Denali Therapeutics Inc. (DNLI) shares took a hit in Thursday’s after-hours trading session after the company announced the discontinuation of its Phase 2 study of oditrasertib.
The news came as a blow to the company after its strategic partner, Sanofi SA (SNY), informed them that the K2 Phase 2 study evaluating oditrasertib on serum neurofilament light chain levels in participants with multiple sclerosis failed to meet its primary and key secondary endpoints. This development is a significant setback for Denali, as the Phase 2 study had previously been fully enrolled.
The company’s earnings release from August had highlighted the enrollment completion of the Phase 2 study evaluating oditrasertib, but no further updates were provided at that time. Denali is scheduled to report its quarterly results in early November, where analysts expect a loss of 61 cents per share and revenue of $9.45 million. The upcoming earnings call is expected to shed more light on the Phase 2 study discontinuation.
In light of this news, Raymond James analyst Danielle Brill reinstated Denali Therapeutics with a Market Perform rating on Thursday morning. This comes after other analysts, such as Cantor Fitzgerald, HC Wainwright & Co, and BofA Securities, maintained their respective ratings on the company.
Denali Therapeutics shares closed down 2.29% in after-hours trading, settling at $25.15 at the time of publication. The market’s reaction to the study’s discontinuation reflects the potential impact this could have on the company’s future prospects.
While the news of the failed study is undoubtedly disappointing, Denali Therapeutics remains committed to developing innovative therapies for neurodegenerative diseases. It’s important to note that this is a single setback and does not negate the company’s ongoing efforts in other areas. Investors will be closely watching the company’s upcoming earnings call for further details and insights into how Denali intends to navigate this challenge.
