

Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.

Our directors, executive officers, holders of more than 5% of our outstanding stock, and their respective affiliates beneficially own a significant percentage of our outstanding common stock.

As a result, these stockholders, if they act together, may significantly influence all matters requiring stockholder approval, including the approval of significant corporate transactions and the election of directors, as with the recent board nomination and election of a director designated by Baker Brothers Life Sciences L.P.

As a result, these stockholders, if they act together, may significantly influence all matters requiring stockholder approval, including approval of significant corporate transactions and the election of directors, as with the recent board nomination and election of a director designated by Baker Brothers Life Sciences L.P.

and 667, L.P.

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We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake or system failures.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.

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• eliminate cumulative voting in the election of directors;

• authorize our board of directors to issues shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval;

• authorize our board of directors to issue shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval;

• provide our board of directors with the exclusive right to elect a director to fill a vacancy or newly created directorship;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors