Denali Capital Acquisition Corp. Reports Significant Financial Decline, Net Loss in Latest Quarter

Denali Capital Acquisition Corp. reported significant financial changes in its 10-Q filing for the period ending September 30, 2024. The company, classified as a shell entity, had a notable decline in cash and total assets, with cash decreasing from $204.5 million at the end of 2023 to $14.3 thousand by September 30, 2024. Total current assets also fell sharply from $209.4 million to $35.4 thousand during the same period. The Trust Account, which holds cash and investments, saw a decrease from $50.5 million to $8.9 million.

The company’s liabilities increased, with total current liabilities rising from $5.6 million to $6.6 million, and total liabilities growing from $8.5 million to $9.5 million. The accumulated deficit expanded from $(8.3 million) to $(9.4 million), reflecting ongoing operational challenges.

In terms of profitability, Denali reported a net loss of $(40.9 thousand) for the three months ended September 30, 2024, contrasting sharply with a net income of $630.6 thousand for the same period in 2023. However, for the nine-month period, the company achieved a net income of $672.4 thousand, a significant increase from $79.2 thousand in the prior year. The basic and diluted net income per redeemable ordinary share for the nine months ended September 30, 2024, was $0.35, compared to $0.14 in 2023.

Strategically, Denali has been active in pursuing business combinations. The company entered into a merger agreement with Semnur Pharmaceuticals, Inc. on August 30, 2024, with a total consideration of $2.5 billion, payable in New Semnur Common Shares. This follows the termination of a previous merger agreement with Longevity Biomedical, Inc. on June 26, 2024. Shareholder redemptions have also been significant, with approximately $43.4 million withdrawn from the Trust Account in July 2024, leading to a reduction in outstanding public shares.

Denali's operational status remains limited, as it has not commenced any operations and is primarily generating non-operating income from IPO proceeds. The company has expressed concerns regarding its ability to meet working capital needs and has indicated potential measures to conserve liquidity if additional capital is not raised. As of September 30, 2024, Denali had $1.3 million outstanding under working capital loans, with accrued interest of $57.8 thousand.

The company continues to navigate compliance with Nasdaq listing requirements, having received notifications regarding its market value and total assets. Denali's ability to complete a business combination by the extended deadline of April 11, 2025, remains critical for its future operations.