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What changed in Denali Therapeutics Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Denali Therapeutics Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+706 added−777 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in Denali Therapeutics Inc.'s 2024 10-K

706 paragraphs added · 777 removed · 512 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

175 edited+117 added−107 removed254 unchanged
Biggest changeOur TV technology is differentiated from other BBB technologies through its engineering approach, which may provide superior therapeutic efficacy and safety through higher stability, exposure, and biodistribution of drug candidates in the brain ( Figure 2 ). 9 Table of Contents Figure 2 : Denali’s TV technology is modular and highly differentiated Our most advanced TV-enabled program, DNL310 (ETV:IDS), is currently in an ongoing Phase 2/3 study for MPS II, and we are conducting Phase 1/2 studies of TAK-594/DNL593 (PTV:PGRN) and DNL126 (ETV:SGSH) for FTD-GRN and MPS IIIA, respectively.
Biggest changeSchematic of the TV platform and modalities, designed to cross the BBB through receptor mediated transcytosis, leveraging endogenous receptors expressed on endothelial cells of the central nervous system vasculature. 9 Table of Contents Our TV technology is differentiated from other BBB technologies through its engineering approach, which may provide superior therapeutic efficacy, safety, and tolerability through higher stability, exposure, and biodistribution as well as the potential for lower immunogenicity of drug candidates in the brain.
MPS II is caused by mutations in the iduronate-2-sulfatase ( IDS ) gene, which leads to a deficiency of the IDS enzyme responsible for the breakdown of the glycosaminoglycans (GAGs) heparan and dermatan sulfate in lysosomes.
MPS II is caused by mutations in the iduronate-2-sulfatase (" IDS" ) gene, which leads to a deficiency of the IDS enzyme responsible for the breakdown of the glycosaminoglycans ("GAGs") heparan sulfate and dermatan sulfate in lysosomes.
The process generally involves the following: • Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice ("GLP"), requirements; • Submission of an IND to the FDA, which must become effective before human interventional clinical trials may begin; • Approval by an independent institutional review board ("IRB") at each clinical trial site before each trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice ("GCP") requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • Submission to the FDA of an NDA or BLA; • A determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review; • Satisfactory completion of a FDA pre-approval inspection of the manufacturing facility or facilities where the drug or biologic will be produced to assess compliance with current good manufacturing practices ("cGMP"), requirements to assure that the facilities, methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity; • Potential FDA inspection of the preclinical and/or clinical trial sites that generated the data in support of the NDA or BLA; • FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug or biologic in the United States; and • Compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy ("REMS"), and the potential requirement to conduct post-approval studies.
The process generally involves the following: • Completion of extensive nonclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice ("GLP"), requirements; • Submission of an IND to the FDA, which must become effective before human interventional clinical trials may begin; • Approval by an independent institutional review board ("IRB") at each clinical trial site before each trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice ("GCP") requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • Submission to the FDA of an NDA or BLA; • A determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review; • Satisfactory completion of a FDA pre-approval inspection of the manufacturing facility or facilities where the drug or biologic will be produced to assess compliance with current good manufacturing practices ("cGMP"), requirements to assure that the facilities, methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity; • Potential FDA inspection of the preclinical and/or clinical trial sites that generated the data in support of the NDA or BLA; • FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug or biologic in the United States; and • Compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy ("REMS"), and the potential requirement to conduct post-approval studies.
Under the Regulation, sponsors can submit one online application via a single online platform known as the Clinical Trials Information System (CTIS) for approval to run a clinical trial in several European countries, making it more efficient to carry out such multinational trials. A transition period applies to clinical trial submissions under the Regulation.
Under the Regulation, sponsors submit one online application via a single online platform known as the Clinical Trials Information System ("CTIS") for approval to run a clinical trial in several European countries, making it more efficient to carry out such multinational trials. A transition period applies to clinical trial submissions under the Regulation.
The data support the potential for ATV:HER2 to treat HER2-positive peripheral tumors and brain metastases and to further validate the potential for TV applications in oncology. 25 Licenses and Collaborations Biogen License and Collaboration Agreement and Right of First Negotiation, Option and License Agreement Overview In October 2020, we entered into a Definitive LRRK2 Collaboration and License Agreement (“LRRK2 Agreement”) pursuant to which we granted Biogen a license to co-develop and co-commercialize our small molecule LRRK2 inhibitor program (the "LRRK2 Program"), and a Right of First Negotiation, Option and License Agreement (the "ROFN and Option Agreement"), pursuant to which we granted an option and right of first negotiation to certain of our programs utilizing our TV technology platform, including our amyloid beta program (collectively the "Biogen Collaboration Agreement"), with Biogen Inc.’s subsidiaries, Biogen MA Inc.
The data support the potential for ATV:HER2 to treat HER2-positive peripheral tumors and brain metastases and to further validate the potential for TV applications in oncology. 25 Table of Contents Licenses and Collaborations Biogen License and Collaboration Agreement and Right of First Negotiation, Option and License Agreement Overview In October 2020, we entered into a Definitive LRRK2 Collaboration and License Agreement (“LRRK2 Agreement”) pursuant to which we granted Biogen a license to co-develop and co-commercialize our small molecule LRRK2 inhibitor program (the "LRRK2 Program"), and a Right of First Negotiation, Option and License Agreement (the "ROFN and Option Agreement"), pursuant to which we granted an option and right of first negotiation to certain of our programs utilizing our TV technology platform, including our amyloid beta program (collectively the "Biogen Collaboration Agreement"), with Biogen Inc.’s subsidiaries, Biogen MA Inc.
We hold significant development and commercialization rights to all of our CNS programs, including the programs which are subject to our collaboration agreements with Biogen, Sanofi and Takeda, where we share responsibility for clinical development and share commercialization rights in the United States and China.
We hold significant development and commercialization rights to all of our CNS programs, including the programs which are subject to our collaboration agreements with Biogen and Takeda, where we share responsibility for clinical development and share commercialization rights in the United States and China.
In August 2023, Biogen agreed to waive the remaining option upon execution of the Biogen Amendment. In August 2023, upon execution of the Biogen Amendment, Biogen also agreed to waive its right of first negotiation on two additional TV-enabled therapeutics, which we initially granted to Biogen under the ROFN and Option Agreement.
In August 2023, upon execution of the Biogen Amendment, Biogen also agreed to waive its right of first negotiation on two additional TV-enabled therapeutics, which we initially granted to Biogen under the ROFN and Option Agreement.
For example, the FDA has issued various guidance documents on conducting clinical trials during the pandemic, including certain reporting requirements and additional guidance on good manufacturing practice considerations for responding to COVID-19 infection.
For example, the FDA has issued various guidance documents on conducting clinical trials during the COVID-19 pandemic, including certain reporting requirements and additional guidance on good manufacturing practice considerations for responding to global pandemic infection.
Collaboration Activities Following Takeda’s Option Exercise Subsequent to Takeda exercising its option with respect to a particular target and collaboration program (i.e., the biologic products directed to the target for which Takeda has exercised its option), Takeda has the right to develop and commercialize, jointly with us, a specified number of biologic products enabled by our BBB technology that were developed during the option period and which are directed to the relevant target, and we are obligated to grant to Takeda a co-exclusive license under the intellectual property we control related to those biologic products.
Collaboration Activities Following Takeda’s Option Exercise Subsequent to Takeda exercising its option with respect to a particular target and collaboration program (i.e., the biologic products directed to the target for which Takeda has exercised its option), Takeda has the right to develop and commercialize, jointly with us, a specified number of biologic products enabled by our TV technology that were developed during the option period and which are directed to the relevant target, and we are obligated to grant to Takeda a co-exclusive license under the intellectual property we control related to those biologic products.
An IND is a request for authorization from the FDA to administer an investigational product to humans, and must become effective before human clinical trials may begin. 42 Table of Contents Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the pharmacology, pharmacokinetics, and potential for adverse events and in some cases to establish a rationale for therapeutic use.
An IND is a request for authorization from the FDA to administer an investigational product to humans, and must become effective before human clinical trials may begin. 40 Table of Contents Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the pharmacology, pharmacokinetics, and potential for adverse events and in some cases to establish a rationale for therapeutic use.
In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries.
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.
Any agency or judicial enforcement action could have a material adverse effect on us. 41 Table of Contents Any future product candidates must be approved by the FDA through either a new drug application ("NDA"), or a biologics license application ("BLA"), process before they may be legally marketed in the United States.
Any agency or judicial enforcement action could have a material adverse effect on us. 39 Table of Contents Any future product candidates must be approved by the FDA through either a new drug application ("NDA"), or a biologics license application ("BLA"), process before they may be legally marketed in the United States.
As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Takeda to co-develop and co-commercialize TAK-594/DNL593 (PTV:PGRN), an investigational, brain-penetrant PGRN replacement therapy enabled by Denali's PTV platform and designed to restore PGRN levels in the brain without interfering with normal PGRN transport and processing.
TAK-594/DNL593 (PTV:PGRN) is an investigational, brain-penetrant PGRN replacement therapy enabled by Denali's TV platform and designed to restore PGRN levels in the brain without interfering with normal PGRN transport and processing. As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Takeda to co-develop and co-commercialize TAK-594/DNL593 (PTV:PGRN).
These trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing. 43 Table of Contents When these phases overlap or are combined, the trials may be referred to as Phase 1/2 or Phase 2/3.
These trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing. 41 Table of Contents When these phases overlap or are combined, the trials may be referred to as Phase 1/2 or Phase 2/3.
Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. 45 Table of Contents If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.
Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. 43 Table of Contents If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.
FDA approval of an NDA or BLA must be obtained before a drug or biologic may be marketed in the United States. 44 Table of Contents Under the Prescription Drug User Fee Act ("PDUFA"), as amended, each NDA or BLA must be accompanied by a user fee. FDA adjusts the PDUFA user fees on an annual basis.
FDA approval of an NDA or BLA must be obtained before a drug or biologic may be marketed in the United States. 42 Table of Contents Under the Prescription Drug User Fee Act ("PDUFA"), as amended, each NDA or BLA must be accompanied by a user fee. FDA adjusts the PDUFA user fees on an annual basis.
Post-Approval Requirements Following approval of a new product, the manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and record-keeping requirements, requirements to report adverse experiences, and complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (known as “off-label use”) and limitations on industry-sponsored scientific and educational activities.
Post-Approval Requirements 47 Table of Contents Following approval of a new product, the manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and record-keeping requirements, requirements to report adverse experiences, and complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (known as “off-label use”) and limitations on industry-sponsored scientific and educational activities.
Corporate Information We were incorporated in Delaware in 2013. Our principal executive offices are located at 161 Oyster Point Blvd., South San Francisco, California 94080. Our telephone number is (650) 866-8548. Our website address is www.denalitherapeutics.com.
Corporate Information We were incorporated in Delaware in 2013. Our principal executive offices are located at 161 Oyster Point Blvd., South San Francisco, California 94080. Our telephone number is (650) 866-8547. Our website address is www.denalitherapeutics.com.
These include up to $3.0 million in preclinical contingent payments, $30.0 million in clinical contingent payments, $60.0 million in regulatory contingent payments and $150.0 million in commercial contingent payments. We have made payments of $49.8 million through December 31, 2023 in the aggregate consisting of up-front, preclinical and clinical contingent consideration.
These include up to $3.0 million in preclinical contingent payments, $30.0 million in clinical contingent payments, $60.0 million in regulatory contingent payments and $150.0 million in commercial contingent payments. We have made payments of $49.8 million through December 31, 2024 in the aggregate consisting of up-front, preclinical and clinical contingent consideration.
Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed. The clinical studies must be conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Once the CTA is approved in accordance with a EMA requirements, clinical study development may proceed. The clinical studies must be conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Abbreviated Licensure Pathway of Biological Products as Biosimilar or Interchangeable The Patient Protection and Affordable Care Act ("PPACA"), Affordable Care Act ("ACA"), signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 ("BPCIA"), created an abbreviated approval pathway for biological products shown to be highly similar to an FDA-licensed reference biological product.
Abbreviated Licensure Pathway of Biological Products as Biosimilar or Interchangeable 45 Table of Contents The Patient Protection and Affordable Care Act ("PPACA"), Affordable Care Act ("ACA"), signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 ("BPCIA"), created an abbreviated approval pathway for biological products shown to be highly similar to an FDA-licensed reference biological product.
Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor. European Union Drug Development As in the United States, medicinal products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained.
Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor. 50 Table of Contents European Union Drug Development As in the United States, medicinal products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained.
Inhibition of LRRK2 activity has the potential to slow the progression of Parkinson’s disease in patients, with and without known genetic risks based on restoration of lysosomal function. As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen to co-develop and co-commercialize our small molecule inhibitors of LRRK2 for Parkinson's disease.
Inhibition of LRRK2 activity has the potential to slow the progression of Parkinson’s disease in patients, with and without known genetic risks based on restoration of lysosomal function. 19 Table of Contents As described in more detail in “Business - Licenses and Collaborations” below, we are collaborating with Biogen to co-develop and co-commercialize our small molecule inhibitors of LRRK2 for Parkinson's disease.
Takeda will pay these royalties to us for each biologic product included in the relevant collaboration program, on a country-by-country basis, until the latest of (i) the expiration of certain patents covering the relevant biologic product, (ii) the expiration of all regulatory exclusivity for that biologic product, and (iii) an agreed period of time after the first commercial sale of that biologic product in the applicable country, unless biosimilar competition in excess of a significant level specified in the Takeda Collaboration Agreement occurs earlier, in which case Takeda’s royalty obligations in the applicable country would terminate.
Takeda will pay these royalties to us, on a country-by-country basis, until the latest of (i) the expiration of certain patents covering the biologic product, (ii) the expiration of all regulatory exclusivity for that biologic product, and (iii) an agreed period of time after the first commercial sale of that biologic product in the applicable country, unless biosimilar competition in excess of a significant level specified in the Takeda Collaboration Agreement occurs earlier, in which case Takeda’s royalty obligations in the applicable country would terminate.
For example, the FDA has discretion over the kind and amount of scientific evidence—laboratory, preclinical and/or clinical—required to demonstrate biosimilarity to a licensed biological product. The FDA intends to consider the totality of the evidence, provided by a sponsor to support a demonstration of biosimilarity, and recommends that sponsors use a stepwise approach in the development of their biosimilar products.
For example, the FDA has discretion over the kind and amount of scientific evidence—laboratory, preclinical and/or clinical—required to demonstrate biosimilarity to a licensed biological product. 46 Table of Contents The FDA intends to consider the totality of the evidence, provided by a sponsor to support a demonstration of biosimilarity, and recommends that sponsors use a stepwise approach in the development of their biosimilar products.
The patent portfolio also includes over 500 licensed patents issued in jurisdictions outside of the United States, and over 800 owned patent applications pending in jurisdictions outside of the United States that, in many cases, are counterparts to the foregoing U.S. patents and patent applications.
The patent portfolio also includes over 500 licensed patents issued in jurisdictions outside of the United States, and over 850 owned patent applications pending in jurisdictions outside of the United States that, in many cases, are counterparts to the foregoing U.S. patents and patent applications.
The impact of these judicial challenges, legislative, executive, and administrative actions, and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear.
The impact of these judicial challenges, legislative, executive, and administrative actions, and any future healthcare measures and agency rules implemented by the new administration on us and the pharmaceutical industry as a whole is unclear.
An application for licensure of a biosimilar product must include information demonstrating biosimilarity based upon the following, unless the FDA determines otherwise: • analytical studies demonstrating that the proposed biosimilar product is highly similar to the approved product notwithstanding minor differences in clinically inactive components; and 47 Table of Contents • animal studies (including the assessment of toxicity).
An application for licensure of a biosimilar product must include information demonstrating biosimilarity based upon the following, unless the FDA determines otherwise: • analytical studies demonstrating that the proposed biosimilar product is highly similar to the approved product notwithstanding minor differences in clinically inactive components; and • animal studies (including the assessment of toxicity).
Preclinical studies demonstrated robust and sustained pharmacodynamic effects in the brain after intravenous dosing of TV-enabled antibodies, enzymes, proteins, and antisense oligonucleotides ("ASOs"), while standard antibodies, enzymes, proteins and ASOs had no or minimal pharmacodynamic effects.
Preclinical studies demonstrated robust and sustained pharmacodynamic effects in the brain after intravenous dosing of TV-enabled antibodies, enzymes, proteins, and oligonucleotides, while standard antibodies, enzymes, proteins and oligonucleotides had no or minimal pharmacodynamic effects.
Moreover, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. 50 Table of Contents Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S.
Moreover, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S.
Key areas of focus for Denali include: Health and Safety. Our health and safety programs are designed around global standards with specifications addressing regulations, specific hazards, and the unique working environment of our operations. We mandate employee health and safety training and ergonomic assessments, and require specialized training for all lab-based employees.
Key areas of focus for Denali include: 54 Table of Contents Health and Safety. Our health and safety programs are designed around global standards with specifications addressing regulations, specific hazards, and the unique working environment of our operations. We mandate employee health and safety training and ergonomic assessments, and require specialized training for all lab-based employees.
In July 2021, we executed a side letter to our agreements with F-star which confirmed the completion of the research services performed by F-star Ltd that were funded by us. Genentech Exclusive License Agreement In June 2016, we entered into an exclusive license agreement with Genentech, Inc. (“Genentech”).
In July 2021, we executed a side letter to our agreements with F-star which confirmed the completion of the research services performed by F-star Ltd that were funded by us. 33 Table of Contents Genentech Exclusive License Agreement In June 2016, we entered into an exclusive license agreement with Genentech, Inc. (“Genentech”).
Intellectual Property Our intellectual property is critical to our business and we strive to protect it, including by obtaining and maintaining patent protection in the United States and internationally for our product candidates, novel biological discoveries and BBB platform technology, including new targets and applications, and other inventions that are important to our business.
Intellectual Property Our intellectual property is critical to our business and we strive to protect it, including by obtaining and maintaining patent protection in the United States and internationally for our product candidates, novel biological discoveries and TV platform, including new targets and applications, and other inventions that are important to our business.
We have established relationships with several CDMOs, including Lonza Sales AG ("Lonza") and WuXi Biologics Limited ("Wuxi"). Effective September 2017, we entered into a development and manufacturing services agreement with Lonza, which we have subsequently amended to add scope of work. We refer to this agreement, as amended, as the DMSA or the Lonza agreement.
We have established relationships with several CDMOs, including Lonza Sales AG ("Lonza"). Effective September 2017, we entered into a development and manufacturing services agreement with Lonza, which we have subsequently amended to add scope of work. We refer to this agreement, as amended, as the DMSA or the Lonza agreement.
We look to grow strategically both in terms of therapeutic areas of high unmet need, starting with LSDs with CNS pathology and expanding into large neurodegenerative disorders, as well as from a geographic perspective, with an initial focus on establishing a commercial presence in the United States and the European Union ("EU"), with subsequent global expansion (including China).
We look to grow strategically both in terms of therapeutic areas of high unmet need, starting with lysosomal storage diseases with CNS pathology and expanding into large neurodegenerative disorders, as well as from a geographic perspective, with an initial focus on establishing a commercial presence in the United States and the European Union ("EU"), with subsequent global expansion (including China).
This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024, and the remainder will be triggered based on time and operational milestones in the study. Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease. Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval.
This agreement includes committed funding of $75.0 million, of which $25.0 million was received in 2024, and the remainder will be triggered based on time and operational milestones in the study. Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease. Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval.
For each collaboration program for which we are sharing costs and profits with Takeda, we will lead the conduct of clinical activities for each indication up to the first trial with a clinical outcomes-based efficacy endpoint, and Takeda will lead the conduct of all subsequent clinical activities for that indication.
For the PTV:PGRN program for which we are sharing costs and profits with Takeda, we will lead the conduct of clinical activities for each indication up to the first trial with a clinical outcomes-based efficacy endpoint, and Takeda will lead the conduct of all subsequent clinical activities for that indication.
The TV technology is engineered to engage specific BBB transport receptors, such as the transferrin receptor (“TfR”) and CD98 heavy chain ("CD98hc"), which are highly expressed in brain capillaries and facilitate transport of proteins into the brain ( Figure 1 ) in a process called receptor mediated transcytosis, or RMT. Figure 1 : Engineering brain delivery.
The TV technology is engineered to engage specific BBB transport receptors, such as the transferrin receptor ("TfR") and CD98 heavy chain ("CD98hc"), which are highly expressed in brain capillaries and facilitate transport of proteins into the brain ( Figure 1 ) in a process called receptor mediated transcytosis. Figure 1 : Engineering brain delivery.
License Grant Under the Sanofi Collaboration Agreement, we granted Sanofi an exclusive, worldwide license under intellectual property that we control related to our RIPK1 Inhibitors, including certain intellectual property licensed to us by an academic institution. Payments When the Sanofi Collaboration Agreement became effective in November 2018, Sanofi paid us $125.0 million upfront.
License Grant Under the Sanofi Collaboration Agreement, we granted Sanofi an exclusive, worldwide license under intellectual property that we control related to our RIPK1 Inhibitors, including certain intellectual property licensed to us by an academic institution. Payments 28 Table of Contents When the Sanofi Collaboration Agreement became effective in November 2018, Sanofi paid us $125.0 million upfront.
We do not have the right to terminate the agreement without cause, but may terminate the agreement for Genentech’s material breach, subject to specified notice and cure provisions. Manufacturing We believe it is important to our business success to have a reliable, high-quality preclinical and clinical drug supply chain.
We do not have the right to terminate the agreement without cause, but may terminate the agreement for Genentech’s material breach, subject to specified notice and cure provisions. 34 Table of Contents Manufacturing We believe it is important to our business success to have a reliable, high-quality preclinical and clinical drug supply chain.
For more information regarding the risks related to our intellectual property, see "Risk Factors - Risks Related to Our Intellectual Property." 40 Table of Contents In addition to patent protection, we also rely on trademark registration, trade secrets, know how, other proprietary information and continuing technological innovation to develop and maintain our competitive position.
For more information regarding the risks related to our intellectual property, see "Risk Factors - Risks Related to Our Intellectual Property." 38 Table of Contents In addition to patent protection, we also rely on trademark registration, trade secrets, know how, other proprietary information and continuing technological invention to develop and maintain our competitive position.
We also ensure pipeline diversity by partnering with each division in their workforce planning forecasts to develop initiatives and goals to recruit diverse talent across all leadership and skill areas. As of December 31, 2023 , approximately 54% of our workforce and 48% of managers were female.
We also ensure pipeline diversity by partnering with each division in their workforce planning forecasts to develop initiatives and goals to recruit diverse talent across all leadership and skill areas. As of December 31, 2024 , approximately 54% of our workforce and 50% of managers were female.
Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that our product candidates do not undergo unacceptable deterioration over their shelf life. We may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects from public health concerns, such as the COVID-19 pandemic.
Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that our product candidates do not undergo unacceptable deterioration over their shelf life. We may be required to develop and implement additional clinical trial policies and procedures designed to help protect subjects from public health concerns, such as a global pandemic.
After such an election by us or termination by Takeda becomes effective, we will no longer be obligated to share in the development and commercialization costs for the relevant collaboration program, and we will not share in any profits from that collaboration program. Instead, we will be entitled to receive tiered royalties.
After such an election by us or termination by Takeda becomes effective, we will no longer be obligated to share in the development and commercialization costs for the PTV:PGRN program, and we will not share in any profits from that program. Instead, we will be entitled to receive tiered royalties.
However, in addition to such currently approved therapies, we believe that our product candidates, if approved, may also compete with other potential therapies intended to halt or slow the progression of neurodegenerative disease that are being developed by a number of companies and institutions, including but not limited to: • Alzheimer’s Disease: Treatments currently approved in some geographies for Alzheimer’s Disease include amyloid beta-directed antibody therapies from Biogen and Eisai.
However, in addition to such currently approved therapies, we believe that our product candidates, if approved, may also compete with other potential therapies intended to halt or slow the progression of neurodegenerative disease that are being developed by a number of companies and institutions, including but not limited to: • Alzheimer’s Disease: Treatments currently approved in some geographies for Alzheimer’s Disease include the amyloid beta-directed antibody therapies Aduhelm (Biogen), LEQEMBI (Eisai/Biogen), and Kisunla (Eli Lilly).
In addition, there are companies that are developing technologies that would compete directly with our technologies, including: • Blood-Brain Barrier Technology: There are several large and specialty pharmaceutical and biotechnology companies developing BBB delivery technologies that utilize RMT, including JCR Pharmaceuticals, Roche (including Genentech, its wholly owned subsidiary), Alector, Bioarctic, Bicycle Therapeutics among others.
In addition, there are companies that are developing technologies that would compete directly with our technologies, including: • Blood-Brain Barrier Technology: There are several large and specialty pharmaceutical and biotechnology companies developing BBB delivery technologies that utilize RMT, including JCR Pharmaceuticals, Roche (including Genentech, its wholly owned subsidiary), Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Abbvie, Regeneron, BioArctic, Alector and Bicycle Therapeutics, among others.
Additionally, potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Clene Nanomedicine, AB Science, Novartis, Bristol Myers Squibb, and Calico/AbbVie in various stages of development. • FTD-GRN: Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Alector/GSK, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Passage Bio, AviadoBio, Vesperbio, Arkuda Therapeutics, Biomarin, and Orchard Therapeutics in various stages of development. • LSDs: The currently approved treatments for LSDs are enzyme-based therapies.
Additionally, potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Clene Nanomedicine, AB Science, Novartis, Bristol Myers Squibb, Calico/AbbVie, and Zydus in various stages of development. • FTD-GRN: Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including GSK/Alector, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Passage Bio, AviadoBio, Vesperbio, Arkuda Therapeutics, and Orchard Therapeutics in various stages of development. • Lysosomal storage diseases: The currently approved treatments for lysosomal storage diseases are conventional enzyme-based therapies.
Any patents issuing from these families are expected to expire in 2039 and 2041, respectively, not including any patent term adjustments and any patent term extensions. PTV:PGRN Program We own 4 patent families directed to our PTV:PGRN program.
Any patents issuing from these families are expected to expire between 2039 and 2045, respectively, not including any patent term adjustments and any patent term extensions. PTV:PGRN Program We own 4 patent families directed to our PTV:PGRN program.
We also own 6 additional patent families directed to various aspects of our DNL310 program, which if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions. Of the 10 patent families, 2 families relate to the composition of matter of our ETV:SGSH structures, including DNL126.
We also own 4 additional patent families directed to various aspects of our DNL310 program, which if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions. Of the 11 patent families, 3 families relate to the composition of matter of our ETV:SGSH structures, including DNL126.
In February 2024, we announced the execution of a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which Denali plans to solely operationalize to evaluate safety and biomarkers associated with BIIB122 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2.
In February 2024, we announced the execution of a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we are operationalizing to evaluate safety and biomarkers associated with BIIB122 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2.
If any such changes were to be imposed, they could adversely affect the operation of our business. U.S.
If any such changes were to be imposed, they could adversely affect the operation of our business. 49 Table of Contents U.S.
Termination Each party may terminate the Sanofi Collaboration Agreement in its entirety, or with respect to a particular program (i.e., the CNS Products program or Peripheral Products program), as applicable, if the other party remains in material breach of the Sanofi Collaboration Agreement following a cure period to remedy the material breach.
Termination Each party may terminate the Sanofi Collaboration Agreement in its entirety, or with respect to a particular program, as applicable, if the other party remains in material breach of the Sanofi Collaboration Agreement following a cure period to remedy the material breach.
The cumulative earned and potential milestones include $120.0 million in clinical milestone payments, $175.0 million in regulatory milestone payments and $200.0 million in commercial milestone payments for Peripheral Products, as defined, that are developed and approved in the United States, Europe and in Japan for three indications.
Such milestone payments include $120.0 million in clinical milestone payments, $175.0 million in regulatory milestone payments and $200.0 million in commercial milestone payments for Peripheral Products, as defined, that are developed and approved in the United States, Europe and in Japan for three indications.
We also have 3 issued U.S. patents, which are also expected to expire in 2038, not including any patent term adjustments and any patent term extensions, as well as pending patent applications, to other BBB platform technology.
We also have 7 issued U.S. patents, which are also expected to expire in 2038, not including any patent term adjustments and any patent term extensions, as well as pending patent applications, to other TV platform.
We plan to use the facility to expand our clinical manufacturing capabilities for biologic therapeutics including the manufacture of materials for toxicology studies and drug substance for early human clinical studies, with the goal of increasing flexibility and speed in advancing new investigational therapies into clinical trials.
We are in the final stages of building out the facility, and beginning in 2025, we plan to use the facility to expand our clinical manufacturing capabilities for biologic therapeutics including the manufacture of materials for toxicology studies and drug substance for early human clinical studies, with the goal of increasing flexibility and speed in advancing new investigational therapies into clinical trials.
For our product candidates and our BBB platform technology, we generally pursue or in-license patent protection covering compositions of matter, methods of use, and manufacture. BBB Platform We own 11 patent families related to our BBB platform technology.
For our product candidates and our TV platform, we generally pursue or in-license patent protection covering compositions of matter, methods of use, and manufacture. TV Platform We own 10 patent families related to our TV platform.
These families are directed to compositions and methods of use of our OTVs, and if issued, are expected to expire between 2042 and 2043, not including any patent term adjustments and any patent term extensions. LRRK2 Inhibitor Program Our LRRK2 program is subject to our collaboration agreement with Biogen.
These families are directed to compositions and methods of use of our OTVs, including DNL628 (OTV:MAPT) and DNL422(OTV:SNCA), and if issued, are expected to expire between 2042 and 2045, not including any patent term adjustments and any patent term extensions. LRRK2 Inhibitor Program Our LRRK2 program is subject to our collaboration agreement with Biogen.
We have made milestone payments to Genentech of $15.0 million through December 31, 2023. 35 Table of Contents In addition, we are obligated to pay royalties on net sales of licensed products ranging from low to high single-digit percentages, with the exact royalty rate dependent on various factors, including (i) whether the compound incorporated in the relevant licensed product is a Genentech-provided compound or a compound acquired or developed by us, (ii) the date a compound was first discovered, derived or optimized by us, (iii) the existence of patent rights covering the relevant licensed product in the relevant country, (iv) the existence of orphan drug exclusivity covering a licensed product that is a Genentech-provided compound and (v) the level of annual net sales of the relevant licensed product.
In addition, we are obligated to pay royalties on net sales of licensed products ranging from low to high single-digit percentages, with the exact royalty rate dependent on various factors, including (i) whether the compound incorporated in the relevant licensed product is a Genentech-provided compound or a compound acquired or developed by us, (ii) the date a compound was first discovered, derived or optimized by us, (iii) the existence of patent rights covering the relevant licensed product in the relevant country, (iv) the existence of orphan drug exclusivity covering a licensed product that is a Genentech-provided compound and (v) the level of annual net sales of the relevant licensed product.
In February 2019, we amended the agreement to replace the ATV:BACE1/Tau program with the ATV:Tau program and in March 2022, the parties mutually agreed to terminate activity on the ATV:Tau program over which Takeda had its option to develop and commercialize jointly with the Company.
In February 2019, we amended the agreement to replace the ATV:BACE1/Tau program with the ATV:Tau program and in March 2022, the parties mutually agreed to terminate activity on the ATV:Tau program over which Takeda had its option to develop and commercialize jointly with the Company. Takeda exercised the options for the PTV:PGRN program in November 2021.
According to the FDA’s FY 2024 user fee schedule, effective through September 30, 2024, the user fee for an application requiring clinical data, such as an NDA or BLA, is $4,048,695. PDUFA also imposes an annual program fee for each marketed human drug or biologic of $416,734. Fee waivers or reductions are available in certain limited circumstances.
According to the FDA’s FY 2025 user fee schedule, effective through September 30, 2025, the user fee for an application requiring clinical data, such as an NDA or BLA, is $4,310,002. PDUFA also imposes an annual program fee for each marketed human drug or biologic of $403,889. Fee waivers or reductions are available in certain limited circumstances.
We use Denali®, the Denali Therapeutics logo, and other marks as trademarks in the United States and other countries. This Annual Report on Form 10-K contains references to our trademarks and service marks and to those belonging to other entities.
We use Denali®, the Denali Therapeutics logo, ATV, ETV, OTV, PTV, TV, TransportVehicle TM , and other marks as trademarks in the United States and other countries. This Annual Report on Form 10-K contains references to our trademarks and service marks and to those belonging to other entities.
Our costs of developing programs associated with these collaborations are largely covered through upfront payments, expected incoming milestones and cost sharing. We may seek additional strategic partnering opportunities as we strive to capture the full value of our portfolio and platforms.
Our costs of developing programs associated with these collaborations are largely covered through upfront payments, expected incoming milestones and cost sharing. We are also eligible to receive royalty payments for SAR443122/DNL758 from Sanofi. We may seek additional strategic partnering opportunities as we strive to capture the full value of our portfolio and platforms.
This is a small, multicenter, open-label, Phase 1/2 study to assess the safety, tolerability, pharmacokinetics, pharmacodynamics, and exploratory clinical efficacy of DNL126 in participants with Sanfilippo syndrome Type A (MPS IIIA). The core study period is 25 weeks (approximately 6 months) and is followed by a 72-week (approximately 18 month) open-label extension.
In January 2024, we commenced dosing of participants with MPS IIIA in a multicenter, open-label, Phase 1/2 study to assess the safety, tolerability, pharmacokinetics, pharmacodynamics, and exploratory clinical efficacy of DNL126. The core study period is 25 weeks (approximately 6 months) and is followed by a 72-week (approximately 18 month) open-label extension.
We believe that the TV can significantly increase the probability of success of biotherapeutics for CNS indications and can enable many new potential treatment options. 8 Table of Contents Our TV technology is modular and enables several classes of biotherapeutics to more effectively cross the BBB, including enzymes, antibodies, proteins and oligonucleotides.
We believe that the TV can significantly increase the probability of success of biotherapeutics for CNS indications and can enable many new effective medicines. Our TV technology is modular and enables several classes of biotherapeutics to more effectively cross the BBB, including enzymes, antibodies, oligonucleotides, and other proteins.
It is estimated that FTD-GRN is 5-10% of the total FTD patient population. There are currently no approved medicines to stop or slow the progression of FTD or FTD-GRN.
It is estimated that FTD-GRN is 5-10% of the total FTD patient population, or more than 25,000 people worldwide. There are currently no approved medicines to stop or slow the progression of FTD or FTD-GRN.
As of December 31, 2023 , ethnic or racial minorities represented approximately 54% of our workforce and 46% of our managers. 56 Table of Contents Training and Development. We believe training and development are an important part of creating a safe, productive, fair, and equal environment. We encourage continuous feedback, improvement, and growth for our employees.
As of December 31, 2024 , ethnic or racial minorities represented approximately 55% of our workforce and 45% of our managers. Training and Development. We believe training and development are an important part of creating a safe, productive, fair, and equal environment. We encourage continuous feedback, improvement, and growth for our employees.
In short, the NDA or BLA is a request for approval to market the drug or biologic for the specified indication(s) and must contain proof of safety and efficacy for a drug or safety, purity and potency for a biologic. The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings.
In short, the NDA or BLA is a request for approval to market the drug or biologic for the specified indication(s) and must contain sufficient evidence of efficacy, acceptable safety profile, and appropriate quality attributes. The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings.
Results from Phase 1 and Phase 1b trials of BIIB122/DNL151 in healthy volunteers and patients with Parkinson's disease, respectively, showed robust target and pathway engagement as measured by pS935 LRRK2 and pT73 Rab10 (“pRab10”), respectively.
Enrollment of LUMA is expected to be completed in 2025. Results from Phase 1 and Phase 1b trials of BIIB122/DNL151 in healthy volunteers and patients with Parkinson's disease, respectively, showed robust target and pathway engagement as measured by pS935 LRRK2 and pT73 Rab10 (“pRab10”), respectively.
Regulatory Matters Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.
Regulatory Matters Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments. 48 Table of Contents For example, in the United States, sales, marketing and scientific and educational programs also must comply with state and federal fraud and abuse laws.
In April 2023, Biogen exercised its option to develop and commercialize our ATV:Abeta program. As Biogen exercised its option with respect to the ATV:Abeta Program, we granted Biogen an exclusive, worldwide license under certain intellectual property to develop, manufacture, and commercialize products that are the subject of the ATV:Abeta Program.
As Biogen exercised its option with respect to the ATV:Abeta Program, we granted Biogen an exclusive, worldwide license under certain intellectual property to develop, manufacture, and commercialize products that are the subject of the ATV:Abeta Program. In August 2023, Biogen agreed to waive the remaining option upon execution of the Biogen Amendment.
However, for each collaboration program, we may elect not to continue sharing development and commercialization costs, or Takeda may elect to terminate our cost-profit sharing rights and obligations if, following notice from Takeda and a cure period, we fail to satisfy our cost sharing obligations with respect to the relevant collaboration program.
However, we may elect not to continue sharing development and commercialization costs, or Takeda may elect to terminate our cost-profit sharing rights and obligations if, following notice from Takeda and a cure period, we fail to satisfy our cost sharing obligations.
Information on cost sharing reimbursements between us and Takeda is included in this Annual Report on Form 10-K in our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Exclusivity Unless the Takeda Collaboration Agreement is terminated earlier, until expiration of an agreed period of time after the first regulatory approval in the United States or Europe of a biologic product within the applicable collaboration program, neither party may conduct clinical or commercial activities involving antibodies or protein-based therapeutic products directed to the same target (or in the case of a bi-specific program, the same combination of targets) that have an intended therapeutic effect in diseases and conditions of the CNS (including LSDs), except to the extent permitted under the Takeda Collaboration Agreement. 33 Table of Contents Termination Each party may terminate the Takeda Collaboration Agreement in its entirety, or with respect to a particular collaboration program, as applicable, if the other party remains in material breach of the Takeda Collaboration Agreement following a cure period to remedy the material breach.
Information on cost sharing reimbursements between us and Takeda is included in this Annual Report on Form 10-K in our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Exclusivity Unless the Takeda Collaboration Agreement is terminated earlier, until expiration of an agreed period of time after the first regulatory approval in the United States or Europe of a biologic product within the PTV:PGRN program, neither party may conduct clinical or commercial activities involving antibodies or protein-based therapeutic products directed to the same target (or in the case of a bi-specific program, the same combination of targets) that have an intended therapeutic effect in diseases and conditions of the CNS (including lysosomal storage diseases), except to the extent permitted under the Takeda Collaboration Agreement.
We also own a patent family that includes 3 issued U.S. patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of BIIB122/DNL151 and methods of treatment using BIIB122/DNL151, respectively, as well as pending patent applications and granted patents in jurisdictions outside the U.S. 39 Table of Contents RIPK1 Inhibitor Program Our RIPK1 program is subject to our collaboration agreement with Sanofi.
We also own a patent family that includes 3 issued U.S. patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions, directed to the composition of matter of BIIB122/DNL151 and methods of treatment using BIIB122/DNL151, respectively, as well as pending patent applications and granted patents in jurisdictions outside the U.S.
We also own additional patent families directed to various aspects of our TAK-594/DNL593 program, which, if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions. Our PTV:PGRN program is subject to our Takeda collaboration. ATV:TREM2 Program We own 6 patent families related to our ATV:TREM2 program.
We also own additional patent families directed to various aspects of our TAK-594/DNL593 program, which, if issued, are expected to expire in 2039 or later, all not including any patent term adjustments and any patent term extensions.
Further, an applicant would be required to submit and obtain FDA approval of a new NDA/BLA or a supplement before any material modifications can be implemented for a drug or biologic, including changes in labeling or manufacturing processes or facilities, which may require the development of additional data or nonclinical studies and clinical trials. 49 Table of Contents The FDA may also place other conditions on approvals including the requirement for a REMS, to assure the safe use of the product.
Further, an applicant would be required to submit and obtain FDA approval of a new NDA/BLA or a supplement before any material modifications can be implemented for a drug or biologic, including changes in labeling or manufacturing processes or facilities, which may require the development of additional data or nonclinical studies and clinical trials.
We also own a patent family that includes 2 issued U.S. patents, which are expected to expire in 2037, not including any patent term adjustments and any patent term extensions, and pending patent applications, which include those directed to the composition of matter of eclitasertib (SAR443122/DNL758), as well as other RIPK1 inhibitor compounds. eIF2b Activator Program We own 9 patent families directed to our eIF2B activator program, including 4 patent families directed to DNL343 that are expected to expire in 2038 or later, with the remaining families directed to other eIF2B compounds expiring between 2038 and 2040, not including any patent term adjustments and any patent term extensions.
These include 3 issued U.S. patent, including one directed to the composition of matter of eclitasertib (SAR443122/DNL758), which is expected to expire in 2037, not including any patent term adjustments and any patent term extensions. eIF2B Activator Program We own 9 patent families directed to our eIF2B activator program, including 4 patent families directed to DNL343 that are expected to expire in 2038 or later, with the remaining families directed to other eIF2B compounds expiring between 2038 and 2040, not including any patent term adjustments and any patent term extensions.
Product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Exclusivity of LRRK2 Program During the term of the LRRK2 Agreement, neither we nor Biogen may conduct preclinical, clinical or commercial activities involving any small molecule that targets LRRK2 as its primary mechanism of action anywhere in the world, unless such molecule is included under the collaboration and only to the extent such activity is permitted under the LRRK2 Agreement or, with respect to Biogen, the molecule is an ASO product that is the subject of a collaboration between Biogen and a particular third party. 27 Table of Contents ROFN and Option Agreement Option & ROFN Programs In addition to the LRRK2 Program, Biogen also received an exclusive option to license two preclinical programs enabled by our TV technology platform, including our ATV:Abeta program ("Option Programs").
Exclusivity of LRRK2 Program During the term of the LRRK2 Agreement, neither we nor Biogen may conduct preclinical, clinical or commercial activities involving any small molecule that targets LRRK2 as its primary mechanism of action anywhere in the world, unless such molecule is included under the collaboration and only to the extent such activity is permitted under the LRRK2 Agreement or, with respect to Biogen, the molecule is an ASO product that is the subject of a collaboration between Biogen and a particular third party.
Additionally, potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Roche (including Genentech, its wholly owned subsidiary), Alector, and AbbVie in various stages of development. • Parkinson’s Disease: Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Prothena/Roche (including Genentech, its wholly owned subsidiary), Novartis/UCB, Biogen, Ionis, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), AstraZeneca, Takeda, Oncodesign/Servier, and Neuron 23 in various stages of development. 37 Table of Contents • ALS: Treatments currently approved in some geographies for ALS include Relyvrio/Albrioza (Amylyx Pharmaceuticals), Radicava (Mitsubishi Tanabe Pharma) and Qalsody (Biogen).
Additionally, potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), Roche (including Genentech, its wholly owned subsidiary), AbbVie, Bristol Myers Squibb, Prothena, Regeneron, Alnylam, Eisai, and BioArctic in various stages of development. • Parkinson’s Disease: Potentially disease modifying therapeutics are being developed by several large and specialty pharmaceutical and biotechnology companies, including Roche/Prothena (including Genentech, its wholly owned subsidiary), Ionis, Eli Lilly (including Prevail Therapeutics, its wholly owned subsidiary), AstraZeneca, Takeda, Oncodesign/Servier, and Neuron23 in various stages of development. • ALS: Treatments currently approved in some geographies for ALS include Radicava (Mitsubishi Tanabe Pharma) and Qalsody (Biogen).
In the future, we may apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA. 51 Table of Contents Market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications.
In the future, we may apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, these factors include: • the success of existing or new competitive products or technologies; • the timing and results of clinical trials for our current product candidates and any future product candidates that we may develop; • commencement or termination of collaborations for our product development and research programs; • 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 develop our BBB platform technology; • results of preclinical studies, clinical trials, or regulatory approvals of product candidates of our competitors, or announcements about new research programs or product candidates of our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents, or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our research programs, clinical development programs, or product candidates that we may develop; • the results of our efforts to develop additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines, or recommendations by securities analysts; 116 Table of Contents • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders, or other stockholders; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems or in accounting standards; • ineffectiveness of our internal controls; • significant lawsuits, including patent or stockholder litigation; • market conditions in the pharmaceutical and biotechnology sectors; and • other events or factors affecting general economic, industry, and market conditions, including bank failures or instability in the financial services sector, geopolitical events, such as war and armed conflict, and outbreaks of pandemic diseases, such as COVID-19.
Biggest changeIn addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, these factors include: 106 Table of Contents • the timing and results of clinical trials for our current product candidates and any future product candidates that we may develop; • 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; • 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 develop our TV platform; • 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; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents, or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our research programs, clinical development programs, or product candidates that we may develop; • the results of our efforts to develop additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines, or recommendations by securities analysts; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders, or other stockholders; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems or in accounting standards; • ineffectiveness of our internal controls; • significant lawsuits, including patent or stockholder litigation; • market conditions in the pharmaceutical and biotechnology sectors; and • other events or factors affecting general economic, industry, and market conditions, including bank failures or instability in the financial services sector, geopolitical events, such as war and armed conflict, natural disasters, and public health crises. 107 Table of Contents In recent years, the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations.
Any inability to successfully initiate or complete clinical trials could result in additional costs to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we or our collaborators may be required or elect to conduct additional studies to bridge our modified product candidates to earlier versions.
Any inability to successfully initiate or complete clinical trials could result in additional costs to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we or our collaborators may be required to or elect to conduct additional studies to bridge our modified product candidates to earlier versions.
Our business is subject to complex and evolving U.S. and foreign laws and regulations, information security policies, and contractual obligations relating to privacy and data protection, including the use, processing, and cross-border transfer of personal information.
Our business is subject to complex and evolving U.S. and foreign laws and regulations, information security policies, and contractual obligations relating to privacy and data protection and security, including the use, processing, and cross-border transfer of personal information.
Risks Related to Our Intellectual Property • If we are unable to obtain and maintain patent protection for our product candidates or our BBB technology, our competitors could develop and commercialize products or technology similar or identical to ours, and adversely affect our ability to commercialize any product candidates. • 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. • Our rights to develop and commercialize our BBB 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. • We may not be able to protect our intellectual property and proprietary rights throughout the world. • Our patent protection could be reduced or eliminated if we are unable to comply with requirements imposed by government patent agencies. • Changes in U.S. patent law could impair our ability to protect our products. • Issued patents covering our BBB technology, product candidates and other technologies could be found invalid or unenforceable if challenged. • Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. • We may be subject to claims challenging the inventorship of our intellectual property. • If we are unable to protect the confidentiality of our trade secrets, our business would be harmed. • We may not be successful in obtaining, through acquisitions, in-licenses or otherwise, necessary rights to our BBB platform technology, product candidates or other technologies. • We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers. • Third party intellectual property claims against us, our licensors or our collaborators may prevent or delay the development of our BBB platform technology, product candidates and other technologies.
Risks Related to Our Intellectual Property • If we are unable to obtain and maintain patent protection for our product candidates or our TV technology, our competitors could develop and commercialize products or technology similar or identical to ours, and adversely affect our ability to commercialize any product candidates. • 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. • 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. • We may not be able to protect our intellectual property and proprietary rights throughout the world. • Our patent protection could be reduced or eliminated if we are unable to comply with requirements imposed by government patent agencies. • Changes in U.S. patent law could impair 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. • Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. • We may be subject to claims challenging the inventorship of our intellectual property. • If we are unable to protect the confidentiality of our trade secrets, our business would be harmed. • We may not be successful in obtaining, through acquisitions, in-licenses, or otherwise, necessary rights to our TV platform, product candidates or other technologies. • We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers. • 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.
Risks Related to Ownership of Our Common Stock • The market price of our common stock has been and may continue to be volatile, which could result in substantial losses for investors. • If securities analysts publish negative evaluations of our stock, or if they do not publish research or reports about our business; the price of our stock and trading volume could decline. • 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. • 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. • Our amended and restated certificate of incorporation provides exclusive forums for disputes between us and our stockholders, limiting their ability to obtain a favorable judicial forum. 59 Table of Contents 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.
Risks Related to Ownership of Our Common Stock • The market price of our common stock has been and may continue to be volatile, which could result in substantial losses for investors. • If securities analysts publish negative evaluations of our stock, or if they do not publish research or reports about our business; the price of our stock and trading volume could decline. • 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. • 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. • Our amended and restated certificate of incorporation provides exclusive forums for disputes between us and our stockholders, limiting their ability to obtain a favorable judicial forum. 58 Table of Contents 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.
Events that may prevent successful or timely initiation or completion of clinical trials include: • inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials; • delays in confirming target engagement, patient selection, or other relevant biomarkers to be utilized in preclinical and clinical product candidate development; • 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 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; as a result of a new safety finding that presents unreasonable risk to clinical trial participants; a negative finding from an inspection of our clinical trial operations or trial sites; developments on trials conducted by competitors for related technology that raises FDA or EMA concerns about risk to patients of the technology broadly; 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; • difficulty collaborating with patient groups and investigators; • failure by our CROs, other third parties, or us to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s or any other regulatory authority’s current good clinical practices ("cGCPs") requirements, or other regulatory guidelines in other countries; • occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • 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; • changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; 68 Table of Contents • the cost of clinical trials of our product candidates being greater than we anticipate; • clinical trials of our product candidates producing negative or inconclusive results, which may result in us or our collaborators deciding, or regulators requiring us, to conduct additional clinical trials or abandon product development programs; • transfer of manufacturing processes from our academic collaborators to larger-scale facilities operated by a CDMO or by us, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing process; • delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; and • delays associated with a pandemic or other public health emergency.
Events that may prevent successful or timely initiation or completion of clinical trials include: • inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials; • delays in confirming target engagement, patient selection, or other relevant biomarkers to be utilized in preclinical and clinical product candidate development; • 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 IRB approval at each clinical trial site; 64 Table of Contents • 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; as a result of a new safety finding that presents unreasonable risk to clinical trial participants; a negative finding from an inspection of our clinical trial operations or trial sites; developments in trials conducted by competitors for related technology that raise FDA or EMA concerns about risk to patients of the technology broadly; 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; • difficulty collaborating with patient groups and investigators; • failure by our CROs, other third parties, or us to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s or any other regulatory authority’s current good clinical practices ("cGCPs") requirements, or other regulatory guidelines in other countries; • occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • 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; • changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; • the cost of clinical trials of our product candidates being greater than we anticipate; • clinical trials of our product candidates producing negative or inconclusive results, which may result in us or our collaborators deciding, or regulators requiring us, to conduct additional clinical trials or abandon product development programs; • transfer of manufacturing processes from our academic collaborators to larger-scale facilities operated by a CDMO or by us, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing process; • delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; and • delays associated with a pandemic or other public health emergency.
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: • the efficacy or potency and safety of such product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals; • the potential and perceived advantages compared to alternative treatments; • the ability to offer our products for sale at competitive prices; • the ability to offer appropriate patient access programs, such as co-pay assistance; • the extent to which physicians recommend our products to their patients; • convenience and ease of dosing and administration compared to alternative treatments; • the clinical indications for which the product candidate is approved by FDA, EMA or other regulatory agencies; 75 Table of Contents • product labeling or product insert requirements of the FDA, EMA or other comparable foreign regulatory authorities, including any limitations, contraindications or warnings contained in a product’s approved labeling; • restrictions on how the product is distributed; • the timing of market introduction of competitive products; • publicity concerning our products or competing products and treatments; • the strength of marketing and distribution support; • sufficient third-party coverage or reimbursement; and • the prevalence and severity of any side effects.
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: • the efficacy or potency and safety of such product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals; • the potential and perceived advantages compared to alternative treatments; • the ability to offer our products for sale at competitive prices; • the ability to offer appropriate patient access programs, such as co-pay assistance; • the extent to which physicians recommend our products to their patients; • convenience and ease of dosing and administration compared to alternative treatments; • the clinical indications for which the product candidate is approved by FDA, EMA or other regulatory agencies; • product labeling or product insert requirements of the FDA, EMA or other comparable foreign regulatory authorities, including any limitations, contraindications or warnings contained in a product’s approved labeling; • restrictions on how the product is distributed; • the timing of market introduction of competitive products; • publicity concerning our products or competing products and treatments; 72 Table of Contents • the strength of marketing and distribution support; • sufficient third-party coverage or reimbursement; and • the prevalence and severity of any side effects.
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, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
Our reliance on third parties for the manufacture of the 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, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
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; and • our reputation may suffer. 81 Table of Contents 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.
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; and • our reputation may suffer. 68 Table of Contents 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.
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; 74 Table of Contents • 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; and • unforeseen costs and expenses associated with creating an independent commercialization organization.
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; 71 Table of Contents • 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; and • unforeseen costs and expenses associated with creating an independent commercialization organization.
Among other things, our charter documents: • establish that our board of directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • provide that our directors may only be removed for cause; • 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; • provide our board of directors with the exclusive right to elect a director to fill a vacancy or newly created directorship; • permit stockholders to only take actions at a duly called annual or special meeting and not by written consent; • prohibit stockholders from calling a special meeting of stockholders; • require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; • authorize our board of directors, by a majority vote, to amend the bylaws; and • require the affirmative vote of at least 66 2/3% or more of the outstanding shares of common stock to amend many of the provisions described above.
Among other things, our charter documents: • establish that our board of directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • provide that our directors may only be removed for cause; • 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; • provide our board of directors with the exclusive right to elect a director to fill a vacancy or newly created directorship; • permit stockholders to only take actions at a duly called annual or special meeting and not by written consent; • prohibit stockholders from calling a special meeting of stockholders; 110 Table of Contents • require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; • authorize our board of directors, by a majority vote, to amend the bylaws; and • require the affirmative vote of at least 66 2/3% or more of the outstanding shares of common stock to amend many of the provisions described above.
Damage or extended periods of interruption to our corporate, development or research facilities due to fire, extreme weather conditions or natural disaster, power loss, communications failure, unauthorized entry, or other events could cause us to cease or delay development of some or all of our product candidates.
Damage or extended periods of interruption to our corporate, development, research, or manufacturing facilities due to fire, extreme weather conditions or natural disaster, power loss, communications failure, unauthorized entry, or other events could cause us to cease or delay development of some or all of our product candidates.
We expect our trade secrets and know-how to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel from academic to industry scientific positions. 106 Table of Contents We seek to protect these trade secrets and other proprietary technology, in part, by entering into nondisclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors, and other third parties.
We expect our trade secrets and know-how to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel from academic to industry scientific positions. 97 Table of Contents We seek to protect these trade secrets and other proprietary technology, in part, by entering into nondisclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors, and other third parties.
Further, some states have enacted more specific legislation, such as Washington's enactment of the My Health, My Data Act, which includes a private right of action. The U.S. federal government is also contemplating federal privacy legislation.
Further, some states have enacted more specific legislation, such as Washington's enactment of the My Health, My Data Act, which includes a private right of action. The U.S. federal government is also contemplating federal privacy legislation. Additionally, the U.S.
In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
In addition, government funding of the SEC, USPTO, and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
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. 77 Table of Contents 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.
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. 74 Table of Contents 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.
Accordingly, our future results could be harmed by a variety of factors, including: 114 Table of Contents • economic weakness, including inflation, rising interest rates or political instability in certain non-U.S. economies and markets; • differing and changing regulatory requirements in non-U.S. countries; • challenges enforcing our contractual and intellectual property rights, especially in those non-U.S. countries that do not offer the same level of intellectual property protection as the United States; • difficulties in compliance with non-U.S. laws and regulations; • changes in non-U.S. regulations and customs, tariffs, and trade barriers; • changes in non-U.S. currency exchange rates and currency controls; • changes in a specific country’s or region’s political or economic environment; • trade protection measures, import or export licensing requirements, or other restrictive government actions; • negative consequences from changes in tax laws; • compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; • workforce uncertainty in countries where labor unrest is more common than in the United States; • difficulties associated with staffing and managing international operations, including differing labor relations; • potential liability under the FCPA, UK Bribery Act, or comparable foreign laws; • business interruptions resulting from geopolitical actions, including war and armed conflict, terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or health epidemics such as COVID-19; and • cyberattacks, which are growing in frequency, sophistication and intensity, and are becoming increasingly difficult to detect.
Accordingly, our future results could be harmed by a variety of factors, including: • economic weakness, including inflation, rising interest rates or political instability in certain non-U.S. economies and markets; • differing and changing regulatory requirements in non-U.S. countries; • challenges enforcing our contractual and intellectual property rights, especially in those non-U.S. countries that do not offer the same level of intellectual property protection as the United States; • difficulties in compliance with non-U.S. laws and regulations; • changes in non-U.S. regulations and customs, tariffs, and trade barriers; • changes in non-U.S. currency exchange rates and currency controls; • changes in a specific country’s or region’s political or economic environment; • trade protection measures, import or export licensing requirements, or other restrictive government actions; • negative consequences from changes in tax laws; • compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; • workforce uncertainty in countries where labor unrest is more common than in the United States; • difficulties associated with staffing and managing international operations, including differing labor relations; 105 Table of Contents • potential liability under the FCPA, UK Bribery Act, or comparable foreign laws; • business interruptions resulting from geopolitical actions, including war and armed conflict, terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or health epidemics; and • cyberattacks, which are growing in frequency, sophistication and intensity, and are becoming increasingly difficult to detect.
We cannot guarantee that we are in compliance with all such applicable data protection laws and regulations and we cannot be sure how these regulations will be interpreted, enforced or applied to our operations.
We cannot guarantee that we or our vendors are in compliance with all such applicable data protection laws and regulations and we cannot be sure how these regulations will be interpreted, enforced or applied to our operations.
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. 79 Table of Contents 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.
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. 75 Table of Contents 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.
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. 73 Table of Contents 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.
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. 70 Table of Contents 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.
If any of our product candidates are approved, they will be subject to ongoing regulatory requirements, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. 82 Table of Contents While healthcare professionals are free to use and prescribe drug products for off-label uses, the FDA strictly regulates manufacturers’ promotional claims of drug products.
If any of our product candidates are approved, they will be subject to ongoing regulatory requirements, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. 77 Table of Contents While healthcare professionals are free to use and prescribe drug products for off-label uses, the FDA strictly regulates manufacturers’ promotional claims of drug products.
In the event that any third-party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable, and infringed by our BBB platform technology, product candidates, or other technologies.
In the event that any third-party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable, and infringed by our TV platform, product candidates, or other technologies.
Risks Related to Our Operations We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. 110 Table of Contents Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract, motivate and retain highly qualified managerial, scientific, and medical personnel.
Risks Related to Our Operations We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. 101 Table of Contents Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract, motivate and retain highly qualified managerial, scientific, and medical personnel.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our common stock. 57 Table of Contents Risk Factor Summary This summary of risks provides an overview of the principal risks we are exposed to. These risks are more fully described below.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our common stock. 56 Table of Contents Risk Factor Summary This summary of risks provides an overview of the principal risks we are exposed to. These risks are more fully described below.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, or results of operations or growth prospects. 109 Table of Contents 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.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, or results of operations or growth prospects. 100 Table of Contents 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.
As stated above, this reform adds uncertainty to the possibility of challenge to our patents in the future. 108 Table of Contents Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist relating to BBB technology and in the fields in which we are developing our product candidates.
As stated above, this reform adds uncertainty to the possibility of challenge to our patents in the future. 99 Table of Contents Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist relating to BBB technology and in the fields in which we are developing our product candidates.
Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our BBB platform technology, product candidates and other technologies.
Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our TV platform, product candidates and other technologies.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patents for our BBB platform technology, product candidates, and other technologies, we also rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to maintain our competitive position.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patents for our TV platform, product candidates, and other technologies, we also rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to maintain our competitive position.
To the extent that the results of the 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, or to conduct additional trials in support of potential approval of our product candidates.
T o the extent that the results of the 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, or to conduct additional trials in support of potential approval of our product candidates.
We receive, generate, and store significant and increasing volumes of sensitive information and business-critical information, including employee and personal data (including protected health information), research and development information, commercial information, and business and financial information. We heavily rely on external security and infrastructure vendors to manage our information technology systems and data centers.
We receive, generate, store, and otherwise process significant and increasing volumes of sensitive information and business-critical information, including employee and personal data (including protected health information), research and development information, commercial information, and business and financial information. We heavily rely on external security and infrastructure vendors to manage our information technology systems and data centers.
If our licensors or licensees fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, our right to develop and commercialize our BBB platform technology and any of our product candidates that are subject of such licensed rights could be adversely affected, and we may not be able to prevent competitors from making, using and selling competing products.
If our licensors or licensees fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, our right to develop and commercialize our TV platform and any of our product candidates that are subject of such licensed rights could be adversely affected, and we may not be able to prevent competitors from making, using and selling competing products.
We may experience difficulties in patient enrollment and retention in our clinical trials for a variety of reasons, including: • public health crises, such as the COVID-19 pandemic; • 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; and • the risk that patients enrolled in clinical trials will not complete such trials, for any reason, including the risk of higher drop-out rates if participants become infected with the COVID-19 virus or other infectious diseases that impact their participation in our trials.
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; 66 Table of Contents • 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; and • the risk that patients enrolled in clinical trials will not complete such trials, for any reason, including the risk of higher drop-out rates if participants become infected with the global virus or other infectious diseases that impact their participation in our trials.
If, in the future, 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.
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.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our BBB platform technology, product candidates or other technologies or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our TV platform, product candidates or other technologies or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
We may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our BBB platform technology, product candidates, and other technologies might assert are infringed by our current or future BBB platform technology, product candidates or other technologies, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our BBB platform technology, product candidates, or other technologies.
We may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our TV platform, product candidates, and other technologies might assert are infringed by our current or future TV platform, product candidates or other technologies, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our TV platform, product candidates, or other technologies.
Furthermore, in some cases, we may not be able to obtain issued claims covering compositions relating to our BBB platform technology, programs and product candidates, as well as other technologies that are important to our business, and instead may need to rely on filing patent applications with claims covering a method of use and/or method of manufacture for protection of such BBB platform technology, programs, product candidates, and other technologies.
Furthermore, in some cases, we may not be able to obtain issued claims covering compositions relating to our TV platform, programs and product candidates, as well as other technologies that are important to our business, and instead may need to rely on filing patent applications with claims covering a method of use and/or method of manufacture for protection of such TV platform, programs, product candidates, and other technologies.
Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. 84 Table of Contents In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.
Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our owned or in-licensed patent rights, allow third parties to commercialize our BBB platform technology, product candidates or other technologies and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our owned or in-licensed patent rights, allow third parties to commercialize our TV platform, product candidates or other technologies and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
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 that render our product candidates obsolete or less attractive; • our competitors may develop platform technologies to deliver large molecule therapeutics across the BBB that render our platform technology obsolete or less attractive; • the product candidates and BBB platform technology that we develop may not be sufficiently covered by intellectual property for which we hold exclusive rights; • the product candidates and BBB platform technology 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; 65 Table of Contents • if a product candidate obtains regulatory approval, we may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate; and • a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payors, if applicable.
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; 62 Table of Contents • 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; and • a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable.
We are a clinical-stage biopharmaceutical company with a limited operating history, focused on developing therapeutics for neurodegenerative diseases, including Alzheimer’s disease, Parkinson’s disease and ALS, and LSDs, 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.
We are a clinical-stage biopharmaceutical company with a limited operating history, focused on developing therapeutics for neurodegenerative diseases, including Alzheimer’s disease, Parkinson’s disease and ALS, 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.
Our most advanced product candidates, BIIB122/DNL151, DNL310, SAR443820/DNL788, eclitasertib (SAR443122/DNL758) , DNL343, and TAK-594/DNL593 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.
Our most advanced product candidates, DNL310, DNL126, BIIB122/DNL151, eclitasertib (SAR443122/DNL758), TAK-594/DNL593, and DNL343 , 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.
If we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering our BBB platform technology, product candidates or other technologies, the defendant could counterclaim that such patent is invalid or unenforceable or raise a defense to infringement. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
If we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering our TV platform, product candidates or other technologies, the defendant could counterclaim that such patent is invalid or unenforceable or raise a defense to infringement. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
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.
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.
If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates or of our current BBB platform technology.
If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates or of our current TV platform.
Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to our patents in such a way that they no longer cover our BBB platform technology, product candidates or other technologies.
Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to our patents in such a way that they no longer cover our TV platform, product candidates or other technologies.
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 early-stage clinical trials.
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.
Further, future government shutdowns or other disruptions to normal operations could impact our ability to access the public markets and obtain the funding necessary to properly capitalize and continue our operations. 91 Table of Contents Risks Related to Our Reliance on Third Parties We depend on collaborations with third parties for the research, development, and commercialization of certain product candidates.
Further, future government shutdowns or other disruptions to normal operations could impact our ability to access the public markets and obtain the funding necessary to properly capitalize and continue our operations. Risks Related to Our Reliance on Third Parties We depend on collaborations with third parties for the research, development, and commercialization of certain product candidates.
We have entered into license agreements with third parties and may need to obtain additional licenses from others to advance our research or allow commercialization of product candidates we may develop or our BBB platform technology. It is possible that we may be unable to obtain additional licenses at a reasonable cost or on reasonable terms, if at all.
We have entered into license agreements with third parties and may need to obtain additional licenses from others to advance our research or allow commercialization of product candidates we may develop or our TV platform. It is possible that we may be unable to obtain additional licenses at a reasonable cost or on reasonable terms, if at all.
Our approach to the treatment of neurodegenerative and LSDs aims to identify and select targets with a genetic link to neurodegenerative and LSDs, as applicable, 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.
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, as applicable, 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.
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. 69 Table of Contents 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.
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.
If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed. We may not be successful in obtaining, through acquisitions, in-licenses, or otherwise, necessary rights to our BBB platform technology, product candidates or other technologies.
If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed. We may not be successful in obtaining, through acquisitions, in-licenses, or otherwise, necessary rights to our TV platform, product candidates or other technologies.
Such claims could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. Third-party claims of intellectual property infringement, misappropriation, or other violation against us, our licensors, or our collaborators may prevent or delay the development and commercialization of our BBB platform technology, product candidates, and other technologies.
Such claims could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. Third-party claims of intellectual property infringement, misappropriation, or other violation against us, our licensors, or our collaborators may prevent or delay the development and commercialization of our TV platform, product candidates, and other technologies.
We are heavily reliant upon licenses to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our BBB platform technology and product candidates.
We are heavily reliant upon licenses to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our TV platform and product candidates.
Collaborations involving our research programs, or any product candidates we may develop, pose the following risks to us: • collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not properly obtain, maintain, enforce, or defend intellectual property or proprietary rights relating to our product candidates or research programs or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property; • collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; • 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; • 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; • collaborators may decide to not pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; 92 Table of Contents • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators may restrict us from researching, developing, or commercializing certain products or technologies without their involvement; • collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates; • we may lose certain valuable rights under circumstances identified in our agreements with our collaborators, including if we undergo a change of control; • collaborators may grant sublicenses to our technology or product candidates or undergo a change of control and the sublicensees or new owners may decide to take the collaboration in a direction which is not in our best interest; • collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how, or intellectual property of the collaborator relating to our products, product candidates, or research programs; • key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators; • collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders, or disrupt our management and business; • if our collaborators do not satisfy their obligations under our agreements with them, or if they terminate our collaborations with them, we may not be able to develop or commercialize product candidates as planned; • collaborations may require us to share in development and commercialization costs pursuant to budgets that we do not fully control and our failure to share in such costs could have a detrimental impact on the collaboration or our ability to share in revenue generated under the collaboration; • collaborations may be terminated in their entirety or with respect to certain product candidates or technologies and, if so terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or technologies, including our BBB platform technology; and • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.
Collaborations involving our research programs, or any product candidates we may develop, pose the following risks to us: • collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations; 84 Table of Contents • collaborators may not properly obtain, maintain, enforce, or defend intellectual property or proprietary rights relating to our product candidates or research programs or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property; • collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; • 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; • 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; • collaborators may decide to terminate or not pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • collaborators may restrict us from researching, developing, or commercializing certain products or technologies without their involvement; • collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates; • we may lose certain valuable rights under circumstances identified in our agreements with our collaborators, including if we undergo a change of control; • collaborators may grant sublicenses to our technology or product candidates or undergo a change of control and the sublicensees or new owners may decide to take the collaboration in a direction which is not in our best interest; • collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how, or intellectual property of the collaborator relating to our products, product candidates, or research programs; • key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators; 85 Table of Contents • collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders, or disrupt our management and business; • if our collaborators do not satisfy their obligations under our agreements with them, or if they terminate our collaborations with them, we may not be able to develop or commercialize product candidates as planned; and • collaborations may require us to share in development and commercialization costs pursuant to budgets that we do not fully control and our failure to share in such costs could have a detrimental impact on the collaboration or our ability to share in revenue generated under the collaboration.
However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our current or future product candidates and our BBB platform technology.
However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our current or future product candidates and our TV platform.
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. • A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, or the perception of its effects, may materially and adversely affect our business, operations, and financial condition.
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. • A pandemic, epidemic, or outbreak of an infectious disease, or the perception of its effects, may materially and adversely affect our business, operations, and financial condition.
If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our BBB platform technology, product candidates and other technologies.
If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our TV platform, product candidates and other technologies.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our BBB platform technology, product candidates, or other technologies, or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our TV platform, product candidates, or other technologies, or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.
Any patents that we own or in-license may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether our BBB platform technology, product candidates or other technologies will be protectable or remain protected by valid and enforceable patents.
Any patents that we own or in-license may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether our TV platform, product candidates or other technologies will be protectable or remain protected by valid and enforceable patents.
Filing, prosecuting, and defending patents on our BBB platform technology, product candidates and other technologies in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
Filing, prosecuting, and defending patents on our TV platform, product candidates and other technologies in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
If we are unable to do so, we may be unable to develop or commercialize the affected product candidates or continue to utilize our existing BBB platform technology, which could harm our business, financial condition, results of operations, and growth prospects significantly.
If we are unable to do so, we may be unable to develop or commercialize the affected product candidates or continue to utilize our existing TV platform, which could harm our business, financial condition, results of operations, and growth prospects significantly.
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 LSDs, where failure rates historically have been higher than in many other disease areas.
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.
To date, we have invested substantially all of our efforts and financial resources to identify, acquire intellectual property for, and develop our BBB platform technology and our programs, including conducting preclinical studies and clinical trials, and providing general and administrative support for these operations.
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.
Developing and, if approved, commercializing our product candidates for treatment of neurodegenerative and LSDs 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.
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.
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 LSDs. 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.
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. 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.
If we need to enter into alternative arrangements, it would delay our product development activities. Our reliance on these third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibilities.
If we need to enter into alternative arrangements, it would delay our product development activities. 86 Table of Contents Our reliance on these third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibilities.
We seek to protect our proprietary position by in-licensing intellectual property and filing patent applications in the United States and abroad relating to our BBB platform technology, programs and product candidates, as well as other technologies that are important to our business.
We seek to protect our proprietary position by in-licensing intellectual property and filing patent applications in the United States and abroad relating to our TV platform, programs and product candidates, as well as other technologies that are important to our business.
It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our BBB platform technology, product candidates, or other technologies, could be found to be infringed by our BBB platform technology, product candidates, or other technologies.
It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our TV platform, product candidates, or other technologies, could be found to be infringed by our TV platform, product candidates, or other technologies.
The fields of discovering treatments for neurodegenerative and LSDs, especially using BBB technology, is highly competitive and dynamic. Due to the focused research and development that is taking place by several companies, including us and our competitors, in these fields, the intellectual property landscape is in flux, and it may remain uncertain in the future.
The fields of discovering treatments for neurodegenerative and lysosomal storage diseases, especially using BBB technology, is highly competitive and dynamic. Due to the focused research and development that is taking place by several companies, including us and our competitors, in these fields, the intellectual property landscape is in flux, and it may remain uncertain in the future.
We cannot assure you that our BBB platform technology, product candidates, and other technologies that we have developed, are developing or may develop in the future will not infringe existing or future patents owned by third parties.
We cannot assure you that our TV platform, product candidates, and other technologies that we have developed, are developing or may develop in the future will not infringe existing or future patents owned by third parties.
Similarly, our potential decisions to delay, terminate, spin out, 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.
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.
As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our BBB platform technology, product candidates, and other technologies may give rise to claims of infringement of the patent rights of others.
As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our TV platform, product candidates, and other technologies may give rise to claims of infringement of the patent rights of others.
Our owned or in-licensed pending and future patent applications may not result in patents being issued which protect our BBB platform technology, product candidates or other technologies or which effectively prevent others from commercializing competitive technologies and product candidates.
Our owned or in-licensed pending and future patent applications may not result in patents being issued which protect our TV platform, product candidates or other technologies or which effectively prevent others from commercializing competitive technologies and product candidates.
In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our BBB platform technology, product candidates, or other technologies may infringe.
In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our TV platform, product candidates, or other technologies may infringe.
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 LSDs, our business, financial condition, results of operations and growth prospects could be materially adversely affected.
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.
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. 90 Table of Contents In addition, in the future once we enter a commercialization phase, our products may be subject to U.S. and foreign export controls, trade sanctions, and import laws and regulations.
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. 83 Table of Contents In addition, if we enter a commercialization phase, our products may be subject to U.S. and foreign export controls, trade sanctions, and import laws and regulations.
For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our BBB platform technology, product candidates, or other technologies.
For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our TV platform, product candidates, or other technologies.
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; 61 Table of Contents • 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, including conditions resulting from rising inflation and interest rates, recent bank failures and instability in the financial services sector, geopolitical uncertainty and instability or war; and • addressing any delays in our clinical trials or other impacts from a pandemic or other global health emergency.
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; 60 Table of Contents • 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; and • addressing any delays in our clinical trials or other impacts from a pandemic or other global health emergency.
Furthermore, other jurisdictions outside the EU are similarly introducing or enhancing privacy and data security laws, rules, and regulations, which could increase our compliance costs and the risks associated with noncompliance.
Furthermore, other jurisdictions outside the EU are similarly introducing or enhancing laws and regulations addressing privacy and data protection and security, which could increase our compliance costs and the risks associated with noncompliance.
Risks Related to the Discovery, Development and Commercialization of Our Product Candidates • We are heavily dependent on the successful development of our BBB 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 LSDs, 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. • The manufacture of our product candidates, particularly those that utilize our BBB platform technology, is complex and we may encounter difficulties in production. • 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. • If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our 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. • 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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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur board of directors administers its cybersecurity risk oversight function directly as a whole, as well as through the audit committee. Our Head of IT is primarily responsible to assess and manage our material risks from cybersecurity threats and has prior work experience in cybersecurity, holds relevant degrees, and current industry recognized cybersecurity certifications.
Biggest changeOur Head of IT is primarily responsible to assess and manage our material risks from cybersecurity threats and has prior work experience in cybersecurity, holds relevant degrees, and has current industry recognized cybersecurity certifications. 112 Table of Contents Our Head of IT oversees our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Our audit committee provides regular updates to the board of directors on such reports; the Head of IT may be called upon to brief the board as well. 122 Table of Contents
Our audit committee provides regular updates to the board of directors on such reports; the Head of IT may be called upon to brief the board as well.
The processes by which our Head of Information Technology is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents includes the following the identification and assessment of assets and assessing potential associated risks, implementation of protective measures, continuous monitoring and detection of unusual or suspicious activities, incident response and recovery management, regular security awareness and training, review and alignment of cybersecurity practices with industry recognized cybersecurity practices, compliance and regulation concerns Our Head of IT provides quarterly briefings to the audit committee regarding our company’s cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, and the like.
The processes by which our Head of IT is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents include the following: the identification and assessment of assets and assessing potential associated risks, implementation of protective measures, continuous monitoring and detection of unusual or suspicious activities, incident response and recovery management, regular security awareness and training, and review and alignment of cybersecurity practices with industry recognized cybersecurity practices, compliance, and regulation concerns.
These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks. 121 Table of Contents Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
We devote significant resources and designate high-level personnel, including our Head of IT and Cybersecurity, to manage the risk assessment and mitigation process.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. We devote significant resources and designate high-level personnel, including our Head of IT and Cybersecurity, to manage the risk assessment and mitigation process.
Removed
Our Head of IT oversees our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Added
Our board of directors administers its cybersecurity risk oversight function directly as a whole, as well as through the audit committee.
Added
Our Head of IT provides quarterly briefings to the audit committee regarding our company’s cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, and the like.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease ("SLC Lease") will commence when the space is available for use, which is anticipated to be during 2024, and is expected to terminate in 2039. We have two five year renewal period options to extend the lease for a further ten years at the end of the lease term.
Biggest changeWe have two five-year renewal period options to extend the lease for a further ten years at the end of the lease term. Switzerland Our European headquarters encompasses office space in a shared facility located in Zürich, Switzerland. The current lease agreement is through December 2025, with the option to renew.
PROPERTIES Below is a summary of our key leased properties as of December 31, 2023 : California Our corporate headquarters are located in South San Francisco, California, comprising 148,020 square feet of office, research and development, engineering and laboratory space pursuant to a lease agreement which commenced on April 12, 2019 and expires on April 30, 2029, with an option to extend for a period of ten years.
PROPERTIES Below is a summary of our key leased properties as of December 31, 2024 : California Our corporate headquarters are located in South San Francisco, California, comprising 148,020 square feet of office, research and development, engineering, and laboratory space pursuant to a lease agreement which commenced on April 12, 2019 and expires on April 30, 2029, with an option to extend for a period of ten years.
This facility houses the majority of our personnel. Utah The build-out of approximately 60,000 rentable square feet of office, lab and clinical manufacturing premises in Salt Lake City, Utah ("SLC Facility") is in process.
This facility houses the majority of our personnel. Utah We have substantially completed the build-out of approximately 60,000 rentable square feet of office, lab, and clinical manufacturing premises in Salt Lake City, Utah ("SLC Facility"). The lease legally commenced on April 1, 2024, and is expected to terminate in 2039.
Switzerland Our European headquarters encompasses office space in a shared facility located in Zürich, Switzerland. The current lease agreement is through December 2024, with the option to renew. The lease terms provide flexibility to increase our space allocation on short term notice. We believe that our existing premises are adequate for our current needs.
The lease terms provide flexibility to increase our space allocation on short term notice. We believe that our existing premises are adequate for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 123 Table of Contents PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 113 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 123 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 124 Item 6. [Reserved] 126 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 127 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 145 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 113 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 114 Item 6. [Reserved] 116 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 117 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 133 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe are relying on the exemptions from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering, and we expect to file a Form D with respect to the private placement.
Biggest changeWe are relying on the exemptions from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering, and we expect to file a Form D with respect to the private placement. 115 Table of Contents Use of Proceeds from Registered Securities In October 2022, we sold 11,933,962 shares of common stock (inclusive of shares sold pursuant to an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of $26.50 per share for aggregate net proceeds of approximately $296.2 million.
The following graph compares the cumulative total stockholder return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index. An investment of $100 is assumed to have been made in our common stock and each index on December 31, 2018 and its relative performance is tracked through December 31, 2023.
The following graph compares the cumulative total stockholder return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index. An investment of $100 is assumed to have been made in our common stock and each index on December 31, 2019 and its relative performance is tracked through December 31, 2024.
The stockholder returns shown on the graph below are based on historical results and are not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 124 Table of Contents Recent Sales of Unregistered Securities On February 27, 2024, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain existing accredited investors for the private placement of (i) 3,244,689 shares of our common stock at a price of $17.07 per share and (ii) pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock (the “Pre-Funded Warrants”) at a purchase price of $17.06 per Pre-Funded Warrant, resulting in anticipated gross proceeds of $499.7 million.
The stockholder returns shown on the graph below are based on historical results and are not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 114 Table of Contents Recent Sales of Unregistered Securities On February 27, 2024, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain existing accredited investors for the private placement of (i) 3,244,689 shares of our common stock at a price of $17.07 per share and (ii) pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock (the “Pre-Funded Warrants”) at a purchase price of $17.06 per Pre-Funded Warrant.
Holders of Common Stock As of February 20, 2024, there were approximately 144 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Holders of Common Stock As of February 21, 2025, there were approximately 145 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
The Pre-Funded Warrants are exercisable at an exercise price of $0.01 and will be exercisable until exercised in full. The holders of Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.
The holders of Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.
We intend to use the net proceeds from the private placement to support our ongoing research and development activities, the acceleration and expansion of its proprietary BBB-crossing TV technology, as well as general corporate purposes and working capital.
We intend to use the net proceeds from the private placement to support our ongoing research and development activities, the acceleration and expansion of our proprietary BBB-crossing TV technology, as well as general corporate purposes and working capital. We have invested the funds received in short-term and long-term, interest-bearing investment-grade securities and government securities.
The holders of Pre-Funded Warrants may increase or decrease such percentage not in excess of 19.99%, in the case of an increase, by providing at least 61 days’ prior notice to the Company. The private placement is expected to close on February 29, 2024, subject to customary closing conditions.
The holders of Pre-Funded Warrants may increase or decrease such percentage not in excess of 19.99%, in the case of an increase, by providing at least 61 days’ prior notice to the Company. We have also granted a certain investor certain director nomination and additional registration rights, subject to certain exceptions, conditions, and limitations.
We have invested or plan to invest the funds received in short-term, interest-bearing investment-grade securities and government securities. Issuer Purchases of Equity Securities Not applicable.
There have been no material changes in the planned use of the net proceeds from the follow-on public offering as described in the Registration Statement. We have invested the funds received in short-term and long-term, interest-bearing investment-grade securities and government securities. Issuer Purchases of Equity Securities Not applicable.
We have agreed to file a registration statement for purposes of registering the shares of common stock sold in the private placement (including the shares of common stock underlying the Pre-Funded Warrants). We have also granted a certain investor certain director nomination and additional registration rights, subject to certain exceptions, conditions, and limitations.
We filed a registration statement to register the shares of common stock sold in the private placement (including the shares of common stock underlying the Pre-Funded Warrants) on March 22, 2024.
Removed
Use of Proceeds from Registered Securities In October 2022, we sold $11.9 million shares of common stock (inclusive of shares sold pursuant to an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of $26.50 per share for aggregate net proceeds of approximately $296.2 million. 125 Table of Contents There have been no material changes in the planned use of the net proceeds from the follow-on public offering as described in the Registration Statement.
Added
The private placement closed on February 29, 2024, at which time we received gross proceeds of $499.7 million. The Pre-Funded Warrants are exercisable at an exercise price of $0.01 and will be exercisable until exercised in full.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur clinic al-stage small molecule programs are as follows: • BIIB122/DNL151 (LRRK2), our LRRK2 inhibitor program, being developed in collaboration with Biogen, to address Parkinson’s disease; • DNL343 (eIF2B), our eIF2B activator program to address diseases such as ALS and FTD; 127 Table of Contents • SAR443820/DNL788 (CNS-penetrant RIPK1 inhibitor) , our CNS-penetrant RIPK1 inhibitor program, partnered with Sanofi, to address neurological diseases such as MS and Alzheimer's disease; and • Eclitasertib (SAR443122/DNL758, peripheral RIPK1 inhibitor) , a second non-CNS penetrant RIPK1 inhibitor, partnered with Sanofi, to address peripheral inflammatory diseases such as UC.
Biggest changeOu r clinical programs are as follows: • Tividenofusp alfa (DNL310, ETV:IDS), composed of IDS fused to TV, is designed to deliver IDS into cells and tissues throughout the body, including the brain by crossing the BBB, with the goal of addressing the behavioral, cognitive, and physical manifestations of MPS II ; • DNL126 (ETV:SGSH), composed of 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; • TAK-594/DNL593 (PTV:PGRN), composed of PGRN fused to TV, is designed to restore PGRN levels in the brain with the goal of treating FTD-GRN and is being developed in collaboration with Takeda; • BIIB122/DNL151, our small molecule LRRK2 inhibitor program, is being developed in collaboration with Biogen, to address PD; • DNL343, our small molecule eIF2B activator program, is under evaluation in ALS; and • Eclitasertib (SAR443122/DNL758), a peripheral and non-CNS penetrant small molecule RIPK1 inhibitor, is being developed by Sanofi, to address peripheral inflammatory diseases such as UC.
Years ended December 31, 2022 and 2021 Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our 2022 Annual Report on Form 10-K for a discussion of the cash flows for the years ended December 31, 2022 and 2021.
Years ended December 31, 2023 and 2022 Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our 2023 Annual Report on Form 10-K for a discussion of the cash flows for the years ended December 31, 2023 and 2022.
Comparison of the years ended December 31, 2022 and 2021 Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” in our 2022 Annual Report on Form 10-K for a discussion of the results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Comparison of the years ended December 31, 2023 and 2022 Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” in our 2023 Annual Report on Form 10-K for a discussion of the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We expect to continue to incur significant expenses and operating losses as we advance our current clinical stage programs through healthy volunteer and patient trials; broaden and improve our BBB platform technology; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.
We expect to continue to incur significant expenses and operating losses as we advance our current clinical stage programs through healthy volunteer and patient trials; broaden and improve our TV platform; acquire, discover, validate and develop additional product candidates; obtain, maintain, protect and enforce our intellectual property portfolio; and hire additional personnel.
Under the terms of the Biogen Collaboration Agreement, we received $560.0 million in upfront payments in October 2020. In April 2023, Biogen exercised its option to license our ATV:Abeta program and we received additional consideration of $5.0 million for an option exercise fee.
Under the terms of the Biogen Collaboration Agreement, we received $560.0 million in upfront payments in October 2020. 121 Table of Contents In April 2023, Biogen exercised its option to license our ATV:Abeta program and we received additional consideration of $5.0 million for an option exercise fee.
Research and development expenses incurred by us for the discovery and development of our product candidates and BBB platform technology include: • external research and development expenses, including: – expenses incurred under arrangements with third parties, such as contract research organizations ("CROs"), preclinical testing organizations, contract development and manufacturing organizations ("CDMOs"), academic and non-profit institutions and consultants; – expenses to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use; 135 Table of Contents – fees related to our license and collaboration agreements; • personnel related expenses, including salaries, benefits and stock-based compensation expense; and • other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.
Research and development expenses incurred by us for the discovery and development of our product candidates and TV platform include: • external research and development expenses, including: – expenses incurred under arrangements with third parties, such as contract research organizations ("CROs"), preclinical testing organizations, contract development and manufacturing organizations ("CDMOs"), academic and non-profit institutions and consultants; – expenses to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use; – fees related to our license and collaboration agreements; • personnel related expenses, including salaries, benefits and stock-based compensation expense; and • other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, we had cash, cash equivalent s and marketable securities in the amount of $1.03 billion . We fund our operations primarily with the proceeds from the sale of common stock and payments received from collaboration partners, including those received under agreements with Takeda, Sanofi, and Biogen.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2024, we had cash, cash equivalent s and marketable securities in the amount of $1.19 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.
This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of: • our ability to add and retain key research and development personnel; • our ability to establish an appropriate safety profile with IND-enabling toxicology studies; • our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates; • our successful enrollment in and completion of clinical trials; • the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations; • our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our molecules; • our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved; • the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; • our ability to obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates if and when approved; • our receipt of marketing approvals from applicable regulatory authorities; 136 Table of Contents • our ability to commercialize products, if and when approved, whether alone or in collaboration with others; and • the continued acceptable safety profiles of the product candidates following approval.
This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of: • our ability to add and retain key research and development and commercial, sales and marketing personnel; • our ability to establish an appropriate safety profile with IND-enabling toxicology studies; • our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates; • our successful enrollment in and completion of clinical trials; • the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations; • our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our molecules; • our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved; • the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; • our ability to obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates if and when approved; • our receipt of marketing approvals from applicable regulatory authorities; • our ability to commercialize products, if and when approved, whether alone or in collaboration with others; and • the continued acceptable safety profiles of the product candidates following approval. 125 Table of Contents A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate.
It is challenging to predict the nature, timing and estimated long-range costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. This is made more challenging by events outside of our control, such as the COVID-19 pandemic and increased geopolitical uncertainty.
It is challenging to predict the nature, timing and estimated long-range costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. This is made more challenging by events outside of our control, such as global pandemics and increased geopolitical uncertainty.
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 and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees.
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-commercial preparatory activities, and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees.
A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis once a program has commenced late-stage IND-enabling studies. Program expenses include expenses associated with our most advanced product candidates and the discovery and development of backup or next-generation molecules. We also track external expenses associated with our TV platform.
A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis once a program has commenced late-stage IND-enabling studies. 124 Table of Contents Program expenses include expenses associated with our most advanced product candidates and the discovery and development of backup or next-generation molecules.
Further details regarding the terms of the arrangements between us and the F-star entities, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." Through December 31, 2023 we have recognized consideration paid under the F-star Purchase Agreement of $49.8 million as research and development expenses consisting of up-front, preclinical and clinical contingent consideration payments, of which $30.0 million of research and development expense was recognized in the year ended December 31, 2023 for a contingent consideration payment triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.
Further details regarding the terms of the arrangements between us and the F-star entities, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." Through December 31, 2024 we have recognized consideration paid under the F-star Purchase Agreement of $49.8 million as research and development expenses consisting of upfront, preclinical and clinical contingent consideration payments, including a $30.0 million contingent consideration payment triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program.
We have sold common stock in public offerings and stock purchase agreements with Takeda and Biogen. Through December 31, 2023 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022.
We have sold common stock and other securities in public offerings, a private placement, and stock purchase agreements with Takeda and Biogen. Through December 31, 2024 we have obtained aggregate net proceeds of approximately $754.4 million from public offerings of our common stock, including $296.2 million obtained through the sale of 11.9 million shares of common stock in October 2022.
We have an accumulated deficit of $1.12 billion through December 31, 2023. We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.
We have an accumulated deficit of $1.54 billion as of December 31, 2024. We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.
We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. As actual costs become known, we adjust our accrued estimates.
We estimate the amount of work completed based on information received from internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. As actual costs become known, we adjust our accrued estimates.
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 expect to increase our administrative headcount as we advance our product candidates through clinical development, which will increase our general and administrative expenses.
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 expect to increase our administrative headcount as we prepare for commercialization of Tividenofusp alfa (DNL310, ETV:IDS) and advance our other product candidates through clinical development, which will increase our general and administrative expenses.
Further details regarding the terms of the agreement between us and Sanofi, and historic payments between the parties under the agreement, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." We have recognized collaboration revenue of $25.0 million, $53.4 million and $15.0 million associated with the Sanofi Collaboration Agreement in the years ended December 31, 2023, 2022 and 2021, respectively, and recorded no receivable from Sanofi on the Consolidated Balance Sheets as of December 31, 2023 and 2022.
Further details regarding the terms of the agreement between us and Sanofi, and historic payments between the parties under the agreement, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." We recognized no collaboration revenue associated with the Sanofi Collaboration Agreement in the year ended December 31, 2024, and we recognized collaboration revenue of $25.0 million and $53.4 million in the years ended December 31, 2023 and 2022, respectively.
Our future funding requirements, including changes to and new commitments, will depend on many factors, including: • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; 141 Table of Contents • the progress of the development efforts of third parties with whom we have entered into license and collaboration agreements; • our ability to maintain our current research and development programs and to establish new research and development, license or collaboration arrangements; • our ability and success in securing manufacturing relationships with third parties or in establishing and operating a manufacturing facility; • the costs involved in prosecuting, defending and enforcing patent claims and other intellectual property claims; • the cost and timing of regulatory approvals; • our efforts to enhance operational, financial and information management systems and hire additional personnel, including personnel to support development of our product candidates; and • the costs and ongoing investments to in-license and/or acquire additional technologies.
These commitments are more fully described in Note 4, "Acquisition, License Agreement and Research and Development Funding Collaboration Agreement" and Note 7, "Commitments and Contingencies" to the consolidated financial statements included in Item 8. of this Annual Report on Form 10-K . 129 Table of Contents Our future funding requirements, including changes to and new commitments, will depend on many factors, including: • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • the progress of the development efforts of third parties with whom we have entered into license and collaboration agreements; • our ability to maintain our current research and development programs and to establish new research and development, license or collaboration arrangements; • our ability and success in securing manufacturing relationships with third parties or in establishing and operating a manufacturing facility; • the costs involved in prosecuting, defending and enforcing patent claims and other intellectual property claims; • the cost and timing of regulatory approvals; • our efforts to enhance operational, financial and information management systems and hire additional personnel, including personnel to support development of our product candidates; and • the costs and ongoing investments to in-license and/or acquire additional technologies.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” and elsewhere in this report. Overview Our goal is to discover, develop and deliver therapeutics to defeat degeneration.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” and elsewhere in this report.
We currently do not need commercial manufacturing capacity. 132 Table of Contents License and Collaboration Agreements Collaborations and partnering are central components of our strategy to build, develop and commercialize our portfolio of product candidates. We have numerous arrangements with biopharmaceutical companies, technology companies, academic institutions, foundations, and patient-focused data companies.
License and Collaboration Agreements Collaborations and partnering are central components of our strategy to build, develop and commercialize our portfolio of product candidates. We have numerous arrangements with biopharmaceutical companies, technology companies, academic institutions, foundations, and patient-focused data companies.
They also reflect our estimates of research and development expense as discussed above. As such, a change in estimates or judgments by either our partner or us can result in a change to a reimbursement amount. To date, there have been no material true ups from estimated to actual reimbursements owed or owing.
As such, a change in estimates or judgments by either our partner or us can result in a change to a reimbursement amount. To date, there have been no material true ups from estimated to actual reimbursements owed or owing.
Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our business.
To date, there have been no material true ups to R&D funding recognition. Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our business.
In connection with the entry into the F-star Collaboration Agreement, we also purchased an option to acquire all of the outstanding shares of F-star Gamma pursuant to a pre-negotiated buy-out option agreement.
The goal of the collaboration was the development of Fcabs to enhance delivery of therapeutics across the BBB into the brain. In connection with the entry into the F-star Collaboration Agreement, we also purchased an option to acquire all of the outstanding shares of F-star Gamma pursuant to a pre-negotiated buy-out option agreement.
Although we do not expect our estimates to be materially different from amounts actually incurred, incomplete or inaccurate data from vendors could impact our understanding of the status and timing of services performed which could result in us reporting expenses that are too high or too low in any particular period. 144 Table of Contents In some cases, expense is recorded using an underlying assumption of the progress to completion of specific activities.
Although we do not expect our estimates to be materially different from amounts actually incurred, incomplete or inaccurate data from vendors could impact our understanding of the status and timing of services performed which could result in us reporting expenses that are too high or too low in any particular period.
For example, costs may be recognized based on the passage of time for activities that span reporting periods. If the provision of services is not linear then this assumption could impact the amount of expense recognized.
In some cases, expense is recorded using an underlying assumption of the progress to completion of specific activities. For example, costs may be recognized based on the passage of time for activities that span reporting periods. If the provision of services is not linear then this assumption could impact the amount of expense recognized.
The decision was made based on clinical validation and prioritization of our TV-enabled platforms for brain delivery of large molecules; and ◦ In February 2024, we announced that on February 27, 2024 we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,689 shares of our common stock at a price of $17.07 per share and pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting in anticipated gross proceeds of approximately $499.7 million.
The decision was made based on clinical validation and prioritization of our TV-enabled platforms for brain delivery of large molecules; ◦ In February 2024, we announced that the Phase 2 HIMALAYA study evaluating SAR443820/DNL788 in participants with ALS did not meet the primary endpoint of change in ALS Functional Rating Scale-Revised ("ALSFRS-R"); ◦ In February 2024, we announced that we entered into a securities purchase agreement with certain existing accredited investors for the private placement of 3,244,689 shares of our common stock at a price of $17.07 per share and pre-funded warrants to purchase an aggregate of 26,046,065 shares of our common stock at a purchase price of $17.06 per pre-funded warrant, resulting in net proceeds of approximately $499.3 million.
These expenses include external expenses incurred by us relating to our Takeda Collaboration Agreement, Sanofi Collaboration Agreement and Biogen Collaboration Agreement. All external costs associated with earlier stage programs, or that benefit the entire portfolio, are tracked as a group. We also incur personnel and other operating expenses for our research and development programs which are presented in aggregate.
We also track external expenses associated with our TV platform. These expenses include external expenses incurred by us relating to our Takeda Collaboration Agreement, Biogen Collaboration Agreement and Sanofi Collaboration Agreement. All external costs associated with earlier stage programs, or that benefit the entire portfolio, are tracked as a group.
To date, there have been no material true ups to revenue as a result of changes in the satisfaction of performance obligations.
To date, there have been no material true ups to revenue as a result of changes in the key judgments detailed below.
Cash Flows The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below (in thousands): Year Ended December 31, 2023 2022 2021 Net cash used in operating activities $ (357,991) $ (244,716) $ (211,389) Net cash provided by (used in) investing activities 249,308 (141,387) (21,626) Net cash provided by financing activities 17,820 310,670 19,348 Net decrease in cash, cash equivalents and restricted cash $ (90,863) $ (75,433) $ (213,667) Net Cash Used In Operating Activities During the year ended December 31, 2023, net cash used in operating activities was $358.0 million, which consisted of a net loss of $145.2 million, adjusted by non-cash items primarily related to stock-based compensation expense, depreciation and amortization, net amortization of premiums and (discounts) on marketable securities and non-cash rent expenses.
Cash Flows The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below (in thousands): Year Ended December 31, 2024 2023 2022 Net cash used in operating activities $ (347,694) $ (357,991) $ (244,716) Net cash provided by (used in) investing activities (88,756) 249,308 (141,387) Net cash provided by financing activities 484,304 17,820 310,670 Net increase (decrease) in cash, cash equivalents and restricted cash $ 47,854 $ (90,863) $ (75,433) Net Cash Used In Operating Activities During the year ended December 31, 2024, net cash used in operating activities was $347.7 million, which consisted of a net loss of $422.8 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 rent expenses, and the non-cash gain on divestiture of small molecule programs.
These research and development expenses include the conduct of preclinical studies and clinical trials, contract manufacturing activities and consulting services. The measurement of these research and development expenses can impact the measurement of research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss , and of prepaid assets and accrued liabilities on the Consolidated Balance Sheets .
The measurement of these research and development expenses can impact the measurement of research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss , and of prepaid assets and accrued liabilities on the Consolidated Balance Sheets .
The increase in collaboration revenue of $222.0 million was primarily due to $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program, partially offset by a decrease of $41.9 million in revenue earned under the Takeda Collaboration Agreement, as well as a decrease of $28.4 million in milestone revenue earned under the Sanofi Collaboration Agreement.
The decrease in collaboration revenue of $330.5 million was primarily due to $293.9 million in revenue recognized in April 2023 under the Biogen Collaboration Agreement as a result of Biogen exercising its option to license our ATV:Abeta program, as well as decreases due to revenue earned under the Takeda and Sanofi Collaboration Agreements of $10.0 million and $25.0 million, respectively.
Further details regarding the terms of the agreement between us and Takeda, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." We recognized collaboration revenue of $10.0 million, $51.9 million and $29.9 million associated with the Takeda Collaboration Agreement in the years ended December 31, 2023, 2022 and 2021, respectively, and offsets to research and development expense for cost sharing reimbursements of $12.2 million, $18.2 million and $13.7 million in the years ended December 31, 2023, 2022, and 2021, respectively.
Further details regarding the terms of the agreement between us and Takeda, and historic payments between the parties under the agreements, are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." We did not recognize collaboration revenue under the Takeda Collaboration Agreement in the year ended December 31, 2024, and we recognized collaboration revenue of $10.0 million and $51.9 million in the years ended December 31, 2023 and 2022, respectively.
Research and development expenses also include reimbursements owed or owing to a collaboration partner to satisfy cost sharing requirements. These reimbursement amounts are estimated based, in part, on data received from our collaboration partner, which may include a certain level of estimation or judgments made by that partner.
These reimbursement amounts are estimated based, in part, on data received from our collaboration partner, which may include a certain level of estimation or judgments made by that partner. They also reflect our estimates of research and development expense as discussed above.
Our existing commitments primarily relate to our obligations under existing lease agreements, and certain clinical and manufacturing agreements, including the DMSA with Lonza Sales AG ("Lonza") for the development and manufacture of biologic products. As of December 31, 2023, operating lease liabilities were $52.2 million .
Our existing commitments primarily relate to our obligations under existing lease agreements, and certain clinical and manufacturing agreements, including the DMSA with Lonza Sales AG ("Lonza") for the development and manufacture of biologic products. A s of December 31, 2024, the operating lease liability was $45.0 million and the finance lease liability was $9.3 million.
Through December 31, 2023, we had received milestone payments of $100.0 million and we had not recorded any product sales under the Sanofi Collaboration Agreement. 133 Table of Contents Takeda In January 2018, we entered into the Takeda Collaboration Agreement pursuant to which we granted Takeda an option to develop and commercialize, jointly with us, our ATV:TREM2, PTV:PGRN and ATV:BACE1/Tau programs, the latter of which was later replaced with our ATV:Tau program.
Takeda In January 2018, we entered into the Takeda Collaboration Agreement pursuant to which we granted Takeda an option to develop and commercialize, jointly with us, our ATV:TREM2, PTV:PGRN and ATV:BACE1/Tau programs, the latter of which was later replaced with our ATV:Tau program.
Under stock purchase agreements with collaboration partners we have received a further $575.0 million through December 31, 2023 . I n February 2022, we established a registered “at-the-market” facility for the sale of up to 400.0 million of shares of common stock from time to time by entering into an equity distribution agreement with Goldman Sachs & Co.
I n February 2025, we established a registered “at-the-market” facility for the future sale of up to $400.0 million of shares of common stock from time to time by entering into an equity distribution agreement with Goldman Sachs & Co. LLC and Leerink Partners LLC as sales agents.
Revenue Recognition We recognize revenue associated with our collaboration arrangements, which may require us to exercise considerable judgment in estimating revenue to be recognized, including judgments made on day one accounting and judgments associated with the amount of revenue to be recognized over time as performance obligations are satisfied.
Revenue Recognition We recognize revenue associated with our collaboration arrangements, which may require us to exercise considerable judgment in estimating revenue to be recognized, including judgments made on day one accounting and judgments associated with the amount of revenue to be recognized over time as performance obligations are satisfied. 131 Table of Contents Significant judgment is required to apply the authoritative accounting guidance at the outset of a collaboration arrangement, and over time, and the determinations including judgment are highly subjective and can differ between arrangement based on specific contractual terms.
We do not expect to generate any product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if, either will occur. 140 Table of Contents We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we expand our research and development activities and continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products.
We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we expand our research and development activities and continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products.
Further details regarding the terms of the agreements between us and Biogen are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." In relation to the Biogen Collaboration Agreement, we have recognized related party collaboration revenue of $295.5 million, $3.1 million, and $3.7 million in the years ended December 31, 2023, 2022 and 2021, respectively, related party research and development expense of $17.7 million and $8.2 million for cost sharing payments to Biogen in the year ended December 31, 2023 and 2022, respectively, and a related party offset to research and development expense as a result of cost sharing reimbursements from Biogen of $6.5 million in the year ended December 31, 2021.
Further details regarding the terms of the agreements between us and Biogen are included in this Annual Report on Form 10-K in the section titled "Business - Licenses and Collaborations." We did not recognize any collaboration revenue under the Biogen Collaboration Agreement in the year ended December 31, 2024, and we recognized related party collaboration revenue of $295.5 million, and $3.1 million in the years ended December 31, 2023 and 2022, respectively.
Collaboration revenue. Collaboration revenue was $330.5 million for the year ended December 31, 2023 compared to $108.5 million for the year ended December 31, 2022.
Collaboration revenue. There was no collaboration revenue for the year ended December 31, 2024 and $330.5 million for the year ended December 31, 2023.
Further, in the normal course of business, we enter into various firm purchase commitments primarily related to research and development activities. While the lease obligations span multiple years, the majority of the purchase commitments with Lonza and other clinical and manufacturing agreements are due within twelve months, with some spanning several years.
While the lease obligations span multiple years, the majority of the purchase commitments with Lonza and other clinical and manufacturing agreements are due within twelve months, with some spanning several years.
We recorded receivables of $2.7 million and $8.9 million from Takeda as of December 31, 2023 and 2022, respectively. Through December 31, 2023, we have received $65.0 million in milestone payments and $10.0 million of option exercise fees from Takeda, and we have not recorded any product sales under the Takeda Collaboration Agreement.
Through December 31, 2024, we have received $65.0 million in milestone payments and $10.0 million of option exercise fees from Takeda, and we have not recorded any product sales under the Takeda Collaboration Agreement. F-star In August 2016, we entered into the F-star Collaboration Agreement with the F-star entities.
Under the SLC lease which was executed in April 2023, we have future undiscounted lease payments totaling approximately $13.4 million. Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments of $74.0 million as of December 31, 2023, with certain amounts subject to cost sharing with Takeda.
Under the DMSA with Lonza, and certain other clinical and manufacturing agreements, we had total non-refundable purchase commitments of $63.0 million as of December 31, 2024, with certain amounts subject to cost sharing with Takeda.
We have recorded cost sharing payables of $3.2 million and $4.4 million on the Consolidated Balance Sheet as of December 31, 2023 and 2022, respectively. Through December 31, 2023, we had earned $5.0 million in option fee payments but had not recorded any milestone revenue or product sales under the Biogen Collaboration Agreement.
Through December 31, 2024, we have earned $5.0 million in option fee payments but have not recorded any milestone revenue or product sales under the Biogen Collaboration Agreement.
Pursuant to the terms of the Takeda Collaboration Agreement, we also entered into the Purchase Agreement with Takeda in January 2018, pursuant to which we sold 4,214,559 shares of our common stock to Takeda for an aggregate purchase price of $110.0 million.
Pursuant to the terms of the Takeda Collaboration Agreement, we also entered into the Purchase Agreement with Takeda in January 2018, pursuant to which we sold 4,214,559 shares of our common stock to Takeda for an aggregate purchase price of $110.0 million. 122 Table of Contents In November 2021 and December 2021, Takeda exercised its options for the PTV:PGRN and ATV:TREM2 programs, respectively, subsequent to which we have shared equally in the development costs for the programs.
Net Cash Provided By (Used In) Investing Activities During the year ended December 31, 2023, net cash provided by investing activities was $249.3 million, which consisted of $2.1 billion in proceeds from the maturities and sales of marketable securities, partially offset by $1.8 billion of purchases of marketable securities, and $12.9 million capital expenditures to purchase property and equipment. 142 Table of Contents Net Cash Provided By Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $17.8 million, which consisted of proceeds from the exercise of options to purchase common stock and purchases of ESPP shares.
Cash used in operating activities was also driven by changes in our operating assets and liabilities. 130 Table of Contents Net Cash Provided By (Used In) Investing Activities During the year ended December 31, 2024, net cash used in investing activities was $88.8 million, which consisted of $1.23 billion of purchases of marketable securities, and $15.9 million capital expenditures to purchase property and equipment, partially offset by $1.16 billion in proceeds from the maturities of marketable securities.
The following table summarizes key information about our clinical stage programs: Program Product Candidate Clinical Study(ies) Indication Operational Control ETV:IDS Tividenofusp alfa, or DNL310 Ph 1/2 Hunter syndrome (MPS II) Denali Ph 2/3 PTV:PGRN TAK-594/DNL593 Ph 1/2 (paused) 1 FTD-GRN Joint with Takeda ETV:SGSH DNL126 Ph 1/2 Sanfilippo syndrome Type A (MPS IIIA) Denali LRRK2 BIIB122/DNL151 Ph 2a (planned) Parkinson's disease Denali Ph 2b Joint with Biogen eIF2B DNL343 Ph 1b ALS Denali Ph 2/3 ALS Joint with Healey Center RIPK1 (CNS-penetrant) SAR443820/DNL788 Ph 2 (closing) 2 ALS Sanofi Ph 2 MS Sanofi RIPK1 (Peripheral) Eclitasertib, or SAR443122/DNL758 Ph 2 UC Sanofi __________________________________________________ (1) Study has been voluntarily paused in order to implement protocol modifications and is expected to resume this year.
The following table summarizes key information about our clinical stage programs: 117 Table of Contents Program Product Candidate Clinical Study(ies) Indication Operational Control ETV:IDS tividenofusp alfa, or DNL310 Ph 1/2 Hunter syndrome (MPS II) Denali Ph 2/3 ETV:SGSH DNL126 Ph 1/2 Sanfilippo syndrome Type A (MPS IIIA) Denali PTV:PGRN TAK-594/DNL593 Ph 1/2 FTD-GRN Joint with Takeda LRRK2 BIIB122/DNL151 Ph 2a Parkinson's disease Denali Ph 2b Joint with Biogen eIF2B DNL343 Ph 2/3 ALS Joint with Healey Center RIPK1 (Peripheral) eclitasertib, or SAR443122/DNL758 Ph 2 UC Sanofi 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.
Pursuant to our collaboration agreements with Takeda, Sanofi and Biogen, through December 31, 2023 we have received upfront, option and milestone payments of $115.0 million , $225.0 million , and $560.0 million , respectively, and have also received $41.3 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and $13.7 million in specified reimbursements from Sanofi.
Pursuant to our collaboration and research and development funding agreements with Takeda, Sanofi and Biogen and an unrelated third party, through December 31, 2024 we have received upfront, option and milestone payments of $115.0 million , $225.0 million , $565.0 million and $25.0 million , respectively, and have also received $48.6 million and $16.2 million of gross cost sharing reimbursements from Takeda and Biogen, respectively, and received $13.7 million in specified reimbursements from Sanofi. 128 Table of Contents Future Funding Requirements and Commitments To date, we have not generated any product revenue.
We have funded our operations primarily from the issuance and sale of convertible preferred stock, the sale of common stock in public offerings, and payments received from our collaboration agreements with Takeda, Sanofi and Biogen. We have incurred significant operating losses to date and expect to continue to incur operating losses for the foreseeable future.
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 and funding agreements with Takeda, Sanofi, Biogen and other third parties.
In addition, Biogen agreed to waive the remaining option and rights of first negotiation under the ROFN and Option Agreement; and ◦ In February 2024, we announced the execution of a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize to evaluate safety and biomarkers associated with BIIB122 in participants with Parkinson’s disease and confirmed pathogenic variants of LRRK2.
In the second quarter of 2024, we finalized the protocol amendment and dosing in the Phase 1/2 study is ongoing. • BIIB122/DNL151 (LRRK2) ◦ In February 2024, we announced that we executed a Collaboration and Development Funding Agreement in January 2024 with a third party related to a global Phase 2a study of BIIB122/DNL151, which we plan to solely operationalize, to evaluate safety and biomarkers associated with BIIB122 (DNL151) in participants with LRRK2-associated Parkinson’s disease (LRRK2-PD).
Of these milestones, we recognized $6.3 million as research and development expense as incurred after cost sharing reimbursements from Biogen in the year ended December 31, 2022. We recognized no expenses under this agreement in the years ended December 31, 2023 and 2021.
We have recognized $18.8 million of research and development expense, net of cost sharing reimbursements from Biogen, including $6.3 million in the year ended December 31, 2022.
This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024, and the remainder will be triggered based on time and operational milestones in the study. Biogen will continue to conduct the ongoing global Phase 2b LUMA study in early-stage Parkinson’s disease. Denali and Biogen will co-commercialize BIIB122/DNL151 assuming regulatory approval.
This agreement includes committed funding of $75.0 million, of which $12.5 million was received in January 2024 and $12.5 million was received in July 2024, with the remainder to be triggered based on operational milestones in the study.
General and administrative expenses . General and administrative expenses were $103.4 million for the year ended December 31, 2023 compared to $90.5 million for the year ended December 31, 2022.
Research and development expenses. Research and development expenses were $396.4 million for the year ended December 31, 2024 compared to $423.9 million for the year ended December 31, 2023.
To date, there have been no material true ups from estimated to actual external research and development expenses. However, w e expect that the level of judgment in estimating research and development expenses may increase over time as we are entering later stage, more extensive, clinical trials.
However, w e expect that the level of judgment in estimating research and development expenses may increase over time as we are entering later stage, more extensive, clinical trials. 132 Table of Contents Research and development expenses also include reimbursements owed or owing to a collaboration partner to satisfy cost sharing requirements.
The third party will be eligible to receive low single-digit royalties from Denali on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease, with royalty amounts varying based on the scope of the label . • SAR443820/DNL788 and Eclitasertib (SAR443122/DNL758) (RIPK1) ◦ In January 2023, our collaboration partner Sanofi commenced dosing in the Phase 2 study of SAR443820/DNL788 in patients with MS , triggering a $25.0 million milestone payment, which was received in January 2023.
The third party will be eligible to receive low single-digit royalties from Denali on annual worldwide net sales of LRRK2 inhibitors for the treatment of Parkinson’s disease, with royalty amounts varying based on the scope of the label.
Further, in February 2024, we presented preclinical data at WORLD Symposium TM demonstrating that DNL126 improves lysosomal and microglial morphology, degeneration, and cognitive behavior in MPS IIIA mice. 129 Table of Contents • BIIB122/DNL151 (LRRK2) ◦ In June 2023, in conjunction with Biogen, and based on review of portfolio timelines and resource prioritization, we announced plans to revise the clinical development program for BIIB122/DNL151.
Further, in February 2024, we presented supportive preclinical data at WORLD Symposium TM demonstrating that DNL126 improves lysosomal and microglial morphology, degeneration, and cognitive behavior in MPS IIIA mice; and ◦ In June 2024, DNL126 was selected for the FDA's Support for clinical Trials Advancing Rare disease Therapeutics ("START") program to accelerate the development of rare disease therapeutics.
Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates. We had net losses of $145.2 million, $326.0 million, and $290.6 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of $1.12 billion.
We had net losses of $422.8 million, $145.2 million, and $326.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $1.54 billion.
These expenses primarily relate to salaries and benefits, stock-based compensation, facility expenses including rent and depreciation, and lab consumables. Where we share costs with our collaboration partners, such as in our Biogen Collaboration Agreement and Takeda Collaboration Agreement, research and development expenses may include cost sharing reimbursements from, or payments to, our collaboration partners.
Where we share costs with our collaboration partners, such as in our Biogen Collaboration Agreement and Takeda Collaboration Agreement, research and development expenses may include cost sharing reimbursements from, or payments to, our collaboration partners. Further, where we receive R&D funding from third parties, this may be recognized as a reduction to research and development expenses.
Components of Operating Results Collaboration Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. All revenue recognized to date has been collaboration and license revenue from our collaboration agreements with Takeda, Sanofi and Biogen.
All revenue recognized to date has been collaboration and license revenue from our collaboration agreements with Takeda, Sanofi and Biogen.
We currently rely on third-party contract manufacturers to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates.
We have relied on third-party contract manufacturers to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates through 2024. We are in the final stages of building out our Salt Lake City ("SLC") manufacturing facility , and beginning in early 2025 plan to commence manufacturing operations.
Interest and Other Income, Net Interest and other income, net, consists primarily of interest income and investment income earned on our cash, cash equivalents, and marketable securities, and sublease income. 137 Table of Contents Results of Operations Comparison of the years ended December 31, 2023 and 2022 The following table sets forth the significant components of our results of operations (in thousands): Year Ended December 31, Change 2023 2022 $ % Collaboration revenue: Collaboration revenue from customers 330,531 105,065 225,466 * % Other collaboration revenue — 3,398 (3,398) (100) Total collaboration revenue 330,531 108,463 222,068 * Operating expenses: Research and development 423,876 358,732 65,144 18 General and administrative 103,354 90,475 12,879 14 Total operating expenses 527,230 449,207 78,023 17 Loss from operations (196,699) (340,744) 144,045 (42) Interest and other income, net 51,505 14,774 36,731 * Loss before income taxes (145,194) (325,970) 180,776 (55) Income tax expense (30) (21) (9) 43 Net loss $ (145,224) $ (325,991) $ 180,767 (55) % __________________________________________________ * Percentage is not meaningful.
Interest and Other Income, Net Interest and other income, net, consists primarily of interest income and investment income earned on our cash, cash equivalents and marketable securities, as well as sublease income, and an offset from interest expense on our finance lease liability. 126 Table of Contents Results of Operations Comparison of the years ended December 31, 2024 and 2023 The following table sets forth the significant components of our results of operations (in thousands): Year Ended December 31, Change 2024 2023 $ % Collaboration revenue: Collaboration revenue from customers $ — $ 330,531 (330,531) * % Total collaboration revenue — 330,531 (330,531) * Operating expenses: Research and development 396,440 423,876 (27,436) (6) General and administrative 105,438 103,354 2,084 2 Total operating expenses 501,878 527,230 (25,352) (5) Gain from divestiture of small molecule programs 14,537 — 14,537 * Loss from operations (487,341) (196,699) (290,642) * Interest and other income, net 64,636 51,505 13,131 25 Loss before income taxes (422,705) (145,194) (277,511) * Income tax expense (68) (30) (38) * Net loss $ (422,773) $ (145,224) (277,549) * % __________________________________________________ * Percentage is not meaningful.
The pre-funded warrants will have an exercise price of $0.01 per share of Common Stock, be immediately exercisable and remain exercisable until exercised in full. The private placement is expected to close on February 29, 2024, subject to customary closing conditions. We do not have any products approved for sale and have not generated any product revenue since our inception.
The pre-funded warrants have an exercise price of $0.01 per share of Common Stock, and are immediately exercisable and will remain exercisable until exercised in full.
The agreement gives us access to Genentech’s LRRK2 inhibitor program. Our collaboration partner in the LRRK2 program, Biogen, is responsible for 50% of any payment obligation to Genentech under the Biogen Collaboration Agreement.
Our collaboration partner in the LRRK2 program, Biogen, is responsible for 50% of any payment obligation to Genentech under the Biogen Collaboration Agreement. We have made a total of $25.0 million in consideration payments under the Genentech agreement, including $12.5 million in the year ended December 31, 2022 related to two clinical milestones.
Key operational and financing milestones for the year ended December 31, 2023 and in 2024 to date include: • Tividenofusp alfa DNL310 (ETV:IDS) ◦ In February 2023, at the WORLD Symposium TM , we reported additional interim data from the open-label, single-arm Phase 1/2 study of DNL310.
Key operational and financing milestones for the year ended December 31, 2024 and in 2025 to date include: • Tividenofusp alfa DNL310 (ETV:IDS) ◦ In February 2024, we presented new positive data from the ongoing Phase 1/2 study of tividenofusp alfa in MPS II at the 20th Annual WORLD Symposium TM demonstrating sustained normalization of heparan sulfate in cerebrospinal fluid ("CSF HS"), robust and sustained reductions in biomarkers of lysosomal dysfunction and neuronal damage (neurofilament light; "NfL"), and improvements and stabilization of multiple clinical outcomes measures over two years of treatment.
Research and Development Expenses A significant portion of our research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss are external costs, which we track on a program-specific basis once a program has commenced a late-stage IND-enabling study.
Research and Development Expenses A significant portion of our research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss are external costs. These research and development expenses include the conduct of preclinical studies and clinical trials, contract manufacturing activities and consulting services.
We will maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs.
Further analyses are anticipated later in 2025. • Other ◦ In January 2024, we announced our intention to divest our preclinical small molecule portfolio, which was completed effective March 1, 2024. We maintain ownership of, and continue to advance, our current portfolio of clinical stage small molecule programs, in collaboration with our partners.
We recognized $0.1 million of research and development expense related to the funding of F-star research costs for the year ended December 31, 2021, but none for the years ended December 31, 2023 or 2022 . 134 Table of Contents Genentech In June 2016, we entered into an exclusive license agreement with Genentech.
We did not recognize contingent consideration in the years ended December 31, 2024 or 2022. Genentech In June 2016, we entered into an exclusive license agreement with Genentech. The agreement gives us access to Genentech’s LRRK2 inhibitor program.
Significant judgment is required to apply the authoritative accounting guidance at the outset of a collaboration arrangement, and over time, as detailed below: • Identification of performance obligations - there is judgment involved in identifying the promised goods or services in the collaboration agreement, determining whether these are distinct in the context of the contract, and determining if these represent a performance obligation to a customer.
The key areas of judgment identified are: (1) Identification of performance obligations at the outset of a collaboration arrangement (identifying the promised goods or services and determining whether these are distinct in the context of the contract); (2) Measurement of the transaction price at the outset of a collaboration arrangement and at each reporting period (estimating valuation of share premium payments, constraint of future variable consideration); (3) Allocation of the transaction price to the performance obligations at the outset of a collaboration arrangement ( estimating the standalone selling price of identified performance obligations); and (4) Recognition of revenue when (or as) we satisfy each performance obligation, assessed at each reporting period (when the performance obligation has been satisfied for point-in time recognition, the extent of satisfaction of an obligation for recognition over time).
(1) Personnel-related expenses include stock-based compensation expense of $62.9 million and $60.2 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $2.7 million. (2) Net cost sharing payments (reimbursements) details are broken down as shown in the table below.
Further, we offset research and development expense due to cost sharing reimbursements received from Takeda of $5.9 million, $12.2 million and $18.2 million in the years ended December 31, 2024, 2023, and 2022, respectively. We recorded receivables of $1.5 million and $2.7 million from Takeda as of December 31, 2024 and 2023, respectively.
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Our discovery and development strategy is guided by three overarching principles that we believe will significantly increase the probability of success and accelerate the timing to bring effective therapeutics to people living with neurodegenerative diseases and LSDs : • Degenogenes: Genetic Pathway Realization – each of our programs addresses a molecular target or biological pathway that is genetically validated to cause or increase the risk for neurodegenerative diseases. • Brain Delivery: Validation and Optionality – we engineer our product candidates to cross the BBB and act directly in the brain.
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Overview Key elements of our strategy include: 1) Discover and develop a new class of barrier-crossing therapeutics by leveraging our TV platforms and deep expertise in BBB biology to enhance the delivery of biotherapeutics to the brain and throughout the body. 2) Accelerate and expand a broad portfolio of TV-based product candidates to fully unlock the potential of barrier-crossing therapeutics, applying patient-informed development and driving biomarker-guided regulatory approvals. 3) 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.
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Our proprietary TV platform technology is designed to effectively deliver large therapeutic molecules, such as enzymes, proteins, antibodies, and oligonucleotides, across the BBB after intravenous administration. • Biomarker-Driven Development and Approval – we discover, develop and use biomarkers to inform dose selection, assess clinical activity, and identify patients most likely to respond to our therapies.
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Also in February, we participated in the Reagan-Udall Foundation for the FDA workshop on CSF heparan sulfate as a potential surrogate biomarker to support accelerated approval in MPS. ◦ In April 2024, we completed enrollment of 47 participants with MPS II in the Phase 1/2 open-label study.
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We are actively engaged in discussions with health authorities regarding the potential use of biomarkers as primary clinical endpoints to support faster paths to approval.
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Following the Reagan-Udall Foundation workshop, we received written communication from the Center for Drug Evaluation and Research ("CDER") division of the FDA indicating openness to discussing an accelerated approval pathway for tividenofusp alfa in MPS II with CSF heparan sulfate as a surrogate biomarker; ◦ In September 2024, we announced that we plan to file a biologics license application ("BLA") for accelerated approval for tividenofusp alpha (DNL310) for the treatment of MPS II, based on the outcome of a recent successful meeting with the Center for Drug Evaluation and Research ("CDER") division of the FDA.
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Ou r clinic al-stage large molecule programs are as follows: • Tividenofusp alfa (DNL310, ETV:IDS), our lead ERT program enabled by our ETV , ETV:IDS is designed to cross the BBB and restore IDS and reduce GAGs , both peripherally and in the brain, in patients with MPS II (Hunter syndrome); • TAK-594/DNL593 (PTV:PGRN), our recombinant PGRN biotherapeutic enabled by our PTV, being developed in collaboration with Takeda, to address certain types of FTD, specifically FTD-GRN caused by PGRN deficiency; • DNL126 (ETV:SGSH), our second most advanced ETV enabled program, which is designed to restore lysosomal activity of SGSH, an enzyme responsible for degrading heparan sulfates in the lysosome, in patients with MPS IIIA (Sanfilippo syndrome Type A).
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In addition, the meeting also provides a path for conversion to full approval based on the totality of the tividenofusp clinical development plan.
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(2) Study will be closing as it did not meet its primary endpoint. Since we commenced operations, we have devoted substantially all of our resources to discovering, acquiring and developing product candidates, building our BBB platform technology and assembling our core capabilities in understanding key neurodegenerative disease pathways.
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Based on discussions with CDER, we will include preclinical and clinical data on biomarkers (CSF HS and NfL) and safety in the BLA for tividenofusp alfa as a treatment of MPS II and intend to submit the BLA under the accelerated approval pathway in early 2025.
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Over 49 weeks of DNL310 treatment in the Phase 1/2 study, positive changes across measures of exploratory clinical outcomes including VABS-II (adaptive behavior) and BSID-III (cognitive capabilities) scores and global impression scales were observed. The data also suggested that DNL310 improved hearing, as assessed by auditory brainstem response testing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe had cash, cash equivalents and marketable securities of $1.03 billion as of December 31, 2023, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short-term fixed income securities. The primary objective of our investment activities is to preserve capital to fund our operations.
Biggest changeWe had cash, cash equivalents and marketable securities of $1.19 billion as of December 31, 2024, which consisted primarily of money market funds and marketable securities, largely composed of investment grade, short and intermediate term fixed income securities. The primary objective of our investment activities is to preserve capital to fund our operations.
The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of expenses, assets and liabilities primarily associated with a limited number of preclinical, clinical and manufacturing activities. 145 Table of Contents
The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of expenses, assets and liabilities primarily associated with a limited number of preclinical, clinical and manufacturing activities. 133 Table of Contents

Other DNLI 10-K year-over-year comparisons