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On Friday, H.C. Wainwright analyst Andrew Fein adjusted the price target for Denali Therapeutics Inc. (NASDAQ:DNLI) to $80.00, down from the previous $87.00, while maintaining a Buy rating on the stock. The revision comes as the stock has experienced a notable 10% decline over the past week, trading at $18.60. According to InvestingPro analysis, the stock appears undervalued at current levels, with analyst targets ranging from $24 to $87. The revision reflects the firm’s reassessment of operational expenses and market penetration projections for Denali’s product DNL310, despite positive clinical data and anticipated regulatory milestones.
Denali is advancing towards a Biologics License Application (BLA) submission under the accelerated approval pathway, expected in early 2025, with a U.S. commercial launch targeted for late 2025 or early 2026. While InvestingPro data shows the company isn’t currently profitable, with a -$511.85M EBITDA, it maintains a strong financial position with a current ratio of 9.98 and more cash than debt on its balance sheet. The company’s ETV platform, particularly tividenofusp alfa for Hunter syndrome (HS), has shown promising results in clinical trials. These include significant reductions in disease biomarkers in the central nervous system and urine, as well as improvements in liver volume, hearing, adaptive behavior, and cognition.
The analyst pointed out that the long-term data from the Phase 1/2 study and the potential of tividenofusp alfa could position it as the preferred therapy over Elaprase for HS. Moreover, the successful clinical experience with tividenofusp alfa may benefit other ETV programs, such as those for Gaucher and Pompe diseases, and especially for DNL-126.
Denali’s DNL-126 has shown significant promise in early studies, with a notable reduction in cerebrospinal fluid heparan sulfate levels and a mostly linear safety and biomarker data profile. The program’s inclusion in the FDA’s Support for Clinical Trials Advancing Rare Disease Therapeutics (START) program could provide a pathway to accelerated approval. The START program may also enable Denali to negotiate a Phase 3 trial without a placebo arm, potentially expediting the development timeline.
In preparation for the BLA submission and potential market launch, Denali has expanded its DNL-126 trial to include up to three additional cohorts, aiming to compile sufficient data for a pre-BLA filing. This expansion, along with the data supporting Denali’s products, forms the basis for H.C. Wainwright’s continued endorsement of the company’s stock, despite the lowered price target. InvestingPro reveals a strong analyst consensus recommendation of 1.32 (where 1 is Strong Buy), with 6 additional ProTips available to subscribers, offering deeper insights into the company’s financial health and market position.
In other recent news, Denali Therapeutics Inc. has been in the spotlight due to several significant developments. The company has received Breakthrough Therapy Designation from the FDA for its investigational drug, tividenofusp alfa (DNL310), aimed at treating Hunter syndrome. This designation is expected to expedite the review process as Denali prepares to submit a Biologics License Application for accelerated approval. Analysts from Stifel have maintained a Buy rating with a $37.00 price target, highlighting the potential of DNL310 and the progress of DNL126 for Sanfilippo syndrome. Similarly, Deutsche Bank (ETR:DBKGn) initiated coverage with a Buy rating and a $31.00 target, citing Denali’s extensive pipeline and expected advancements in 2025.
Jefferies also maintained a Buy rating, setting a higher price target of $45.00, despite Denali’s recent trial challenges with its ALS treatment. The analysts anticipate that Denali’s lead drug, DNL310, could receive approval by the end of 2025. Stifel’s analysis suggests that the FDA’s Breakthrough Therapy Designation could reduce the risks associated with DNL310’s approval process. Denali’s efforts to address rare diseases through its Transport Vehicle platform are seen as promising by analysts, with a focus on neurological diseases and lysosomal storage disorders. These developments reflect Denali’s ongoing commitment to advancing its pipeline and securing regulatory approvals for its innovative therapies.
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