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Why Is Denali Therapeutics Inc. (DNLI) Down 16% Since Last Earnings Report?

It has been about a month since the last earnings report for Denali Therapeutics Inc. (DNLI). Shares have lost about 16% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Denali Therapeutics Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Denali Q4 Earnings Beat Estimates, Pipeline in Focus

Denali Therapeutics incurred a loss of 75 cents per share for fourth-quarter 2022, narrower than the Zacks Consensus Estimate of a loss of 78 cents, but wider than the year-ago quarter’s loss of 62 cents per share. The recorded loss per share of the company is narrower than our estimate of a loss of 76 cents per share as well.

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Collaboration revenues came in at $10.3 million in the reported quarter, surpassing the Zacks Consensus Estimate of $8.03 million and down from $12.5 million in the year-ago period. The decrease was primarily due to a decrease in revenues from collaboration with Takeda as the preclinical performance obligations have been met. This decrease was partially offset by an increase in revenues from collaboration with Sanofi (SNY) for Alzheimer's Disease program.

Total collaboration revenues also beat our estimate of $7 million.

Quarter in Detail

Research and development expenses increased to $92.1 million in the quarter under review compared with $67.9 million in the year-ago period.

General and administrative expenses were $23.5 million, up from $21.8 million in the year-ago quarter.

Cash, cash equivalents and marketable securities were approximately $1.34 billion as of Dec 31, 2022, compared to $1.11 billion as of Sep 30, 2022.

2022 Results

Total collaboration revenues for the full year were clocked at $108.5 million. Collaboration revenues increased by 122.8% from the last year’s figure of $48.7 million.

Loss per share for the full year 2022 is $2.60. In the year ended 2021, the loss per share of Denali was $2.39.

2023 Financial Guidance

Denali anticipates an increase in cash operating expenses by 25-30% in 2023 from the year-ago period, partially offset by milestone payments received, including $25 million received from Sanofi in January 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Denali Therapeutics Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Denali Therapeutics Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Denali Therapeutics Inc. belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Moderna (MRNA), has gained 5.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.

Moderna reported revenues of $5.08 billion in the last reported quarter, representing a year-over-year change of -29.5%. EPS of $3.61 for the same period compares with $11.29 a year ago.

For the current quarter, Moderna is expected to post a loss of $1.73 per share, indicating a change of -120.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -15.5% over the last 30 days.

Moderna has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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Denali Therapeutics Inc. (DNLI) : Free Stock Analysis Report

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