What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 155 added, 78 removed, 207 unchanged (53% of the section changed)

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

• the commercial success of AVLAYAH and any other products for which we obtain marketing approval;

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

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

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

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

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

Commercial Product:

We currently have one approved product.

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

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

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

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

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

AVLAYAH's accelerated approval was based on a surrogate endpoint (reduction in CSF HS), and continued approval is contingent upon confirmation of clinical benefit in the ongoing global Phase 2/3 COMPASS trial, as further described under "Clinical-Stage Programs" below.

We began commercial distribution of AVLAYAH in April 2026.

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

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

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

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

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

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

This study includes young adults living with Hunter syndrome.

Since launch, our commercial activities have focused on executing our commercialization strategy, including supporting product availability through market access, specialty distribution and patient support services.

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

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

Ou r clinical-stage programs are as follows:

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

• DNL593 (PTV:PGRN), composed of PGRN fused to TV, is designed to restore PGRN levels in the brain with the goal of treating frontotemporal dementia ("FTD") associated with a mutation in the granulin ("GRN") gene.

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

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

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

In June 2026, we entered into an agreement to sell the PRV for gross proceeds of $195.0 million.

The transaction closed and proceeds were received in July 2026.

Clinical-Stage Programs

• Tividenofusp alfa-eknm (ETV:IDS), is an ETV-enabled enzyme replacement therapy designed to systemically deliver iduronate 2-sulfatase (IDS) throughout the body, including the brain for the treatment of neurologic manifestations of Hunter syndrome (MPS II).

The ongoing global Phase 2/3 COMPASS study is intended to support generation of confirmatory evidence, expansion of the U.S.

label to adult patients and future global regulatory submissions;

• Zafinofusp alfa (DNL126;

ETV:SGSH) is an investigational ETV-enabled enzyme replacement therapy designed to systemically deliver N-sulfoglucosamine sulfohydrolase (SGSH) throughout the body, including the brain, for the treatment of Sanfilippo syndrome type A (MPS IIIA);

• DNL593 (PTV:PGRN) is an investigational Protein TransportVehicle (PTV)-enabled protein replacement therapy designed to systemically deliver progranulin (PGRN) across the blood-brain barrier for the treatment of granulin ( GRN )-related frontotemporal dementia (FTD- GRN );

• DNL952 (ETV:GAA) is an investigational ETV-enabled enzyme replacement therapy designed to systemically deliver acid alpha-glucosidase (GAA) to muscle tissue and the brain by crossing the blood-brain barrier for the treatment of Pompe disease;

• DNL628 (OTV:MAPT) is an investigational Oligonucleotide TransportVehicle (OTV)-enabled antisense oligonucleotide designed for systemic delivery across the blood-brain barrier to reduce tau by targeting the MAPT gene for the treatment of Alzheimer's disease ("AD" );

• DNL921 (ATV:Abeta) is an investigational Antibody TransportVehicle (ATV)-enabled antibody designed for systemic delivery across the blood-brain barrier to target amyloid plaques for the treatment of Alzheimer's disease.

In the first half of 2026, we submitted a clinical trial application ("CTA") to initiate a Phase 1/1b study of DNL921;

• DNL151 is an investigational small molecule inhibitor of leucine-rich repeat kinase 2 (LRRK2) for the treatment of Parkinson's disease.

Denali conducts the Phase 2a BEACON study evaluating DNL151 in individuals with Parkinson's disease who are confirmed by genetic testing to be carriers of a pathogenic LRRK2 variant;

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

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Hunter syndrome (MPS II) Denali

ETV:SGSH DNL126 Ph 1/2

ETV:SGSH zafinofusp alfa

Sanfilippo syndrome Type A (MPS IIIA) Denali

Ph 1 (planned)

Pompe disease

Ph 1 Pompe disease

Alzheimer’s disease

LRRK2 BIIB122/DNL151 Ph 2a

Abeta DNL 921 Ph 1/1b Alzheimer’s disease Denali

LRRK2 DNL151 Ph 2a

Parkinson's disease Denali

Joint with Biogen

RIPK1 (Peripheral) eclitasertib, or SAR443122/DNL758

Ph 2 UC Sanofi

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

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

Key operational and financing milestones in 2026 to date include:

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

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

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

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

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

• In January 2026, we announced that the FDA has lifted the clinical hold on the IND application for DNL952 (ETV:GAA), and we are enrolling the Phase 1 study;

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

In March 2026, the first patient was dosed in the Phase 1b study of DNL628;

• In February 2026, we presented preliminary open-label Phase 1/2 data for our zafinofusp alfa study at the 2026 WORLDSymposium demonstrating that treatment with zafinofusp alfa resulted in substantial reductions in both cerebrospinal fluid (CSF) and urine heparan sulfate (HS), including normalization of CSF HS, with a safety profile generally consistent with established enzyme replacement therapies;

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

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

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

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

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

The termination became effective in June 2026, at which time all rights in the DNL593 program reverted to Denali.

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

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

We continue to conduct the Phase 1/2 study of DNL593 for FTD- GRN ;

• In May 2026, we and Biogen announced topline results from the Phase 2b LUMA study of BIIB122/DNL151 in individuals with early-stage Parkinson's disease.

The LUMA study did not meet its primary or secondary endpoints, and we and Biogen decided to discontinue further development of BIIB122/DNL151 in idiopathic Parkinson's disease.

We continue to independently conduct the Phase 2a BEACON study evaluating DNL151 in individuals with Parkinson's disease who carry a pathogenic LRRK2 variant;

• In June 2026, we entered into a definitive agreement to sell our Rare Pediatric Disease Priority Review Voucher for gross proceeds of $195.0 million.

The transaction closed and proceeds were received in July 2026;

• In the first half of 2026, we submitted a clinical trial application to initiate a Phase 1/1b study of DNL921 (ATV:Abeta) in healthy volunteers and participants with Alzheimer's disease, and we are conducting the study;

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

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

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

Through June 30, 2026 , we have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock and pre-funded warrants to purchase shares of our common stock in public offerings and private placements, and payments received from our collaboration, synthetic royalty and other funding agreements with Takeda, Sanofi, Biogen, Royalty Pharma and other third parties.

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

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

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

We had net losses of $127.6 million and $256.0 million for the three and six months ended June 30, 2026, respectively, and $124.1 million and $257.1 for the three and six months ended June 30, 2025, respectively.

As of June 30, 2026, we had an accumulated deficit o f $2.31 billion.

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

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Components of Operating Results

Product Revenue

Following FDA approval of AVLAYAH in March 2026, we commenced commercial distribution in the United States during the second quarter of 2026.

Product revenue consists of sales of AVLAYAH, our only commercial product, and is recognized at the net selling price.

Product revenue is reduced by estimates of variable consideration, including distributor service fees, government rebates, product returns and other fees and incentives.

Product revenue may fluctuate based on patient demand, reimbursement, payer mix and distributor ordering patterns.

Operating Expenses

Cost of Goods Sold

Cost of goods sold consists primarily of direct and indirect costs related to the manufacture of AVLAYAH for commercial distribution, including third-party manufacturing costs, raw material and component costs, packaging services, freight, and storage costs.

Research and Development

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

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

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

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In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

General and Administrative

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

Selling, General and Administrative

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

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

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

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

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

Intangible Asset Amortization

Intangible asset amortization consists of amortization of our intangible asset, which represents the developed technology recognized in connection with the FDA approval of AVLAYAH in March 2026.

We amortize this asset on a straight-line basis over its estimated useful life.

We began recognizing intangible asset amortization in the second quarter of 2026 and did not record any such expense prior to that period.

Interest and Other Income, Net

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

Results of Operations

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

Comparison of the three and six months ended June 30, 2026 and 2025

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

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2026 2025 $ %

Product revenue, net $ 3,604 $ — $ 3,604 * %

Total revenue 3,604 — 3,604 *

Operating expenses:

Cost of goods sold 93 — 93 *

Research and development 97,019 102,696 (5,677) (6)

$ 103,846 $ 116,227 $ (12,381) (11) %

General and administrative

33,511 29,353 4,158 14

Selling, general and administrative 36,283 32,267 4,016 12

Intangible asset amortization 750 — 750 *

Total operating expenses 134,145 134,963 (818) (1)

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

Loss from operations (130,541) (134,963) 4,422 (3)

Interest and other income, net 2,988 10,844 (7,856) (72)

Net loss $ (127,553) $ (124,119) $ (3,434) 3 %

Six Months Ended June 30, Change

2026 2025 $ %

Product revenue, net $ 3,604 $ — $ 3,604 * %

Total revenue 3,604 — 3,604 *

Operating expenses:

Cost of goods sold 93 — 93 *

Research and development 200,865 218,923 (18,058) (8)

Selling, general and administrative 69,794 61,620 8,174 13

Intangible asset amortization 750 — 750 *

Total operating expenses 271,502 280,543 (9,041) (3)

Loss from operations (267,898) (280,543) 12,645 (5)

Interest and other income, net 11,898 23,454 (11,556) (49)

Net loss $ (256,000) $ (257,089) $ 1,089 — %

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* Percentage is not meaningful.

Product revenue, net

Product revenue was $3.6 million for the three and six months ended June 30, 2026 , compared to no product revenue in the prior-year periods.

The increase was due to the FDA approval of AVLAYAH in March 2026 and commencement of commercial sales in the United States during the second quarter of 2026.

Product revenue reflects sales of AVLAYAH, net of estimates for variable consideration, including distributor service fees, government rebates, product returns and other fees and incentives.

Cost of goods sold

Cost of goods sold was $0.1 million for the three and six months ended June 30, 2026 , compared to no cost of goods sold in the prior-year periods.

Because manufacturing costs incurred prior to FDA approval of AVLAYAH were expensed to research and development, cost of goods sold during the initial commercialization period reflects a lower average per-unit cost of materials as previously expensed inventory is sold.

Research and development expen ses

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

Research and development expenses were $97.0 million and $102.7 million for the three months ended June 30, 2026 and 2025, respectively, and $200.9 million and $218.9 million for the six months ended June 30, 2026 and 2025, respectively.

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

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2026 2025 $ %

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

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

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

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

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

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

General and administrative expenses.

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

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

(1) Personnel related expenses include stock-based compensation expense of $13.5 million and $15.2 million for the three months ended June 30, 2026 and 2025, respectively, reflecting a decrease of $1.7 million.

The decrease in research and development expenses of approximately $5.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, was primarily attributable to the following:

• a decrease of $8.4 million in other research and development expenses is driven by lower cost for BIIB122/DNL151 and DNL343;

partially offset by increased purchasing of raw materials at our large molecule manufacturing facility in Salt Lake City, Utah;

• an increase of $2.8 million in TV programs external research and development expenses is driven by manufacturing expenses and clinical expenses for zafinofusp alfa;

partially offset by lower manufacturing expenses for DNL628, and lower clinical expense for tividenofusp alfa.

Six Months Ended June 30, Change

2026 2025 $ %

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

$ 78,883 $ 84,052 $ (5,169) (6) %

Other research and development expenses 40,048 54,347 (14,299) (26)

Personnel related expenses (1)

81,934 80,524 1,410 2

Total research and development expenses $ 200,865 $ 218,923 $ (18,058) (8) %

(1) Personnel related expenses include stock-based compensation expense of $27.0 million and $30.3 million for the six months ended June 30, 2026 and 2025 respectively, reflecting a decrease of $3.3 million.

The decrease in research and development expenses of approximately $18.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, was primarily attributable to the following:

• a decrease of $14.3 million in other research and development expenses is driven by lower clinical expenses for BIIB122/DNL151 and DNL343;

partially offset by increased purchasing of raw material at our large molecule manufacturing facility in Salt Lake City, Utah;

• a decrease of $5.2 million in external TV research and development expenses driven by lower external manufacturing expense partially offset by higher clinical expenses for zafinofusp alfa, DNL952 and DNL628, and higher pre-clinical expenses;

• an increase of $1.4 million in personnel-related expenses driven by increased headcount year over year.

Selling general and administrative expenses

Selling, general and administrative expense was $36.3 million and $32.3 million for the three months ended June 30, 2026 and 2025 respectively.

The $4.0 million increase was primarily driven by:

• An increase of $2.8 million in personnel expenses driven by increased headcount related to the commercial launch of AVLAYAH

• An increase of $1.2 million in other selling general and administration costs driven by increased South San Francisco site costs

Selling, general and administrative expense was $69.8 million and $61.6 million for the six months ended June 30, 2026, and 2025, respectively.

The $8.2 million increase was primarily driven by:

• An increase of $6.6 million in personnel expenses driven by increased headcount related to the commercial launch of AVLAYAH

• An increase of $1.5 million in other selling general and administration costs driven by increased South San Francisco site costs;

partially offset by lower IT project expenses

Intangible Asset Amortization

Intangible asset amortization was $0.7 million and zero for both the three and six months ended June 30, 2026 and 2025, respectively.

The intangible asset, which consists of developed technology recognized in connection with the FDA approval of AVLAYAH in March 2026, began amortizing in the second quarter of 2026 on a straight-line basis over its estimated useful life.

Interest and other income, net

Interest and other income, net was $3.0 million and $10.8 million for the three months ended June 30, 2026 and 2025, respectively.

The decrease of approximately $7.8 million was primarily driven by $5.9 million of non-cash interest expense related to the revenue participation right liability under the Royalty Pharma synthetic royalty funding agreement, which commenced in the second quarter of 2026.

Interest and other income, net was $11.9 million and $23.5 million for the six months ended June 30, 2026 and 2025, respectively.

The decrease of approximately $11.6 million was primarily driven by:

• Lower interest income due to lower average cash and investment balances;

• Lower yields on our investment portfolio;

• $5.9 million of non-cash interest expense related to the revenue participation right liability under the Royalty Pharma funding agreement, which commenced in the second quarter of 2026.

Liquidity and Capital Resources

Sources of Liquidity

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

We fund our operations primarily with the proceeds from the sale of common stock and payments received from our collaboration partners, including those received under agreements with Takeda, Sanofi, and Biogen, and we expect product sales to contribute to funding our operations following the commercial launch of AVLAYAH, although such revenues are not expected to be sufficient to offset our expenses in the near term.

As of June 30, 2026, we had cash, cash equivalents and marketable securities in the amount of $940.0 million.

Following the commercial launch of AVLAYAH, we expect product revenue to contribute to funding our operations, and our liquidity requirements will include working capital to support commercial inventory, patient support programs, market access activities, distribution arrangements, pharmacovigilance obligations and continued investment in commercial infrastructure.

Although we expect AVLAYAH product revenue to contribute to funding our operations, we do not expect such revenue to be sufficient to offset our operating expenses in the near term.

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

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

Through June 30, 2026, we have obtained aggregate net proceeds of approximately $956.1 million from public offerings of our common stock, including $12.4 million obtained through the sale of 746,468 shares of common stock in January 2026.

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

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

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

Under stock purchase agreements with collaboration partners we have received a further $575.0 million through June 30, 2026.

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

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

Through March 31, 2026, we have received $115.0 million , $225.0 million, $565.0 million and $50.0 million, p ursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, respectively.

Through June 30, 2026, we have received $115.0 million , $225.0 million, $565.0 million and $62.5 million, p ursuant to our collaboration and research and development funding agreements with Takeda, Sanofi, Biogen and an unrelated third party, respectively.

These payments include upfront, option and milestone payments.

Additionally, we have received $58.2 million and $16.2 million in gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi.

In July 2026, we completed the sale of our Rare Pediatric Disease PRV for gross proceeds of $195.0 million.

Future Funding Requirements and Commitments

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

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

Following the FDA approval of AVLAYAH, we commenced commercialization in April 2026 and have begun generating product revenue;

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

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

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

We have an accumulated deficit of $2.31 billion as of June 30, 2026.

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

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

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

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

As of June 30, 2026, we had total undiscounted lease payment obligations of $47.8 million.

We had total non-refundable purchase commitments of $104.7 million as of June 30, 2026.

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

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

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

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

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

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

• the rate and degree of market acceptance of AVLAYAH, including physician adoption, persistence and payer coverage;

• the amount and timing of product revenue from AVLAYAH, including the impact of variable consideration, reimbursement timing and distributor ordering patterns;

• the cost of commercialization activities, including sales, marketing, market access, medical affairs, patient support, distribution and pharmacovigilance;

• our ability to maintain adequate commercial supply of AVLAYAH through third-party manufacturers and manage commercial inventory levels.

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

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities $ (228,206) $ (206,766)

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

Net cash provided by (used in) investing activities (9,618) 176,683

Net cash provided by (used in) financing activities 234,028 (2,139)

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

Net decrease in cash, cash equivalents and restricted cash $ (3,796) $ (32,222)

Net Cash Used In Operating Activities

During the three months ended March 31, 2026, net cash used in operating activities was $131.2 million, which consisted of a net loss of $128.4 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, and non-cash rent expenses.

During the six months ended June 30, 2026, net cash used in operating activities was $228.2 million, which consisted of a net loss of $256.0 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net accretion of discounts on marketable securities, non-cash interest expense related to revenue participation right liability, and non-cash rent expenses.

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

Net Cash Provided By Investing Activities

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

Net Cash Used In Investing Activities

During the six months ended June 30, 2026, net cash used in investing activities was $9.6 million, which consisted of $394.6 million for purchases of marketable securities, $28.8 million in milestone payments related to intangible assets, and $3.3 million in capital expenditures to purchase property and equipment.

partially offset by $417.0 million in proceeds from the maturities of marketable securities.

Net Cash Provided By Financing Activities

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

During the six months ended June 30, 2026, cash provided by financing activities was $234.0 million, which consisted of $200.0 million in gross proceeds related to the sale of the revenue participation right under the synthetic royalty funding agreement with Royalty Pharma, $12.4 million in proceeds from public offerings of our common stock, and $21.7 million in proceeds from the exercise of stock options.

Critical Accounting Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues recognized and expenses incurred during the reporting periods.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues recognized and expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in detail in the notes to our consolidated financial statements included elsewhere in this report.

Our significant accounting policies are described in detail in the notes to our condensed consolidated financial statements included elsewhere in this report.

In our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 26, 2026, we described the accounting estimates that we believe involve a significant level of estimation uncertainty which could have a material impact on our financial condition or results of operations.

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

There have been no material changes to these critical accounting estimates during the six months ended June 30, 2026, except as discussed in the notes to our condensed consolidated financial statements with respect to accounting policies adopted upon the commercialization of AVLAYAH.

Recent Accounting Pronouncements

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

There have been no new accounting pronouncements or changes to accounting pronouncements during the six months ended June 30, 2026 , as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 26, 2026, that are of significance or potential significance to us.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis