Form 4: Denali Therapeutics Director Julian Baker Receives Equity Compensation, Indirectly Benefiting Baker Bros. Funds

Denali Therapeutics Inc. disclosed that director Julian C. Baker was granted 10,565 restricted stock units and 31,695 non-qualified stock options as compensation, with the pecuniary interest indirectly benefiting Baker Bros. affiliated funds.

Summary

• Julian C. Baker, a director of Denali Therapeutics Inc. (DNLI) and managing member of Baker Bros. Advisors (GP) LLC, was granted 10,565 restricted stock units (RSUs) and 31,695 non-qualified stock options on June 3, 2025.
• The RSUs are payable solely in Denali Common Stock and were granted at a price of $0, vesting in four equal annual installments on June 3, 2026, June 3, 2027, June 3, 2028, and the earlier of June 3, 2029 or the day prior to the Issuer's Annual Meeting occurring after June 3, 2028, subject to continuous board service.
• The non-qualified stock options have a strike price of $13.93 and expire on June 3, 2035. One fourth of the options vest on June 3, 2026, with the remaining vesting in 36 equal monthly installments beginning July 3, 2026, subject to continuous board service.
• Due to the policies of Baker Bros. Advisors, Julian C. Baker does not have a direct pecuniary interest in these securities; instead, the affiliated funds, 667, L.P. and Baker Brothers Life Sciences, L.P., are entitled to an indirect proportionate pecuniary interest.
• Following these transactions, the indirect beneficial ownership reported includes 336,867 and 3,415,958 shares of Common Stock, and 31,695 Stock Options.
• Baker Bros. Advisors LP, as the investment adviser, retains complete and unlimited discretion and authority over the investment and voting power of these securities held by or for the benefit of the Funds.

Sentiment

Score: 7

Explanation: The sentiment is positive as it indicates standard corporate governance practices for director compensation, aligning interests with shareholders. There are no negative implications from this routine disclosure.

Positives

• The grant of equity compensation to a director aligns the director's interests with those of the shareholders, promoting long-term value creation.
• The vesting schedule for both RSUs and stock options incentivizes Julian C. Baker's continued service on the board of directors.

Negatives

• No specific negatives are identified in this Form 4 filing, as it primarily reports a routine compensation grant.

Risks

• No specific risks related to company operations or financial health were disclosed in this transaction report, which focuses solely on insider equity transactions.

Future Outlook

The future outlook involves the vesting of the granted RSUs and stock options over several years, contingent on Julian C. Baker's continuous service on the Denali Therapeutics board. The stock options have an expiration date of June 3, 2035.

Management Comments

• Julian C. Baker serves on the Board as a representative of 667, L.P. and Baker Brothers Life Sciences, L.P. (the 'Funds') and their affiliates and control persons.
• Pursuant to the policies of Baker Bros. Advisors, Julian C. Baker does not have a right to any of the Issuer's securities issued as compensation for his service on the Board, and the Funds are entitled to an indirect proportionate pecuniary interest in such securities.
• Julian C. Baker, Felix J. Baker, Baker Bros. Advisors (GP) LLC, and Baker Bros. Advisors LP disclaim beneficial ownership of the securities held directly by or for the benefit of the Funds except to the extent of their pecuniary interest therein.
• Baker Bros. Advisors LP has complete and unlimited discretion and authority with respect to the investment and voting power of the securities held directly by the Funds or for the benefit of the Funds.

Industry Context

The grant of equity compensation, including restricted stock units and stock options, to independent directors is a standard practice across industries, particularly in the biotechnology and pharmaceutical sectors like Denali Therapeutics, to align director incentives with long-term shareholder value.

Corporate Governance

Related Party Transactions

• The grant of 10,565 restricted stock units and 31,695 non-qualified stock options to Julian C. Baker, a director of Denali Therapeutics Inc., constitutes a related party transaction. While Julian C. Baker is the recipient, the pecuniary interest in these securities indirectly benefits 667, L.P. and Baker Brothers Life Sciences, L.P., which are affiliated funds of Baker Bros. Advisors LP, also a reporting person and significant shareholder.

Stakeholder Impact

• Shareholders: The equity grants align the interests of a key director and affiliated investment funds with long-term shareholder value, potentially leading to more aligned decision-making.
• Employees: No direct impact on employees is mentioned in this filing.
• Customers/Suppliers/Creditors: No direct impact on these stakeholders is mentioned in this filing.

Next Steps

• Continued service of Julian C. Baker on the Denali Therapeutics Inc. board of directors.
• Vesting of the granted 10,565 RSUs and 31,695 stock options according to their respective schedules.
• Potential exercise of stock options by the indirectly benefiting funds prior to their expiration on June 3, 2035.

Key Dates

Keywords

Denali Therapeutics, DNLI, SEC Form 4, Insider Transaction, Director Compensation, Restricted Stock Units, Stock Options, Equity Incentive Plan, Baker Bros. Advisors, Beneficial Ownership