0001714899-23-000146 | 10-Q | XBRL Viewer

Marketable Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

All marketable securities were considered available-for-sale at September 30, 2023 and December 31, 2022. 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, 2023
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	925,091	$	20	$	(300)	$	924,811
U.S. government agency securities(2)	20,952		1		(12)		20,941

Commercial paper	15,493		—		—		15,493
Total short-term marketable securities	961,536		21		(312)		961,245
Long-term marketable securities:
U.S. government treasuries(3)	7,914		—		(9)		7,905


Total long-term marketable securities	7,914		—		(9)		7,905
Total	$	969,450	$	21	$	(321)	$	969,150

__________________________________________________

(1)Unrealized holding losses on 39 securities with an aggregate fair value of $686.2 million.

(2)Unrealized holding losses on 4 securities with an aggregate fair value of $17.5 million.

(3)Unrealized holding loss on 1 security with an aggregate fair value of $7.9 million.


	December 31, 2022
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	1,009,733	$	58	$	(6,287)	$	1,003,504
U.S. government agency securities	16,823		38		—		16,861
Corporate debt securities(2)	54,571		—		(356)		54,215
Commercial paper	43,591		—		—		43,591






Total	$	1,124,718	$	96	$	(6,643)	$	1,118,171

__________________________________________________

(1)Unrealized holding losses on 51 securities with an aggregate fair value of $683.4 million.

(2)Unrealized holding losses on 16 securities with an aggregate fair value of $54.2 million.

As of September 30, 2023 and December 31, 2022, a majority of the Company's marketable securities were in an unrealized loss position. The Company has not recognized an allowance for credit losses as of September 30, 2023 or December 31, 2022. 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, a majority of these marketable securities are held in U.S. government securities, and the remainder 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.

As of September 30, 2023, all of the Company’s marketable securities have an effective maturity of less than two years.

Commitments and Contingencies - Summary of Company's Future Minimum Lease Commitments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Operating Lease Liabilities, Payments Due [Abstract]
2023 (three months)	$ 2,793
2024	11,417
2025	11,793
2026	12,182
2027	12,584
Thereafter	17,381
Total undiscounted lease payments	68,150
Present value adjustment	(14,249)
Net operating lease liabilities	$ 53,901

Collaboration Agreements

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Agreements

Biogen

In August 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”), which 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 "Biogen Collaboration Agreement"). The details of the Provisional Biogen Collaboration Agreement and the Biogen Collaboration Agreement and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the 2022 Annual Report on Form 10-K. In August 2023, the Company and Biogen executed an Amendment (the “Biogen Amendment”) to the LRRK2 Agreement and ROFN and Option Agreement. Pursuant to the Biogen Amendment, the schedule of potential LRRK2 Agreement milestones was amended, while maintaining the same total value of milestones that Denali is eligible to receive. In addition, under the Biogen Amendment, Biogen waived its option right to the second option program and waived its rights of first negotiation for two other TV-enabled programs under the ROFN and Option Agreement.

During the nine months ended September 30, 2023, Biogen exercised its option to license Denali’s ATV:Abeta program which was previously concluded to be a material right. Biogen provided additional consideration of $5.0 million at the time of exercise which was fully allocated to the material right. The option exercise was accounted for as a continuation of the existing contract, and resulted in the delivery of the ATV:Abeta Program License. The $288.9 million related party contract liability associated with the material right for the ATV:Abeta option, and the $5.0 million option fee were both allocated to this performance obligation which was satisfied upon transfer of the ATV:Abeta Program License in April 2023. Accordingly, related-party collaboration revenue from customers of $293.9 million was recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss during the nine months ended September 30, 2023. No change in the transaction price for the Biogen Collaboration Agreement was recorded during the three months ended September 30, 2023 and three and nine months ended September 30, 2022.

As a result of the Biogen Amendment, the related-party contract liability of $1.3 million related to the Option Research Services for the second option program, the only remaining performance obligation under the Biogen Collaboration Agreement, was considered fully satisfied, and as such this contract liability was recognized in full within collaboration revenue from customers during the three months ended September 30, 2023. No related-party contract liability remains on the Condensed Consolidated Balance Sheet as of September 30, 2023. A related-party contract liability of $290.5 million was recorded on the Consolidated Balance Sheet as of December 31, 2022.

The Company recorded incremental research and development expenses in the Condensed Consolidated Statement of Operations and Comprehensive Loss of $3.4 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, and $14.5 million and $3.8 million for the nine months ended September 30, 2023 and 2022, respectively, representing cost sharing payments owed to Biogen for LRRK2 development activities. Cost sharing payments due to related party of $10.4 million and $4.4 million were recorded on the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, the Company had earned $5.0 million in option fee payments, but has not recorded milestone revenue or product sales under the 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"). The details of the Sanofi Collaboration Agreement and the payments the Company has received, and is entitled to receive, are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K. The Company has no remaining performance obligations under the Sanofi Collaboration Agreement, and therefore no contract liability remains on the Condensed Consolidated Balance Sheets as of September 30, 2023 or December 31, 2022.

During the three and nine months ended September 30, 2023, there were no changes to the terms of the Sanofi Collaboration Agreement. There was no revenue or changes in transaction price for the three months ended September 30, 2023 or 2022. The transaction price increased by $25.0 million and $40.0 million for the nine months ended September 30, 2023 and 2022, respectively, related to clinical milestones received, which were recognized in full within collaboration revenue from customers in the Condensed Consolidated Statements of Operations and Comprehensive Loss in the period in which they were earned.

As of September 30, 2023, the Company had earned milestone payments of $100.0 million and had not recorded any product sales under the Sanofi Collaboration Agreement.

Takeda

PTV:PGRN and ATV:TREM2 Collaboration Agreements

In January 2018, the Company entered into a Collaboration and Option Agreement ("Takeda Collaboration Agreement") with Takeda Pharmaceutical Company Limited ("Takeda"). The details of the Takeda Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K. There are no remaining performance obligations or potential payments remaining under the initial Takeda Collaboration Agreement.

The opt-in by Takeda on the PTV:PGRN and ATV:TREM2 programs represented two new contracts with a customer for accounting purposes (the "PTV:PGRN Collaboration Agreement" and the "ATV:TREM2 Collaboration Agreement"), both of which became effective in December 2021. The details of the PTV:PGRN Collaboration Agreement and the ATV:TREM2 Collaboration Agreement are further described in Note 5, "Collaboration Agreements", to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K.

During the three and nine months ended September 30, 2023, there were no changes to the terms of the ATV:TREM2 or PTV:PGRN Collaboration Agreements. During the three months ended September 30, 2023, and the three and nine months ended September 30, 2022, there were no changes to the transaction prices for either the PTV:PGRN or ATV:TREM2 Collaboration Agreements. The transaction price increased by $10.0 million in the nine months ended September 30, 2023 related to a clinical milestone received, which was recognized in full within collaboration revenue from customers in the Condensed Consolidated Statements of Operations and Comprehensive Loss in the period in which it was earned.

The Company recorded $1.7 million and $5.1 million of cost sharing reimbursements for PTV:PGRN development activities, and $1.1 million and $4.3 million for ATV:TREM2 development activities, for the three and nine months ended September 30, 2023, respectively, as offsets to research and development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company recorded $2.3 million and $8.0 million of cost sharing reimbursements for PTV:PGRN development activities, and $1.6 million and $5.2 million for ATV:TREM2 development activities, for the three and nine months ended September 30, 2022, respectively, as offsets to research and development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Cost sharing reimbursements of $2.1 million and $8.9 million were recorded as receivables within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, the Company had earned an aggregate of $10.0 million in option fee payments and $10.0 million in milestone payments from Takeda under the PTV:PGRN and ATV:TREM2 Collaboration Agreements, and had not recorded any product sales under either 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,
	2023		2022		2023		2022
Takeda Collaboration Agreement:
Takeda Collaboration Agreement Services(1)	$	—	$	—	$	—	$	51,916
PTV:PGRN Collaboration Agreement	—		—		10,000		—

Total Takeda Collaboration Revenue	—		—		10,000		51,916
Sanofi Collaboration Agreement
CNS Program License	—		—		25,000		40,000

Alzheimer's Disease Services(2)	—		3,375		—		3,375

Total Sanofi Collaboration Revenue	—		3,375		25,000		43,375
Biogen Collaboration Agreement

ATV:Abeta Program License(3)	—		—		293,912		—
Option Research Services(2)	1,267		184		1,619		2,889
Total Biogen Collaboration Revenue	1,267		184		295,531		2,889
Total Collaboration Revenue	$	1,267	$	3,559	$	330,531	$	98,180

_________________________________________________

(1)Revenue of $27.9 million for the nine months ended September 30, 2022 was included in the contract liability balance at the beginning of the period.

(2)Revenue for all periods presented was included in the contract liability balance at the beginning of the respective period.

(3)Revenue of $288.9 million for nine months ended September 30, 2023 was included in the related-party contract liability balance at the beginning of the period.

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

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, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	93,890	$	—	$	—	$	93,890


Short-term marketable securities:
U.S. government treasuries	924,811		—		—		924,811
U.S. government agency securities	—		20,941		—		20,941

Commercial paper	—		15,493		—		15,493
Long-term marketable securities:
U.S. government treasuries	7,905		—		—		7,905


Total	$	1,026,606	$	36,434	$	—	$	1,063,040


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	105,340	$	—	$	—	$	105,340
U.S. government treasuries	43,781		—		—		43,781
Commercial paper	—		9,948		—		9,948
Short-term marketable securities:
U.S. government treasuries	1,003,504		—		—		1,003,504
U.S. government agency securities	—		16,861		—		16,861
Corporate debt securities	—		54,215		—		54,215
Commercial paper	—		43,591		—		43,591




Total	$	1,152,625	$	124,615	$	—	$	1,277,240

The carrying amounts of prepaid expenses and other current assets, accounts payable, accrued liabilities and cost sharing payments due to related party 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.

The Company has not transferred any assets or liabilities between the fair value measurement levels.

- 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

Stock-Based Awards - Summary of Assumptions Used for Estimating the Fair Value of Stock Options Granted (Details) - Stock Options	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility, minimum	67.90%	65.10%
Volatility, maximum	69.60%	66.10%
Risk-free interest rate, minimum	3.40%	1.50%
Risk-free interest rate, maximum	4.30%	3.30%
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

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		122,283,305
Beginning balance at Dec. 31, 2021	$ 962,291	$ 1,548	$ 1,608,238	$ (2,499)	$ (644,996)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		723,604
Issuances under equity incentive plans	11,019	$ 8	11,011
Vesting of restricted stock units (in shares)		789,529
Vesting of restricted stock units	0	$ 8	(8)
Stock-based compensation	74,660		74,660
Net loss	(227,313)				(227,313)
Other comprehensive income (loss)	(9,354)			(9,354)
Ending balance (in shares) at Sep. 30, 2022		123,796,438
Ending balance at Sep. 30, 2022	811,303	$ 1,564	1,693,901	(11,853)	(872,309)
Beginning balance (in shares) at Jun. 30, 2022		123,157,278
Beginning balance at Jun. 30, 2022	884,448	$ 1,558	1,664,174	(12,274)	(769,010)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		331,643
Issuances under equity incentive plans	5,154	$ 3	5,151
Vesting of restricted stock units (in shares)		307,517
Vesting of restricted stock units	0	$ 3	(3)
Stock-based compensation	24,579		24,579
Net loss	(103,299)				(103,299)
Other comprehensive income (loss)	421			421
Ending balance (in shares) at Sep. 30, 2022		123,796,438
Ending balance at Sep. 30, 2022	$ 811,303	$ 1,564	1,693,901	(11,853)	(872,309)
Beginning balance (in shares) at Dec. 31, 2022	135,965,918	135,965,918
Beginning balance at Dec. 31, 2022	$ 1,042,430	$ 1,686	2,018,617	(6,886)	(970,987)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		953,575
Issuances under equity incentive plans	13,115	$ 9	13,106
Vesting of restricted stock units (in shares)		1,132,305
Vesting of restricted stock units	0	$ 12	(12)
Stock-based compensation	82,302		82,302
Net loss	(25,751)				(25,751)
Other comprehensive income (loss)	$ 6,235			6,235
Ending balance (in shares) at Sep. 30, 2023	138,051,798	138,051,798
Ending balance at Sep. 30, 2023	$ 1,118,331	$ 1,707	2,114,013	(651)	(996,738)
Beginning balance (in shares) at Jun. 30, 2023		137,362,688
Beginning balance at Jun. 30, 2023	1,186,825	$ 1,700	2,083,951	(1,441)	(897,385)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances under equity incentive plans (in shares)		222,688
Issuances under equity incentive plans	2,492	$ 2	2,490
Vesting of restricted stock units (in shares)		466,422
Vesting of restricted stock units	0	$ 5	(5)
Stock-based compensation	27,577		27,577
Net loss	(99,353)				(99,353)
Other comprehensive income (loss)	$ 790			790
Ending balance (in shares) at Sep. 30, 2023	138,051,798	138,051,798
Ending balance at Sep. 30, 2023	$ 1,118,331	$ 1,707	$ 2,114,013	$ (651)	$ (996,738)

Acquisition	9 Months Ended
Acquisition	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Acquisition	AcquisitionIn 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. In May 2018, the Company exercised the pre-negotiated option agreement (the "Option Agreement") under the F-star Collaboration 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”). The details of the Acquisition are further described in Note 4, "Acquisition", to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K.As of September 30, 2023, the Company had paid consideration of $49.8 million in the aggregate consisting of up-front, preclinical and clinical contingent consideration. The aggregate $49.8 million consideration payment includes a $30.0 million contingent consideration payment triggered in March 2023 upon the achievement of a specified clinical milestone in the ETV:IDS program, all of which was recognized as research and development expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss in the first quarter of 2023. This contingent consideration payment fully satisfies the Company's clinical contingent consideration obligations under the Purchase Agreement. There was no contingent consideration expense recognized for the three months ended September 30, 2023 or the three and nine months ended September 30, 2022.

License Agreements	9 Months Ended
License Agreements	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
License Agreements	License Agreement Genentech In June 2016, the Company entered into an Exclusive License Agreement with Genentech, Inc. (“Genentech License Agreement”). The details of the Genentech License Agreement are further described in Note 6, "License Agreements", to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K. No expenses were recorded under the Genentech License Agreement for the three and nine months ended September 30, 2023. In the nine months ended September 30, 2022, the Company paid Genentech two clinical milestone payments of $7.5 million and $5.0 million, triggered upon the commencement of dosing in the global Phase 2b LUMA study to evaluate the efficacy and safety of BIIB122/DNL151, and the commencement of dosing in the global Phase 3 LIGHTHOUSE study to evaluate the efficacy and safety profile of BIIB122/DNL151, respectively, by the Company's collaboration partner Biogen. Biogen is responsible for 50% of any payment obligation to Genentech under the Biogen Collaboration Agreement, including these clinical milestones, and accordingly $2.5 million and $6.3 million of research and development expense was recorded in the three and nine months ended September 30, 2022, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Loss. To date, the Company has made payments to Genentech of $25.0 million in the aggregate, including an upfront fee, a technology transfer fee and three clinical milestone payments, with $18.8 million of the payments recorded as research and development expense as incurred, net of cost sharing reimbursements from Biogen.

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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)	138,051,798	135,965,918
Common stock, shares outstanding (in shares)	138,051,798	135,965,918

Collaboration Agreements - Biogen (Details)

1 Months Ended

3 Months Ended

9 Months Ended

38 Months Ended

Aug. 31, 2023

program

Sep. 30, 2023

USD ($)

Jun. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Apr. 30, 2023

USD ($)

Dec. 31, 2022

USD ($)

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

^[1]

$ 1,267,000

$ 184,000

$ 330,531,000

$ 94,805,000

Research and development expense due to cost share payments to related party

^[2]

89,737,000

87,786,000

316,073,000

266,621,000

Collaboration revenue from customers

1,300,000

200,000

295,500,000

2,900,000

Research and development expense due to cost share payments to related party

3,400,000

1,400,000

14,500,000

3,800,000

Accounts payable

10,354,000

$ 10,354,000

$ 4,388,000

Biogen | Related Party

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

293,900,000

Contract liability

290,500,000

Transaction price, increase (decrease)

Contract liability, amount recognized

1,300,000

Biogen Amendment | Biogen

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Number of TV-enabled programs in which rights of first negotiation were waived | program

Collaborative Arrangement, ATV:Abeta | Biogen | Related Party

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

$ 5,000,000

5,000,000

Contract liability

$ 288,900,000

Biogen Collaborative Arrangement | Biogen | Related Party

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development expense due to cost share payments to related party

3,400,000

$ 1,400,000

14,500,000

$ 3,800,000

Accounts payable

$ 10,400,000

10,400,000

$ 4,400,000

Biogen Collaborative Arrangement | Biogen | Option Fee Payment

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

5,000,000

Biogen Collaborative Arrangement | Biogen | Milestone Triggered

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

Biogen Collaborative Arrangement | Biogen | Product

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

$ 0

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.
[2]	Includes expenses for cost sharing payments due to a related party of $3.4 million and $14.5 million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $3.8 million for the three and nine months ended September 30, 2022.

Collaboration Agreements - Summary of Collaboration Revenue (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

^[1]

$ 1,267

$ 184

$ 330,531

$ 94,805

Other collaboration revenue

3,375

Total Collaboration Revenue

1,267

3,559

330,531

98,180

Takeda Collaboration Agreement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Total Collaboration Revenue

10,000

51,916

Revenue recognized included in the contract liability balance at the beginning of the period

27,900

Takeda Collaboration Agreement | Collaboration Agreement Services

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

51,916

Takeda Collaboration Agreement | PTV:PGRN Collaboration Agreement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

10,000

Sanofi Collaboration Agreement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Total Collaboration Revenue

3,375

25,000

43,375

Sanofi Collaboration Agreement | CNS Program License

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

25,000

40,000

Sanofi Collaboration Agreement | Alzheimer's Disease Services

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Other collaboration revenue

3,375

Biogen

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Total Collaboration Revenue

1,267

184

295,531

2,889

Biogen | ATV:Abeta Program License

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

293,912

Biogen | Option Research Services

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaborative revenue, revenue from contract with customer

$ 1,267

$ 184

1,619

$ 2,889

Collaborative Arrangement, ATV:Abeta

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Revenue recognized included in the contract liability balance at the beginning of the period

$ 288,900

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net loss	$ (25,751)	$ (227,313)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	14,549	6,292
Stock–based compensation expense	82,114	74,660
Net amortization of premiums and (discounts) on marketable securities	(31,709)	1,430
Non-cash adjustment to operating lease expense	(2,762)	(2,488)
Other non-cash items	0	51
Changes in operating assets and liabilities:
Prepaid expenses and other assets	1,910	(1,386)
Accounts payable	4,512	3,989
Accruals and other current liabilities	(11,665)	6,891
Contract liabilities	0	(31,290)
Related-party contract liability	(290,532)	(2,889)
Net cash used in operating activities	(259,334)	(172,053)
Investing activities
Purchases of marketable securities	(1,399,982)	(628,330)
Purchases of property and equipment	(10,704)	(12,984)
Maturities and sales of marketable securities	1,586,947	627,486
Net cash provided by (used in) investing activities	176,261	(13,828)
Financing activities
Proceeds from exercise of awards under equity incentive plans	13,115	11,019
Net cash provided by financing activities	13,115	11,019
Net decrease in cash, cash equivalents and restricted cash	(69,958)	(174,862)
Cash, cash equivalents and restricted cash at beginning of period	219,544	294,977
Cash, cash equivalents and restricted cash at end of period	149,586	120,115
Supplemental disclosures of cash flow information
Cash paid during the period for income taxes	4	0
Property and equipment purchases accrued but not yet paid	$ 6,230	$ 284

Net Loss Per Share	9 Months Ended
Net Loss Per Share	Sep. 30, 2023
Earnings Per Share [Abstract]
Net Loss Per Share	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, including all options issued and outstanding, ESPP shares issuable, and restricted shares subject to future vesting, that were not included in the diluted per share calculations for all periods presented because they would be anti-dilutive totaled approximately 20.7 million and 18.4 million shares as of September 30, 2023 and September 30, 2022, respectively.

Collaboration Agreements - Sanofi (Details) - USD ($)

3 Months Ended

9 Months Ended

60 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Dec. 31, 2022

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

^[1]

$ 1,267,000

$ 184,000

$ 330,531,000

$ 94,805,000

Sanofi | Collaborative Arrangement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Contract liability

$ 0

Transaction price, increase (decrease)

$ 25,000,000

$ 40,000,000

Collaboration revenue from customers

$ 0

Sanofi | Collaborative Arrangement | Milestone Triggered

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

100,000,000

Sanofi | Collaborative Arrangement | Product

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

$ 0

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.

- 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

License Agreements - Narrative (Details)

1 Months Ended

3 Months Ended

9 Months Ended

88 Months Ended

Oct. 05, 2020

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

payment

Sep. 30, 2023

USD ($)

payment

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

^[1]

$ 89,737,000

$ 87,786,000

$ 316,073,000

$ 266,621,000

Genetech License Agreement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

$ 18,800,000

Genentech Inc | Milestone Triggered, LUMA Study

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Clinical milestone payment

$ 7,500,000

Genentech Inc | Accrued Clinical and Other Research and Development Costs | Milestone Triggered, LIGHTHOUSE Study

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Clinical milestone payment

$ 5,000,000

Genentech Inc | Genetech License Agreement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

Clinical milestone payments | payment

Genentech Inc | Genetech License Agreement | Research and development

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Aggregate payments

$ 25,000,000

Genentech Inc | Collaborative Arrangement

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

$ 2,500,000

$ 6,300,000

Payment obligation, percentage

50.00%

[1]	Includes expenses for cost sharing payments due to a related party of $3.4 million and $14.5 million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $3.8 million for the three and nine months ended September 30, 2022.

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2023	Oct. 30, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
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)		138,196,848
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Central Index Key	0001714899
Current Fiscal Year End Date	--12-31

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Summary of Supplemental Information for Lease Amounts Recognized

The following table contains a summary of other information pertaining to the Company’s operating lease for the periods presented (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Cash paid for amounts included in measurement of lease liabilities	$	2,793	$	2,899	$	8,552	$	8,193

	As of September 30,
	2023				2022
Weighted average remaining lease term	5.6 years				6.4 years
Weighted average discount rate	9.0%				8.9%

Summary of Future Minimum Lease Commitments

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, 2023 (in thousands):


Year Ended December 31:
2023 (three months)	2,793
2024	11,417
2025	11,793
2026	12,182
2027	12,584
Thereafter	17,381
Total undiscounted lease payments	68,150
Present value adjustment	(14,249)
Net operating lease liabilities	$	53,901

Stock-Based Awards - Summary of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of Options
Beginning balance (in shares) \| shares	14,673,717
Granted (in shares) \| shares	3,395,331
Exercised (in shares) \| shares	(795,686)
Forfeited (in shares) \| shares	(597,984)
Ending balance (in shares) \| shares	16,675,378
Vested and expected to vest (in shares) \| shares	15,865,507
Exercisable (in shares) \| shares	10,721,238
Weighted-Average Exercise Price
Beginning balance (usd per share) \| $ / shares	$ 27.03
Granted (usd per share) \| $ / shares	27.68
Exercised (usd per share) \| $ / shares	12.20
Forfeited (usd per share) \| $ / shares	40.37
Ending balance (usd per share) \| $ / shares	27.39
Vested and expected to vest (usd per share) \| $ / shares	29.91
Exercisable (usd per share) \| $ / shares	$ 25.28

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (99,353)	$ (103,299)	$ (25,751)	$ (227,313)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482790/220-10-45-1A

Reference 37: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482790/220-10-45-1B

Reference 38: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 39: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2023
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 the Securities and Exchange Commission ("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, 2022, as filed with the SEC on February 27, 2023 (the "2022 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from the audited annual consolidated financial statements as of and for 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, if any, 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 subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. For the Company and its subsidiaries, 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, and transactions in foreign currencies are remeasured at average exchange rates. Foreign currency 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 assets and 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 Condensed Consolidated 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, and marketable securities. 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 and its agencies, as well as 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, 2023 and December 31, 2022, the Company had no off-balance sheet concentrations of credit risk. The Company is subject to a number of risks similar to other clinical-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. Further, the company is also subject to broad market risks and uncertainties resulting from recent events, such as bank failures or instability in the financial services sector, the COVID-19 pandemic, the Russian invasion of Ukraine, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages.
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. Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Condensed Consolidated Balance Sheets and $1.6 million of restricted cash for the letter of credit for the Company’s headquarters building lease which is included within other non-current assets in the 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 or short-term marketable securities on the Condensed Consolidated Balance Sheets, are considered available-for-sale, and are 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, unless intended to fund current operations. 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 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, excluding related parties, net of an allowance for credit losses, if required.
Leases	Leases The Company leases real estate and certain equipment for use in its operations. A determination is made as to whether an arrangement is a lease at inception. Right-of-use (“ROU”) assets and operating lease liabilities are 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 twelve 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, Option 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 license, option and collaboration agreements entered into typically include payment of one or more of the following: non-refundable, up-front license fees; option exercise 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. The Company may also receive reimbursement or make payments to a collaboration partner to satisfy cost sharing requirements. These payments are accounted for pursuant to ASC 808 and are recorded as an offset or increase to research and development expenses, respectively. 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 promised good or service 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. The Company accounts for the exercise of a material right as either a contract modification or as a continuation of the existing contract, as is most appropriate based on the facts and circumstances. 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 Loss	Comprehensive Loss Comprehensive 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.

Collaboration Agreements - Takeda (Details)

1 Months Ended

3 Months Ended

9 Months Ended

69 Months Ended

Dec. 31, 2021

contract

Sep. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

Dec. 31, 2022

USD ($)

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

^[1]

$ 1,267,000

$ 184,000

$ 330,531,000

$ 94,805,000

Collaborative Arrangement, PTV:PGRN and ATV:TREM2 | Takeda Pharmaceutical Company Limited

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Number of new contracts | contract

Transaction price, increase (decrease)

10,000,000

Collaborative Arrangement, PTV:PGRN and ATV:TREM2 | Takeda Pharmaceutical Company Limited | Prepaid Assets and Other Current Assets

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Receivable

2,100,000

$ 2,100,000

$ 8,900,000

Collaborative Arrangement, PTV:PGRN and ATV:TREM2 | Takeda Pharmaceutical Company Limited | Milestone Payment

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

10,000,000

Collaborative Arrangement, PTV:PGRN and ATV:TREM2 | Takeda Pharmaceutical Company Limited | Option Fee Payment

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

10,000,000

Collaborative Arrangement, PTV:PGRN and ATV:TREM2 | Takeda Pharmaceutical Company Limited | Product

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Collaboration revenue from customers

$ 0

Collaborative Arrangement, PTV:PGRN | Takeda Pharmaceutical Company Limited

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Offset to research and development expense, cost reimbursement

1,700,000

2,300,000

5,100,000

8,000,000

Collaborative Arrangement, ATV:TREM2 | Takeda Pharmaceutical Company Limited

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Offset to research and development expense, cost reimbursement

$ 1,100,000

$ 1,600,000

$ 4,300,000

$ 5,200,000

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.

Significant Accounting Policies - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) segment
Accounting Policies [Abstract]
Number of operating segments \| segment	1
Restricted cash \| $	$ 1.6

Fair Value Measurements - Schedule of Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets:
Total	$ 1,063,040	$ 1,277,240
U.S. government treasuries
Assets:
Short-term marketable securities, fair value	924,811	1,003,504
Long-term marketable securities, fair value	7,905
U.S. government agency securities
Assets:
Short-term marketable securities, fair value	20,941	16,861
Corporate debt securities
Assets:
Short-term marketable securities, fair value		54,215
Commercial paper
Assets:
Short-term marketable securities, fair value	15,493	43,591
Money market funds
Assets:
Cash equivalents	93,890	105,340
U.S. government treasuries
Assets:
Cash equivalents		43,781
Commercial paper
Assets:
Cash equivalents		9,948
Level 1
Assets:
Total	1,026,606	1,152,625
Level 1 \| U.S. government treasuries
Assets:
Short-term marketable securities, fair value	924,811	1,003,504
Long-term marketable securities, fair value	7,905
Level 1 \| U.S. government agency securities
Assets:
Short-term marketable securities, fair value	0	0
Level 1 \| Corporate debt securities
Assets:
Short-term marketable securities, fair value		0
Level 1 \| Commercial paper
Assets:
Short-term marketable securities, fair value	0	0
Level 1 \| Money market funds
Assets:
Cash equivalents	93,890	105,340
Level 1 \| U.S. government treasuries
Assets:
Cash equivalents		43,781
Level 1 \| Commercial paper
Assets:
Cash equivalents		0
Level 2
Assets:
Total	36,434	124,615
Level 2 \| U.S. government treasuries
Assets:
Short-term marketable securities, fair value	0	0
Long-term marketable securities, fair value	0
Level 2 \| U.S. government agency securities
Assets:
Short-term marketable securities, fair value	20,941	16,861
Level 2 \| Corporate debt securities
Assets:
Short-term marketable securities, fair value		54,215
Level 2 \| Commercial paper
Assets:
Short-term marketable securities, fair value	15,493	43,591
Level 2 \| Money market funds
Assets:
Cash equivalents	0	0
Level 2 \| U.S. government treasuries
Assets:
Cash equivalents		0
Level 2 \| Commercial paper
Assets:
Cash equivalents		9,948
Level 3
Assets:
Total	0	0
Level 3 \| U.S. government treasuries
Assets:
Short-term marketable securities, fair value	0	0
Long-term marketable securities, fair value	0
Level 3 \| U.S. government agency securities
Assets:
Short-term marketable securities, fair value	0	0
Level 3 \| Corporate debt securities
Assets:
Short-term marketable securities, fair value		0
Level 3 \| Commercial paper
Assets:
Short-term marketable securities, fair value	0	0
Level 3 \| Money market funds
Assets:
Cash equivalents	$ 0	0
Level 3 \| U.S. government treasuries
Assets:
Cash equivalents		0
Level 3 \| Commercial paper
Assets:
Cash equivalents		$ 0

Stock-Based Awards

9 Months Ended

Sep. 30, 2023

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 9, "Stock-Based Awards" to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K.

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2023:


	Number of Options	Weighted-Average Exercise Price
Balance at December 31, 2022	14,673,717	$	27.03
Granted	3,395,331	27.68
Exercised	(795,686)	12.20
Forfeited	(597,984)	40.37
Balance at September 30, 2023	16,675,378	$	27.39
Vested and expected to vest at September 30, 2023	15,865,507	$	29.91
Exercisable at September 30, 2023	10,721,238	$	25.28

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,
	2023	2022
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Volatility	67.9% - 69.6%	65.1% - 66.1%
Risk-free interest rate	3.4% - 4.3%	1.5% - 3.3%
Dividend yield	—	—

Restricted Stock Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2023:


	Number of RSU shares	Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2022	3,330,654	$	41.39
Granted	1,811,640	27.54
Vested and released	(1,132,305)	38.55
Forfeited	(293,478)	36.69
Unvested and expected to vest at September 30, 2023	3,716,511	$	35.87

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,
	2023		2022		2023		2022
Research and development	$	15,821	$	14,716	$	47,795	$	45,144
General and administrative	11,638		9,863		34,319		29,516
Total	$	27,459	$	24,579	$	82,114	$	74,660

Significant Accounting Policies	9 Months Ended
Significant Accounting Policies	Sep. 30, 2023
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 the Securities and Exchange Commission ("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, 2022, as filed with the SEC on February 27, 2023 (the "2022 Annual Report on Form 10-K"). The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from the audited annual consolidated financial statements as of and for 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, if any, 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, 2023 there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2022 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 2022 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 subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. For the Company and its subsidiaries, 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, and transactions in foreign currencies are remeasured at average exchange rates. Foreign currency 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 assets and 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 Condensed Consolidated 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, and marketable securities. 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 and its agencies, as well as 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, 2023 and December 31, 2022, the Company had no off-balance sheet concentrations of credit risk. The Company is subject to a number of risks similar to other clinical-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. Further, the company is also subject to broad market risks and uncertainties resulting from recent events, such as bank failures or instability in the financial services sector, the COVID-19 pandemic, the Russian invasion of Ukraine, inflation, rising interest rates, and recession risks as well as supply chain and labor shortages. 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. Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Statements of Cash Flows is composed of cash and cash equivalents reported in the Condensed Consolidated Balance Sheets and $1.6 million of restricted cash for the letter of credit for the Company’s headquarters building lease which is included within other non-current assets in the 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 or short-term marketable securities on the Condensed Consolidated Balance Sheets, are considered available-for-sale, and are 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, unless intended to fund current operations. 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, excluding related parties, net of an allowance for credit losses, if required. Leases The Company leases real estate and certain equipment for use in its operations. A determination is made as to whether an arrangement is a lease at inception. Right-of-use (“ROU”) assets and operating lease liabilities are 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 twelve 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, Option 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 license, option and collaboration agreements entered into typically include payment of one or more of the following: non-refundable, up-front license fees; option exercise 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. The Company may also receive reimbursement or make payments to a collaboration partner to satisfy cost sharing requirements. These payments are accounted for pursuant to ASC 808 and are recorded as an offset or increase to research and development expenses, respectively. 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 promised good or service 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. The Company accounts for the exercise of a material right as either a contract modification or as a continuation of the existing contract, as is most appropriate based on the facts and circumstances. 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 Loss Comprehensive 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.

Stock-Based Awards - Summary of Restricted Stock Activity (Details) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of RSU shares
Unvested at December 31, 2022 (in shares) \| shares	3,330,654
Granted (in shares) \| shares	1,811,640
Vested and released (in shares) \| shares	(1,132,305)
Forfeited (in shares) \| shares	(293,478)
Unvested at September 30, 2023 (in shares) \| shares	3,716,511
Expected to vest at September 30, 2023 (in shares) \| shares	3,716,511
Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2022 (usd per share) \| $ / shares	$ 41.39
Granted (usd per share) \| $ / shares	27.54
Vested and released (usd per share) \| $ / shares	38.55
Forfeited (usd per share) \| $ / shares	36.69
Unvested at September 30, 2023 (usd per share) \| $ / shares	35.87
Expected to vest at September 30, 2023 (usd per share) \| $ / shares	$ 35.87

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 148,011	$ 218,044
Short-term marketable securities	961,245	1,118,171
Prepaid expenses and other current assets	33,628	36,104
Total current assets	1,142,884	1,372,319
Long-term marketable securities	7,905	0
Property and equipment, net	48,101	44,087
Operating lease right-of-use assets	26,750	30,437
Other non-current assets	11,137	13,399
Total assets	1,236,777	1,460,242
Current liabilities:
Accrued clinical and other research & development costs	14,534	16,297
Accrued manufacturing costs	12,421	22,307
Other accrued costs and current liabilities	9,331	3,682
Accrued compensation	16,344	17,087
Operating lease liabilities, current	7,014	7,318
Related-party contract liability, current	0	290,053
Total current liabilities	71,180	363,922
Related-party contract liability, less current portion	0	479
Operating lease liabilities, less current portion	46,887	53,032
Other non-current liabilities	379	379
Total liabilities	118,446	417,812
Commitments and contingencies (Note 7)
Stockholders' equity:
Convertible preferred stock, $0.01 par value; 40,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022	0	0
Common stock, $0.01 par value; 400,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 138,051,798 shares and 135,965,918 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1,707	1,686
Additional paid-in capital	2,114,013	2,018,617
Accumulated other comprehensive loss	(651)	(6,886)
Accumulated deficit	(996,738)	(970,987)
Total stockholders' equity	1,118,331	1,042,430
Total liabilities and stockholders’ equity	1,236,777	1,460,242
Nonrelated Party
Current liabilities:
Accounts payable	1,182	2,790
Related Party
Current liabilities:
Accounts payable	$ 10,354	$ 4,388

Net Loss Per Share - Narrative (Details) - shares shares in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Antidilutive securities, excluded (in shares)	20.7	18.4

Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

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, 2023
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	925,091	$	20	$	(300)	$	924,811
U.S. government agency securities(2)	20,952		1		(12)		20,941

Commercial paper	15,493		—		—		15,493
Total short-term marketable securities	961,536		21		(312)		961,245
Long-term marketable securities:
U.S. government treasuries(3)	7,914		—		(9)		7,905


Total long-term marketable securities	7,914		—		(9)		7,905
Total	$	969,450	$	21	$	(321)	$	969,150

__________________________________________________

(1)Unrealized holding losses on 39 securities with an aggregate fair value of $686.2 million.

(2)Unrealized holding losses on 4 securities with an aggregate fair value of $17.5 million.

(3)Unrealized holding loss on 1 security with an aggregate fair value of $7.9 million.


	December 31, 2022
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Aggregate Fair Value
Short-term marketable securities:
U.S. government treasuries(1)	$	1,009,733	$	58	$	(6,287)	$	1,003,504
U.S. government agency securities	16,823		38		—		16,861
Corporate debt securities(2)	54,571		—		(356)		54,215
Commercial paper	43,591		—		—		43,591






Total	$	1,124,718	$	96	$	(6,643)	$	1,118,171

__________________________________________________

(1)Unrealized holding losses on 51 securities with an aggregate fair value of $683.4 million.

(2)Unrealized holding losses on 16 securities with an aggregate fair value of $54.2 million.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Collaboration revenue from customers

^[1]

$ 1,267

$ 184

$ 330,531

$ 94,805

Research and development expense due to cost share payments to related party

^[2]

89,737

87,786

316,073

266,621

Related Party

Collaboration revenue from customers

1,300

200

295,500

2,900

Research and development expense due to cost share payments to related party

$ 3,400

$ 1,400

$ 14,500

$ 3,800

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.
[2]	Includes expenses for cost sharing payments due to a related party of $3.4 million and $14.5 million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $3.8 million for the three and nine months ended September 30, 2022.

- Definition

+ References

+ Details

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of 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, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	93,890	$	—	$	—	$	93,890


Short-term marketable securities:
U.S. government treasuries	924,811		—		—		924,811
U.S. government agency securities	—		20,941		—		20,941

Commercial paper	—		15,493		—		15,493
Long-term marketable securities:
U.S. government treasuries	7,905		—		—		7,905


Total	$	1,026,606	$	36,434	$	—	$	1,063,040


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	105,340	$	—	$	—	$	105,340
U.S. government treasuries	43,781		—		—		43,781
Commercial paper	—		9,948		—		9,948
Short-term marketable securities:
U.S. government treasuries	1,003,504		—		—		1,003,504
U.S. government agency securities	—		16,861		—		16,861
Corporate debt securities	—		54,215		—		54,215
Commercial paper	—		43,591		—		43,591




Total	$	1,152,625	$	124,615	$	—	$	1,277,240

Collaboration Agreements (Tables)

9 Months Ended

Sep. 30, 2023

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,
	2023		2022		2023		2022
Takeda Collaboration Agreement:
Takeda Collaboration Agreement Services(1)	$	—	$	—	$	—	$	51,916
PTV:PGRN Collaboration Agreement	—		—		10,000		—

Total Takeda Collaboration Revenue	—		—		10,000		51,916
Sanofi Collaboration Agreement
CNS Program License	—		—		25,000		40,000

Alzheimer's Disease Services(2)	—		3,375		—		3,375

Total Sanofi Collaboration Revenue	—		3,375		25,000		43,375
Biogen Collaboration Agreement

ATV:Abeta Program License(3)	—		—		293,912		—
Option Research Services(2)	1,267		184		1,619		2,889
Total Biogen Collaboration Revenue	1,267		184		295,531		2,889
Total Collaboration Revenue	$	1,267	$	3,559	$	330,531	$	98,180

_________________________________________________

(1)Revenue of $27.9 million for the nine months ended September 30, 2022 was included in the contract liability balance at the beginning of the period.

(2)Revenue for all periods presented was included in the contract liability balance at the beginning of the respective period.

(3)Revenue of $288.9 million for nine months ended September 30, 2023 was included in the related-party contract liability balance at the beginning of the period.

Acquisition - Narrative (Details) - USD ($)

1 Months Ended

3 Months Ended

9 Months Ended

86 Months Ended

Mar. 31, 2023

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

^[1]

$ 89,737,000

$ 87,786,000

$ 316,073,000

$ 266,621,000

Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Research and development

$ 49,800,000

Contingent consideration recognized

$ 0

Collaborative Arrangement with F-Star and Acquisition of F-Star Gamma | Contingent Payments Upon Achievement of Specialized Clinical Milestone

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Contingent consideration payment triggered

$ 30,000,000

[1]	Includes expenses for cost sharing payments due to a related party of $3.4 million and $14.5 million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $3.8 million for the three and nine months ended September 30, 2022.

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Sep. 30, 2023

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Our policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors and employees to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. As disclosed in the table below, during the third quarter of 2023, certain of our executive officers and directors adopted a “Rule 10b5-1 trading arrangement”. These plans provide for the sale of our common stock and are intended to satisfy the affirmative defense in Rule 10b5-1(c).

Name

Position

Date of Plan Adoption

Scheduled End Date of Trading Arrangement(1)

Maximum Total Shares of Common Stock to be Sold Under the Plan(2)

Ryan Watts, Ph.D.

Chief Executive Officer

9/29/2023

2/16/2025

300,000

Alexander Schuth, M.D.

Chief Operating and Financial Officer

9/29/2023

2/14/2025

116,918

Carole Ho, M.D.

Chief Medical Officer

9/29/2023

12/29/2024

340,953

__________________________________________________

(1)In each case, the trading arrangement may expire on an earlier date if and when all transactions under the arrangement are completed.

(2)These amounts represent the maximum total shares that could be sold under the plan, but the amounts may change for executive officers due to the sale of shares to satisfy tax withholding requirements.

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Ryan Watts [Member]

Trading Arrangements, by Individual

Name

Ryan Watts, Ph.D.

Title

Chief Executive Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

9/29/2023

Arrangement Duration

506 days

Aggregate Available

300,000

Alexander Schuth [Member]

Trading Arrangements, by Individual

Name

Alexander Schuth, M.D.

Title

Chief Operating and Financial Officer

Rule 10b5-1 Arrangement Adopted

true

9/29/2023

504 days

116,918

Trading Arrangements, by Individual

Name

Carole Ho, M.D.

Title

Chief Medical Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

9/29/2023

Arrangement Duration

457 days

Aggregate Available

340,953

Marketable Securities - Summary of Available for Sale Securities (Details) $ in Thousands	Sep. 30, 2023 USD ($) security	Dec. 31, 2022 USD ($) security
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 969,450
Unrealized Holding Gains	21
Unrealized Holding Losses	(321)
Aggregate Fair Value	969,150
Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	961,536	$ 1,124,718
Unrealized Holding Gains	21	96
Unrealized Holding Losses	(312)	(6,643)
Aggregate Fair Value	961,245	1,118,171
Long-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	7,914
Unrealized Holding Gains	0
Unrealized Holding Losses	(9)
Aggregate Fair Value	7,905
U.S. government treasuries \| Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	925,091	1,009,733
Unrealized Holding Gains	20	58
Unrealized Holding Losses	(300)	(6,287)
Aggregate Fair Value	$ 924,811	$ 1,003,504
Number of securities held in unrealized holding loss positions, short-term \| security	39	51
Aggregate fair value, unrealized holding loss position, short-term	$ 686,200	$ 683,400
U.S. government treasuries \| Long-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	7,914
Unrealized Holding Gains	0
Unrealized Holding Losses	(9)
Aggregate Fair Value	$ 7,905
Number of securities held in unrealized holding loss positions, short-term \| security	1
Aggregate fair value, unrealized holding loss position, short-term	$ 7,900
U.S. government agency securities \| Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	20,952	16,823
Unrealized Holding Gains	1	38
Unrealized Holding Losses	(12)	0
Aggregate Fair Value	$ 20,941	16,861
Number of securities held in unrealized holding loss positions, short-term \| security	4
Aggregate fair value, unrealized holding loss position, short-term	$ 17,500
Corporate debt securities \| Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		54,571
Unrealized Holding Gains		0
Unrealized Holding Losses		(356)
Aggregate Fair Value		$ 54,215
Number of securities held in unrealized holding loss positions, short-term \| security		16
Aggregate fair value, unrealized holding loss position, short-term		$ 54,200
Commercial paper \| Short-term marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	15,493	43,591
Unrealized Holding Gains	0	0
Unrealized Holding Losses	0	0
Aggregate Fair Value	$ 15,493	$ 43,591

Marketable Securities - Narrative (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Allowance for credit losses	$ 0	$ 0
Effective maturity (less than)	2 years

Commitments and Contingencies - Summary of Supplemental Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Cash paid for amounts included in measurement of lease liabilities	$ 2,793	$ 2,899	$ 8,552	$ 8,193
Weighted average remaining lease term	5 years 7 months 6 days	6 years 4 months 24 days	5 years 7 months 6 days	6 years 4 months 24 days
Weighted average discount rate	9.00%	8.90%	9.00%	8.90%

Stock-Based Awards (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2023:


	Number of Options	Weighted-Average Exercise Price
Balance at December 31, 2022	14,673,717	$	27.03
Granted	3,395,331	27.68
Exercised	(795,686)	12.20
Forfeited	(597,984)	40.37
Balance at September 30, 2023	16,675,378	$	27.39
Vested and expected to vest at September 30, 2023	15,865,507	$	29.91
Exercisable at September 30, 2023	10,721,238	$	25.28

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,
	2023	2022
Expected term (in years)	5.50 - 6.08	5.50 - 6.08
Volatility	67.9% - 69.6%	65.1% - 66.1%
Risk-free interest rate	3.4% - 4.3%	1.5% - 3.3%
Dividend yield	—	—

Summary of Restricted Stock Activity

The following table summarizes restricted stock unit ("RSU") activity for the nine months ended September 30, 2023:


	Number of RSU shares	Weighted-Average Fair Value at Date of Grant per Share
Unvested at December 31, 2022	3,330,654	$	41.39
Granted	1,811,640	27.54
Vested and released	(1,132,305)	38.55
Forfeited	(293,478)	36.69
Unvested and expected to vest at September 30, 2023	3,716,511	$	35.87

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,
	2023		2022		2023		2022
Research and development	$	15,821	$	14,716	$	47,795	$	45,144
General and administrative	11,638		9,863		34,319		29,516
Total	$	27,459	$	24,579	$	82,114	$	74,660

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Collaboration revenue:

Collaboration revenue from customers

^[1]

$ 1,267

$ 184

$ 330,531

$ 94,805

Other collaboration revenue

3,375

Total collaboration revenue

1,267

3,559

330,531

98,180

Operating expenses:

Research and development

^[2]

89,737

87,786

316,073

266,621

General and administrative

25,325

23,259

78,585

66,959

Total operating expenses

115,062

111,045

394,658

333,580

Loss from operations

(113,795)

(107,486)

(64,127)

(235,400)

Interest and other income, net

14,442

4,187

38,376

8,114

Loss before income taxes

(99,353)

(103,299)

(25,751)

(227,286)

Income tax expense

(27)

Net loss

(99,353)

(103,299)

(25,751)

(227,313)

Other comprehensive income (loss):

Net unrealized gain (loss) on marketable securities, net of tax

790

421

6,235

(9,354)

Comprehensive loss

$ (98,563)

$ (102,878)

$ (19,516)

$ (236,667)

Net loss per share, basic (usd per share)

$ (0.72)

$ (0.84)

$ (0.19)

$ (1.85)

Net loss per share, diluted (usd per share)

$ (0.72)

$ (0.84)

$ (0.19)

$ (1.85)

Weighted average number of shares outstanding, basic (in shares)

137,644,534

123,473,390

137,076,199

123,054,889

Weighted average number of shares outstanding, diluted (in shares)

137,644,534

123,473,390

137,076,199

123,054,889

[1]	Includes related-party collaboration revenue from customers of $1.3 million and $295.5 million for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $2.9 million for the three and nine months ended September 30, 2022, respectively.
[2]	Includes expenses for cost sharing payments due to a related party of $3.4 million and $14.5 million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $3.8 million for the three and nine months ended September 30, 2022.

Stock-Based Awards - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 27,459	$ 24,579	$ 82,114	$ 74,660
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	15,821	14,716	47,795	45,144
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 11,638	$ 9,863	$ 34,319	$ 29,516

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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-Topic 718
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-Section 35
-Paragraph 1D
-Publisher FASB
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-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

+ Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Lease Obligations

In May 2018, the Company entered into an operating lease for its corporate headquarters in South San Francisco (the "Headquarters Lease"), as further described in Note 8, "Commitments and Contingencies," to the consolidated financial statements in the Company's 2022 Annual Report on Form 10-K. In August 2021, the Company entered into an operating lease for laboratory, office and warehouse premises in Salt Lake City, Utah (the “SLC Lease”). In March 2023, the Company terminated the SLC Lease, which resulted in the recognition of $7.9 million of accelerated depreciation on leasehold improvements in the nine months ended September 30, 2023. The SLC Lease had not commenced for accounting purposes, and as such, no lease liability or ROU asset was recorded on the Condensed Consolidated Balance Sheet, and no operating lease expense was recorded associated with this lease.

In April 2023, the Company entered into a new operating lease in Salt Lake City for a 59,336 square foot laboratory, office and warehouse premises with a contractual term of approximately 15.0 years upon commencement, and future undiscounted lease payments of approximately $13.4 million. For accounting purposes, this new lease has not yet commenced, and as such, no lease liability or ROU asset is recorded on the Condensed Consolidated Balance Sheet as of September 30, 2023, and no operating lease expense has been recorded on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023.

Management exercised judgment in applying the requirements of ASC 842, including the determination as to whether certain contracts contain a lease, the lease consideration, and the commencement date of the lease, and for leases identified under the standard, the discount rate used to determine the measurement of the lease liability. The discount rates of our operating leases are an approximation of the Company's incremental borrowing rate and are dependent upon the term and economics of the agreement. To estimate the incremental borrowing rate, management considers observable debt yields of comparable market instruments, as well as benchmarks within the lease agreement that may be indicative of the rate implicit in the lease. There were no changes to the terms of the leases recognized under ASC 842 during the three or nine months ended September 30, 2023.

Operating lease costs, including variable costs, recognized under ASC 842 were $3.2 million and $9.4 million for the three and nine months ended September 30, 2023, respectively, and $3.3 million and $8.7 million for the three and nine months ended September 30, 2022, respectively. The following table contains a summary of other information pertaining to the Company’s operating lease for the periods presented (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Cash paid for amounts included in measurement of lease liabilities	$	2,793	$	2,899	$	8,552	$	8,193

	As of September 30,
	2023				2022
Weighted average remaining lease term	5.6 years				6.4 years
Weighted average discount rate	9.0%				8.9%


Year Ended December 31:
2023 (three months)	2,793
2024	11,417
2025	11,793
2026	12,182
2027	12,584
Thereafter	17,381
Total undiscounted lease payments	68,150
Present value adjustment	(14,249)
Net operating lease liabilities	$	53,901

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 when all development and manufacturing services are completed, which is not expected to be before November 2029. As of September 30, 2023 and December 31, 2022, the Company had total non-cancellable purchase commitments under the DMSA of $49.9 million and $32.3 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company incurred costs of $10.4 million and $3.4 million, respectively, and made payments of $12.8 million and $3.9 million, respectively, for the development and manufacturing services rendered under the DMSA. During the nine months ended September 30, 2023 and 2022, the Company incurred costs of $26.5 million and $22.9 million, respectively, and made payments of $24.9 million and $19.6 million, respectively, for the development and manufacturing services rendered under the DMSA.

In the normal course of business, the Company enters into other firm purchase commitments primarily related to research and development activities. The Company had contractual obligations under certain clinical and manufacturing agreements other than the DMSA of $37.8 million and $9.6 million, as of September 30, 2023 and December 31, 2022, respectively, with certain amounts subject to cost sharing with Takeda.

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.

Commitments and Contingencies - Narrative (Details)	3 Months Ended		9 Months Ended
Commitments and Contingencies - Narrative (Details)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Apr. 30, 2023 USD ($) ft²	Dec. 31, 2022 USD ($)
Loss Contingencies [Line Items]
Operating lease cost	$ 3,200,000	$ 3,300,000	$ 9,400,000	$ 8,700,000
DMSA, Non-Cancellable
Loss Contingencies [Line Items]
Purchase commitments	49,900,000		49,900,000			$ 32,300,000
DMSA
Loss Contingencies [Line Items]
Costs incurred	10,400,000	3,400,000	26,500,000	22,900,000
Payments for development and manufacturing services	12,800,000	$ 3,900,000	24,900,000	$ 19,600,000
Other than DMSA
Loss Contingencies [Line Items]
Purchase commitments	37,800,000		37,800,000			$ 9,600,000
Building \| SLC Lease
Loss Contingencies [Line Items]
Lease not yet commenced, lease liability	0		0
Lease not yet commenced, ROU asset	0		0
Lease not yet commenced, operating lease expense			0
Building \| SLC Lease \| Operating Lease, 9.3 Year Lease Agreement, Terminated
Loss Contingencies [Line Items]
Accelerated depreciation on leasehold improvements in relation to SLC Lease termination			7,900,000
Laboratory, Office, and Warehouse \| New SLC Operating Lease \| Operating Lease, 15 Year Lease Agreement
Loss Contingencies [Line Items]
Lease not yet commenced, lease liability	0		0
Lease not yet commenced, ROU asset	0		0
Lease not yet commenced, operating lease expense	$ 0		$ 0
Lease not yet commenced, area under lease \| ft²					59,336
Lease not yet commenced, period					15 years
Lease not yet commenced, undiscounted lease payments					$ 13,400,000