Denali Therapeutics Q2 2026 Earnings Call Transcript

On Thursday, Denali Therapeutics (NASDAQ: DNLI ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

6 million in net product revenue, supported by strong engagement from the Hunter syndrome community and physicians. 1 billion in cash and securities. Denali outlined a strategic focus on expanding Avlea's reach, maintaining strong launch momentum, and pursuing broader pipeline opportunities, including an enzyme transport vehicle platform for neurodegenerative diseases. Full Transcript OPERATOR Good day and thank you for standing by.

Welcome to the second quarter 2026 financial results and business highlights. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone.

You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laura Hanson.

Please go ahead. Laura Hanson, Investor Relations Good afternoon, everyone, and thank you for joining us today to discuss Denali Therapeutics' second quarter 2026 financial results and business highlights. Earlier today we issued our earnings press release and filed our quarterly report. The press release, financial tables, and today's presentation are available in the Investor Relations section of our website.

Before we begin, I would like to remind everyone that today's discussion will include forward-looking statements. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings and the cautionary language in today's press release and presentation for a discussion of these risks. Denali undertakes no obligation to update these forward-looking statements except as required by law.

Joining me today are Ryan Watts, our Chief Executive Officer; Katie Peng, our Chief Commercial Officer; Alexander Schuth, our Chief Operating and Financial Officer; and Peter Chin, our Chief Medical Officer and Head of Development. Ryan will begin with opening remarks. S. launch of Avalia.

Ryan will return to discuss pipeline highlights, and Alex will review our financial results. Peter will join the team for the question-and-answer session. Ryan J. Watts, CEO Ryan, thanks Laura, and thank you everyone for joining us today.

We will begin on slide 5. This was a transformative quarter for Denali. We completed the first full quarter of the Abloya launch, advanced two transport vehicle-enabled Alzheimer's disease programs into clinical development, and further strengthened our financial position. Before I discuss those highlights, I want to begin with why we are here at Denali.

Our purpose is to transform life for people living with serious diseases. That includes children and adults with rare genetic diseases such as Hunter syndrome, Sanfilippo syndrome, FTD, granulin and Pompe disease, as well as the millions of people living with common neurodegenerative diseases such as Alzheimer's disease and Parkinson's disease. Across both groups, our mission is the same: to bring the power of biologic medicine to the brain. Slide 6.

A common challenge across many of these diseases is the blood-brain barrier. For over a decade we have built the transport vehicle platform to address that challenge by engineering biologic medicines to cross the blood-brain barrier through receptor-mediated transport. Earlier this year, that work reached an important milestone. Slide 7.

With FDA approval of Avlea, Denali became a commercial company and began delivering our first medicine to patients for the Hunter syndrome community. Avlea is the first new FDA-approved therapy in nearly 20 years and a new treatment option designed to reach both the body and the brain. Importantly, Avlea became the first approved medicine developed using our transport vehicle platform and the first FDA-approved biologic specifically designed to cross the blood-brain barrier. For Denali, Ablea is much more than a product.

It is the first proof that our platform can progress from scientific concept to an approved medicine for patients. Slide 8. We believe Denali today represents a powerful and differentiated combination to create significant value for patients, the healthcare system, and investors in the near and long term. We have a commercial product in Abloya and an encouraging early launch.

We have a broad clinical pipeline spanning rare genetic diseases and common neurodegenerative diseases, each with substantial market potential. We have a validated and scalable transport vehicle platform and scientific leadership in the field of BBB transport. We have the operational capabilities and financial strength to execute from discovery through development, manufacturing, and commercialization. Together these attributes position Denali to create near-term growth and sustainable long-term value.

Slide 9. 6 million in net product revenue in its first full commercial quarter. The positive response from the Hunter syndrome community and the physicians caring for these individuals reflects years of partnership with patients, families, advocacy organizations, and clinicians. We could not have achieved this milestone without their unwavering commitment to advancing new treatment options.

I also want to recognize the outstanding execution by our commercial team in the early stages of this launch. In the pipeline, DNL628 targeting tau and DNL921 targeting Aβ both advanced into clinical development for Alzheimer's disease, with initial clinical data expected in 2027. 1 billion. Slide 10.

A key focus of today's call will be the Abloya launch. Katie will walk through the early commercial indicators, what we are learning, and how we are building the foundation for continued growth. Katie Peng, Chief Commercial Officer Thank you. Ryan, on slide 12, I'd like to start by reinforcing why we believe ABLEA is setting a new bar for the treatment of MPS II.

For the first time, a therapy is designed to reach the whole body, including the brain, and can normalize key disease biomarkers both in the CNS and peripherally. These data continue to reinforce physician confidence and resonate with families, supporting the strong momentum we are seeing in the launch. Slide 12: Hunter syndrome represents one of the more prevalent mucopolysaccharidoses and affects a meaningful patient population within the rare disease community. S.

opportunity is highly concentrated, with most eligible patients already identified and receiving conventional IDS enzyme replacement therapy at a relatively small number of specialized treatment centers. These are pediatric patients with pre-symptomatic or symptomatic neurologic manifestations who have not progressed to advanced neurologic impairment. We estimate that there are approximately 2,000 patients worldwide in the addressable market, including approximately 500 prevalent patients with Hunter syndrome in the United States. S.

prevalent population, or roughly 375 patients, are currently eligible for ABLEA. In addition, about 30 children are born each year with Hunter syndrome, providing an ongoing opportunity to initiate treatment early. Our ongoing Phase 3 COMPASS study is an important next step in advancing ABLEA, with the goal of supporting full approval and expansion of the label to include adults. Ultimately, our goal is to reach all eligible patients worldwide.

Slide 13: Our launch is being executed against four core strategies. First, partnering closely with the Hunter syndrome community through a high—touch, community—centered approach. In rare diseases, families often learn from and support one another. We believe that positive experiences with both ABLEA and the Denali team help build trust, increase awareness, and encourage additional families to seek treatment.

Second, helping physicians evaluate ABLEA and supporting treatment centers as they prepare to initiate therapy. Strong clinical conviction is creating urgency amongst physicians to switch eligible patients and engage payers to accelerate access. Third, helping each patient and family navigate the steps from prescription through their first infusion. And fourth, driving fast, label—aligned coverage decisions that help remove payer roadblocks.

After our first full quarter of launch, what has been particularly encouraging is how these four strategies have reinforced one another. Strong clinical conviction has driven physician and patient demand. That demand has accelerated payer coverage, and together these dynamics are enabling more patients to begin therapy. Slide 14: Beginning with physicians, we entered the launch with a strong foundation.

Before approval, more than 80% of physicians surveyed were already aware of ABLEA. Ninety percent viewed the biomarker and clinical data as motivating to prescribe. Since approval, we have reached approximately 80% of targeted healthcare organizations with ABLEA’s launch information through our field engagements, scientific exchange, educational webinars, and treatment center support. These activities have been highly impactful and are driving strong engagement across a significant number of treating physicians.

Physicians constantly tell us that the ability to address neurologic manifestations is highly meaningful and that most patients experience neurologic symptoms at some point during the course of their disease. That belief is translating into action, as many treatment centers with eligible patients are working with families to navigate reimbursement and transition patients to ABLEA. Slide 15: We have seen equally strong engagement from patients and caregivers. S.

patients. This high level of engagement reflects both the unmet need in Hunter syndrome and the extent to which families have followed the development of ABLEA. We are also seeing families share their experiences through advocacy networks and local media, helping other members of the community learn about the availability of a new treatment option. Slide 16: One of the most powerful aspects of launch has been hearing directly from families and advocates about their experience with ABLEA and Denali.

They have described the opportunity to begin ABLEA as a source of hope and, in some cases, as the possibility of gaining more meaningful time with their children. We are careful not to draw clinical conclusions from individual experiences; however, these stories illustrate how much the approval of ABLEA means to this community that has waited many years for a therapy designed to reach both the brain and the body. We are also hearing very positive feedback about the way the Denali team is supporting families and healthcare organizations.

For many patients, initiating a new therapy involves coordinating physicians, infusion centers, insurers, specialty distributors, and patient services. Our team works closely with each family and treatment center to help them navigate those steps. The feedback from families and advocacy organizations has consistently highlighted the responsiveness, compassion, and partnership of the Denali team. That experience matters.

It builds confidence in treatment, helps patients move through the access process, and supports continuity once treatment begins. Slide 17: Now, turning to payer access, we have made exceptional progress during the first quarter of launch. Commercial policies covering more than 50% of lives have already been established. As with many rare diseases, a significant portion of MPS II patients is covered by Medicaid.

Recognizing that not every state will publish a product—specific policy, 14 state Medicaid programs publicly listed ABLEA as covered separately. We are also seeing managed Medicaid policies align their coverage with commercial plans. These results compare favorably with early coverage achieved by analogous rare disease launches. Importantly, the absence of published policy does not mean a patient cannot obtain access.

To date, physicians and families have successfully used prior authorizations, appeals, and medical exceptions while formal policies are being developed. The willingness of physicians to initiate these requests reflects their conviction in ABLEA, and our payer and patient access teams are working closely with them to move eligible patients towards treatment. S. launch.

6 million in net product revenue and secured commercial coverage for more than 50% of covered lives. Before discussing the outlook, I want to briefly address our approach to communicating launch dynamics and metrics. We understand that visibility is important to our investors, and we are committed to maintaining an open dialogue. There are many factors that influence the trajectory of ABLEA adoption, and every patient journey is unique from the initial expression of interest through reimbursement approval and ultimately dosing.

In addition, because ABLEA is weight—based, the number of vials used can vary meaningfully between a newly diagnosed infant and a 16—year—old adolescent. For the first two quarters of launch, we therefore plan to provide guidance on expected net product revenue for the following quarter. We believe that this approach, together with the prior quarter’s reported net product revenue, will provide the clearest view of the launch trajectory. During this early period before launch, we described an adoption curve that would build over time.

We expected the earliest patients to be highly engaged families who were waiting for ABLEA and were prepared to move quickly through the medical exceptions process. That initial demand has been stronger than we anticipated, reflecting both the high awareness of ABLEA and the significant unmet need in the Hunter syndrome community. While many patients have already started therapy, others continue to move through the reimbursement and treatment journey. As payer coverage expands and treatment centers gain experience with ABLEA, we expect the patient journey from prescription to infusion to become increasingly efficient, enabling more eligible patients to begin treatment.

Given the pace of adoption, expanding access, and continued strong execution, we expect Q3 net product revenue to be in the range of $10 to $12 million. Most importantly, families continue to tell us that ABLEA and the support they receive from the Denali team is making a meaningful difference in their lives. Slide 19: The ABLEA launch also has significance beyond a single product. It establishes the first commercial foundation for our enzyme transport vehicle franchise across lysosomal storage disorders.

The ETV platform is designed to reach the whole body, including the brain, and it provides opportunities across Hunter syndrome, Sanfilippo syndrome, progranulin, Pompe disease, Gaucher disease, and Hurler syndrome. The ERT market alone represents more than a $9 billion opportunity across these diseases. We expect to benefit from shared scientific expertise, established relationships with treatment centers and advocacy organizations, and commercial capabilities that could be leveraged across future launches. Each patient we support and each treatment center we activate strengthens the infrastructure that can serve the broader ETV franchise.

ABLEA is therefore both an important medicine for the Hunter syndrome community and an early demonstration of our ability to discover, develop, manufacture, and commercialize innovative therapies efficiently and successfully. We are proud of the start. While recognizing that this is still the beginning of the launch, our priorities remain expanding access, supporting a positive treatment experience, reaching additional eligible patients, and preparing for the international expansion. With that, I'll turn it back to you, Ryan, to discuss the broader pipeline.

Ryan J. Watts, CEO Thanks, Katie. Slide 21: Earlier I described ABLEA as the commercial foundation for Denali and the first proof that the transport vehicle platform can enable medicines for patients. I would now like to provide an update on the broader pipeline and then spend most of my time on our Alzheimer's disease programs.

Our D3X3 strategy remains unchanged: deliver, develop, and discover. Over the 2026 to 2028 period, our goals are to build two growing commercial brands, generate five clinical proofs of concept, and advance four to six additional programs into the clinic through continued leadership and invention in blood—brain barrier technologies. Slide 22: Next, I would like to briefly update you on DNL593.