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    DNLI
    Earnings call· Jun 2026(Q2 FY26)

    Denali Therapeutics Q2 FY26 earnings call DNLI

    Aug 6, 2026 Source

    Executive summary

    Denali Therapeutics Q2 FY26 — AVLAYAH Launch and Pipeline Advancement

    Denali Therapeutics reported a transformative quarter, marked by the successful initial launch of AVLAYAH, its first commercial product, which exceeded early demand expectations. The company also significantly advanced its Alzheimer's disease pipeline with two new clinical programs and strengthened its financial position through a priority review voucher sale. Management emphasized the validation of its transport vehicle platform and its strategy to leverage this for future growth across rare genetic and neurodegenerative diseases.

    Highlights

    5

    • AVLAYAH generated $3.6 million in net product revenue in its first full commercial quarter.

    • Pro forma cash, cash equivalents, and marketable securities exceeded $1.1 billion after the Priority Review Voucher sale.

    • Commercial policies covering over 50% of lives for AVLAYAH were established by the end of Q2 FY26.

    • DNL628 (tau) and DNL921 (Abeta) advanced into clinical development for Alzheimer's disease.

    • DNL593 received Orphan Drug Designation for FTD-GRN.

    Concerns

    2

    • DNL593 data readout for FTD-GRN delayed to H1 2027 from prior expectation of end of year 2026.

    • Intrathecal tau therapies may not achieve uniform distribution throughout the brain and have other limitations.

    Guidance & targets

    7
    CategoryTargetConfidence
    AVLAYAH Net Product Revenue
    $10 million to $12 million
    high materiality
    High
    DNL593 FTD-GRN Data Readout
    Data in the first half of 2027
    medium materiality
    High
    DNL628 Alzheimer's Disease Initial Clinical Biomarker Data
    Initial clinical biomarker data in the first half of 2027
    high materiality
    High
    DNL921 Alzheimer's Disease Initial Safety and Clinical Proof of Concept Data
    Initial safety and clinical proof of concept data in 2027
    high materiality
    High
    AVLAYAH COMPASS Phase II/III Study Completion
    End of next year
    medium materiality
    High
    DNL126 Potential Launch
    Potential launch in 2027
    medium materiality
    Medium
    AVLAYAH Clinical Trial Patient Conversion to Commercial
    All clinical trial patients to be able to convert to commercial patients by the end of this year
    low materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    AVLAYAH (Hunter Syndrome)
    First full commercial quarter for AVLAYAH, exceeding initial demand expectations. Strong physician awareness and family engagement, with rapid payer access.
    Eligible US patients: 375Commercial policies covering lives: >50%State Medicaid programs covering: 14Families reached by webinars/services: >100
    		$3.6 million———

    Operational metrics

    13
    Research and development expenses
    $97 milliondecreased from $102.7 million in Q2 FY25
    Q2 FY26

    Decrease primarily reflected timing of AVLAYAH commercial supply manufacturing in prior year and lower external spending on small molecule programs.

    Selling, general, and administrative expenses
    $36.3 millionincreased from $32.3 million in Q2 FY25
    Q2 FY26

    Increase primarily reflected investments to support the AVLAYAH commercial launch.

    Cash, cash equivalents, and marketable securities
    $940 million
    Q2 FY26 end

    Balance before receipt of $195 million in Priority Review Voucher proceeds in July.

    Pro forma cash, cash equivalents, and marketable securities
    $1.1 billion
    Q2 FY26 end (pro forma July)

    Balance after $195 million proceeds from sale of rare pediatric disease priority review voucher in July.

    Hunter syndrome addressable market
    2,000
    worldwide

    Estimated worldwide addressable market for Hunter syndrome.

    Hunter syndrome prevalent patients
    500
    US

    Estimated prevalent patients with Hunter syndrome in the United States.

    Hunter syndrome newly born patients
    30
    annually

    Number of children born each year with Hunter syndrome in the United States.

    AVLAYAH average annual cost (10kg patient)
    $270,000
    per year

    At maintenance dose for a 10-kilogram patient.

    AVLAYAH average annual cost (30kg patient)
    $800,000
    per year

    At maintenance dose for a 30-kilogram patient.

    ERT market opportunity
    $9 billion
    annual

    Estimated market opportunity for the enzyme replacement therapy (ERT) market alone.

    ETV program market opportunity
    $500 million to >$1 billion
    per program

    Estimated potential market opportunity per program for next-generation enzyme and protein replacement therapies.

    AVLAYAH dose escalation period
    4 weeks
    per step

    Expected duration at each step of dose escalation before reaching maintenance dose, ultimately a physician's decision.

    AVLAYAH clinical trial patient conversion
    all clinical trial patients
    by end of 2026

    Expectation for clinical trial patients to transition to commercial therapy.

    Industry KPIs

    4
    MetricValueDetails
    Launch access metrics>50%%
    Pipeline read out calendarDNL593 (FTD-GRN), DNL628 (Alzheimer's), DNL921 (Alzheimer's)
    Product franchise net sales$3.6 millionUSD
    Regulatory approvals filingsAVLAYAH

    Deals & partnerships

    1
    TakedaRegained full ownership and control of DNL593 program.

    Denali regained full ownership and control of the DNL593 program from Takeda earlier this year.

    Risks & headwinds

    3
    Uneven distribution of intrathecally administered antisense oligonucleotides

    uneven exposure across brain regions

    Mitigation: Denali's OTV delivery uses the capillary network to distribute the antisense oligo broadly across the brain and spinal cord, aiming for uniform distribution.

    Modest efficacy and ARIA risk with currently available anti-amyloid antibodies

    modest efficacy and the risk of amyloid-related imaging abnormalities, or ARIA

    Mitigation: DNL921 is designed to improve plaque engagement while reducing ARIA potential and peripheral immune activation through its transport vehicle-enabled delivery.

    Variability in time from patient interest to infusion for AVLAYAHearly in launch

    huge variability in the time between patients expressing interest to when they actually get infused

    Mitigation: Management expects the timeline to become more efficient as payer coverage expands and treatment centers gain experience with AVLAYAH.

    What to watch in Q3 FY26

    5

    AVLAYAH Net Product Revenue

    Q3 FY26
    Current$3.6 million
    Target$10 million to $12 million

    Why it matters

    Indicates the early trajectory and adoption rate of Denali's first commercial product.

    Given the pace of adoption, expanding access, and continued strong execution, we expect Q3 net product revenue to be in the range of $10 million to $12 million.

    Q&A highlights

    7

    What factors give confidence for next quarter's AVLAYAH guidance, and can the growth trajectory continue? Will OpEx guidance be provided?

    Management expressed confidence in AVLAYAH's Q3 guidance due to high physician awareness, strong family engagement, expanding payer coverage (>50% commercial lives), and successful medical exceptions. OpEx remained flat YoY despite launch prep and new programs; full-year guidance is typically provided at the beginning of the year.

    “So given all the dynamics are moving in the right direction, we feel very confident that the momentum will continue.”

    asked by Adam Ferrari · answered by Katie Peng

    2 min read6 chapters

    Detailed Narrative

    01

    AVLAYAH Launch Momentum

    Denali's first full commercial quarter for AVLAYAH generated $3.6 million in net product revenue, exceeding initial demand expectations. The launch is supported by high physician awareness (80% surveyed aware pre-approval), strong family engagement (over 100 families reached), and rapid payer access, with commercial policies covering over 50% of lives established. The company expects Q3 net product revenue of $10 million to $12 million, driven by continued positive indicators and expanding access.

    02

    Transport Vehicle Platform Validation

    AVLAYAH's FDA approval and early commercial success serve as the first proof of Denali's transport vehicle platform's ability to deliver biologic medicines across the blood-brain barrier. This platform is central to its strategy for lysosomal storage disorders and neurodegenerative diseases, demonstrating its capability to progress from scientific concept to an approved medicine for patients.

    03

    Alzheimer's Disease Pipeline Advancement

    Two key Alzheimer's programs, DNL628 (targeting tau) and DNL921 (targeting Abeta), advanced into clinical development, with initial clinical data expected in 2027. Both are designed to improve brain delivery compared to existing approaches. DNL921 aims for better plaque engagement with reduced ARIA risk, while DNL628 targets broad, uniform distribution of antisense oligonucleotides via intravenous administration, addressing limitations of intrathecal delivery.

    04

    DNL593 (FTD-GRN) Update

    The DNL593 program, now fully owned by Denali after regaining rights from Takeda, received Orphan Drug Designation. The company extended the observation period for the Phase I/II study, with data now expected in H1 2027, to better characterize treatment effects across biomarkers like neurofilament light chain (NfL) and explore a potential biomarker-driven accelerated approval path, leveraging NfL's regulatory precedent in related neurodegenerative diseases.

    05

    Financial Strength and Capital Allocation

    Denali ended Q2 FY26 with $940 million in cash, cash equivalents, and marketable securities, which increased to over $1.1 billion pro forma after the $195 million sale of a Priority Review Voucher in July. This capital provides flexibility for portfolio investment, including AVLAYAH commercial activities, preparations for DNL126 launch in 2027, advancement of clinical programs, and building capabilities like its Salt Lake City manufacturing facility.

    06

    ETV Franchise Expansion

    AVLAYAH is positioned as the commercial foundation for a broader enzyme transport vehicle (ETV) franchise across lysosomal storage disorders, including Sanfilippo syndrome, FTD-GRN, Pompe disease, Gaucher disease, and Hurler syndrome. The ERT market is estimated at over $9 billion, and Denali plans to leverage shared scientific expertise, established relationships, and commercial capabilities for future launches, strengthening the infrastructure for the broader ETV franchise.

    AI-generated summary of the company’s earnings call. Not investment advice.