Denali Therapeutics Inc. (DNLI) Stock Analysis and Metrics

Sector: Healthcare Industry: Biotechnology CIK: 0001714899

P/B 3.32

P/E -6.16

P/S 0.00

Market Cap 3.07 Bn

ROIC (Qtr) -53.60

Div Yield % 0.00

Rev 1y % (Qtr) 0.00

Total Debt (Qtr) 44.40 Mn

Debt/Equity (Qtr) 0.05

About

Denali Therapeutics Inc., often recognized by its ticker symbol DNLI, operates in the biopharmaceutical industry with a specific focus on developing therapies for neurodegenerative diseases and lysosomal storage disorders (LSDs). The company's mission is to discover, develop, and deliver therapeutics that defeat degeneration. Denali boasts a diverse portfolio of both small molecule and biotherapeutic medicines, comprising seven product candidates in clinical development across seven indications, and more than a dozen preclinical therapeutic candidates. The...

Denali Therapeutics Inc., often recognized by its ticker symbol DNLI, operates in the biopharmaceutical industry with a specific focus on developing therapies for neurodegenerative diseases and lysosomal storage disorders (LSDs). The company's mission is to discover, develop, and deliver therapeutics that defeat degeneration. Denali boasts a diverse portfolio of both small molecule and biotherapeutic medicines, comprising seven product candidates in clinical development across seven indications, and more than a dozen preclinical therapeutic candidates.

The core of Denali's business activities revolves around three scientific principles: Degenogenes, Brain Delivery, and Biomarker-Driven Development and Approval. The company's proprietary platform technology, the Transport Vehicle (TV), is a key differentiator. This technology is designed to deliver large therapeutic molecules across the blood-brain barrier (BBB) after systemic administration. The TV engages specific BBB transport receptors, such as the transferrin receptor (TfR) and CD98 heavy chain (CD98hc), facilitating the transport of proteins into the brain.

Denali's product portfolio includes several TV-enabled programs. Tividenofusp alfa (DNL310, ETV:IDS) is in an ongoing Phase 2/3 study for mucopolysaccharidosis II (MPS II), or Hunter syndrome. The company has reported positive interim results from the Phase 1/2 study, including normalization of cerebrospinal fluid (CSF) heparan sulfate, improved hearing, and generally positive somatic activity. DNL343, a novel eIF2B activator for amyotrophic lateral sclerosis (ALS), has demonstrated robust inhibition of biomarkers associated with the integrated stress response (ISR) pathway in blood samples from study participants.

Denali's competitive advantages stem from its proprietary platform technology and its focus on developing therapies for rare diseases. Key competitors in the biopharmaceutical industry include companies like Biogen Inc. and Takeda Pharmaceutical Company Limited, which also focus on neurodegenerative diseases and LSDs.

Denali's customers include patients and families affected by neurodegenerative diseases and LSDs, as well as healthcare providers and payers. The company has established partnerships with organizations such as the Northeast ALS Consortium (NEALS) and the Sean M. Healey & AMG Center for ALS (Healey Center) at Massachusetts General Hospital (MGH).

In terms of brand names, Denali's most advanced TV-enabled program, tividenofusp alfa (DNL310, ETV:IDS), is a notable product. Additionally, DNL343, a novel eIF2B activator for ALS, is another significant product in Denali's pipeline. The company's RIPK1 inhibitor program, including SAR443122/DNL758 for ulcerative colitis, and its alpha-synuclein program, with ATV:SNCA for Parkinson's disease, are also noteworthy. Denali's oncology program, focusing on HER2-positive breast cancer, is another area of interest for the company.

Stock Price Chart

Analysis

Pros

Healthy cash reserves of 90.96M provide 9.93x coverage of short-term debt 9.16M, demonstrating strong liquidity position and minimal refinancing risk.
Strong tangible asset base of 1.06B provides 23.77x coverage of total debt 44.40M, indicating robust asset backing and low credit risk.
Short-term investments of 757.24M provide solid 10.20x coverage of other current liabilities 74.24M, indicating strong liquidity.
Long-term investments of 24.70M provide solid 0.70x coverage of long-term debt 35.24M, indicating strategic financial planning.
Tangible assets of 1.06B provide robust 14.22x coverage of other current liabilities 74.24M, indicating strong asset backing.

Cons

Operating cash flow of (397.78M) barely covers its investment activities of 406.72M, with a coverage ratio of -0.98, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Investment activities of 406.72M provide weak support for R&D spending of 420.66M, which is 0.97x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
Short-term investments of 757.24M significantly exceed cash reserves of 90.96M, which is 8.32x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.
The company's operating cash flow of (397.78M) shows concerning coverage of stock compensation expenses of 100.76M, with a -3.95 ratio indicating potential earnings quality issues.
Free cash flow of (410.85M) provides weak coverage of capital expenditures of 13.07M, with a -31.43 ratio suggesting additional external financing needs for growth initiatives.

Peer Comparison

Companies in the Biotechnology

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	SMMT	Summit Therapeutics Inc.	1,349.40 Bn	-1,464.17	0.00	0.01 Bn
2	ONC	BeOne Medicines Ltd.	437.43 Bn	6,381.20	87.97	1.90 Bn
3	VRTX	Vertex Pharmaceuticals Inc / Ma	116.09 Bn	31.59	9.90	1.83 Bn
4	REGN	Regeneron Pharmaceuticals, Inc.	78.10 Bn	17.06	5.48	2.71 Bn
5	ALNY	Alnylam Pharmaceuticals, Inc.	55.87 Bn	1,282.42	17.40	3.21 Bn
6	ARGX	Argenx Se	52.85 Bn	35.08	27,559.65	-
7	BNTC	Benitec Biopharma Inc.	41.75 Bn	-998.33	0.00	0.00 Bn
8	INSM	INSMED Inc	37.80 Bn	-31.93	84.56	0.74 Bn

Industry Comparisons

Current Valuation

Metric	Value	Industry
EV to Assets	2.82	12.31
EV to Cash from Ops.	-7.48	23.25
EV to Debt	67.03	738.44
EV to EBIT	-5.97	-9.16
EV to EBITDA	-5.57	6.95
EV to Free Cash Flow [EV/FCF]	-7.24	21.90
EV to Market Cap	0.97	65.67
EV to Revenue	0.00	227.32
Price to Book Value [P/B]	3.32	22.34
Price to Earnings [P/E]	-6.16	-11.77

Dividend Metrics

Metric	Value	Industry	Percentile
Dividend Coverage Ratio	0.00	-11.94
Dividend Payout Ratio %	0.00	0.16
Dividend per Basic Share	0.00	0.01
FCF Dividend Payout Ratio %	0.00	-0.14
Interest Coverage	0.00	841.00

Growth Metrics

Metric	Value	Industry
Capex Growth (1y) %	-0.11	-27.13
Cash and Equivalents Growth (1y) %	0.36	734.65
Dividend Growth (1y) %	0.00	0.01
EBIAT Growth (1y) %	-16.67	-46.93
EBITDA Growth (1y) %	-10.94	-1.68
EBIT Growth (1y) %	-16.66	-56.45
EBT Growth (1y) %	-16.66	-12.70
EPS Growth (1y) %	-5.42	-28.31
FCF Growth (1y) %	-9.36	-31.90
Gross Profit Growth (1y) %	0.00	226.84

Liquidity Ratios

Metric	Value	Industry
Asset Utilization Ratio	0.00	0.14
Cash Payout Ratio	0.00	0.00
Cash Ratio	1.01	3.85
Current Ratio	9.79	7.27
Debt to Equity Ratio	0.05	0.40
Interest Cover Ratio	0.00	841.00
Times Interest Earned	0.00	841.00

Profitability

Metric	Value	Industry	Percentile
EBITDA Margin %	0.00	-18,234.31
EBIT Margin %	0.00	-18,580.80
EBT Margin %	0.00	-19,488.74
Gross Margin %	0.00	-7.59
Net Profit Margin %	0.00	-19,439.22

Denali Therapeutics Inc. (NASDAQ: DNLI)