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Denali (DNLI) Q1 Earnings Miss Estimates, Pipeline in Focus

Denali Therapeutics DNLI incurred a loss of 80 cents per share for first-quarter 2023, wider than the Zacks Consensus Estimate of a loss of 71 cents and the year-ago quarter’s loss of 53 cents per share. The recorded loss per share is also wider than our estimate of 78 cents.

Collaboration revenues came in at $35.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $31 million but down from $42.1 million in the year-ago period. The decrease was primarily due to a fall in revenues from collaboration with Takeda, primarily due to the completion of the preclinical research service performance obligations and a decrease in revenues under the Biogen Collaboration Agreement on the completion of the ATV:Abeta Option Research Services. Total collaboration revenues beat our estimate of $25 million.

Denali’s shares have lost 2% in the year so far compared with the industry’s 5.4% decline.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarter in Detail

Research and development expenses increased to $128.8 million in the quarter under review, up 49.6% year over year.

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General and administrative expenses increased to $27.1 million, up from $22.5 million in the year-ago quarter.

Cash, cash equivalents and marketable securities were approximately $1.29 billion as of Mar 31, 2023 compared with $1.34 billion as of Dec 31, 2022.

Recent Updates

Last month, Denali announced that Biogen BIIB exercised its option to license Denali’s ATV:Abeta. Biogen will assume responsibility for all development and commercial activities and associated expenses. On the other hand, Denali will receive a one-time option exercise payment and certain milestone payments and royalties based on future net sales.

Denali has also collaborated with Biogen to advance its LRRK2 inhibitor program to address Parkinson’s disease (PD). Biogen is conducting two late-stage studies: the phase IIb LUMA study in participants with early-stage PD and the phase III LIGHTHOUSE study in participants with PD and a confirmed LRRK2 pathogenic variant.

In February, Denali reported new interim results from the ongoing open-label, single-arm phase I/II study of DNL310 in children with MPS II (Hunter syndrome), including data from additional participants and up to 104 weeks of treatment. Data continues to suggest robust central nervous system (CNS) and peripheral activity of DNL310 and support continued recruitment of participants with MPS II, with and without neuronopathic disease, in the global phase II/III COMPASS study.

Denali is evaluating DNL593, an investigational, intravenously administered, brain-penetrant progranulin (PGRN) replacement therapy, in collaboration with Takeda. In March 2023, a $10 million milestone payment was triggered upon the achievement of a specified clinical milestone in the phase I/II study, which is due in May 2023.

Denali Therapeutics Inc. Price, Consensus and EPS Surprise

 

Denali Therapeutics Inc. Price, Consensus and EPS Surprise
Denali Therapeutics Inc. Price, Consensus and EPS Surprise

 

Denali Therapeutics Inc. price-consensus-eps-surprise-chart | Denali Therapeutics Inc. Quote

Denali and partner Sanofi SNY are co-developing SAR443820. Sanofi is conducting the global phase II HIMALAYA study for participants with amyotrophic lateral sclerosis (ALS). In January, Denali announced that Sanofi initiated a phase II study in multiple sclerosis (MS), for which Denali received a milestone payment of $25 million.

Zacks Rank and Stock to Consider

Denali currently has a Zacks Rank #3 (Hold).

A better-ranked stock in the biotech sector is Ligand Pharmaceuticals LGND which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 90 days, earnings estimates for LGND in 2023 have increased by 86 cents to $4.16. LGND topped earnings estimates in two of the last four quarters and missed in the other two.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sanofi (SNY) : Free Stock Analysis Report

Biogen Inc. (BIIB) : Free Stock Analysis Report

Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report

Denali Therapeutics Inc. (DNLI) : Free Stock Analysis Report

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Zacks Investment Research