Stifel maintains Buy on Denali Therapeutics, $37 target

On Monday, Stifel analysts confirmed their Buy rating on Denali Therapeutics Inc. (NASDAQ:DNLI) with a steady price target of $37.00. According to InvestingPro data, analysts maintain a Strong Buy consensus with price targets ranging from $24 to $87, suggesting significant upside potential from the current price of $22.25. The affirmation follows a discussion with Denali’s CEO, Ryan Watts, at the BioPharma Ski Summit regarding the company’s promising developments. Stifel’s analysts highlighted the potential for Denali’s DNL310 to receive regulatory approval for the treatment of Hunter syndrome and the progress of DNL126 for Sanfilippo syndrome, based on the heparin sulfate biomarker.

Denali Therapeutics has been working towards submitting a Biologics License Application (BLA) for DNL310, which could lead to accelerated approval. The company is also seeking regulatory alignment for DNL126. Both treatments are part of Denali’s Transport Vehicle (TV) platform, which targets rare diseases through engineered enzymes.

The analysts at Stifel noted that 2025 is poised to be a pivotal year for Denali, with the potential to reduce the risks associated with their two lead Transport Vehicle (TV) platform-based enzyme replacement therapies (ERTs). InvestingPro data shows the company maintains a strong financial position with a current ratio of 9.98x and minimal debt-to-equity of 0.04, providing ample runway for its development programs. The success of these therapies could pave the way for the company to transition into addressing more common rare diseases and even larger markets. Denali’s pipeline includes programs targeting Pompe disease, Gaucher’s disease, Parkinson’s disease, and Alzheimer’s.

Investor debates have centered on the extent to which the current stock valuation reflects the potential of the company’s initial ERTs. Stifel’s analysts believe that while the stock does account for some of the platform’s value, the significant opportunities presented by these therapies are not fully appreciated in the current valuation. InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips highlighting strong recent momentum despite current unprofitability. Subscribers can access 8 more exclusive ProTips and detailed valuation metrics to make more informed investment decisions.

Denali Therapeutics continues to focus on developing treatments for a range of neurological diseases, leveraging their TV platform to advance their research and potential therapies. As the company moves forward with its regulatory submissions and clinical trials, Stifel’s analysis suggests that the stock holds significant promise based on these advancements.

In other recent news, Denali Therapeutics has been making significant strides with its investigational drug, DNL310, for the treatment of Hunter Syndrome. The U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation (BTD) to DNL310, a development Stifel analysts have highlighted as significant. This designation could reduce the risk associated with the drug’s approval process and has positive implications for Denali’s other enzyme replacement therapy, DNL126, being developed for Sanfilippo Syndrome.

Stifel analysts maintained a Buy rating on Denali Therapeutics, with a price target of $37.00. Similarly, Jefferies and H.C. Wainwright analysts also maintained a Buy rating, with price targets of $45.00 and $87.00, respectively. BofA Securities, while reducing their price target to $30 from $34, also kept a Buy rating on the stock.

These recent developments come despite the failure of Denali’s Phase II/III eIF2B study for ALS to meet its primary endpoint, a setback that analysts from Jefferies and BofA Securities have noted. However, the analysts remain optimistic about Denali’s upcoming plans, including the filing of a Biologics License Application (BLA) for accelerated approval of DNL310 early in 2025. The market opportunities for treating Hunter Syndrome and Sanfilippo Syndrome combined are estimated to exceed $1 billion.

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