What happened

Denali Therapeutics (DNLI -0.28%), a biopharmaceutical company that focuses on therapies to treat neurodegenerative disorders, had a bit of a seesaw day on Wednesday. The stock rose as much as 12.4% before finishing the day up 6.6% over Tuesday. It closed on Tuesday at $28.96, then hit as high as $32.54 around 2 p.m. ET on Wednesday. Over the next two hours, it declined before closing at $30.73 a share. The stock is down more than 36% this year.

So what

Denali doesn't have any marketed therapies, but it does have a large pipeline. The stock was buoyed when the company, on Tuesday, released interim phase 1/2 results from a study in which TAK-594/DNL593, a therapy it is developing with Takeda Pharmaceutical (TAK), showed good safety results in healthy subjects while increasing the progranulin levels in their brains. Progranulin is a secreted glycoprotein that is found lacking in patients with frontotemporal dementia (FTD), the most common form of dementia in people under 60. The company said that single doses of the therapy increased sufficient progranulin levels to show it was delivered to the brain and could be used to counteract progranulin deficits associated with FTD. The next step will be to dose FTD patients to see the drug's efficacy.

It has been a big year for dementia therapies, and that's why the market reacted positively to the news of Denali's interim data.

Now what

Denali is in a good position to oversee the development of the therapy as it had, as of June 30, $1.16 billion in cash. In the second quarter, the biotech company reported collaboration revenue of $52.5 million, up from $22.9 million in the same period last year. The company, in the quarter, reported a loss of $92.7 million compared to a loss of $65.7 million in Q2 2021.