Denali Stock Falls as Partner Takeda Ends Collaboration Deal

Shares of Denali Therapeutics Inc. DNLI were down 6.15% on April 6, after the company announced that partner Takeda TAK has decided to terminate their collaboration agreement to co-develop and co-commercialize DNL593 (PTV:PGRN) on April 3.

Per DNLI, Takeda’s decision was based on strategic priorities and not on any efficacy or safety issues.

Following the termination of the co-development agreement, Denali will regain full ownership of DNL593 along with its intellectual property.

Denali stock has gained 17.4% year to date compared with the industry’s growth of 0.4%.

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More on DNLI’s Frontotemporal Dementia-granulin Candidate

DNL593 is an investigational progranulin replacement therapy designed using Denali’s Protein TransportVehicle (PTV) platform to deliver progranulin across the blood-brain barrier for the treatment of frontotemporal dementia caused by GRN mutations (FTD-GRN).

Denali plans to independently advance DNL593 and post phase I/II study results by the end of 2026.

The ongoing phase I/II study of DNL593 has completed enrollment with 40 participants diagnosed with FTD-GRN, with biomarker data expected later in 2026. Earlier interim results from healthy volunteers showed dose-dependent increases in cerebrospinal fluid progranulin levels, indicating effective brain delivery. The therapy has been generally well tolerated so far, with no major safety concerns reported.

Frontotemporal dementia is the most common form of dementia in individuals under 60. It leads to progressive decline in behavior, personality, and language or motor functions. Mutations in the GRN gene, which encodes the progranulin protein, are among the leading genetic causes of the disease. Currently, there are no approved treatments to halt or slow its progression.

Regaining full control of DNL593 is a strategic positive, as it allows Denali to capture all future value if the therapy succeeds.

However, Takeda’s exit may raise concerns. Even though the decision was not tied to safety or efficacy, the loss of a large pharma partner removes external validation and shared financial burden. Denali will now need to fund late-stage development and potential commercialization on its own, increasing capital requirements.

Denali’s Recent Drug Approval: A Major Boost

Last month, Denali secured a major regulatory win with the FDA approval of lead pipeline candidate tividenofusp alfa-eknm, under the brand name Avlayah, for the treatment of Hunter Syndrome.

The approval marks the company’s first commercial product and a potential inflection point for its long-term growth story.

The FDA granted accelerated approval to Avlayah, marking the first new treatment option in nearly 20 years for patients with Hunter syndrome, a rare lysosomal storage disorder. It is also the first approved therapy in a new class of biologics designed to cross the blood-brain barrier by targeting the transferrin receptor.

While successful commercialization remains key, the approval of Avlayah underscores the potential of Denali’s TransportVehicle platform to address the longstanding challenge of delivering biologic therapies across the blood-brain barrier, with the goal of transforming treatment for a broad range of neurodegenerative diseases, lysosomal storage disorders, and other serious conditions affecting millions worldwide.

Denali boasts a deep pipeline. One promising asset is DNL126, being developed for Sanfilippo syndrome type A, a rare pediatric neurodegenerative disorder. DNLI is also evaluating DNL628 (OTV:MAPT) for Alzheimer’s disease.

Strategic partnerships further strengthen Denali’s development capabilities and help mitigate financial and clinical risk.

Denali is developing other candidates in partnership with Biogen BIIB and Sanofi SNY.

DNLI and Biogen continue co-development of BIIB122.

Biogen is leading the global phase IIb LUMA study, evaluating BIIB122's impact on disease progression in early-stage PD. Data is expected in mid-2026.

Denali is conducting the phase IIa BEACON study, specifically enrolling participants with LRRK2-associated PD, to assess how LRRK2 inhibition may impact this disease.

Sanofi is developing eclitasertib for the treatment of moderate-to-severe ulcerative colitis. Data from the phase II study is expected in the first half of the year.

Another promising asset is DNL126, being developed for Sanfilippo syndrome type A, a rare pediatric neurodegenerative disorder. DNLI is also evaluating DNL628 (OTV:MAPT) for Alzheimer’s disease.

The company’s sound cash position is a positive and underscores its ability to fund ongoing programs.

DNLI's Zacks Rank

Denali currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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