Denali Therapeutics (NASDAQ:DNLI) reported third-quarter 2026 net product revenue of $17.8 million from AVLAYAH, its treatment for Hunter syndrome, as expanding payer coverage and transitions of clinical-trial participants to commercial therapy supported a faster-than-expected launch.
The company said AVLAYAH revenue rose from $3.6 million in its first full commercial quarter and exceeded its August guidance of $10 million to $12 million. Denali projected fourth-quarter AVLAYAH net product revenue of $30 million to $32 million.
“Patient interest, physician engagement, and access are all moving faster than we expected,” Chief Commercial Officer Katie Peng said during the company’s earnings call. She said commercial coverage increased to more than 70% of covered lives from more than 50% in the prior quarter, while 20 state Medicaid programs now list the drug as covered, up from 14 programs.
AVLAYAH Launch and Market Access
AVLAYAH is approved in the U.S. for pediatric patients with Hunter syndrome, also known as MPS II. Denali estimates that about 500 people in the U.S. have Hunter syndrome, including roughly 375 patients eligible under AVLAYAH’s current pediatric label.
The company said it had reached approximately 90% of targeted healthcare organizations since launch. A permanent J-code for AVLAYAH became effective Oct. 1, which Denali said should simplify billing and reimbursement for treatment centers.
Peng attributed the third-quarter revenue increase in part to rapid expansion in coverage and the quicker-than-anticipated transition of most eligible patients from AVLAYAH’s phase I/II study into commercial treatment. Those patients had already reached their maintenance dose, enabling them to contribute more immediately to revenue.
Denali cautioned that the quarter-to-quarter increase should not be treated as a continuing run rate. The company expects revenue to continue rising at a steadier pace over the next several quarters as additional patients begin therapy, reimbursement processes develop and patients complete dose escalation.
AVLAYAH is priced at $5,200 per vial, according to Peng. The company previously indicated that treatment for a 30-kilogram patient would cost approximately $811,000 annually, though management noted that actual revenue is affected by patient weight, dose escalation and other factors. Denali did not provide patient-start figures, cumulative start forms or annual sales guidance.
Sanfilippo Program Advances Toward 2027 Filing
Denali said its phase I/II trial of zafinofusp alfa for Sanfilippo syndrome type A, or MPS IIIA, completed the pre-specified treatment duration for its primary endpoint during the third quarter. The company is analyzing the complete data set and plans to present results from all 20 participants at a medical conference in the first quarter of 2027.
The company expects the data package could support a biologics license application seeking accelerated approval in 2027. Denali said it has aligned with the FDA that cerebrospinal fluid heparan sulfate, or CSF HS, may be considered a reasonably likely surrogate endpoint for predicting clinical benefit in MPS IIIA.
In preliminary data from the first two dose-finding cohorts presented earlier this year, Denali reported an 80% mean reduction in CSF heparan sulfate at week 49, with three of seven assessed participants reaching the normal range. The company also reported a 61% mean reduction in CSF GM3, an 83% mean reduction in urine heparan sulfate and normalized liver volume among assessed participants.
Infusion-related reactions were the most common adverse events in the preliminary data, and Denali said the safety profile was generally consistent with established enzyme replacement therapies. Chief Executive Officer Ryan Watts said manufacturing readiness, including the chemistry, manufacturing and controls portion of a potential filing, will drive the timing of the company’s planned 2027 submission.
Alzheimer’s and Other Pipeline Readouts
Denali said both of its Alzheimer’s disease programs are in clinical trials. DNL628, an intravenously delivered antisense oligonucleotide targeting tau, is being studied in a randomized, placebo-controlled phase I-B trial in people with biomarker-confirmed early Alzheimer’s disease. Initial clinical biomarker data are expected in the first half of 2027.
DNL921, a blood-brain barrier-enabled anti-amyloid antibody, is in an ongoing phase I/I-B study. Denali expects initial safety and clinical proof-of-concept data in 2027. The company said it is also exploring subcutaneous administration for the anti-amyloid program.
Management said it expects data from five TransportVehicle platform programs in 2027, including zafinofusp alfa, DNL593 in frontotemporal dementia associated with progranulin mutations, DNL628 and DNL921 in Alzheimer’s disease, and DNL952 in Pompe disease.
For DNL593, Watts said Denali extended the study endpoint to one year to focus on neurofilament light chain, or NfL. He said the company has not established a specific percentage reduction in NfL needed to advance toward a regulatory path, but described a “believable reduction” as important.
Financial Position and Strategic Goals
Denali reported third-quarter net income of $70.1 million, primarily reflecting $195 million in one-time gross proceeds from the sale of a priority review voucher. Operating expenses for both the third quarter and year-to-date period were essentially flat from a year earlier, according to Chief Operating and Financial Officer Alexander Schuth.
The company ended September with approximately $1.01 billion in cash equivalents and marketable securities. Schuth said Denali believes its financial resources support execution of its three-year objectives.
Through 2028, Denali aims to build two commercial brands, establish five clinical proofs of concept and advance four to six additional programs into the clinic. The company is pursuing brain-penetrant enzyme replacement therapies alongside programs for common neurodegenerative diseases, including Alzheimer’s and Parkinson’s disease.
About Denali Therapeutics (NASDAQ:DNLI)
Denali Therapeutics Inc is a biopharmaceutical company focused on discovering and developing therapies for patients with neurodegenerative diseases. The company’s research programs target conditions including Parkinson’s disease, Alzheimer’s disease, amyotrophic lateral sclerosis, and lysosomal storage disorders.
Denali uses its blood-brain barrier transport technology, known as the Transport Vehicle platform, to design medicines intended to deliver therapeutic proteins and other biologic treatments into the central nervous system.
