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Denali Therapeutics Inc. (NASDAQ:DNLI) is one of the 10 best AI driven biotech stocks to invest in.

On May 22, Denali Therapeutics Inc. (NASDAQ:DNLI) halted its joint work with Biogen Inc. (NASDAQ:BIIB), around the development of BIIB122 for idiopathic Parkinson’s disease. The decision came after topline results from the Phase 2b LUMA trial showed that the investigational small molecule inhibitor did not perform better than a placebo at slowing down symptoms, missing both primary and secondary clinical measures.

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Even though the molecule did not achieve its main clinical goals, lab tests showed it hit its expected biological targets. It achieved over 90% kinase inhibition of peripheral LRRK2, alongside an estimated 30% biomarker reduction in spinal fluid, while maintaining a safe profile.

Looking ahead, Denali plans to independently conduct the global Phase 2a BEACON trial to test the drug in patients who carry a specific genetic mutation, with initial results expected in the first half of 2027.

On May 22, Morgan Stanley adjusted its view of Denali Therapeutics Inc. (NASDAQ:DNLI). The firm kept an Overweight rating on the stock but lowered its price target from $40 to $35. This update came after the Phase 2b LUMA study missed its primary and secondary endpoints, which caused the cancellation of the BIIB122 drug program.

The firm noted that the stock valuation will now depend on other assets in the company pipeline and the validation of their overall platform. Despite this, Morgan Stanley’s projected price target leads to an adjusted upside potential of almost 80% at the prevailing level.

Denali Therapeutics Inc. (NASDAQ:DNLI) is a biotechnology company that utilizes proprietary technology to address neurodegenerative diseases. Through their TransportVehicle™ platform and by leveraging the power of biotherapeutics, they develop medicines for some very serious conditions, including lysosomal storage.

While we acknowledge the potential of DNLI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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