Why Is Denali Therapeutics (DNLI) Up 16.2% Since Last Earnings Report?

A month has gone by since the last earnings report for Denali Therapeutics Inc. (DNLI). Shares have added about 16.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Denali Therapeutics due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Denali Therapeutics Inc. before we dive into how investors and analysts have reacted as of late.Denali Tops on Q2 EarningsDenali reported a second-quarter 2025 loss of 72 cents per share, narrower than the Zacks Consensus Estimate of a loss of 74 cents. The company reported a loss of 59 cents in the year-ago quarter.The loss per share deteriorated year over year due to an increase in total operating expenses.In the absence of a marketed product, the company only recognizes revenues from ongoing collaborations. Denali did not generate collaboration revenues in the reported quarter. The Zacks Consensus Estimate for revenues was pegged at $25 million.Highlights of DNLI’s Q2 ResultsResearch and development expenses increased 12.4% to $102.7 million. The increase was primarily due to increased spending on multiple preclinical programs. An increase in other research and development expenses, consultants and general facilities costs also contributed to the surge.General and administrative expenses increased 28% to $32.3 million due to activities related to the preparations for a potential launch of tividenofuspalfa.As of June 30, 2025, cash, cash equivalents, and marketable securities amounted to approximately $977.4 million.DNLI Makes Encouraging Pipeline ProgressIn July 2025, Denali announced that the FDA accepted its biologics license application (BLA) for pipeline candidate tividenofuspalfa for priority review. The regulatory body assigned a target action date of Jan. 5, 2026.The BLA seeks accelerated approval based on a data package, including results from the phase I/II study in individuals with Hunter syndrome. The FDA had previously granted tividenofusp alfa Breakthrough Therapy, Fast Track, Orphan Drug, and Rare Pediatric Disease designations.Tividenofusp alfa is an investigational, next-generation enzyme replacement therapy designed to cross the blood-brain barrier (BBB) and deliver the iduronate-2-sulfatase (IDS) enzyme throughout the body and brain.Denali continues to prepare for commercial launch and is conducting the phase II/III COMPASS study to support global regulatory submissions.Denali is also evaluating DNL126 for the treatment of Sanfilippo syndrome type A (MPS IIIA). Concurrent with the quarterly results, Denali announced that it has reached alignment with the FDA’s Center for Drug Evaluation and Research that cerebrospinal fluid heparan sulfate (CSF HS) may be considered a reasonably likely surrogate endpoint to predict clinical benefit and may therefore be used to support accelerated approval of DNL126 for MPS IIIA.Data from the ongoing open-label phase I/II study at week 49 is consistent with previously announced 25-week data, demonstrating a significant reduction in CSF HS from baseline, including normalization, and a safety profile that supports continued development. Denali has almost completed enrollment in the phase I/II study, and planning is underway for a confirmatory global phase III study.Another candidate in DNLI’s pipeline is TAK-594/DNL593. Denali has collaborated with Takeda for the co-development and co-commercialization of DNL593, a therapeutic candidate engineered for the delivery of progranulin (PGRN) across the BBB and into lysosomes for the treatment of frontotemporal dementia (FTD) associated with a mutation in the granulin (GRN) gene. Denali is conducting the ongoing phase I/II study of DNL593 in FTD-GRN.Denali and Biogen are jointly evaluating an LRRK2 inhibitor, BIIB122/DNL151, in development to treat Parkinson’s disease (PD).Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage PD. In May 2025, Biogen announced that the LUMA study was fully enrolled with a readout expected in 2026.Meanwhile, Denali is conducting the phase IIaBEACON study, specifically enrolling participants with LRRK2-associated PD to assess how LRRK2 inhibition may impact this disease.Denali expects to submit regulatory applications to begin clinical testing of one to two TV-enabled programs each year over the next three years across its Enzyme TV (ETV), Antibody TV (ATV), and Oligonucleotide TV (OTV) franchises. The most advanced programs include: DNL952 (ETV: GAA) for Pompedisease; DNL111 (ETV:GCase) for Parkinson’s/Gaucher disease; DNL622 (ETV:IDUA) for MPS I; DNL921 (ATV:Abeta) for Alzheimer’s disease; DNL628 (OTV:MAPT) for Alzheimer’s disease; and DNL422 (OTV:SNCA) for Parkinson’s disease.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.VGM ScoresCurrently, Denali Therapeutics has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock has a score of F on the value side, putting it in the fifth quintile for value investors.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Denali Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerDenali Therapeutics belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, MannKind (MNKD), has gained 50.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2025.MannKind reported revenues of $76.53 million in the last reported quarter, representing a year-over-year change of +5.7%. EPS of $0.00 for the same period compares with $0.05 a year ago.MannKind is expected to post earnings of $0.01 per share for the current quarter, representing a year-over-year change of -75%. Over the last 30 days, the Zacks Consensus Estimate has changed -25%.MannKind has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Denali Therapeutics Inc. (DNLI): Free Stock Analysis Report MannKind Corporation (MNKD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks