0001714899-20-000118 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2020	Oct. 28, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38311
Entity Registrant Name	Denali Therapeutics Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-3872213
Entity Address, Address Line One	161 Oyster Point Blvd
Entity Address, City or Town	South San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94080
City Area Code	650
Local Phone Number	866-8548
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	DNLI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (shares)		119,918,496
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Central Index Key	0001714899
Current Fiscal Year End Date	--12-31

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 351,047	$ 79,449
Short-term marketable securities	610,154	335,907
Prepaid expenses and other current assets	9,665	14,675
Total current assets	970,866	430,031
Long-term marketable securities	20,341	39,886
Property and equipment, net	42,265	46,732
Operating lease right-of-use asset	32,976	33,923
Other non-current assets	3,858	2,659
Total assets	1,070,306	553,231
Current liabilities:
Accounts payable	2,806	2,590
Accrued compensation	9,010	8,739
Accrued clinical costs	4,689	5,042
Other accruals and other current liabilities	11,531	6,569
Operating lease liability, current	4,508	3,665
Related party contract liability	44,854	0
Other contract liabilities	28,015	18,739
Total current liabilities	105,413	45,344
Contract liabilities, less current portion	16,557	43,753
Operating lease liability, less current portion	65,407	68,865
Other non-current liabilities	379	379
Total liabilities	187,756	158,341
Commitments and contingencies (Note 8)
Stockholders' equity:
Convertible preferred stock, $0.01 par value; 40,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019	0	0
Common stock, $0.01 par value; 400,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 119,795,216 shares and 96,189,935 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	1,524	1,288
Additional paid-in capital	1,480,315	818,803
Accumulated other comprehensive income	11	350
Accumulated deficit	(599,300)	(425,551)
Total stockholders' equity	882,550	394,890
Total liabilities and stockholders’ equity	$ 1,070,306	$ 553,231

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Convertible preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized (in shares)	40,000,000	40,000,000
Convertible preferred stock, shares issued (in shares)	0	0
Convertible preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	400,000,000	400,000,000
Common stock, shares issued (in shares)	119,795,216	96,189,935
Common stock, shares outstanding (in shares)	119,795,216	96,189,935

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Collaboration revenue
Collaboration revenue from customers	$ 9,388	$ 13,508	$ 18,751	$ 21,717
Other collaboration revenue	5	96	93	289
Total collaboration revenue	9,393	13,604	18,844	22,006
Operating expenses:
Research and development	53,704	52,544	157,872	141,831
General and administrative	15,805	11,215	42,332	35,601
Total operating expenses	69,509	63,759	200,204	177,432
Loss from operations	(60,116)	(50,155)	(181,360)	(155,426)
Interest and other income, net	1,944	3,782	7,611	11,411
Loss before income taxes	(58,172)	(46,373)	(173,749)	(144,015)
Income tax benefit (provision)	(56)	113	0	426
Net loss	(58,228)	(46,260)	(173,749)	(143,589)
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable securities, net of tax	(540)	(317)	(339)	1,211
Comprehensive loss	$ (58,768)	$ (46,577)	$ (174,088)	$ (142,378)
Net loss per share, basic and diluted (usd per share)	$ (0.54)	$ (0.48)	$ (1.65)	$ (1.50)
Weighted average number of shares outstanding, basic and diluted (in shares)	107,490,702	95,859,048	105,217,770	95,449,570

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Common stock, shares outstanding beginning balance (in shares) at Dec. 31, 2018		94,662,435
Beginning balance at Dec. 31, 2018	$ 546,845	$ 1,273	$ 774,158	$ (649)	$ (227,937)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		781,107
Issuances under equity incentive plans	4,156	$ 7	4,149
Vesting of early exercised common stock (in shares)		125,001
Vesting of early exercised common stock	85	$ 2	83
Vesting of restricted stock units (2020) and restricted stock awards and units (2019) (in shares)		419,064
Vesting of restricted stock units (2020) and restricted stock awards and units (2019)	0	$ 4	(4)
Stock-based compensation	29,489		29,489
Net loss	(143,589)				(143,589)
Other comprehensive income (loss)	1,211			1,211
Common stock, shares outstanding ending balance (in shares) at Sep. 30, 2019		95,987,607
Ending balance at Sep. 30, 2019	438,197	$ 1,286	807,875	562	(371,526)
Common stock, shares outstanding beginning balance (in shares) at Jun. 30, 2019		95,656,896
Beginning balance at Jun. 30, 2019	475,173	$ 1,283	798,277	879	(325,266)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		233,983
Issuances under equity incentive plans	679	$ 2	677
Vesting of early exercised common stock (in shares)		31,249
Vesting of early exercised common stock	21		21
Vesting of restricted stock units (2020) and restricted stock awards and units (2019) (in shares)		65,479
Vesting of restricted stock units (2020) and restricted stock awards and units (2019)	0	$ 1	(1)
Stock-based compensation	8,901		8,901
Net loss	(46,260)				(46,260)
Other comprehensive income (loss)	(317)			(317)
Common stock, shares outstanding ending balance (in shares) at Sep. 30, 2019		95,987,607
Ending balance at Sep. 30, 2019	$ 438,197	$ 1,286	807,875	562	(371,526)
Common stock, shares outstanding beginning balance (in shares) at Dec. 31, 2019	96,189,935	96,189,935
Beginning balance at Dec. 31, 2019	$ 394,890	$ 1,288	818,803	350	(425,551)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in follow-on offering, net of issuance costs of $632 (in shares)		9,000,000
Issuance of common stock in follow-on offering, net of issuance costs of $632	193,948	$ 90	193,858
Issuance of common stock in connection with the Biogen Stock Purchase Agreement (in shares)		13,310,243
Issuance of common stock in connection with the Biogen Stock Purchase Agreement	420,146	$ 133	420,013
Issuances under equity incentive plans (in shares)		1,001,905
Issuances under equity incentive plans	11,133	$ 10	11,123
Vesting of restricted stock units (2020) and restricted stock awards and units (2019) (in shares)		293,133
Vesting of restricted stock units (2020) and restricted stock awards and units (2019)	0	$ 3	(3)
Stock-based compensation	36,521		36,521
Net loss	(173,749)				(173,749)
Other comprehensive income (loss)	$ (339)			(339)
Common stock, shares outstanding ending balance (in shares) at Sep. 30, 2020	119,795,216	119,795,216
Ending balance at Sep. 30, 2020	$ 882,550	$ 1,524	1,480,315	11	(599,300)
Common stock, shares outstanding beginning balance (in shares) at Jun. 30, 2020		105,897,872
Beginning balance at Jun. 30, 2020	502,167	$ 1,385	1,041,303	551	(541,072)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with the Biogen Stock Purchase Agreement (in shares)		13,310,243
Issuance of common stock in connection with the Biogen Stock Purchase Agreement	420,146	$ 133	420,013
Issuances under equity incentive plans (in shares)		412,389
Issuances under equity incentive plans	5,753	$ 4	5,749
Vesting of restricted stock units (2020) and restricted stock awards and units (2019) (in shares)		174,712
Vesting of restricted stock units (2020) and restricted stock awards and units (2019)	0	$ 2	(2)
Stock-based compensation	13,252		13,252
Net loss	(58,228)				(58,228)
Other comprehensive income (loss)	$ (540)			(540)
Common stock, shares outstanding ending balance (in shares) at Sep. 30, 2020	119,795,216	119,795,216
Ending balance at Sep. 30, 2020	$ 882,550	$ 1,524	$ 1,480,315	$ 11	$ (599,300)

Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Common Stock
Common stock issuance costs	$ 632

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities
Net loss	$ (173,749)	$ (143,589)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,410	5,936
Stock–based compensation expense	36,521	29,489
Net amortization of discounts on marketable securities	(1,074)	(4,032)
Non-cash adjustment to operating lease expense	(1,669)	2,333
Other non-cash items	18	(427)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	3,819	5,812
Accounts payable	147	466
Accruals and other current liabilities	4,880	2,876
Contract liabilities	(17,920)	(2,797)
Related party contract liability	44,854	0
Net cash used in operating activities	(97,763)	(103,933)
Investing activities
Purchases of marketable securities	(687,523)	(219,139)
Purchases of property and equipment	(1,900)	(15,146)
Maturities and sales of marketable securities	433,557	339,612
Net cash provided by (used in) investing activities	(255,866)	105,327
Financing activities
Proceeds from issuance of common stock in connection with the Biogen Stock Purchase Agreement	420,146	0
Proceeds from public offering of common stock, net of issuance costs	193,948	0
Proceeds from exercise of awards under equity incentive plans	11,133	4,156
Net cash provided by financing activities	625,227	4,156
Net increase in cash, cash equivalents and restricted cash	271,598	5,550
Cash, cash equivalents and restricted cash at beginning of period	80,949	78,623
Cash, cash equivalents and restricted cash at end of period	352,547	84,173
Supplemental disclosures of cash flow information
Tenant improvements provided by the landlord	0	11,343
Property and equipment purchases accrued but not yet paid	$ 32	$ 1,500

Significant Accounting Policies	9 Months Ended
Significant Accounting Policies	Sep. 30, 2020
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies Organization and Description of Business Denali Therapeutics Inc. ("Denali" or the “Company”) is a biopharmaceutical company, incorporated in Delaware, that discovers and develops therapeutics to defeat neurodegenerative diseases. The Company is headquartered in South San Francisco, California. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X for interim financial information. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 27, 2020 (the "2019 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the audited annual consolidated financial statements as of the period then ended. Certain information and footnote disclosures typically included in the Company's annual consolidated financial statements have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All such adjustments are of a normal recurring nature except for the impacts of adopting new accounting standards discussed below. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period. During the nine months ended September 30, 2020, except as discussed below in the sections titled "Marketable Securities" and "Recently Adopted Accounting Pronouncement," there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2019 Annual Report on Form 10-K. For further information with regard to the Company’s Significant Accounting Policies, please refer to Note 1, "Significant Accounting Policies," to the Company’s Consolidated Financial Statements included in the 2019 Annual Report on Form 10-K. Principles of Consolidation These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. For the Company and its subsidiary, the functional currency has been determined to be U.S. dollars. Monetary assets and liabilities denominated in foreign currency are remeasured at period-end exchange rates. Non-monetary assets and liabilities denominated in foreign currencies are remeasured at historical rates. Foreign currency transaction gains and losses resulting from remeasurement are recognized in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material to the Condensed Consolidated Balance Sheets and Statements of Operations and Comprehensive Loss. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and forward foreign currency exchange contracts. Substantially all of the Company’s cash and cash equivalents are deposited in accounts with financial institutions that management believes are of high credit quality. Such deposits have and will continue to exceed federally insured limits. The Company maintains its cash with accredited financial institutions and accordingly, such funds are subject to minimal credit risk. The Company’s investment policy limits investments to certain types of securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and marketable securities and issuers of marketable securities to the extent recorded on the Condensed Consolidated Balance Sheets. As of September 30, 2020 and December 31, 2019, the Company has no off balance sheet concentrations of credit risk. The Company is exposed to counterparty credit risk on all of its derivative financial instruments. The Company has established and maintains strict counterparty credit guidelines and enters into hedges only with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company does not require collateral to be pledged under these agreements. The Company is subject to a number of risks similar to other early-stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of current or future preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain regulatory and marketing approvals for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, protection of proprietary technology, the ability to make milestone, royalty or other payments due under any license or collaboration agreements, and the need to secure and maintain adequate manufacturing arrangements with third parties. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. The COVID-19 pandemic has caused increased risk and uncertainty for the Company. Credit risk associated with investments in securities may increase if any institution with which the Company has an investment is significantly impacted by the COVID-19 pandemic. As of September 30, 2020, the Company has not realized any losses on its cash deposits or investments. Further, COVID-19 may impact the timelines and progress of the Company's preclinical activities and clinical trials, and may impact its ability to raise capital in the near term. Segments The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents. Cash equivalents are reported at fair value. The Company’s restricted cash consists of the letter of credit for the Company’s headquarters building lease, and is included within other non-current assets on the accompanying Condensed Consolidated Balance Sheets. Marketable Securities The Company generally invests its excess cash in money market funds and investment grade short to intermediate-term fixed income securities. Such investments are included in cash and cash equivalents, short-term marketable securities, or long-term marketable securities on the Condensed Consolidated Balance Sheets, are considered available-for-sale, and reported at fair value with net unrealized gains and losses included as a component of stockholders’ equity. The Company classifies investments in securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. The Company classifies investments in securities with remaining maturities of over one year as long-term investments. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Realized gains and losses and declines in value determined to be due to credit losses on marketable securities, if any, are included in interest and other income, net. The Company periodically evaluates the need for an allowance for credit losses. This evaluation includes consideration of several qualitative and quantitative factors, including whether it has plans to sell the security, whether it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis, and if the entity has the ability and intent to hold the security to maturity, and the portion of any unrealized loss that is the result of a credit loss. Factors considered in making these evaluations include quoted market prices, recent financial results and operating trends, implied values from any recent transactions or offers of investee securities, credit quality of debt instrument issuers, expected cash flows from securities, other publicly available information that may affect the value of the marketable security, duration and severity of the decline in value, and the Company's strategy and intentions for holding the marketable security. Accounts Receivable Accounts receivable are included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The accounts receivable balance represents amounts receivable from the Company's collaboration partners, net of an allowance for credit losses, if required. Derivatives and Hedging Activities The Company measures its derivative instruments at fair value, and accounts for them as either assets or liabilities included within prepaid assets and other current assets and other accruals and current liabilities, respectively, on the Condensed Consolidated Balance Sheets. Derivatives are adjusted to fair value through interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Leases The Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases as of January 1, 2019. A determination is made as to whether an arrangement is a lease at inception. A right-of-use (“ROU”) asset and operating lease liability is recognized for identified operating leases in the Condensed Consolidated Balance Sheets. The changes in operating lease ROU assets and operating lease liabilities are presented net within non-cash adjustment to operating lease expense in the Condensed Consolidated Statements of Cash Flows. ROU assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments due over the lease term, with the ROU assets adjusted for lease incentives received. When determining the present value of lease payments, the Company uses its incremental borrowing rate on the date of lease commencement, or the rate implicit in the lease, if known. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed by management to be reasonably certain at lease inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet, unless they include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease expenses on a straight-line basis over the lease term. The Company has leases with lease and non-lease components, which the Company has elected to account for as a single lease component. Revenue Recognition License and Collaboration Revenue The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. The accounting treatment pursuant to Topic 606 is outlined below. The terms of licensing and collaboration agreements entered into typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply and research and development services and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenue. The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Amounts received prior to satisfying the revenue recognition criteria are recorded as contract liabilities in the Company’s Condensed Consolidated Balance Sheets. If the related performance obligation is expected to be satisfied within the next twelve months this will be classified in current liabilities. Amounts recognized as revenue prior to the Company having an unconditional right (other than a right that is conditioned only on the passage of time) to receipt are recorded as contract assets in the Company's Condensed Consolidated Balance Sheets. If the Company expects to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets. A net contract asset or liability is presented for each contract with a customer. At contract inception, the Company assesses the goods or services promised in a contract with a customer and identifies those distinct goods and services that represent a performance obligation. A promised good or service may not be identified as a performance obligation if it is immaterial in the context of the contract with the customer, if it is not separately identifiable from other promises in the contract (either because it is not capable of being separated or because it is not separable in the context of the contract), or if the performance obligation does not provide the customer with a material right. The Company considers the terms of the contract to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration will only be included in the transaction price when it is not considered constrained, which is when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices ("SSP"). The relative SSP for each deliverable is estimated using external sourced evidence if it is available. If external sourced evidence is not available, the Company uses its best estimate of the SSP for the deliverable. Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when, or as, the customer obtains control of that asset, which for a service is considered to be as the services are received and used. The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the nature of the service promised to the customer. After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events. Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception, or to a single performance obligation as applicable. Management may be required to exercise considerable judgment in estimating revenue to be recognized. Judgment is required in identifying performance obligations, estimating the transaction price, estimating the SSP of identified performance obligations, which may include forecasted revenue, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success, and estimating the progress towards satisfaction of performance obligations. Comprehensive Income (Loss) Comprehensive income (loss) is composed of net loss and certain changes in stockholders’ equity that are excluded from net loss, primarily unrealized gains or losses on the Company’s marketable securities. Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented. Recently Issued Accounting Pronouncement In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. ASU No. 2019-12 modifies ASC 740 to simplify several aspects of accounting for income taxes, including eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted, and is required to be adopted prospectively, with the exception of certain specific amendments. The Company is currently finalizing its assessment of the impact of this ASU, and does not expect it to have a material impact on its Condensed Consolidated Financial Statements. Recently Adopted Accounting Pronouncement In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The Company adopted this standard as of January 1, 2020 using a modified retrospective approach. Adoption of the standard did not have a material impact on the Condensed Consolidated Financial Statements.

Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Assets and liabilities measured at fair value at each balance sheet date are as follows (in thousands):


	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	326,640	$	—	$	—	$	326,640


Short-term marketable securities:
U.S. government treasuries	542,637		—		—		542,637
U.S. government agency securities	—		10,111		—		10,111
Corporate debt securities	—		43,919		—		43,919
Commercial paper	—		13,487		—		13,487
Long-term marketable securities:
U.S. government treasuries	5,153		—		—		5,153
U.S. government agency securities	—		15,188		—		15,188

Foreign currency derivative contracts	—		109		—		109
Total	$	874,430	$	82,814	$	—	$	957,244
Liabilities:
Foreign currency derivative contracts	$	—	$	173	$	—	$	173
Total	$	—	$	173	$	—	$	173


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	54,163	$	—	$	—	$	54,163
U.S. government treasuries	15,989		—		—		15,989
Short-term marketable securities:
U.S. government treasuries	250,070		—		—		250,070
U.S. government agency securities	—		2,000		—		2,000
Corporate debt securities	—		53,479		—		53,479
Commercial paper	—		30,358		—		30,358
Long-term marketable securities:
U.S. government treasuries	13,869		—		—		13,869
Corporate debt securities	—		26,017		—		26,017
Foreign currency derivative contracts	—		85		—		85
Total	$	334,091	$	111,939	$	—	$	446,030
Liabilities:
Foreign currency derivative contracts	$	—	$	8	$	—	$	8
Total	$	—	$	8	$	—	$	8

The carrying amounts of prepaid expenses and other current assets, accounts payable and accrued liabilities approximate their fair values due to their short-term maturities.

The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.

There were no transfers of assets or liabilities between the fair value measurement levels during the three and nine months ended September 30, 2020 or 2019.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Cash and Marketable Securities

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Cash and Marketable Securities

Cash, cash equivalents and restricted cash

A reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amount reported within the Condensed Consolidated Statements of Cash Flows is shown in the table below (in thousands):


	September 30,		December 31,		September 30,		December 31,
	2020		2019		2019		2018
Cash and cash equivalents	$	351,047	$	79,449	$	82,673	$	77,123
Restricted cash included within other non-current assets	1,500		1,500		1,500		1,500
Total cash, cash equivalents, and restricted cash	$	352,547	$	80,949	$	84,173	$	78,623

Marketable securities

All marketable securities were considered available-for-sale at September 30, 2020 and December 31, 2019. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs as discussed in Note 2, "Fair Value Measurements". The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below (in thousands):


	September 30, 2020
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	542,479	$	161	$	(3)	$	542,637
U.S. government agency securities(2)	10,122		—		(11)		10,111
Corporate debt securities	43,703		216		—		43,919
Commercial paper	13,487		—		—		13,487
Total short-term marketable securities	609,791		377		(14)		610,154
Long-term marketable securities:
U.S. government treasuries	5,153		—		—		5,153
U.S. government agency securities(3)	15,189		—		(1)		15,188

Total long-term marketable securities	20,342		—		(1)		20,341
Total	$	630,133	$	377	$	(15)	$	630,495

__________________________________________________

(1)Unrealized holding losses on 8 securities with an aggregate fair value of $73.3 million.

(2)Unrealized holding losses on 2 securities with an aggregate fair value of $10.1 million.

(3)Unrealized holding losses on 1 securities with an aggregate fair value of $15.2 million.


	December 31, 2019
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	249,478	$	594	$	(2)	$	250,070
U.S. government agency securities	1,999		1		—		2,000
Corporate debt securities(2)	53,396		94		(11)		53,479
Commercial paper	30,358		—		—		30,358
Total short-term marketable securities	335,231		689		(13)		335,907
Long-term marketable securities:
U.S. government treasuries(3)	13,865		6		(2)		13,869

Corporate debt securities(4)	25,998		34		(15)		26,017
Total long-term marketable securities	39,863		40		(17)		39,886
Total	$	375,094	$	729	$	(30)	$	375,793

__________________________________________________

(1)Unrealized holding losses on 2 securities with an aggregate fair value of $9.3 million.

(2)Unrealized holding losses on 4 securities with an aggregate fair value of $25.9 million.

(3)Unrealized holding losses on 1 security with an aggregate fair value of $10.1 million.

(4)Unrealized holding losses on 3 securities with an aggregate fair value of $17.2 million.

As of December 31, 2019, some of the Company’s marketable securities were in an unrealized loss position, and unrealized losses were immaterial as of September 30, 2020. The Company has not recognized an allowance for credit losses as of September 30, 2020 and there was no other-than-temporary impairment as of December 31, 2019. The Company determined that it had the ability and intent to hold all marketable securities that have been in a continuous loss position until maturity or recovery. Further, these marketable securities were initially, and continue to be, held with investment grade, high credit quality institutions. All marketable securities with unrealized losses as of each balance sheet date have been in a loss position for less than twelve months or the loss is not material.

The Company recorded unrealized gains on marketable securities in other comprehensive income for the three and nine months ended September 30, 2019. The Company recorded a tax benefit of $0.1 million and $0.4 million for the three and nine months ended September 30, 2019 on the Condensed Consolidated Statements of Operations and Comprehensive Loss and a corresponding tax charge in other comprehensive income. There was no unrealized gain on marketable securities in other comprehensive income for the three and nine months ended September 30, 2020.

All of the Company’s marketable securities have an effective maturity of less than two years.

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Foreign Currency Exchange Rate Exposure

The Company uses forward foreign currency exchange contracts to hedge certain operational exposures resulting from potential changes in foreign currency exchange rates. Such exposures result from portions of the Company’s forecasted cash flows being denominated in currencies other than the U.S. dollar, primarily the Euro and British Pound. The derivative instruments the Company uses to hedge this exposure are not designated as cash flow hedges, and as a result, changes in their fair value are recorded in interest and other income, net, on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss.

The fair values of forward foreign currency exchange contracts are estimated using current exchange rates and interest rates and take into consideration the current creditworthiness of the counterparties. Information regarding the specific instruments used by the Company to hedge its exposure to foreign currency exchange rate fluctuations is provided below.

The following table summarizes the Company’s forward foreign currency exchange contracts outstanding as of September 30, 2020 and December 31, 2019, respectively (notional amounts in thousands):


Foreign Exchange Contracts	Number of Contracts	Aggregate Notional(1) Amount in Foreign Currency	Maturity
Euros	24	3,630	Oct 2020 - Aug 2021
British Pounds	26	3,736	Oct 2020 - Aug 2021

Total at September 30, 2020	50
Euros	23	1,500	Jan 2020 - Nov 2020
British Pounds	15	2,285	Jan 2020 - Jun 2020
Swiss Francs	10	129	Jan 2020 - Aug 2020
Total at December 31, 2019	48

_________________________________________________

(1) The notional amount represents the net amount of foreign currency that will be received upon maturity of the forward contracts.

Acquisition	9 Months Ended
Acquisition	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Acquisition	Acquisition In August 2016, the Company entered into a License and Collaboration Agreement (“F-star Collaboration Agreement”) with F-star Gamma Limited (“F-star Gamma”), F-star Biotechnologische Forschungs-Und Entwicklungsges M.B.H ("F-star GmbH") and F-star Biotechnology Limited ("F-star Ltd") (collectively, “F-star”) to leverage F-star’s modular antibody technology and the Company’s expertise in the development of therapies for neurodegenerative diseases. Under the F-star Collaboration Agreement, the Company made payments to F-star totaling $11.5 million. In connection with the entry into the F-star Collaboration Agreement, the Company also purchased an option for an upfront option fee of $0.5 million (the “buy-out-option”), to acquire all of the outstanding shares of F-star Gamma pursuant to a pre-negotiated buy-out option agreement (the “Option Agreement”). In May 2018, the Company exercised the Option Agreement and entered into a Share Purchase Agreement (the “Purchase Agreement”) with the shareholders of F-star Gamma and Shareholder Representative Services LLC, pursuant to which the Company acquired all of the outstanding shares of F-star Gamma (the “Acquisition”). As a result of the Acquisition, F-star Gamma became a wholly-owned subsidiary of the Company and the Company changed the entity’s name to Denali BBB Holding Limited. In addition, the Company became a direct licensee of certain intellectual property of F-star Ltd by way of the Company’s assumption of F-star Gamma’s license agreement with F-star Ltd, dated August 24, 2016, (the “F-star Gamma License”). The Company made initial exercise payments under the Purchase Agreement and the F-star Gamma License, in the aggregate, of $17.8 million. In addition, the Company is required to make future contingent payments, to F-star Ltd and the former shareholders of F-star Gamma, up to a maximum amount of $447.0 million in the aggregate upon the achievement of certain defined preclinical, clinical, regulatory and commercial milestones. These include up to $27.0 million in preclinical contingent payments, $50.0 million in clinical contingent payments, $120.0 million in regulatory contingent payments and $250.0 million in commercial contingent payments. The amount of the contingent payments will vary based on whether F-star delivers an Fcab (constant Fc-domains with antigen-binding activity) that meets pre-defined criteria and whether the Fcab has been identified solely by the Company or solely by F-star or jointly by the Company and F-star. In June 30, 2019, the Company made a payment of $1.5 million to F-star Ltd upon the achievement of a specified preclinical milestone in the Company's ETV:IDS program. The Company concluded that the assets acquired and liabilities assumed upon the exercise of the Option Agreement did not meet the accounting definition of a business, and as such, the acquisition was accounted for as an asset purchase. As the transaction was accounted for as an asset purchase rather than a business combination, the Company did not recognize any contingent consideration on the acquisition date. To date, the Company has paid consideration of $19.8 million in the aggregate, consisting of up-front and contingent consideration, all of which was recorded as research and development expense as incurred. The Company recognized $1.5 million of contingent consideration as research and development expense for the three and nine months ended September 30, 2019. There has been no contingent consideration recognized for the three and nine months ended September 30, 2020. Any future contingent consideration is expected to be recognized as incurred in research and development expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Under the F-star Collaboration Agreement, the Company is responsible for certain research costs incurred by F-star Ltd in conducting activities under an agreed development plan for each Fcab, for up to 24 months after the target Fcab is accepted. The Company's responsibility for research costs under the first development plan related to an Fcab that targets the transferrin receptor was completed during the year ended December 31, 2018. The responsibility for costs under the second development plan related to an undisclosed Fcab target commenced in February 2019. The Company recognized $0.3 million and $0.9 million in research and development expense related to the funding of F-star Ltd activities under this development plan during the three and nine months ended September 30, 2020, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2019, respectively.

Collaboration Agreements

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Agreements

Biogen

Provisional Biogen Collaboration Agreement and Common Stock Purchase Agreement

On August 5, 2020, the Company entered into a binding Provisional Collaboration and License Agreement (“Provisional Biogen Collaboration Agreement”) with Biogen Inc.’s subsidiaries, Biogen MA Inc. (“BIMA”) and Biogen International GmbH (“BIG”) (BIMA and BIG, collectively, “Biogen”) pursuant to which the Company granted Biogen a license to co-develop and co-commercialize Denali’s small molecule LRRK2 inhibitor program (the “LRRK2 Program”), an option in respect of each of (i) the Company’s amyloid beta program utilizing the Company's Transport Vehicle ("TV") technology platform to cross the blood-brain barrier and (ii) one other unnamed program also utilizing the Company's TV technology platform (the “Option Programs”), and a right of first negotiation with respect to two additional unnamed programs for indications within Alzheimer’s disease, Parkinson’s disease, amyotrophic lateral sclerosis ("ALS") and multiple sclerosis utilizing the Company's TV technology platform (the “ROFN Programs”) should the Company decide to seek a collaboration with a third party for such programs. The Provisional Biogen Collaboration Agreement is a binding agreement, which became effective on the closing of the Common Stock Purchase Agreement ("SPA"), as described further below. The Provisional Biogen Collaboration Agreement expired in October 2020 upon the execution of a Definitive LRRK2 Collaboration and License Agreement (“LRRK2 Agreement”) with Biogen on October 4, 2020 and a Right of First Negotiation, Option and License Agreement (the “ROFN and Option Agreement”) on October 6, 2020 (collectively, the "Definitive Biogen Collaboration Agreement").

Under the terms of the Provisional Biogen Collaboration Agreement, Biogen was obligated to pay the Company a $560.0 million upfront payment, payable upon execution of the Definitive Biogen Collaboration Agreement, which occurred in October 2020. With respect to the LRRK2 Program, Biogen will make milestone payments up to approximately $1.1 billion upon achievement of certain development and commercial events. Such milestone payments include $375.0 million in development, $375.0 million upon first commercial sale, and $375.0 million in net sales-based milestones. The Company will share 50% of the profits and losses with Biogen for LRRK2 Products in the United States, and 40% of such profits and losses in China. The Company will be entitled to receive royalties in the high teens to low twenties percentages on net sales for LRRK2 Products outside of the United States and China.

Under the terms of the Provisional Biogen Collaboration Agreement, through the effective date of the Definitive Biogen Collaboration Agreement, the Company conducted and controlled LRRK2 clinical development. Subsequently, the Company and Biogen will jointly develop LRRK2 Products pursuant to a clinical development plan set forth within the LRRK2 Agreement. The parties will share responsibility and costs for global development of LRRK2 Products pursuant to a mutually agreed development plan and budget, with Biogen funding 60% and the Company funding 40% of such costs. The Company has the ability to opt out of the development cost sharing arrangement, as further described below.

The Company may opt out of development cost sharing worldwide and upon such election, from any further profit sharing from the LRRK2 Program. The Company also has the right to opt-out of the profit sharing arrangement for the LRRK2 Program or for only those LRRK2 Products that do not penetrate the blood-brain barrier (“Peripheral LRRK2 Products”), in each of the United States and China. After such an opt out, the Company will no longer be obligated to share in the development and commercialization costs for, or be entitled to share in the applicable revenues from, such LRRK2 Program (or from the LRRK2 Peripheral Products). Additionally, following a change of control of the Company, Biogen may, within a specified period of time, elect to terminate the Company’s right to share commercialization costs and revenues from the LRRK2 Program in China. If the Company chooses to exercise its opt out rights, the Company will be entitled to receive tiered royalties on net sales of the applicable LRRK2 Program in the relevant country (or countries). The royalty rates for the applicable LRRK2 Program will be a percentage in the high teens to low twenties, but may increase to the mid-twenties if the Company has met certain co-funding thresholds or there has been a first commercial sale at the time of the Company's election.

In addition to the LRRK2 Program, Biogen received an exclusive option to license two preclinical programs enabled by the Company's TV technology platform, which platform aims to improve brain uptake of biotherapeutics, including its Antibody Transport Vehicle ("ATV"): Abeta program ("ATV enabled anti-amyloid beta program") and a second program utilizing the Company's TV technology for an unnamed target ("TV program"), excluding small molecules, Adeno-associated viruses ("AAV") and oligonucleotides. Biogen’s option may be exercised up to initiation of investigational new drug ("IND")-enabling studies for each program and continues for each program until a specified period of time after delivery of an option data package, or thirty business days after the 5th anniversary of the effective date of the Provisional Biogen Collaboration Agreement, whichever is earlier.

Further, Biogen will have the right of first negotiation ("ROFN") on two additional TV-enabled therapeutics within Alzheimer’s disease, Parkinson’s disease, ALS and multiple sclerosis should the Company decide to seek a collaboration with a third party for such programs, but this does not include any of the Company’s small molecule, AAV and oligonucleotide programs. The ROFN period continues until seven years after the effective date of the Provisional Biogen Collaboration Agreement or the date on which the Company has offered Biogen two ROFN Programs, whichever is earlier. However, if the Company does not execute an agreement with a third party with respect to a particular ROFN Program offered to Biogen within a specified amount of time, Biogen will have one additional right to exercise the ROFN again with respect to such ROFN Program.

In connection with the Provisional Biogen Collaboration Agreement, the Company entered into a common stock purchase agreement (the "Stock Purchase Agreement") with BIMA on August 5, 2020, pursuant to which the Company agreed to issue and sell, and BIMA agreed to purchase, 13,310,243 shares of the Company’s common stock (the “Shares”) for an aggregate purchase price of $465.0 million pursuant to the terms and conditions thereof. Since the shares of common stock owned by Biogen as of September 30, 2020 represent more than 10% of the voting interest of the Company, Biogen is considered a related party as defined in ASC 850. Management determined that it is appropriate to account for the Provisional Biogen Collaboration Agreement and the SPA as one arrangement because they were entered into at the same time with interrelated financial terms.

On September 22, 2020, the Company closed the sale of the Shares to BIMA pursuant to the Stock Purchase Agreement. The estimated fair market value of the Shares issued to Biogen was $420.1 million, based on the closing stock price of $35.87 on the date of issuance adjusted by a discount for lack of marketability due to certain holding period restrictions, which was valued using an option pricing model. This stock issuance resulted in a $44.9 million premium paid to the Company above the estimated fair value of the Company's common stock (the "Stock Premium"), which was recorded as a related party contract liability in the Condensed Consolidated Balance Sheets. The Stock Premium was the only consideration allocated to the Provisional Biogen Collaboration Agreement as of September 30, 2020

Upon inception, the Company identified the LRRK2 license as the only distinct performance obligation under ASC 606 associated with the Provisional Biogen Collaboration Agreement. No performance obligations were identified related to the Option or ROFN Programs since the relevant financial and operational terms were not considered to be sufficiently defined in the Provisional Biogen Collaboration Agreement to allow the Company to determine its obligations. Further, the Company was required to perform interim LRRK2 development activities subject to cost sharing in the period prior to finalization of the clinical development plan set forth within the LRRK2 Agreement.

The Company believes that the Provisional Biogen Collaboration Agreement is a collaboration arrangement as defined in ASC 808, Collaborative Agreements. The Company also believes that Biogen meets the definition of a customer as defined in ASC 606, Revenue From Contracts With Customers, for the LRRK2 license, but does not meet the definition of a customer for the interim LRRK2 development activities for which the Company will fund 40% of total costs. Since ASC 808 does not address recognition and measurement, the Company looked to other accounting literature for guidance where the unit of account does not fall under ASC 606, and determined that for the interim LRRK2 development activities subject to cost sharing provisions, the guidance in ASC 730, Research and Development should be applied.

At inception, there was no transaction price for the Provisional Biogen Collaboration Agreement. On September 22, 2020, as noted above, the $44.9 million Stock Premium was included in the transaction price. All other potential future payments were considered constrained at inception and through September 30, 2020 since they were all contingent on the execution of the Definitive Biogen Collaboration Agreement. For this reason, and due to the uncertainty surrounding the execution of the Definitive Biogen Collaboration Agreement as of September 30, 2020, the Company did not conclude it was probable that a significant reversal in the amount recognized would not occur.

As of September 30, 2020, management determined that no performance obligation had been satisfied or delivered to Biogen. License delivery is contingent on transfer of control to Biogen, which had not occurred as of September 30, 2020. Since no performance obligation had been satisfied as of September 30, 2020, no related party revenue was recognized under ASC 606 in the three and nine months ended September 30, 2020. The entire transaction price was recorded within related party contract liability on the Condensed Consolidated Balance Sheet as of September 30, 2020. Further, since cost sharing reimbursement related to the interim LRRK2 development activities performed prior to September 30, 2020 was contingent upon execution of the Definitive Biogen Collaboration Agreement, no offset to research and development expense from a related party was included in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020, and no related party receivable was recorded on the Condensed Consolidated Balance Sheet as of September 30, 2020.

In assessing the Provisional Biogen Collaboration Agreement, management exercised considerable judgment in estimating revenue to be recognized, specifically related to determining the separate performance obligations under the Agreement and estimating the timing of delivery of those performance obligations.

As of September 30, 2020, the Company had not achieved any milestones or recorded any product sales under the Provisional Biogen Collaboration Agreement.

Definitive Biogen Collaboration Agreement

The Company entered into the LRRK2 Agreement with Biogen on October 4, 2020 and the ROFN and Option Agreement on October 6, 2020. Collectively these are known as the Definitive Biogen Collaboration Agreement, the material terms of which are consistent with, and supersede, the Provisional Biogen Collaboration Agreement discussed above.

Under the ROFN and Option Agreement, with respect to the options granted by the Company to Biogen, Biogen is obligated to pay to the Company an aggregate of up to $270.0 million in option exercise and development milestone payments, up to $325.0 million upon first commercial sale, and up to $290.0 million of net sales-based milestone payments, following the achievement of certain prespecified milestone events and if Biogen exercises both of its options. Furthermore, Biogen is obligated to pay to the Company royalties in the mid-single digit to mid-teens percentages, depending on the program for which Biogen exercises its option and upon the achievement of certain sales thresholds.

In October 2020, the Company received upfront payments totaling $560.0 million pursuant to the Definitive Biogen Collaboration Agreement. Management is in the process of assessing the accounting impact of the execution of the Definitive Biogen Collaboration Agreement.

Sanofi

In October 2018, the Company entered into a Collaboration and License Agreement ("Sanofi Collaboration Agreement") with Genzyme Corporation, a wholly owned subsidiary of Sanofi S.A. ("Sanofi") pursuant to which certain small molecule CNS and peripheral receptor interacting serine/threonine protein kinase 1 ("RIPK1") inhibitors contributed by Sanofi and by the Company will be developed and commercialized. The Sanofi Collaboration Agreement became effective in November 2018 when the Hart-Scott-Rodino ("HSR") requirements were satisfied at which time Sanofi paid the Company an upfront payment of $125.0 million. Under the Sanofi Collaboration Agreement, the Company is eligible to receive milestone payments from Sanofi up to approximately $1.1 billion upon achievement of certain clinical, regulatory and sales milestone events. Such milestone payments include $215.0 million in clinical milestone payments and $385.0 million in regulatory milestone payments for CNS Products, as defined, that are developed and approved in the United States, by the European Medicines Agency ("EMA") and in Japan for three indications, including Alzheimer's disease. These milestones also include $120.0 million in clinical milestone payments, $175.0 million in regulatory milestone payments and $200.0 million in commercial milestone payments for Peripheral Products, as defined, that are developed and approved in the United States, by the EMA and Japan for three indications.

The Company will share profits and losses equally with Sanofi for CNS Products sold in the United States and China, and receive variable royalties on net sales for CNS Products sold outside of the United States and China and for Peripheral Products sold worldwide.

The Company and Sanofi will jointly develop CNS Products pursuant to a global development plan. The Company will be responsible, at its own cost, for conducting Phase 1 and Phase 2 trials for CNS Products in Alzheimer’s disease and any activities required to support such clinical trials and specific for Alzheimer’s disease. The Company conducted, at Sanofi’s cost, a Phase 1b trial for the initial lead CNS penetrant RIPK1 inhibitor, DNL747 (SAR443060), in ALS. In June 2020, the Company announced that clinical activities on DNL747 would be paused and efforts focused on the development of the backup preclinical candidate, DNL788. Sanofi is responsible, at its cost, for all other Phase 1 and Phase 2 trials for CNS Products, including for multiple sclerosis. Sanofi will lead the conduct of all Phase 3 and later stage development trials for CNS Products, with Sanofi and the Company funding 70% and 30% of such costs, respectively. Sanofi will also lead the commercialization activities globally for CNS Products, subject to certain options that the Company has to conduct co-commercialization activities with respect to each CNS Product in the United States and China.

Sanofi will be responsible, at its cost, for conducting activities relating to the development and commercialization of all Peripheral Products. Denali will be entitled to receive tiered royalties in the low- to mid- teen percentages on net sales of Peripheral Products.

The Company identified the following distinct performance obligations associated with the Sanofi Collaboration Agreement upon inception: the CNS program license, the Peripheral program license, the Phase 1 and Phase 2 trials for CNS Products for Alzheimer’s disease ("Alzheimer's Disease Services"), and the Phase 1b trial for DNL747 for ALS and associated activities ("Retained Activities").

The Company believes that the Sanofi Collaboration Agreement is a collaboration arrangement as defined in ASC 808. The Company also believes that Sanofi meets the definition of a customer as defined in ASC 606, Revenue From Contracts With Customers for three of the performance obligations identified at inception, but does not meet the definition of a customer for the Alzheimer's Disease Services. Further, Sanofi does not meet the definition of a customer for all Phase 3 and later stage development trials for CNS Products led by Sanofi for which the Company will fund 30% of total costs. Since ASC 808 does not address recognition and measurement, the Company looked to other accounting literature for guidance where the performance obligation does not fall under ASC 606, and determined that for the Alzheimer's Disease Services, the guidance in ASC 606 should be analogized for the recognition, measurement and reporting of this performance obligation, and for the cost sharing provisions, the Company determined that the guidance in ASC 730, Research and Development should be applied.

The transaction price at inception included upfront fixed consideration of $125.0 million. All potential future milestones and other payments were considered constrained at the inception of the Sanofi Collaboration Agreement since the Company could not conclude it was probable that a significant reversal in the amount recognized would not occur. From inception through September 30, 2020, the transaction price increased by $21.3 million, consisting of $11.3 million related to costs incurred for Retained Activities that were no longer constrained, and $10.0 million related to a milestone triggered in July 2019. The transaction price increased by $0.1 million and $0.9 million for the three and nine months ended September 30, 2020, respectively, related entirely to costs incurred for Retained Activities that were determined to no longer be constrained during these periods. The transaction price increased by $12.4 million and $19.2 million for the three and nine months ended September 30, 2019, respectively, related to the $10.0 million milestone triggered in July 2019, as well as $2.4 million and $9.2 million, respectively, for Retained Activities that were determined to no longer be constrained during these periods.

The respective standalone value for each of the performance obligations was determined by applying the SSP method and the transaction price allocated based on the relative SSP method with revenue recognition timing to be determined either by delivery or the provision of services.

The Company used an adjusted market assessment approach to estimate the selling price for the program licenses, and an expected cost plus margin approach for estimating the Alzheimer’s Disease Services and the Retained Activities. The program licenses and existing know-how were delivered on the effective date of the Sanofi Collaboration Agreement. The Alzheimer’s Disease Services and the Retained Activities are expected to be delivered over time as the services are performed. For the Alzheimer's Disease Services, revenue will be recognized over time using the input method, based on costs incurred to perform the services, since the level of costs incurred over time is thought to best reflect the transfer of services to Sanofi. For the Retained Activities, revenue will be recognized over time using the output method, based on amounts invoiced to Sanofi, since this is believed to directly correlate to the value of the services performed.

A contract liability of $3.4 million and $3.5 million was recorded on the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively. This contract liability relates to the portion of the Alzheimer's Disease Services performance obligation yet to be satisfied, with such amounts to be recognized over the estimated period of the services, which is expected to be several years. The Company recorded a receivable associated with the Sanofi Collaboration Agreement on the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 of $0.1 million and $1.2 million, respectively.

In assessing the Sanofi Collaboration Agreement, management is required to exercise considerable judgment in estimating revenue to be recognized. Management applies judgment in determining the separate performance obligations, in estimating the selling price, in determining when control was transferred to Sanofi for the licenses, and in estimating total future costs when using the input method.

Through September 30, 2020, the Company has received milestone payments of $10.0 million and has not recorded any product sales recorded under the Sanofi Collaboration Agreement.

Takeda

In January 2018, the Company entered into a Collaboration and Option Agreement ("Takeda Collaboration Agreement") with Takeda Pharmaceutical Company Limited ("Takeda"), pursuant to which the Company granted Takeda an option to develop and commercialize, jointly with the Company, certain biologic products that are enabled by the Company's blood-brain barrier ("BBB") delivery technology and intended for the treatment of neurodegenerative disorders. The programs were the Company’s ATV:BACE1/Tau and ATV:TREM2 and PTV:PGRN programs. The Takeda Collaboration Agreement became effective in February 2018, at which time Takeda paid the Company an upfront payment of $40.0 million. Takeda may pay up to an aggregate of $25.0 million with respect to each of the three programs directed to a target and based upon the achievement of certain preclinical milestone events, up to $75.0 million in total, $5.0 million of which was paid upon the Takeda Collaboration Agreement becoming effective. In February 2019, the agreement was amended to replace the ATV:BACE1/Tau program with the ATV:Tau program. The amendment did not have a material impact to the condensed consolidated financial statements.

Under the Takeda Collaboration Agreement and unless otherwise agreed jointly between both parties, the Company will be responsible, at its cost, for conducting activities relating to pre-Investigational New Drug ("IND") development of biologic products directed to the three identified targets and enabled by its BBB delivery technology targeting TfR during the applicable research period. The period through which the option can be exercised continues for each target until the first biologic product directed to the relevant target is IND-ready or approximately five years after selection of the target, whichever is earlier.

If Takeda exercises its option with respect to a particular target, then Takeda will have the right to develop and commercialize, jointly with the Company, a specified number of biologic products enabled by its BBB delivery technology that were developed during the research period and which are directed to the relevant target. The Company will grant to Takeda a co-exclusive license under the intellectual property the Company controls related to those biologic products.

Takeda is obligated to pay the Company a $5.0 million option fee for each target for which Takeda exercises its option, up to $15.0 million in total.

In addition, if Takeda exercises its option for all three collaboration programs, Takeda may be obligated to pay the Company up to an aggregate of $407.5 million upon achievement of certain clinical milestone events and up to an aggregate of $300.0 million in regulatory milestone events relating to receipt of regulatory approval in the United States, certain European countries and Japan. Takeda may also be obligated to pay the Company up to $75.0 million per biologic product upon achievement of a certain sales-based milestone, or an aggregate of $225.0 million if one biologic product from each program achieves this milestone.

If Takeda exercises its option for a particular target, the Company and Takeda will share equally in the development and commercialization costs, and, if applicable, the profits, for each collaboration program.

Pursuant to the terms of the Takeda Collaboration Agreement, the Company entered into a common stock purchase agreement (the "Stock Purchase Agreement") with Takeda on January 3, 2018, pursuant to which Takeda purchased 4,214,559 shares of the Company's common stock (the "Shares") for an aggregate purchase price of $110.0 million. The sale of the Shares closed on February 23, 2018. The fair market value of the common stock sold to Takeda was $94.4 million, based on the closing stock price of $22.40 on the date of issuance, resulting in a $15.6 million premium paid to the Company above the fair value of the Company's common stock which was credited to contract liability in the Company's Condensed Consolidated Balance Sheets.

The Company believes that the Takeda Collaboration Agreement is a collaboration arrangement as defined in ASC 808. Further, during the research period, the Company believes that the arrangement is a contract with a customer as defined in ASC 606, Revenue From Contracts With Customers. The Takeda Collaboration Agreement and the Stock Purchase Agreement are being accounted for as one arrangement because they were entered into at the same time with interrelated financial terms.

The Company identified performance obligations during the research period consisting of the license, the development options, and joint steering committee ("JSC") participation together with the research services for each collaboration program. The license rights, JSC involvement, option and research services are considered to be a single performance obligation for each program since the research services are highly interrelated with the option and JSC involvement and will significantly modify the license. The performance obligations under each of the three programs are separate since the activities and risks under the programs are distinct.

The Company determined that all other goods or services which are contingent upon Takeda exercising its option for each program were not considered performance obligations at the inception of the Takeda Collaboration Agreement.

The transaction price at inception included fixed consideration consisting of the upfront fee of $40.0 million, the $15.6 million premium on the sale of common stock, and the first preclinical milestone payment of $5.0 million. It also included variable consideration of $26.0 million relating to future milestones that were not constrained. The amount of variable consideration was estimated using the most likely amount method.

The remaining $44.0 million of preclinical milestones were considered constrained at the inception of the Takeda Collaboration Agreement since the Company could not conclude it is probable that a significant reversal in the amount recognized will not occur. Additionally, cost and profit sharing income, and the development and commercial milestones as outlined above, have not been considered given Takeda has not exercised its options for the development and commercial phases for any program. No change in the transaction price has been recorded since inception. This will be reassessed at each reporting period.

The transaction price has been ascribed in its entirety to the three performance obligations identified in the research term of the Takeda Collaboration Agreement.

Revenue is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to Takeda. Revenue is being recognized over time using the input method, based on costs incurred to perform the research services, since the level of costs incurred over time is thought to best reflect the transfer of services to Takeda. There were no material changes in estimates during the three and nine months ended September 30, 2020 or September 30, 2019.

A contract liability of $41.1 million and $59.0 million was recorded on the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively. This contract liability relates to the three performance obligations identified, with such amounts to be recognized over the estimated period of the pre-IND research services, which is expected to be several years. There was no receivable related to the Takeda Collaboration Agreement as of September 30, 2020 or December 31, 2019, respectively.

Revenue recognized relating to future milestone payments of $7.5 million and $2.4 million, which the Company concluded is probable that a significant reversal in the amount recognized will not occur, is presented net in the contract liability on the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively.

In assessing the Takeda Collaboration Agreement, management is required to exercise considerable judgment in estimating revenue to be recognized. Management applies judgment in determining the separate performance obligations in the research period, estimating variable consideration, and estimating total future costs when using the input method. There is some increase in the judgment required in estimating the timing of future costs due to the COVID-19 pandemic. This is because it is challenging to predict the duration and extent of the impact of the COVID-19 pandemic on the third-party service providers assisting with the Company's ATV:Tau, ATV:TREM2 and PTV:PGRN programs. This may impact the split between current and non-current contract liability on the Condensed Consolidated Balance Sheet in the future.

Through September 30, 2020, the Company had received $15.0 million in preclinical milestone payments from Takeda and had not recorded any product sales under the Takeda Collaboration Agreement.

Collaboration Revenue

Revenue disaggregated by collaboration agreement and performance obligation is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Takeda Collaboration Agreement(1)	$	9,271	$	1,085	$	17,826	$	2,507
Sanofi Collaboration Agreement

Peripheral Program License	—		10,000		—		10,000
Retained Activities	117		2,423		925		9,210
Alzheimer's Disease Services(1)	5		96		93		289
Total Sanofi Collaboration Revenue	122		12,519		1,018		19,499




Total Collaboration Revenue	$	9,393	$	13,604	$	18,844	$	22,006

_________________________________________________

(1)Amounts represent revenue recognized during the period that was included in the contract liability balance at the beginning of the period.

License Agreements	9 Months Ended
License Agreements	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
License Agreements	License Agreements Genentech In June 2016, the Company entered into an Exclusive License Agreement with Genentech, Inc. (“Genentech”). The agreement gives the Company access to Genentech’s LRRK2 inhibitor small molecule program for Parkinson’s disease. Under the agreement, Genentech granted the Company (i) an exclusive, worldwide, sublicensable license under Genentech’s rights to certain patents and patent applications directed to small molecule compounds which bind to and inhibit LRRK2 and (ii) a non-exclusive, worldwide, sublicensable license to certain related know-how, in each case, to develop and commercialize certain compounds and licensed products incorporating any such compound. The Company may owe Genentech milestone payments upon the achievement of certain development, regulatory, and commercial milestones, up to a maximum of $315.0 million in the aggregate. These milestones include up to $37.5 million in clinical milestone payments, $102.5 million in regulatory milestone payments and $175.0 million in commercial milestone payments. In addition, the Company may owe royalties on net sales of licensed products ranging from low to high single-digit percentages. Effective October 4, 2020, Biogen is responsible for 50% of any payment obligation to Genentech under this agreement. To date, the Company has paid Genentech $12.5 million in the aggregate, including an upfront fee, a technology transfer fee and a clinical milestone payment, all of which was recorded as research and development expense as incurred. No expenses were recorded in the three and nine months ended September 30, 2020 or 2019.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Lease Obligations

In May 2018, the Company entered into an amendment to its operating lease for its former corporate headquarters in South San Francisco (the "Headquarters Lease Amendment") to relocate and expand its headquarters to 148,020 rentable square feet in a building in South San Francisco, California (the "New Premises"). The Headquarters Lease Amendment has a contractual term of ten years from the legal commencement date, which was April 1, 2019, when the building was ready for occupancy. For accounting purposes, the lease commencement date was determined to be August 1, 2018, which was the date at which the Company was deemed to have obtained control over the property. The Company has an option to extend the lease term for a period of ten years by giving the landlord written notice of the election to exercise the option at least nine months, but not more than twelve months, prior to the expiration of the Headquarters Lease Amendment lease term. The Company determined that this renewal was not reasonably certain at lease inception.

The Headquarters Lease Amendment provides for monthly base rent amounts escalating over the term of the lease. In addition, the Headquarters Lease Amendment provided a tenant improvement allowance ("TIA") of up to $25.9 million, which was fully utilized, of which $4.4 million will be repaid to the landlord in the form of additional monthly rent. This is recorded as leasehold improvement assets and an offset to the lease ROU asset on the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019. The Company is also required to pay the operating expenses for the New Premises, such as taxes and insurance, which are treated as variable lease payments.

Management exercised judgment in applying the requirements of ASC 842, including the determination as to whether certain contracts contain a lease and for the Headquarters Lease Amendment, the discount rate used to determine the measurement of the lease liability. As the implicit rate of the Headquarters Lease Amendment was not known, the Company estimated a 9.0% discount rate, which was management’s estimate of the Company’s incremental borrowing rate. To estimate the incremental borrowing rate, management considered observable debt yields of comparable market instruments, as well as benchmarks within the Headquarters Lease Amendment that may be indicative of the rate implicit in the lease.

Total operating lease costs, including variable and short-term lease costs, were $2.8 million and $8.3 million for the three and nine months ended September 30, 2020, respectively, and $2.6 million and $7.4 million for the three and nine months ended September 30, 2019, respectively.

Operating lease liabilities are calculated as the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2020, the weighted average remaining lease term was 8.6 years and the weighted average discount rate used to determine the operating lease liability was 9.0%. Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2020 and September 30, 2019 of $7.2 million and $3.4 million, respectively, was included in net cash used in operating activities in the Company's Condensed Consolidated Statements of Cash Flows.

The following table reconciles the undiscounted cash flows for the next five years and total of the remaining years to the operating lease liabilities recorded in the Condensed Consolidated Balance Sheet as of September 30, 2020 (in thousands):


Year Ended December 31:
2020 (three months)	$	2,536
2021	10,391
2022	10,731
2023	11,083
2024	11,447
Thereafter	54,074
Total undiscounted lease payments	100,262
Present value adjustment	(30,347)
Net operating lease liabilities	$	69,915

In October 2018, the Company entered into a sublease agreement ("Sublease Agreement") to sublease approximately 36,835 rentable square feet of space in its New Premises. The Sublease Agreement has a term of five years from the commencement date of April 12, 2019 and provides for the Company to receive monthly base rent amounts escalating over the term of the lease. The Company also passes through a portion of the operating expenses, such as taxes and insurance for the New Premises to the sublessee, which are treated as variable sublease income. Total sublease income, including rent and variable sublease cost reimbursements, was $0.9 million and $2.8 million for the three and nine months ended September 30, 2020, respectively, and $0.9 million and $1.7 million for the three and nine months ended September 30, 2019, respectively.

The following table details the future undiscounted cash inflows relating to the Sublease Agreement as of September 30, 2020 (in thousands):


Year Ended December 31:
2020 (three months)	$	715
2021	2,925
2022	3,009
2023	3,096
2024	876
Thereafter	—
Total undiscounted sublease receipts	$	10,621

Indemnification

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, lessors, business partners, board members, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company, negligence or willful misconduct of the Company, violations of law by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Comprehensive Loss, or Condensed Consolidated Statements of Cash Flows.

Commitments

Effective September 2017, the Company entered into a Development and Manufacturing Services Agreement as amended (“DMSA”) with Lonza Sales AG (“Lonza”) for the development and manufacture of biologic products. Under the DMSA, the Company will execute purchase orders based on project plans authorizing Lonza to provide development and manufacturing services with respect to certain of the Company's antibody and enzyme products, and will pay for the services provided and batches delivered in accordance with the DMSA and project plan. Unless earlier terminated, the DMSA will expire on September 6, 2022.

As of September 30, 2020 and December 31, 2019, the Company had open non-cancellable purchase orders for biological product development and manufacturing costs totaling $17.6 million and $21.2 million, respectively. The activities under these purchase orders are expected to be completed by May 2027. As of September 30, 2020 and December 31, 2019, the Company had total non-cancellable purchase commitments under the DMSA of $12.0 million and $11.2 million, respectively.

During the three months ended September 30, 2020 and 2019, the Company incurred costs of $1.4 million and $3.0 million, respectively, and made payments of $0.8 million and $2.5 million, respectively, for the development and manufacturing services rendered under the DMSA. During the nine months ended September 30, 2020 and 2019, the Company incurred costs of $6.2 million and $9.7 million, respectively, and made payments of $6.0 million and $9.0 million, respectively, for the development and manufacturing services rendered under the DMSA.

Contingencies

From time to time, the Company may be involved in lawsuits, arbitration, claims, investigations and proceedings consisting of intellectual property, employment and other matters which arise in the ordinary course of business. The Company records accruals for loss contingencies to the extent that the Company concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated.

On September 10, 2020, the Company and all Directors were named in a shareholder derivative action filed in the Delaware Court of Chancery challenging the compensation paid to the Company's Directors since the IPO in December 2017.

This derivative complaint is in the early stages and therefore the Company cannot reasonably estimate a potential future loss or a range of potential future losses. However, the Company does not believe that an unfavorable resolution would have a material adverse effect on the Company's business, financial condition, and results of operations or prospects. No liability has been recorded relating to this matter in the Condensed Consolidated Balance Sheet at September 30, 2020.

Stock-Based Awards

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Awards

The Company has issued stock-based awards from various equity incentive and stock purchase plans, as more fully described in Note 11, "Stock-Based Awards" to the consolidated financial statements in the Company's 2019 Annual Report on Form 10-K.

Stock Option Activity

The following table summarizes option award activity under the Company's 2017 Equity Incentive Plan and the 2015 Stock Incentive Plan:


	Number of Options	Weighted- Average Exercise Price
Balance at December 31, 2019	11,640,734	$	12.96
Granted	3,371,048	25.00
Exercised	(874,357)	10.63
Forfeited	(617,360)	20.60
Balance at September 30, 2020	13,520,065	$	15.77
Vested and expected to vest at September 30, 2020	11,775,333	$	18.00
Exercisable at September 30, 2020	5,437,269	$	13.80

The estimated fair value of stock options granted to employees were calculated using the Black-Scholes option-pricing model using the following assumptions:


	Nine Months Ended September 30,
	2020	2019
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Volatility	65.2% - 67.1%	65.5% - 77.8%
Risk-free interest rate	0.3% - 1.7%	1.6% - 2.6%
Dividend yield	—	—

Restricted Stock Activity

Aggregated information regarding restricted stock for the nine months ended September 30, 2020 is summarized below:


	Share Awards & Units	Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2019	882,636	$	18.67
Granted	1,819,624	27.98
Vested and released	(293,133)	19.45
Forfeited	(139,230)	26.54
Unvested at September 30, 2020	2,269,897	$	25.82
Expected to vest at September 30, 2020	2,269,897	$	25.82

Stock-Based Compensation Expense

The Company’s results of operations include expenses relating to stock-based compensation as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	7,781	$	4,923	$	20,981	$	14,200
General and administrative	5,471		3,978		15,540		15,289
Total	$	13,252	$	8,901	$	36,521	$	29,489

Net Loss Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	Three and Nine Months Ended September 30,
	2020	2019
Options issued and outstanding and ESPP shares issuable	13,680,889	11,981,119
Restricted shares subject to future vesting	2,269,897	826,511
Early exercised common stock subject to future vesting	—	10,423
Total	15,950,786	12,818,053

Related Party Transactions	9 Months Ended
Related Party Transactions	Sep. 30, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsOn September 22, 2020, upon becoming an owner of record of more than 10% of the voting interest in the Company, Biogen became a related party under ASC 850. Refer to Note 6, "Collaboration Agreements" for further information.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn October 4, 2020, the Company entered into the LRRK2 Agreement, and on October 6, 2020, the Company entered into the ROFN and Option Agreement, both with Biogen. Refer to Note 6 and Note 7, "Collaboration Agreements" for further information.

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2020
Accounting Policies [Abstract]
Organization and Description of Business	Organization and Description of Business Denali Therapeutics Inc. ("Denali" or the “Company”) is a biopharmaceutical company, incorporated in Delaware, that discovers and develops therapeutics to defeat neurodegenerative diseases. The Company is headquartered in South San Francisco, California.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X for interim financial information. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 27, 2020 (the "2019 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the audited annual consolidated financial statements as of the period then ended. Certain information and footnote disclosures typically included in the Company's annual consolidated financial statements have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All such adjustments are of a normal recurring nature except for the impacts of adopting new accounting standards discussed below. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.
Principles of Consolidation	Principles of Consolidation These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. For the Company and its subsidiary, the functional currency has been determined to be U.S. dollars. Monetary assets and liabilities denominated in foreign currency are remeasured at period-end exchange rates. Non-monetary assets and liabilities denominated in foreign currencies are remeasured at historical rates. Foreign currency transaction gains and losses resulting from remeasurement are recognized in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material to the Condensed Consolidated Balance Sheets and Statements of Operations and Comprehensive Loss.
Concentration of Credit Risk and Other Risks and Uncertainties	Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and forward foreign currency exchange contracts. Substantially all of the Company’s cash and cash equivalents are deposited in accounts with financial institutions that management believes are of high credit quality. Such deposits have and will continue to exceed federally insured limits. The Company maintains its cash with accredited financial institutions and accordingly, such funds are subject to minimal credit risk. The Company’s investment policy limits investments to certain types of securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and marketable securities and issuers of marketable securities to the extent recorded on the Condensed Consolidated Balance Sheets. As of September 30, 2020 and December 31, 2019, the Company has no off balance sheet concentrations of credit risk. The Company is exposed to counterparty credit risk on all of its derivative financial instruments. The Company has established and maintains strict counterparty credit guidelines and enters into hedges only with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company does not require collateral to be pledged under these agreements. The Company is subject to a number of risks similar to other early-stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of current or future preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain regulatory and marketing approvals for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, protection of proprietary technology, the ability to make milestone, royalty or other payments due under any license or collaboration agreements, and the need to secure and maintain adequate manufacturing arrangements with third parties. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. The COVID-19 pandemic has caused increased risk and uncertainty for the Company. Credit risk associated with investments in securities may increase if any institution with which the Company has an investment is significantly impacted by the COVID-19 pandemic. As of September 30, 2020, the Company has not realized any losses on its cash deposits or investments. Further, COVID-19 may impact the timelines and progress of the Company's preclinical activities and clinical trials, and may impact its ability to raise capital in the near term.
Segments	Segments The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents. Cash equivalents are reported at fair value. The Company’s restricted cash consists of the letter of credit for the Company’s headquarters building lease, and is included within other non-current assets on the accompanying Condensed Consolidated Balance Sheets.
Marketable Securities	Marketable Securities The Company generally invests its excess cash in money market funds and investment grade short to intermediate-term fixed income securities. Such investments are included in cash and cash equivalents, short-term marketable securities, or long-term marketable securities on the Condensed Consolidated Balance Sheets, are considered available-for-sale, and reported at fair value with net unrealized gains and losses included as a component of stockholders’ equity. The Company classifies investments in securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. The Company classifies investments in securities with remaining maturities of over one year as long-term investments. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Realized gains and losses and declines in value determined to be due to credit losses on marketable securities, if any, are included in interest and other income, net. The Company periodically evaluates the need for an allowance for credit losses. This evaluation includes consideration of several qualitative and quantitative factors, including whether it has plans to sell the security, whether it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis, and if the entity has the ability and intent to hold the security to maturity, and the portion of any unrealized loss that is the result of a credit loss. Factors considered in making these evaluations include quoted market prices, recent financial results and operating trends, implied values from any recent transactions or offers of investee securities, credit quality of debt instrument issuers, expected cash flows from securities, other publicly available information that may affect the value of the marketable security, duration and severity of the decline in value, and the Company's strategy and intentions for holding the marketable security.
Accounts Receivable	Accounts ReceivableAccounts receivable are included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The accounts receivable balance represents amounts receivable from the Company's collaboration partners, net of an allowance for credit losses, if required.
Derivatives and Hedging Activities	Derivatives and Hedging ActivitiesThe Company measures its derivative instruments at fair value, and accounts for them as either assets or liabilities included within prepaid assets and other current assets and other accruals and current liabilities, respectively, on the Condensed Consolidated Balance Sheets. Derivatives are adjusted to fair value through interest and other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Leases	Leases The Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases as of January 1, 2019. A determination is made as to whether an arrangement is a lease at inception. A right-of-use (“ROU”) asset and operating lease liability is recognized for identified operating leases in the Condensed Consolidated Balance Sheets. The changes in operating lease ROU assets and operating lease liabilities are presented net within non-cash adjustment to operating lease expense in the Condensed Consolidated Statements of Cash Flows. ROU assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments due over the lease term, with the ROU assets adjusted for lease incentives received. When determining the present value of lease payments, the Company uses its incremental borrowing rate on the date of lease commencement, or the rate implicit in the lease, if known. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed by management to be reasonably certain at lease inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet, unless they include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease expenses on a straight-line basis over the lease term. The Company has leases with lease and non-lease components, which the Company has elected to account for as a single lease component.
Revenue Recognition	Revenue Recognition License and Collaboration Revenue The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. The accounting treatment pursuant to Topic 606 is outlined below. The terms of licensing and collaboration agreements entered into typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply and research and development services and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenue. The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Amounts received prior to satisfying the revenue recognition criteria are recorded as contract liabilities in the Company’s Condensed Consolidated Balance Sheets. If the related performance obligation is expected to be satisfied within the next twelve months this will be classified in current liabilities. Amounts recognized as revenue prior to the Company having an unconditional right (other than a right that is conditioned only on the passage of time) to receipt are recorded as contract assets in the Company's Condensed Consolidated Balance Sheets. If the Company expects to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets. A net contract asset or liability is presented for each contract with a customer. At contract inception, the Company assesses the goods or services promised in a contract with a customer and identifies those distinct goods and services that represent a performance obligation. A promised good or service may not be identified as a performance obligation if it is immaterial in the context of the contract with the customer, if it is not separately identifiable from other promises in the contract (either because it is not capable of being separated or because it is not separable in the context of the contract), or if the performance obligation does not provide the customer with a material right. The Company considers the terms of the contract to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration will only be included in the transaction price when it is not considered constrained, which is when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices ("SSP"). The relative SSP for each deliverable is estimated using external sourced evidence if it is available. If external sourced evidence is not available, the Company uses its best estimate of the SSP for the deliverable. Revenue is recognized when, or as, the Company satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when, or as, the customer obtains control of that asset, which for a service is considered to be as the services are received and used. The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the nature of the service promised to the customer. After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events. Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception, or to a single performance obligation as applicable. Management may be required to exercise considerable judgment in estimating revenue to be recognized. Judgment is required in identifying performance obligations, estimating the transaction price, estimating the SSP of identified performance obligations, which may include forecasted revenue, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success, and estimating the progress towards satisfaction of performance obligations.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive income (loss) is composed of net loss and certain changes in stockholders’ equity that are excluded from net loss, primarily unrealized gains or losses on the Company’s marketable securities.
Net Loss per Share	Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.
Recently Issued and Recently Adopted Accounting Pronouncements	Recently Issued Accounting Pronouncement In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. ASU No. 2019-12 modifies ASC 740 to simplify several aspects of accounting for income taxes, including eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted, and is required to be adopted prospectively, with the exception of certain specific amendments. The Company is currently finalizing its assessment of the impact of this ASU, and does not expect it to have a material impact on its Condensed Consolidated Financial Statements. Recently Adopted Accounting Pronouncement In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The Company adopted this standard as of January 1, 2020 using a modified retrospective approach. Adoption of the standard did not have a material impact on the Condensed Consolidated Financial Statements.

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value at each balance sheet date are as follows (in thousands):


	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	326,640	$	—	$	—	$	326,640


Short-term marketable securities:
U.S. government treasuries	542,637		—		—		542,637
U.S. government agency securities	—		10,111		—		10,111
Corporate debt securities	—		43,919		—		43,919
Commercial paper	—		13,487		—		13,487
Long-term marketable securities:
U.S. government treasuries	5,153		—		—		5,153
U.S. government agency securities	—		15,188		—		15,188

Foreign currency derivative contracts	—		109		—		109
Total	$	874,430	$	82,814	$	—	$	957,244
Liabilities:
Foreign currency derivative contracts	$	—	$	173	$	—	$	173
Total	$	—	$	173	$	—	$	173


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	54,163	$	—	$	—	$	54,163
U.S. government treasuries	15,989		—		—		15,989
Short-term marketable securities:
U.S. government treasuries	250,070		—		—		250,070
U.S. government agency securities	—		2,000		—		2,000
Corporate debt securities	—		53,479		—		53,479
Commercial paper	—		30,358		—		30,358
Long-term marketable securities:
U.S. government treasuries	13,869		—		—		13,869
Corporate debt securities	—		26,017		—		26,017
Foreign currency derivative contracts	—		85		—		85
Total	$	334,091	$	111,939	$	—	$	446,030
Liabilities:
Foreign currency derivative contracts	$	—	$	8	$	—	$	8
Total	$	—	$	8	$	—	$	8

Cash and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents


	September 30,		December 31,		September 30,		December 31,
	2020		2019		2019		2018
Cash and cash equivalents	$	351,047	$	79,449	$	82,673	$	77,123
Restricted cash included within other non-current assets	1,500		1,500		1,500		1,500
Total cash, cash equivalents, and restricted cash	$	352,547	$	80,949	$	84,173	$	78,623

Schedule of Restricted Cash and Cash Equivalents


	September 30,		December 31,		September 30,		December 31,
	2020		2019		2019		2018
Cash and cash equivalents	$	351,047	$	79,449	$	82,673	$	77,123
Restricted cash included within other non-current assets	1,500		1,500		1,500		1,500
Total cash, cash equivalents, and restricted cash	$	352,547	$	80,949	$	84,173	$	78,623

Summary of Available for Sale Securities

The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below (in thousands):


	September 30, 2020
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	542,479	$	161	$	(3)	$	542,637
U.S. government agency securities(2)	10,122		—		(11)		10,111
Corporate debt securities	43,703		216		—		43,919
Commercial paper	13,487		—		—		13,487
Total short-term marketable securities	609,791		377		(14)		610,154
Long-term marketable securities:
U.S. government treasuries	5,153		—		—		5,153
U.S. government agency securities(3)	15,189		—		(1)		15,188

Total long-term marketable securities	20,342		—		(1)		20,341
Total	$	630,133	$	377	$	(15)	$	630,495

__________________________________________________

(1)Unrealized holding losses on 8 securities with an aggregate fair value of $73.3 million.

(2)Unrealized holding losses on 2 securities with an aggregate fair value of $10.1 million.

(3)Unrealized holding losses on 1 securities with an aggregate fair value of $15.2 million.


	December 31, 2019
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	249,478	$	594	$	(2)	$	250,070
U.S. government agency securities	1,999		1		—		2,000
Corporate debt securities(2)	53,396		94		(11)		53,479
Commercial paper	30,358		—		—		30,358
Total short-term marketable securities	335,231		689		(13)		335,907
Long-term marketable securities:
U.S. government treasuries(3)	13,865		6		(2)		13,869

Corporate debt securities(4)	25,998		34		(15)		26,017
Total long-term marketable securities	39,863		40		(17)		39,886
Total	$	375,094	$	729	$	(30)	$	375,793

__________________________________________________

(1)Unrealized holding losses on 2 securities with an aggregate fair value of $9.3 million.

(2)Unrealized holding losses on 4 securities with an aggregate fair value of $25.9 million.

(3)Unrealized holding losses on 1 security with an aggregate fair value of $10.1 million.

(4)Unrealized holding losses on 3 securities with an aggregate fair value of $17.2 million.

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Forward Foreign Currency Exchange Purchase Contracts Outstanding

The following table summarizes the Company’s forward foreign currency exchange contracts outstanding as of September 30, 2020 and December 31, 2019, respectively (notional amounts in thousands):


Foreign Exchange Contracts	Number of Contracts	Aggregate Notional(1) Amount in Foreign Currency	Maturity
Euros	24	3,630	Oct 2020 - Aug 2021
British Pounds	26	3,736	Oct 2020 - Aug 2021

Total at September 30, 2020	50
Euros	23	1,500	Jan 2020 - Nov 2020
British Pounds	15	2,285	Jan 2020 - Jun 2020
Swiss Francs	10	129	Jan 2020 - Aug 2020
Total at December 31, 2019	48

_________________________________________________

(1) The notional amount represents the net amount of foreign currency that will be received upon maturity of the forward contracts.

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624163-113959

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5580258-113959

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41620-113959

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5579245-113959

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41638-113959

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41678-113959

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121590274&loc=d3e41641-113959

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5624171-113959

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=121590274&loc=SL5579240-113959

+ Details

Collaboration Agreements (Tables)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Collaboration Revenue

Revenue disaggregated by collaboration agreement and performance obligation is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Takeda Collaboration Agreement(1)	$	9,271	$	1,085	$	17,826	$	2,507
Sanofi Collaboration Agreement

Peripheral Program License	—		10,000		—		10,000
Retained Activities	117		2,423		925		9,210
Alzheimer's Disease Services(1)	5		96		93		289
Total Sanofi Collaboration Revenue	122		12,519		1,018		19,499




Total Collaboration Revenue	$	9,393	$	13,604	$	18,844	$	22,006

_________________________________________________

(1)Amounts represent revenue recognized during the period that was included in the contract liability balance at the beginning of the period.

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Operating Lease Maturity, Payments


Year Ended December 31:
2020 (three months)	$	2,536
2021	10,391
2022	10,731
2023	11,083
2024	11,447
Thereafter	54,074
Total undiscounted lease payments	100,262
Present value adjustment	(30,347)
Net operating lease liabilities	$	69,915

Operating Lease Maturity, Receivable

The following table details the future undiscounted cash inflows relating to the Sublease Agreement as of September 30, 2020 (in thousands):


Year Ended December 31:
2020 (three months)	$	715
2021	2,925
2022	3,009
2023	3,096
2024	876
Thereafter	—
Total undiscounted sublease receipts	$	10,621

Stock-Based Awards (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

The following table summarizes option award activity under the Company's 2017 Equity Incentive Plan and the 2015 Stock Incentive Plan:


	Number of Options	Weighted- Average Exercise Price
Balance at December 31, 2019	11,640,734	$	12.96
Granted	3,371,048	25.00
Exercised	(874,357)	10.63
Forfeited	(617,360)	20.60
Balance at September 30, 2020	13,520,065	$	15.77
Vested and expected to vest at September 30, 2020	11,775,333	$	18.00
Exercisable at September 30, 2020	5,437,269	$	13.80

Summary of Assumptions Used for Estimating the Fair Value of Stock Granted

The estimated fair value of stock options granted to employees were calculated using the Black-Scholes option-pricing model using the following assumptions:


	Nine Months Ended September 30,
	2020	2019
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Volatility	65.2% - 67.1%	65.5% - 77.8%
Risk-free interest rate	0.3% - 1.7%	1.6% - 2.6%
Dividend yield	—	—

Restricted Stock Activity

Aggregated information regarding restricted stock for the nine months ended September 30, 2020 is summarized below:


	Share Awards & Units	Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2019	882,636	$	18.67
Granted	1,819,624	27.98
Vested and released	(293,133)	19.45
Forfeited	(139,230)	26.54
Unvested at September 30, 2020	2,269,897	$	25.82
Expected to vest at September 30, 2020	2,269,897	$	25.82

Summary of Stock-Based Compensation Expense

The Company’s results of operations include expenses relating to stock-based compensation as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	7,781	$	4,923	$	20,981	$	14,200
General and administrative	5,471		3,978		15,540		15,289
Total	$	13,252	$	8,901	$	36,521	$	29,489

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of Dilutive Securities Not Included in Diluted Per Share Calculations

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	Three and Nine Months Ended September 30,
	2020	2019
Options issued and outstanding and ESPP shares issuable	13,680,889	11,981,119
Restricted shares subject to future vesting	2,269,897	826,511
Early exercised common stock subject to future vesting	—	10,423
Total	15,950,786	12,818,053

Significant Accounting Policies - Narrative (Details)	9 Months Ended
Significant Accounting Policies - Narrative (Details)	Sep. 30, 2020 Segment
Accounting Policies [Abstract]
Number of operating segments	1

Fair Value Measurements - Schedule of Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets:
Fair value	$ 630,495	$ 375,793
Foreign currency derivative contracts	109	85
Total	957,244	446,030
Liabilities:
Foreign currency derivative contracts	173	8
Total	173	8
Money market funds
Assets:
Cash equivalents	326,640	54,163
U.S. government treasuries
Assets:
Cash equivalents		15,989
Short-term marketable securities \| U.S. government treasuries
Assets:
Fair value	542,637	250,070
Short-term marketable securities \| U.S. government agency securities
Assets:
Fair value	10,111	2,000
Short-term marketable securities \| Corporate debt securities
Assets:
Fair value	43,919	53,479
Short-term marketable securities \| Commercial paper
Assets:
Fair value	13,487	30,358
Long-term marketable securities \| U.S. government treasuries
Assets:
Fair value	5,153	13,869
Long-term marketable securities \| U.S. government agency securities
Assets:
Fair value	15,188
Long-term marketable securities \| Corporate debt securities
Assets:
Fair value		26,017
Level 1
Assets:
Foreign currency derivative contracts	0	0
Total	874,430	334,091
Liabilities:
Foreign currency derivative contracts	0	0
Total	0	0
Level 1 \| Money market funds
Assets:
Cash equivalents	326,640	54,163
Level 1 \| U.S. government treasuries
Assets:
Cash equivalents		15,989
Level 1 \| Short-term marketable securities \| U.S. government treasuries
Assets:
Fair value	542,637	250,070
Level 1 \| Short-term marketable securities \| U.S. government agency securities
Assets:
Fair value	0	0
Level 1 \| Short-term marketable securities \| Corporate debt securities
Assets:
Fair value	0	0
Level 1 \| Short-term marketable securities \| Commercial paper
Assets:
Fair value	0	0
Level 1 \| Long-term marketable securities \| U.S. government treasuries
Assets:
Fair value	5,153	13,869
Level 1 \| Long-term marketable securities \| U.S. government agency securities
Assets:
Fair value	0
Level 1 \| Long-term marketable securities \| Corporate debt securities
Assets:
Fair value		0
Level 2
Assets:
Foreign currency derivative contracts	109	85
Total	82,814	111,939
Liabilities:
Foreign currency derivative contracts	173	8
Total	173	8
Level 2 \| Money market funds
Assets:
Cash equivalents	0	0
Level 2 \| U.S. government treasuries
Assets:
Cash equivalents		0
Level 2 \| Short-term marketable securities \| U.S. government treasuries
Assets:
Fair value	0	0
Level 2 \| Short-term marketable securities \| U.S. government agency securities
Assets:
Fair value	10,111	2,000
Level 2 \| Short-term marketable securities \| Corporate debt securities
Assets:
Fair value	43,919	53,479
Level 2 \| Short-term marketable securities \| Commercial paper
Assets:
Fair value	13,487	30,358
Level 2 \| Long-term marketable securities \| U.S. government treasuries
Assets:
Fair value	0	0
Level 2 \| Long-term marketable securities \| U.S. government agency securities
Assets:
Fair value	15,188
Level 2 \| Long-term marketable securities \| Corporate debt securities
Assets:
Fair value		26,017
Level 3
Assets:
Foreign currency derivative contracts	0	0
Total	0	0
Liabilities:
Foreign currency derivative contracts	0	0
Total	0	0
Level 3 \| Money market funds
Assets:
Cash equivalents	0	0
Level 3 \| U.S. government treasuries
Assets:
Cash equivalents		0
Level 3 \| Short-term marketable securities \| U.S. government treasuries
Assets:
Fair value	0	0
Level 3 \| Short-term marketable securities \| U.S. government agency securities
Assets:
Fair value	0	0
Level 3 \| Short-term marketable securities \| Corporate debt securities
Assets:
Fair value	0	0
Level 3 \| Short-term marketable securities \| Commercial paper
Assets:
Fair value	0	0
Level 3 \| Long-term marketable securities \| U.S. government treasuries
Assets:
Fair value	0	0
Level 3 \| Long-term marketable securities \| U.S. government agency securities
Assets:
Fair value	$ 0
Level 3 \| Long-term marketable securities \| Corporate debt securities
Assets:
Fair value		$ 0

Cash and Marketable Securities - Schedule of Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 351,047	$ 79,449	$ 82,673	$ 77,123
Restricted cash included within other non-current assets	1,500	1,500	1,500	1,500
Total cash, cash equivalents, and restricted cash	$ 352,547	$ 80,949	$ 84,173	$ 78,623

Cash and Marketable Securities - Summary of Available for Sale Securities (Details) $ in Thousands	Sep. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 630,133	$ 375,094
Unrealized Holding Gains	377	729
Unrealized Holding Losses	(15)	(30)
Aggregate Fair Value	630,495	375,793
Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	609,791	335,231
Unrealized Holding Gains	377	689
Unrealized Holding Losses	(14)	(13)
Aggregate Fair Value	610,154	335,907
Short-term marketable securities \| U.S. government treasuries
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	542,479	249,478
Unrealized Holding Gains	161	594
Unrealized Holding Losses	(3)	(2)
Aggregate Fair Value	$ 542,637	$ 250,070
Number of securities held in unrealized holding loss position \| security	8	2
Aggregate fair value, unrealized holding loss position	$ 73,300	$ 9,300
Short-term marketable securities \| U.S. government agency securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	10,122	1,999
Unrealized Holding Gains	0	1
Unrealized Holding Losses	(11)	0
Aggregate Fair Value	$ 10,111	2,000
Number of securities held in unrealized holding loss position \| security	2
Aggregate fair value, unrealized holding loss position	$ 10,100
Short-term marketable securities \| Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	43,703	53,396
Unrealized Holding Gains	216	94
Unrealized Holding Losses	0	(11)
Aggregate Fair Value	43,919	$ 53,479
Number of securities held in unrealized holding loss position \| security		4
Aggregate fair value, unrealized holding loss position		$ 25,900
Short-term marketable securities \| Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	13,487	30,358
Unrealized Holding Gains	0	0
Unrealized Holding Losses	0	0
Aggregate Fair Value	13,487	30,358
Long-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	20,342	39,863
Unrealized Holding Gains	0	40
Unrealized Holding Losses	(1)	(17)
Aggregate Fair Value	20,341	39,886
Long-term marketable securities \| U.S. government treasuries
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	5,153	13,865
Unrealized Holding Gains	0	6
Unrealized Holding Losses	0	(2)
Aggregate Fair Value	5,153	$ 13,869
Number of securities held in unrealized holding loss position \| security		1
Aggregate fair value, unrealized holding loss position		$ 10,100
Long-term marketable securities \| U.S. government agency securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	15,189
Unrealized Holding Gains	0
Unrealized Holding Losses	(1)
Aggregate Fair Value	$ 15,188
Number of securities held in unrealized holding loss position \| security	1
Aggregate fair value, unrealized holding loss position	$ 15,200
Long-term marketable securities \| Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		25,998
Unrealized Holding Gains		34
Unrealized Holding Losses		(15)
Aggregate Fair Value		$ 26,017
Number of securities held in unrealized holding loss position \| security		3
Aggregate fair value, unrealized holding loss position		$ 17,200

Cash and Marketable Securities - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cash and Cash Equivalents [Abstract]
Allowance for credit losses	$ 0		$ 0
Other-than-temporary impairment					$ 0
Tax benefit (provision)	(56,000)	$ 113,000	0	$ 426,000
Tax charge in other comprehensive income		$ 100,000		$ 400,000
Unrealized gain on marketable securities	$ 0		$ 0
Effective maturity (less than)	2 years		2 years

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Derivative Financial Instruments - Summary of Forward Foreign Currency Exchange Contracts Outstanding (Details) - Designated as Hedging Instrument € in Thousands, £ in Thousands, SFr in Thousands	Sep. 30, 2020 EUR (€) derivative_instrument	Sep. 30, 2020 GBP (£) derivative_instrument	Dec. 31, 2019 EUR (€) derivative_instrument	Dec. 31, 2019 GBP (£) derivative_instrument	Dec. 31, 2019 CHF (SFr) derivative_instrument
Euros
Derivative [Line Items]
Number of Contracts	24	24	23	23	23
Aggregate Notional Amount in Foreign Currency \| €	€ 3,630		€ 1,500
British Pounds
Derivative [Line Items]
Number of Contracts	26	26	15	15	15
Aggregate Notional Amount in Foreign Currency \| £		£ 3,736		£ 2,285
Swiss Francs
Derivative [Line Items]
Number of Contracts			10	10	10
Aggregate Notional Amount in Foreign Currency \| SFr					SFr 129
Foreign Exchange Contracts
Derivative [Line Items]
Number of Contracts	50	50	48	48	48

Acquisition - Narrative (Details) - USD ($)			1 Months Ended		3 Months Ended		9 Months Ended		50 Months Ended
Acquisition - Narrative (Details) - USD ($)	May 30, 2018	Aug. 24, 2016	Jun. 30, 2019	Aug. 31, 2016	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Research and development					$ 53,704,000	$ 52,544,000	$ 157,872,000	$ 141,831,000
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amount paid				$ 11,500,000
Upfront option fee				$ 500,000
Contingent consideration payment			$ 1,500,000
Contingent consideration recognized	$ 0				0	1,500,000	0	1,500,000
Research and development					$ 300,000	$ 300,000	$ 900,000	$ 800,000	$ 19,800,000
Maximum development plan period for research costs		24 months
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Initial option exercise payments		$ 17,800,000
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option \| Preclinical
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contingent payments upon the achievement of milestones	27,000,000.0
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option \| Clinical
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contingent payments upon the achievement of milestones	50,000,000.0
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option \| Regulatory
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contingent payments upon the achievement of milestones	120,000,000.0
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option \| Commercial
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contingent payments upon the achievement of milestones	250,000,000.0
Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma \| Exercise of buy-out option \| Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contingent payments upon the achievement of milestones	$ 447,000,000.0

Collaboration Agreements - Biogen (Details)			1 Months Ended	2 Months Ended	3 Months Ended		9 Months Ended
Collaboration Agreements - Biogen (Details)	Sep. 22, 2020 USD ($) $ / shares shares	Aug. 05, 2020 USD ($) program	Oct. 31, 2020 USD ($)	Sep. 30, 2020 USD ($) milestone	Sep. 30, 2020 USD ($) milestone	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) milestone	Sep. 30, 2019 USD ($)	Oct. 06, 2020 USD ($) program	Dec. 31, 2019 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Related party contract liability				$ 44,854,000	$ 44,854,000		$ 44,854,000			$ 0
Research and development					53,704,000	$ 52,544,000	157,872,000	$ 141,831,000
Collaboration revenue from customers					9,388,000	$ 13,508,000	18,751,000	$ 21,717,000
Provisional Collaboration Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Funded percentage		40.00%
Provisional Collaboration Agreement \| United States
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Agreed share of commercial profit (loss) percentage		50.00%
Provisional Collaboration Agreement \| China
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Agreed share of commercial profit (loss) percentage		40.00%
Provisional Collaboration Agreement \| Biogen
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Funded percentage		60.00%
Provisional Collaboration Agreement \| Biogen
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment, to be received		$ 560,000,000.0
Milestone payments upon achievement of certain development, first commercial sale, and net sales based milestones		1,100,000,000
Development milestone payments		375,000,000.0
First commercial sale milestone payments		375,000,000.0
Net sales-based milestone payments		$ 375,000,000.0
Performance obligation satisfied				0
Revenue recognized					0		0
Related party receivable				$ 0	$ 0		$ 0
Number of milestones achieved \| milestone				0	0		0
Provisional Collaboration Agreement \| Biogen \| Related Party
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Research and development					$ 0		$ 0
Provisional Collaboration Agreement \| Biogen \| Stock Purchase Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of common stock (in shares) \| shares	13,310,243
Purchase price	$ 465,000,000.0
Fair market value of common stock	$ 420,100,000
Closing stock price (usd per share) \| $ / shares	$ 35.87
Premium on sale of common stock	$ 44,900,000
Related party contract liability				$ 44,900,000	$ 44,900,000		$ 44,900,000
Transaction price	$ 0
Provisional Collaboration Agreement \| Biogen \| Transport Vehicle (TV) Technology Platform, Unnamed Program
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of programs \| program		1
Provisional Collaboration Agreement \| Biogen \| Transport Vehicle (TV) Technology Program, Unnamed Program, Right Of First Negotiation Programs (ROFN)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of additional programs, if circumstances met \| program		2
Provisional Collaboration Agreement \| Biogen \| Transport Vehicle (TV)Technology Platform, Preclinical Programs
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of programs \| program		2
Term of agreement, number of business days after 5th anniversary date of the effective date of the agreement		30 days
Provisional Collaboration Agreement \| Biogen \| Transport Vehicle Technology Platform, Right Of First Negotiation Programs
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of additional programs, if circumstances met \| program		2
Right of first negotiation (ROFN) term, period of time after effective date of agreement, if circumstances met		7 years
Right of first negotiation (ROFN) term, additional program criteria \| program		2
Number of additional programs, no third party agreement executed, if circumstances met \| program		1
Provisional Collaboration Agreement \| Biogen \| Product
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue from customers				$ 0
Definitive Collaboration Agreement \| Biogen \| Subsequent Event
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment			$ 560,000,000.0
ROFN and Option Agreement \| Biogen \| Subsequent Event
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of performance obligations \| program									0
Aggregate option exercise and development milestone payments, to be received									$ 270,000,000.0
First commercial sale milestone payments, to be received									325,000,000.0
Net sales-based milestone payments, to be received									$ 290,000,000.0

Collaboration Agreements - Sanofi (Details) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended		24 Months Ended
Collaboration Agreements - Sanofi (Details) $ in Thousands	Jul. 31, 2019 USD ($)	Nov. 30, 2018 USD ($) indication	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of indications \| indication		3
Sales			$ 9,388	$ 13,508	$ 18,751	$ 21,717
Collaborative Arrangement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Funded percentage		30.00%
Sanofi \| Collaborative Arrangement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Funded percentage		70.00%
Sanofi \| Collaborative Arrangement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment		$ 125,000
Milestone payments upon achievement of certain clinical, regulatory and sales milestone events		1,100,000
Increase in transaction price							$ 21,300
Receivable			100		100		100	$ 1,200
Sanofi \| Collaborative Arrangement \| CNS Product
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Clinical milestone payment		215,000
Regulatory milestone payment		385,000
Sanofi \| Collaborative Arrangement \| Peripheral Program License
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Clinical milestone payment		120,000
Regulatory milestone payment		175,000
Commercial milestone payments		$ 200,000
Sanofi \| Collaborative Arrangement \| Retained Activities
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Increase in transaction price			$ 100	2,400	$ 900	9,200	11,300
Sanofi \| Collaborative Arrangement \| Milestone Triggered
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales	$ 10,000						10,000
Sanofi \| Collaborative Arrangement \| Milestone Triggered and Retained Activities
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Increase in transaction price				$ 12,400		$ 19,200
Sanofi \| Collaborative Arrangement \| Product
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales							$ 0

Collaboration Agreements - Sanofi Performance Obligation (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Alzheimer's Disease Services
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation	$ 3.4	$ 3.5

Collaboration Agreements - Takeda (Details) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended	33 Months Ended
	Feb. 23, 2018 USD ($) program targets $ / shares shares	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2020 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales		$ 9,388	$ 13,508	$ 18,751	$ 21,717
Collaborative Arrangement \| Takeda Pharmaceutical Company Limited
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment	$ 40,000
Number of programs \| program	3
Preclinical milestone payment received	$ 5,000
Number of targets \| targets	3
Target option period	5 years
Option fee	$ 5,000
Number of performance obligations \| program	3
Variable consideration relating to future milestones	$ 26,000
Remaining preclinical milestones, cost and profit sharing income, and the development and commercial milestones	$ 44,000
Contract liability		41,100		41,100		$ 59,000	$ 41,100
Preclinical milestone payment earned not yet received		$ 0		0		0	0
Revenue recognized				$ 7,500		$ 2,400
Collaborative Arrangement \| Takeda Pharmaceutical Company Limited \| Product
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales							0
Collaborative Arrangement \| Takeda Pharmaceutical Company Limited \| Milestone Triggered
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales							$ 15,000
Collaborative Arrangement \| Takeda Pharmaceutical Company Limited \| Stock Purchase Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of common stock (in shares) \| shares	4,214,559
Purchase price	$ 110,000
Fair market value of common stock	$ 94,400
Closing stock price (usd per share) \| $ / shares	$ 22.40
Premium on sale of common stock	$ 15,600
Collaborative Arrangement \| Maximum \| Takeda Pharmaceutical Company Limited
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Preclinical milestone payments per program	25,000
Total aggregate payments due upon achievement of certain preclinical milestone events	75,000
Aggregated option exercise fee	15,000
Total aggregate payments due upon achievement of certain clinical and regulatory milestone events	407,500
Regulatory milestone payment	300,000
Milestone payments per biologic product upon achievement of a certain sales-based milestone	75,000
Milestone payments upon achievement of biologic product from each program	$ 225,000

Collaboration Agreements - Summary of Collaboration Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative revenue, revenue from contract with customer	$ 9,388	$ 13,508	$ 18,751	$ 21,717
Collaborative revenue, excluding revenue from contract with customer	5	96	93	289
Total Collaboration Revenue	9,393	13,604	18,844	22,006
Takeda Collaboration Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative revenue, revenue from contract with customer	9,271	1,085	17,826	2,507
Sanofi Collaboration Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total Collaboration Revenue	122	12,519	1,018	19,499
Sanofi Collaboration Agreement \| Peripheral Program License
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative revenue, revenue from contract with customer	0	10,000	0	10,000
Sanofi Collaboration Agreement \| Retained Activities
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative revenue, revenue from contract with customer	117	2,423	925	9,210
Sanofi Collaboration Agreement \| Alzheimer's Disease Services
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative revenue, excluding revenue from contract with customer	$ 5	$ 96	$ 93	$ 289

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

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- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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+ Details

License Agreements - Narrative (Details) - Genentech Inc - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended		52 Months Ended
	Jun. 30, 2016	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Oct. 04, 2020
License Agreement \| Research and Development
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront fee paid		$ 0	$ 0	$ 0	$ 0	$ 12,500,000
Subsequent Event \| Biogen
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payment obligation responsibility							50.00%
Clinical
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments upon achievement of specified clinical and regulatory milestones	$ 37,500,000
Regulatory
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments upon achievement of specified clinical and regulatory milestones	102,500,000
Commercial
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments upon achievement of specified clinical and regulatory milestones	175,000,000.0
Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments upon achievement of specified clinical and regulatory milestones	$ 315,000,000.0

Commitments and Contingencies - Narrative (Details)		3 Months Ended		9 Months Ended
Commitments and Contingencies - Narrative (Details)	May 02, 2018 USD ($) ft²	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Oct. 31, 2018 ft²
Loss Contingencies [Line Items]
Discount rate (as a percentage)		9.00%		9.00%
Operating lease costs		$ 2,800,000	$ 2,600,000	$ 8,300,000	$ 7,400,000
Weighted average remaining lease term		8 years 7 months 6 days		8 years 7 months 6 days
Weighted-average discount rate (as a percentage)		9.00%		9.00%
Cash paid for lease liabilities				$ 7,200,000	3,400,000
Sublease income		$ 900,000	900,000	2,800,000	1,700,000
Shareholder Derivative Action, September 2020
Loss Contingencies [Line Items]
Related liability recorded		0		0
DMSA
Loss Contingencies [Line Items]
Purchase order executed		17,600,000		17,600,000		$ 21,200,000
Non-refundable purchase commitments		12,000,000.0		12,000,000.0		$ 11,200,000
Costs incurred		1,400,000	3,000,000.0	6,200,000	9,700,000
Payments for development and manufacturing services		$ 800,000	$ 2,500,000	$ 6,000,000.0	$ 9,000,000.0
Maximum
Loss Contingencies [Line Items]
Leasehold improvements	$ 25,900,000
Headquarters Lease
Loss Contingencies [Line Items]
New premises, area under lease \| ft²	148,020
Lease period	10 years
Lease renewal option term	10 years
Headquarters Lease \| Landlord Funded Tenant Improvements
Loss Contingencies [Line Items]
Tenant improvement allowance repayable in rent	$ 4,400,000
Headquarters Lease \| Minimum
Loss Contingencies [Line Items]
Lease renewal notice period	9 months
Headquarters Lease \| Maximum
Loss Contingencies [Line Items]
Lease renewal notice period	12 months
New Premises Sublease Agreement
Loss Contingencies [Line Items]
Rentable square feet \| ft²							36,835
Sublease term							5 years

Commitments and Contingencies - Summary of Company's Future Minimum Lease Commitments (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Operating Lease Liabilities, Payments Due [Abstract]
2020 (three months)	$ 2,536
2021	10,391
2022	10,731
2023	11,083
2024	11,447
Thereafter	54,074
Total undiscounted lease payments	100,262
Present value adjustment	(30,347)
Net operating lease liabilities	$ 69,915

Commitments and Contingencies - Summary of Company's Future Minimum Lease Receivables (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020 (three months)	$ 715
2021	2,925
2022	3,009
2023	3,096
2024	876
Thereafter	0
Total undiscounted sublease receipts	$ 10,621

Stock-Based Awards - Summary of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of Options
Beginning balance (in shares) \| shares	11,640,734
Granted (in shares) \| shares	3,371,048
Exercised (in shares) \| shares	(874,357)
Forfeited (in shares) \| shares	(617,360)
Ending balance (in shares) \| shares	13,520,065
Vested and expected to vest (in shares) \| shares	11,775,333
Exercisable (in shares) \| shares	5,437,269
Weighted- Average Exercise Price
Beginning balance (usd per share) \| $ / shares	$ 12.96
Granted (usd per share) \| $ / shares	25.00
Exercised (usd per share) \| $ / shares	10.63
Forfeited (usd per share) \| $ / shares	20.60
Ending balance (usd per share) \| $ / shares	15.77
Vested and expected to vest (usd per share) \| $ / shares	18.00
Exercisable (usd per share) \| $ / shares	$ 13.80

Stock-Based Awards - Summary of Assumptions Used for Estimating the Fair Value of Stock Options Granted (Details) - Stock Options	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility, minimum	65.20%	65.50%
Volatility, maximum	67.10%	77.80%
Risk-free interest rate, minimum	0.30%	1.60%
Risk-free interest rate, maximum	1.70%	2.60%
Dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 6 months	5 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 29 days	6 years 29 days

Stock-Based Awards - Summary of Restricted Stock Activity (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Share Awards & Units
Unvested, beginning balance (in shares) \| shares	882,636
Granted (in shares) \| shares	1,819,624
Vested and released (in shares) \| shares	(293,133)
Forfeited (in shares) \| shares	(139,230)
Unvested, ending balance (in shares) \| shares	2,269,897
Expected to vest (in shares) \| shares	2,269,897
Weighted-Average Fair Value at Date of Grant per Share
Unvested, beginning balance (usd per share) \| $ / shares	$ 18.67
Granted (usd per share) \| $ / shares	27.98
Vested and released (usd per share) \| $ / shares	19.45
Forfeited (usd per share) \| $ / shares	26.54
Unvested, ending balance (usd per share) \| $ / shares	25.82
Expected to vest (usd per share) \| $ / shares	$ 25.82

Stock-Based Awards - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 13,252	$ 8,901	$ 36,521	$ 29,489
Research and Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	7,781	4,923	20,981	14,200
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 5,471	$ 3,978	$ 15,540	$ 15,289

Net Loss Per Share - Schedule of Dilutive Securities Not Included in Diluted Per Share Calculations (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	15,950,786	12,818,053	15,950,786	12,818,053
Options issued and outstanding and ESPP shares issuable
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	13,680,889	11,981,119	13,680,889	11,981,119
Restricted shares subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	2,269,897	826,511	2,269,897	826,511
Early exercised common stock subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	0	10,423	0	10,423