Chatting with Kymera Therapeutics. Up here on stage, we've got a couple members from the management team. We've got Bruce Jacobs, who's of course, the Chief Financial Officer, as well as Jared Gollob, who is the Chief Medical Officer. Gentlemen, thanks for making the trip over from Boston.
Thanks for having us.
Maybe we can just start off with a quick overview of the company. Maybe talk to us about, you know, atopic dermatitis is a very, very popular space to be looking at these days. That's just one of the many things that you've got going. Can you just talk in general about the platform and how you differentiate from others who might be pursuing similar indications, and then we can go into more specifics from there?
Sure. Thanks, Tazeen. Maybe I'll start and Jared can chime in. It's a good time for that question. Kymera actually last week celebrated our 10-year anniversary of the company's founding, May 4th, 2016. It's been a great opportunity for us to reflect on all that we've accomplished over that time, but also what we still have in front of us. The company obviously was founded at the time on the promise of targeted protein degradation. Since that time, I think we've been incredibly productive as a discovery engine. We've taken now six programs into the clinic. Over time, we've narrowed our focus really to immunology, where we think there's enormous opportunities.
I think have developed one of the better track records for targeting very unique, difficult to address targets with large opportunities, with clear biologic rationale and human genetics supporting them, and puts us in a very good position with both the programs that we have in the clinic today, I'm sure we'll talk about both STAT6 and IRF5, as well as those that will come in the future. We still have an intention and goal to introduce at least one new program annually. Excited about where we are as a company. This is obviously every year is an important year for Kymera. This year is of particular importance as well because we've embarked on these phase II studies for KT-621, one in atopic dermatitis and one in asthma.
I'd say the highest level of focus at the company right now is on executing on those trials. We expect to complete the AD trial this year. I'm sure we'll get into that throughout the conversation. Asthma next year, and we'll have data we expect for both in 2027. It's an exciting year for us in that regard. Going back again to the overview, IRF5, which is our next program after STAT6, is in the midst of a healthy volunteer study. We'll be able to share data in that, for that program in the second half of this year. Again, working to introduce one new program annually. At the same time, we have a couple programs partnered, one with Gilead, one with Sanofi. Those continue a pace as well.
Really, a lot of opportunity to progress all these molecules towards ultimately helping patients, which is the fundamental goal of the company.
Okay. For STAT6, you guys are, I think, the most advanced in terms of data that's been shown so far in atopic dermatitis. You're not alone. There's quite a few companies pursuing this indication. You can look at it that that de-risks it because a lot of companies are willing to spend time and money on this. On the point of differentiation, do you think that these molecules are meaningfully different from each other?
Yeah. I think in terms of, say, small molecule inhibitors, for example, of STAT6 versus degraders, we think that there is significant differentiation because the pharmacology of degraders allow us to degrade STAT6 completely and keep it down 24/7, which is really the sort of inhibition you need if you want to replicate what upstream injectable biologics do to the IL-4/13 pathway. So we're able to achieve that because of the catalytic mechanism of our degraders. Small molecule inhibitors, and we have looked at these as well, preclinically, they're just not capable of that level of inhibition, 24/7. Small molecule inhibitors, because there's a stoichiometric sort of relationship, you get waxing and waning of exposure after a dose, and therefore you get waxing and waning of pharmacology.
I think it would be very difficult for a inhibitor of STAT6 to hit the pathway completely and consistently and maintain that inhibition the way a degrader can. I think that gives us a significant advantage pharmacologically over the inhibitors.
Yes, you talk about degraders versus inhibitors. In a clinically meaningful definition, what do you think that would manifest as?
Well, I think ultimately it will have to come out on clinical efficacy, right? The ultimate test will be in randomized placebo-controlled studies and looking at efficacy with standard AD endpoints, for example, or asthma endpoints, depending on the study. I think it will have to come out in the clinic ultimately. I think, you know, some of the early phase studies will be able to start to give a sense perhaps with inhibitors. There are several inhibitors in phase I now that might start to give people a sense for, you know, what degree of inhibition are you seeing-
Yeah
What sort of effect are you having on biomarkers, even in healthy volunteers like TARC and Eotaxin-3, how do those compare to what we showed in phase I? You'll start to be able to make some comparisons, but ultimately, I think the true test is gonna be when you're up against a placebo, when you're in a dose range finding phase II study. Again, I think just because we're able to maintain deep degradation over time without any letup, which is much more like what you see with biologics like DUPIXENT, whereas the inhibitors, we don't expect to have that same level of suppression. We think probably we'll compare favorably, at least across studies once there are phase II data out there.
Okay. If you think about how people describe 621, rightly or wrongly, they call it the oral DUPIXENT. I wanted to get your thoughts. Do you like that term? Do you think that the main difference is the dosing, and how are you thinking about the overall efficacy profile over time as you compare it to DUPIXENT, especially as that goes at some point biosimilar?
Well, I think obviously the history of that term is really rooted in the fact that we are, STAT6 as a, as a protein is downstream from IL-4/13. Obviously, the target of dupilumab. There's good reason to believe that if we can fully block that target as we expect to be able to do, that we have the opportunity to come close and hopefully actually replicate the both the efficacy and safety of DUPIXENT. I think that's obviously the derivation of that. Obviously, it's up to us to show that. I can say that everything we've seen, both preclinically, all the way up through our smallish patient study, the phase I-B 22 patient study has supported the fact that it does seem to look and act like Dupy.
We've seen efficacy levels that look comparable, and the safety's been quite clean. Obviously, as I said, it'll be up to us to replicate that in these randomized placebo-controlled trials, which we're in the midst of doing right now. It's an exciting opportunity. You talked about AD. It's obviously a very prevalent disease, and as successful as dupilumab has been, the penetration is still quite low, and there is a large number, depending on, you know, what source you evaluate, 40 million- 50 million people that have moderate to severe TH2 diseases that are effectively not on systemic therapies. That might be for various reasons, aversion to needles, it might be insurance reasons, it might be just fear of having to admit that they have a serious disease.
We think that's a great population for KT-621 should it achieve the TPP that we're hoping to see with the drug. A lot gets made about, you know, how patient volumes will shift from injectables to orals, how many, and so forth. I think the point we try to make is that there's a large number of patients out there available and frankly excited about an oral mechanism, and that's where we'll mostly be focused.
I think as Bruce said, you know, while, you know, the term dupy in a pill helps people to understand mechanistically what we're trying to do with KT-621, I think ultimately we feel that KT-621 will stand on its own, on its own merits, essentially independent of dupy, and maybe those comparisons down the line will start to go away.
Based on the data that you've presented so far, can you talk to us about what you'd expect to see at the next data update for AD?
I think so for us right now, all focus is on the phase IIb, you know, BROADEN2 study, which is a dose range finding study. We have three different doses of KT-621 versus placebo. It's 16 weeks of dosing, daily dosing, followed by a 52-week open label extension. This is the first placebo-controlled test, you know, for KT-621. Clearly we wanna see that the drug itself has superior activity over placebo. You know, the primary endpoint is percent change from baseline and EASI at 16 weeks, and a number of secondary endpoints that look at EASI and pruritus and a number of other relevant AD endpoints in all different ways. I think really what we wanna see is that this is a drug that is superior to placebo.
We wanna see that it's safe and well-tolerated. Of course, there will be cross-study comparisons in terms of, well, what did we see-
Yeah
you know, versus what has been seen in prior DUPIXENT studies. Really, the aim of the phase IIb is to pick the dose that we then bring into phase III, not just phase III in AD, but potentially phase III across other Type 2 indications. For example, other cutaneous Type 2 indications that could include indications like CSU. With the asthma study, which is separate, which is the BREADTH study which is ongoing, that's a phase IIb study. We'll also have a phase III dose come out of there, that phase III dose will be used not just in asthma, but also in potentially other respiratory indications like COPD, you know, CRSwNP, et cetera.
We're obviously very encouraged by the phase I-B data, but that was in by its own right, limited in terms of the number of patients, was not placebo-controlled. I think this will be a real opportunity to really see what this drug is capable of delivering. We were asked many times for that study to put, you know, what's our bar of success, and we're asked that again for II-B. I think the point is, as Jared mentioned, is really to be able to pick a single dose to move into phase III. Everyone will be able to look up where dupy was at 16 weeks and make their comparisons, and then we'll see where it falls out.
Yeah. On the point of the safety profile, mechanistically speaking, would you expect to see conjunctivitis show up at a certain point?
Yeah. You know, we get asked that question a lot. It's a really, you know, relevant question. What we've said is that because we're blocking the same pathway, IL-4/13, and we know that with Dupy or drugs that block IL-4/13, one does see conjunctivitis, predominantly in AD patients. You know, our expectation is that we should also see conjunctivitis, or we may see conjunctivitis 'cause we're also blocking that pathway. Now with that being said, the mechanism for conjunctivitis in AD patients in response to IL-13, IL-4-targeted agents is unknown.
We don't really know what causes the conjunctivitis, so it's always possible there could be something unique to the antibodies that might be different from small molecules that might contribute. Our base case is that mechanistically, we would expect to see something similar. I think we'll learn a lot from the ongoing phase II-B study to really know, are we seeing it, and if so, is the frequency similar or not to what's been seen, previously with Dupy.
We didn't obviously see any cases in the phase I-B.
Yeah
It was 22 patients. At that time point, 28 days, dupilumab only has about a 5% conjunctivitis rate, you might have expected, right, one patient. The fact that we had none, it's hard to make the call whether it was truly nothing or just small numbers, but obviously, we'll learn a lot from the phase II-Bs.
Based on our feedback from physicians, they don't at this point consider conjunctivitis to be, you know, rate limiting in use. It's certainly not for DUPIXENT. Do you think that that bar has been set by dupilumab? I think it's 14% in the approved dose that you see conjunctivitis in general. The higher you go from there, does that kind of impact the way you think of the market opportunity for KT-621 if it's the case that it's higher?
Yeah, I think probably, you know, we'd like not to see a significantly higher rate of conjunctivitis or greater severity. You know, it's possible we could see the same, we could see less. Even though it is a sort of quote unquote nuisance adverse event that usually doesn't lead to discontinuations or dose changes, you know, it is something that, you know, patients and clinicians are aware of. You know, if we're gonna see it, we'd like to be in that same ballpark. We don't wanna see more of it necessarily. Now, if we did see a little bit more, would it matter? You know, I think if our efficacy is strong and we have an oral drug, I don't think that would be an issue.
Are there any other side effects to be looking out for here?
I think with DUPI, you see a very low incidence of viral infections over time, you know, whether it be mostly herpes simplex. Sometimes you can see facial eczema, facial rash, in maybe 5%-10% of patients who are getting DUPI. Those are the main things that people have seen, maybe a little bit of arthralgia in a small percentage of patients. Those are some things that we'd be on the lookout for. The fact that we haven't seen any of this so far, either in our preclinical work or in our phase I, means that these are not, for us, quote-unquote adverse events of special interest. I think, you know, we will be looking for those because those are things that you haven't seen with DUPI.
The data that we've been able to generate through all the preclinical work and then into the both the healthy volunteers and the phase I-B has been as good as we could have expected from a safety standpoint. I think that speaks to, as I, as we said earlier, what's known about the pathway, also the selectivity and potency of the drug being what it is. You know, we went into the human exploration here having dosed at 30- 40 times the efficacious dose in preclinical studies without having seen any adverse events. You know, we come in feeling good, but obviously that's the point of these studies as well.
Again, you know, as we said earlier, the phase II-B. , it's a dose range finding study, so the aim is to look at safety and efficacy across the three doses and look at that in composite and then make a decision about what is the appropriate dose to bring into phase III.
Do you just want to have one dose?
Yes. Ideally, we'd like to have one dose in phase III. I think we should be able to achieve that given all we learned about sort of exposure-response relationship in phase I and what we'll learn hopefully from the three different dose levels that are in phase II-B.
Okay. Next year's a big year for the company, right? You've got both the AD and the asthma phase II- Bs revealed. I think you've guided to mid-year for AD and closer to year-end for asthma. When you do show the AD data, do you think that de-risks the asthma study?
It's a good question. I mean, I think we think of those studies as being separate. It's interesting that in the phase I- B AD study, we did look at some respiratory endpoints. In that study, we had some patients with comorbid asthma and allergic rhinitis, and we were able to see a nice impact of the drug on those comorbid illnesses, as well as a nice impact on a lung biomarker called fractional exhaled nitric oxide. Even in the AD patients, that started to give us confidence of what we think the drug could do in asthma, which we already knew preclinically. We had a very strong effect in the house dust mite asthma model.
I think, yes, you know, I think the AD study can shed some light on potentially, you know, what we may end up seeing in BREADTH. With that being said, you know, the endpoints are different, you know, they're different populations, I think we have to sort of view them separately. You know, do the AD readout first and see how we impact those AD endpoints, then I think hopefully the BREADTH study will stand on its own. The BREADTH study, just as a reminder, also three different dose levels versus placebo. It's a 12-week endpoint, primary endpoint, which is change in FEV1 from baseline, there are a number of other secondary endpoints as well for that study. It's also for patients with eosinophilic asthma. We call it high eosinophils, high T2 pheno.
I think we expect hopefully, you know, to see encouraging results from both, but I think they'll both be sort of standalone studies, and will tell us a lot about, you know, the phase III dose to take into either AD or other skin indications or maybe even GI indications coming out of the AD study. The asthma study, if it's a positive study, telling us what dose to take into asthma, COPD, and other respiratory indications.
I do think, I think it's a fair statement though that if we indeed the AD will read out first, right? We started just to level set on timing. We started that study last year. We expect to complete enrollment by the end of this year, and then that'll Once we announce that'll start the clock for when you can expect to see the data. I think positive results from that AD study will certainly make us feel more confident of the likely outcome in asthma, just given what's known about the mechanism.
Yeah
You know, that's our.
It does seem like other, you know, mechanisms of action for approved drugs, it seems like it's part of the natural progression from AD to asthma and other related indications.
Yeah, exactly. If we look at DUPI and its impact across all Type 2 diseases-
Yeah
whether they be respiratory, cutaneous, or GI, it's also worked across the board. We do have similar expectations there as well. I think for us it's more a question of what is going to be the appropriate dose to take into phase III on the respiratory side versus on the derm side.
As you think about market opportunities for both of these, is there one that's meaningfully bigger as you sit here today for KT-621?
Well, I think Bruce, go ahead.
I think there's a enormous opportunity for both. We talked about the untreated, when I say untreated, but the population that is not interested for a variety of reasons in advanced systemic therapies is significant. The other area that we haven't talked a lot about is the pediatric population. Obviously, many of these diseases afflict children. For right now, we're approved in the AD study adolescence and up. You can rest assured that the pediatric population's gonna be a big focus of our time, attention, and our investment going forward. I think they're both significant opportunities. Asthma in particular is interesting because there's so much known about what they call the atopic march and how patients worsen over time.
The sooner we can treat patients, I think the better for the prevalence of the disease. If you talk to parents, and we have talked to many about the pain that both they feel and the children feel from having to give an injection, it's a real impediment and a traumatic experience for a lot of families. We're, we're excited about having the opportunity to intervene there with a, you know, small molecule, oral approach.
Yeah, certainly one of the reasons we chose to start with AD and asthma is just because those populations are so large. 80% of DUPI's revenues come from those two indications.
Yeah.
It represents a very large opportunity for adults, adolescents, and pediatric patients. Obviously, the other indications are very important as well, but starting with those, I think, made the most sense.
There's a question that's becoming more and more asked in my conversations, which is whenever DUPIXENT has a biosimilar in a world where there might be, you know, multiple different options for AD, does that, in your view, make it a little bit easier because you would be an oral option and for insurance companies that are always looking to kind of have patients step through therapies, would this be something easier that it would be able to get insurance to initially let you use earlier?
It's a good question. I think time will tell how the market unfolds. I think most people believe and expect that DUPI, that Regeneron Sanofi will do their level best to extend the timeline for generic entry, and we've heard anything from the early 2030s- 2033, 2034, beyond. We expect that we will likely be entering the market when before a generic DUPI is on the market. I think that's in our expectation, the most likely scenario-
to come to pass for that to be the case. You know, we again, going back to the patient population, I think we're focused intently on this large number of patients that are not on biologics today. Is it possible and perhaps even likely that some number of patients will likely want to switch? Certainly. You know, we would certainly like to be a, you know, an early line of therapy for a, for a big number of patients, which is what our goal is.
Okay. I did wanna touch upon 579, IRF5. Mechanistically speaking, why does it make sense to pursue this for autoimmune disease?
Yeah, there's been a lot of interest in IRF5 from both big pharma and biotech for years, in large part because of the very strong genetic association between mutations in IRF5 and susceptibility to lupus, to IBD, and to RA. The real problem has been just not being able to drug it. It's difficult to drug because there are multiple IRF family members, so you wanna be specific for IRF5 if you wanna have a drug with a good safety profile. There are also multiple different isoforms of IRF5 itself. You have to be able to block all of the isoforms of IRF5. That's been the, you know, the main stumbling block. IRF5 has been of great interest because it's selectively expressed in certain immune cells like dendritic cells and monocytes and macrophages and B cells.
It's involved in controlling type I interferon response, controlling production of pro-inflammatory cytokines like IL-12, 23, and 6, and also involved in B-cell activation and autoantibody production. You get all of that by targeting one protein. Again, I think the limitation has been being able to target it. Now that we have a degrader that is highly selective for IRF5, that hits all of the isoforms of IRF5, we've been able to show pre-clinically that we can degrade IRF5 completely and that it's safe and well-tolerated. We've also shown importantly in preclinical lupus models, several different models, that we are even more active than either standard drugs that are approved or other active drugs that are in development. We've also shown that recently in a model of IBD as well.
I think we have a, you know, a real profound opportunity here for targeting IRF5 to transform how diseases like lupus, inflammatory bowel disease, and RA are treated, you know, with an oral drug that we think can be dosed safely to fully block IRF5, but by affecting multiple different pathways, not just single pathways, really have a transformative effect on the treatment of these diseases.
Okay. As you think about the level of degradation that you think is gonna be needed to produce clinically meaningful results, is that gonna depend on the indication? Because I think this mechanism has been tried by others, and it's also been a little bit of a challenge to get good data. You've talked about your view about differentiation of your platform, but how should we be thinking about level of degradation you're looking for?
Well, I think we've shown in our models of lupus and IBD that even, you know, 80%-85% degradation is enough to give us very strong activity. I think our expectation on the clinic, just as we've had the expectation for other programs previously, is that we wanna see at least 90%+ degradation of the target, and we feel we'll be able to achieve that based on our preclinical results. Do we need that level of degradation? I think we still don't know whether we need 95%-98% degradation to impact these diseases, especially since our preclinical data suggests that 85% or so, you know, might be sufficient. I think, you know, we'll wanna understand in phase I, can we get at least 90% degradation? Can we push the dose to get higher levels of degradation? Are those doses safe and well-tolerated?
When we do see degradation, are we impacting the pathways that IRF5 is signaling through? TLR7, 8, and 9 doing ex vivo stimulation assays as part of our phase I study to really show how degradation in vivo in healthy volunteers translates then into impact or hopefully inhibition of those TLR7 pathways, which I think if we're able to show at least 90% degradation and blockade, across these, you know, three different TLR pathways, that would hopefully translate into being able to see activity in a subsequent patient study.
Okay. When is the next data update from that program?
We're running the healthy volunteer study now, and the timing will be once we complete the MAD portion. Typically, we do a SAD, and then partway through SAD, we start MAD. Once we finish the last MAD cohort and collect that data, then we'll share it with everyone. We've guided to the second half of the year. We'll be able to give more specificity as we get closer. Just depends on how many cohorts we end up enrolling. We'll hopefully have that data then, and we also plan at that time, if we haven't already done so, to share more data or more details around the plans for the next study, which as we have said, is likely in lupus.
Okay. How many different indications do you think you'd wanna pursue at the same time? I remember, this was in January, one of the questions that Nella was asked when we all met up in January was, how many different programs do you think the company can support given the size of the company? What's your thought? You're the Chief Medical Officer, how comfortable are you gonna be?
Well, they're everything. No, I think for IRF5, I think it's gonna depend on first, let's see what we see in phase I. If we get the levels of degradation and pathway inhibition that we want with doses that are safe and well-tolerated, I think that'll bring us into, you know, our first patient study, which as Bruce said, will likely be a lupus study. If we feel as though there's a pathway forward in lupus, then the question becomes, as you're asking, okay, well, do we start to think about development in inflammatory bowel disease, given the promising results we've seen in our preclinical models there? Would we be interested in other type 1 interferonopathies like Sjögren's disease, where there's also strong genetic association, or systemic sclerosis, or even rheumatoid arthritis?
I think that remains to be seen, so maybe I'll punt it a little bit. I think these are all potential opportunities for us. I think what we see in phase I, what we see in the lupus proof of concept, and how our preclinical animal model data continue to evolve will probably inform ultimately whether we parallel track or not, you know, other indications along with lupus.
The premise of your question is a good one, which is that the breadth of the opportunity in some of these targets is significant, right? Obviously, we've talked about AD and asthma with STAT6, but there's, you know, COPD, there's chronic rhinosinusitis, there's EoE, and several others. Jared mentioned a couple with IRF5. I think, you know, obviously we're a well-capitalized company, but there's also, you know, human resource constraints ultimately in broadly pursuing all of these indications. I think we'll continue to be rooted in the science, what indications are most supported by the preclinical work we do with obviously a commercial lens as well, and then try to make the right resource allocation decisions as we advance both these programs through clinical development.
I think Bruce maybe mentioned this up front, but in terms of how we build our development group, we always try to be very proactive and, now even though we're in phase II-B, we're already looking ahead to phase III and, building our development group to be able to manage, you know, multiple phase IIIs. The same thing goes if KT-579 ends up being a productive, you know, successful program, then we wanna be able to be staffed up to be able to support doing additional trials there across multiple indications.
Yeah. On that point, what's your view going forward, as probably for Bruce, on business development, either partnering what you have, continuing to partner what you have with others, or do you even think that there's a reason for you to bring in things that you don't have currently?
As you might imagine, because of the opportunity in both of these programs, there's been plenty of companies who have kindly offered to lend assistance to our development efforts. Thus far, we've been focused on keeping these two programs internally run and wholly owned, and that's the plan for the foreseeable future. I think the opportunity that we might pursue would be one where we could, I'd say capitalize on the breadth of the opportunity in a greater way than we could do ourselves. But heretofore, we have the team and the capabilities, and importantly, we have the capital to execute.
in the case of STAT6 on these phase IIB studies. We'll see what happens beyond that, but that's our intention. We have a business development effort as well that's looking at in licensing opportunities, mostly in areas in immunology that would be synergistic to the programs we have today. But that also has to compete with a very productive internal discovery engine as well.
Yeah
There's a lot happening on that side as well. Nothing to project and predict, but, just know that we're, you know, we're gonna take the right strategic option to really maximize the opportunities and some very, very large opportunities in front of us.
Yeah. On that last point [audio distortion] that you would wanna develop in-house?
I Yeah.
Do you think that could be complementary from a commercial perspective?
Yeah. I think we've tried to stay focused on our core competencies-
Yeah
which is really on small molecule development. It would be difficult for us to venture into areas that were not kind of our core area of expertise.
Yeah.
Most of the internal work we have, as you might imagine, is around protein degradation or small molecules more broadly. Could we in-license something a little bit afield from that? Certainly, if we thought there was an opportunity to, perhaps, you know, combination therapy down the road is gonna be an interesting area of development.
Yeah.
That's one that works for us.
Okay. With that, we are just about out of time, I wanna say thank you again for making the trip out west, and thanks everybody for joining us for the session.
Thank you.
Thanks. Appreciate it.
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Diagnostics team, we're excited to host Repligen for our next fireside chat, joined by Jason Garland, Chief Financial Officer, and Jacob Johnson, IR. With that, we'll kick things off. We're gonna do just a fireside chat. If you've got questions, throw up your hand, and we'll try to call on you when we can. Maybe just to kick things off, you know, you guys recently reported a 1Q just a couple of weeks ago. Maybe give us a high-level rundown of how the quarter played out relative to expectations. Sort of what was a little bit better, what was a little bit surprising.
Yeah.
Any key takeaways there?
Yeah, no, look, we, in our view, executing exactly what we set out to do, right? We had a strong first quarter, better than expectations, certainly on a top-line basis as well as earnings. You know, it was right down in the middle of the fairway for our overall total year guide on organic growth. Started strong on the top line and enough confidence in our margin profile that we actually raised EPS guidance for the year. Financially, great start. You know, second, I'd say that it helped build that confidence in our total year guide as well. You know, we look at, again, first quarter, 11%. We've shared that second quarter is gonna be around the same.
That's right in line with our total year guide and which means the second half doesn't require an acceleration in growth, right. Again, we kinda keep executing what we're doing, so we've increased our confidence. The other thing is that we've delivered that margin expansion, but we also shared, I think, some tangible actions that we're taking to make margin expansion, I'll say, number one, more sustainable, and two, accelerating a little bit beyond what we've shared before. We launched and announced the transformation office, both focused on our fit for growth journey in terms of the capabilities we have to continue to grow and scale, as well as some very specific projects that will help deliver, you know, margin expansion.
We shared that by the end of next year, 2027, on a run rate basis, we'll see, you know, about 1 point of margin expansion as a benefit. Again, we're building a structure, a framework, bringing in the right resources to execute that. We also announced a small sale of our Polymem segment, you know, small, like $7 million-ish of sales last year, but losing money. Again, cleaning that up as well as a part of our transformation. The other thing that we were really excited to share was the signing of an OEM partnership in China.
We've talked a lot about finding ways to be, I'll say more local. Our design using their local manufacturing cost structure, local supply base, but that gives us, again, access to compete with local players in a different way. We couldn't have been happier with the start of the year with the financial, the financial you put up, with friends, and all the great strategic priorities.
Okay. All right, that's a good overview. Maybe we'll dive into it a little bit deeper-
Yeah, please.
into the performances on the quarter, can you sort of talk through, you know, filtration, chromatography, protein, sort of like, you know, go through the segment or sub-segments, you know, one by one, walk through it?
Protein grew very strong. We saw both strength on the ligand side, but then also some of the other pieces that we have within our custom and resin. You know, we Filtration, again, kind of mid-single digits with overall growth. We talked about some dynamics there with ATF, and happy to share some more of that a bit later. Chromatography, again, really great growth in the quarter, as well as our analytics segments. We've seen a lot of continued traction on particularly our upgrade cycle and the SoloVPE PLUS within our analytics business. In fact, they helped really lead the charge on our overall equipment performance as well in the quarter.
It was great as we saw, you know, great growth across all the franchises. Again, a good testament to the kind of the breadth that we have and the diversity through the portfolio.
Okay. I mean, since you touched on ATF, maybe we'll dive into that a little bit deeper.
Yeah, sure.
You have some customer-specific timing, some inventory dynamics. I know you have a little bit of a more moderated outlook for that for 2026. Sort of what gives you confidence that you've got, you know, strong visibility there and sort of talk about the rebound beyond that?
Absolutely. I think my first point is, you know, ATF grew in the first quarter for both consumables and capital equipment. As you mentioned, Mike, we called out a headwind on ATF that, you know, moderated our expectations for ATF for the balance of the year as kind of part of our updated outlook for the filtration franchise as well. You know, in terms of what's going on there, it really relates to two customers who are managing inventories. You know, we don't think that's totally uncommon for kind of a novel technology like ATF when it's early in its life cycle. You know, as a result, we think it's really kind of a transitory headwind that we're facing this year. We expect those customers to kind of order again next year.
That's what gives us confidence, you know, in ATF returning to robust growth next year. I think the other important point is, you know, both those customers, you know, use ATF beyond, you know, the commercial drug or commercial drugs we're referencing there. You know, we think it's really kind of specific inventory management, you know, doesn't relate to anything else. You know, I think as you think about ATF, you know, this year and beyond, we continue to win new customers. You know, we continue to expand with existing customers, and we have a really strong pipeline of opportunities.
I think to the prior point Jason made is, you know, even with that headwind, we still have the same organic growth outlook for the year, which highlights, you know, what we've been emphasizing for some time, which is we have a broad, diversified portfolio of offerings and growth opportunities across all our franchises.
Yeah. One of those customers actually is platforming the ATF across a lot of their lines. Again, this is a very specific inventory dynamic they're managing.
Is that like a three, six-month drawdown? Sort of just like how long until you're past this headwind?
We see it as kind of a 26 item, right? Whether that changes towards the end of the year, we'll continue to connect with them. We're, you know, our outlook and assumptions is that really that there's nothing that comes to 26.
Maybe the other important point I should note is, you know, outside of kind of the dynamics in ATF, we see healthy demand for consumables, you know, in the rest of the portfolio. Again, I think this is very much kind of a ATF customer specific headwind that we called out.
I'm sure you've done this work, you know, outside of those two customers, what are inventory levels like? Is there a concern that someone else, you know, three, six months from now down the road will have the same process? Is this something that, you know, these guys had more elevated inventory to begin with?
I think as of now, we see it really confined to these two customers. I think it's a testament to how close we are with these customers that we were able to identify this and call it out and as it became apparent. I don't think we're seeing the impact elsewhere within ATF.
We still have a good mix of commercial versus clinical as well business. You know, this type of order magnitude of inventory is gonna be more on the commercial side as well. Again, that's the breadth of what we're offering helps in that too.
Okay. All right. Then maybe more broadly in the portfolio, you know, the strength you're seeing, in the first quarter, the strength you're projecting for the rest of the year. Anything you can point to in terms of, you know, product type or drug class that's driving that? Is it more, you know, mAb, biosimilars, you know, cell and gene therapy? Just sort of dive into sort of where you're seeing the best opportunities.
Yeah. I'll start on the kind of modality side of things.
Yeah.
I'll let Jason kind of maybe chime in on products. I think it's very much mAb driven. You know, in the first quarter, new modalities were dilutive as expected. You know, we've talked about or cited this gene therapy headwind. You know, as a result, you know, I think we'll continue to view new modalities as dilutive for the year as well. With that said, if you look under the hood, we saw strength in cell therapy, which we've now seen for several quarters now. I think that's really encouraging, and we're seeing a lot of opportunities there. If you look at gene therapy, you know, ex that particular headwind, we actually saw growth in the quarter.
I think that's encouraging along with the fact that I think there's been two gene therapy approvals this year. I think you put all that together, we continue to view new modalities as a strategic end market for us, and we are seeing opportunities in cell therapy. ADCs aren't in that count, but I think we think about them similarly.
From a product perspective, again, they cut across both mAbs and new modalities. That's great as we serve both of those kind of equally across the portfolio. Again, talked already about the analytics growth. That's certainly going to be one of the things that we continue to lean on this year. Chromatography as well. A lot of good, a lot of good demand, a lot of good conversion of new customers. Again, this is that type of product where you're not we're not very frequently competing with a similar. It's more about convincing customers that they can outsource what they most often do internally, and the service and the value that we can bring to that, and we continue to see good conversion on that. Those are the two areas in particular that we're really excited about.
Proteins as well, which has continued to have a strong year.
You talked about, you know, dilutive growth from new modalities and some of the effects there. Is that specifically 2026 dynamic? Is that a little bit longer? I mean, like, it's still early in the year, but, like, how much visibility do you have into next year and beyond, you know, when that could turn to be, you know, growth accretive again?
I mean, again, we're still hurt this year by the gene therapy, you know-
Yeah
pain. To that, and like Jacob said, outside of that in the gene therapy space, we're actually growing. We see it as kind of let's get through, you know, the anniversary of that headwind, overall, you know, still very bullish on new modalities in total, and particularly gene therapy.
To be blunter there, for people who aren't familiar, that relates to a specific customer, and we're assuming 0 in revenue from them this year. I think hopeful that we won't have that headwind again next year.
Can't get worse than zero, right?
Yeah. It needs to come, too, right?
There you go. Maybe one of the, you know, the other lens that investors look at when thinking about the business and the market is equipment versus consumables. You know, you've had really good strength in consumables just for a while. Equipment, a lot of focus on orders, you know, lead times there sort of as a leading indicator. You know, you talked about some improving equipment order trends later in the quarter. Just help frame the magnitude of that, you know, how strong of a single data point that is.
Yeah.
You know, it being like week to week on equipment orders and book-to-bill and things like that. How much should we be reading into that or not reading into that?
If you take a step back, the guide assumes equal growth. Low double-digit for both of those segments through the year. Again, I think good equal contribution overall to our growth story. Consumables, again, it's been great strength and will continue. The equipment, I think, is a bit of a tale of two cities. We've got, again, I've already referenced this a couple times now. Equipment's absolutely being helped by the analytics side. Again, that upgrade cycle is a big piece of that. We saw analytics up 50% in the quarter, and 40% was organic. Because we still have some inorganic from the 908 Devices portfolio that we purchased from them.
You know, that's really been a leader. The other piece on the equipment side that's been a growth driver for us is mix improvement.