After launching in April, Hunter syndrome drug Avlayah surprised analysts with a strong first quarter, as patients rush to get access to Denali Therapeutics’ new option.
Denali Therapeutics has blown past analyst expectations with the launch of Hunter syndrome therapy Avlayah, reporting revenue of $3.6 million in the first quarter on the market.
Analysts had expected sales of $1.3 million for the second quarter, after the drug was cleared on March 25 and launched in April.
“While DNLI had previously guided to a slower ramp as they focus on securing access, it’s encouraging that they’re able to get patients on paid drug within the first full quarter of launch,” Stifel wrote in a Thursday note.
CEO Ryan Watts chalked up the success to an engaged patient community and years of work in the clinic.
“The positive response from the Hunter syndrome community and the physicians caring for these individuals reflects years of partnership with patients, families, advocacy organizations and clinicians,” Watts said on the company’s second quarter earnings call on Thursday. “We could not have achieved this milestone without their unwavering commitment to advancing new treatment options.”
Denali has raised its third quarter revenue guidance on the strength of the Avlayah launch to a range of $10 to $12 million. William Blair had previously predicted the biotech would bring in $6 million for the next quarter.
“We continue to view this switch therapy-based launch as underappreciated, and point to the strong early launch as evidence,” William Blair wrote on Friday.
Avlayah enters a market that has been dominated by Takeda’s Elaprase, an enzyme replacement therapy that was first approved 20 years ago. Avlayah’s entrance marked the first approval of a new treatment for the drug since then. Most prescriptions for Avlayah will be switches, with about 90% of existing patients taking Takeda’s drug, according to Jefferies.
“Physicians are highly motivated to switch,” the firm wrote, adding that participants in Denali’s clinical trials could also switch to the now-marketed product by the end of the year.
William Blair sees the therapy exceeding $250 million in U.S. sales in the late 2030s, with potential to hit blockbuster status with $1 billion in sales worldwide.
With an estimated price tag of $500,000 annually, Jefferies believes that Denali is currently serving about 35 patients. Denali believes there are about 375 eligible patients in the U.S.
“Ultimately, our goal is to reach all eligible patients worldwide,” said Denali Chief Commercial Officer Katie Peng on the earnings call.
“To be fair, the US market opportunity overall isn’t very large, but the early signs here are bullish as we think about global peak sales potential, and the ability to switch Eleprase [sic] patients to a therapy that can treat both the peripheral and CNS symptoms,” Stifel wrote.
The approval is also the first for Denali’s key blood-brain barrier technology, called TransportVehicle. Avlayah provides “strong commercial synergies” for the biotech’s upcoming Sanfilippo syndrome type A therapy DNL126, according to William Blair. The company expects to file with the FDA for an accelerated approval next year.
Elsewhere in the pipeline, Denali has DNL628 for Alzheimer’s disease, which recently supported by Biogen’s confirmatory evidence in the Phase 2 CELIA trial that showed lowering tau can provide a clinical benefit, William Blair noted.
Denali is expected to reveal Phase 1b data for the Alzheimer’s program in the first half of 2027.
