Good day, and thank you for standing by. Welcome to the Kiniksa Pharmaceuticals International Q1 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to Rachel Frank, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, and thank you for joining Kiniksa's call to discuss our Q1 2022 financial results and corporate update. A press release highlighting these results can be found on our website under the Investors and Media section. As for the agenda, our Chief Executive Officer, Sanj K. Patel, will start with an introduction. Ross Moat, our Chief Commercial Officer, will provide an update on our ARCALYST commercial execution. Mark Ragosa, our Chief Financial Officer, will review our Q1 2022 financial results. Finally, Sanj will return for closing remarks and to kick off the Q&A session for which John Paolini, our Chief Medical Officer, and Eben Tessari, our Chief Operating Officer, will also be on the line.
Before getting started, please note that we will be making forward-looking statements today that are subject to risks and uncertainties that may cause actual results to differ materially from these statements. A review of such statements and risk factors can be found on this slide, as well as under the caption Risk Factors contained in our SEC filings. These statements speak only as of the date of this presentation, and we undertake no obligation to update such statements except as required by law. With that, I will turn it over to Sanj.
Thanks, Rachel, and good morning, everyone. I'm really happy to review our Q1 2022 results today. It's been a full year since the commercial launch of ARCALYST for recurrent pericarditis. We're really happy with the progress we've made so far and in bringing ARCALYST to patients in need. I'm delighted to report that the net revenue for ARCALYST for the Q1 of 2022 was $22.2 million. Ross will cover our commercial performance in more detail, and overall, we've been incredibly pleased with the growth in prescriber adoption, patient adherence, and payer coverage. We're obviously also highly encouraged by the steady commercial growth of ARCALYST to date, and we plan to fully maximize on this opportunity.
In addition to the launch, we remain focused on helping even more patients and building the most value from across our portfolio of clinical-stage programs, and these include Vixarelimab, KPL-404, and mavrilimumab. Starting with Vixarelimab, we're currently enrolling and dosing in a randomized placebo-controlled phase IIb dose-ranging study in Prurigo Nodularis. We expect data from this study in the Q2 of this year. For KPL-404, which is our CD40 program, we're enrolling and dosing in a phase II study in rheumatoid arthritis. This is a disease where the dose response has been well characterized, and our 12-week study is designed to provide not only PK characterization, but also an early signal of efficacy with chronic administration in a well-described patient population. The trial will potentially stand primarily as a proof of concept and could enable optionality to evaluate a range of other autoimmune diseases.
For Mavri, we remain highly encouraged by its broad potential, which as you recall, has been demonstrated by positive clinical data across multiple indications. We're currently evaluating its development in rare cardiovascular diseases where the GM-CSF mechanism has been implicated. We also continue to be very active in our business development efforts, which are focused on opportunities that have synergies with our existing commercial infrastructure as well as the other assets in our pipeline. In essence, we are making tremendous progress across our entire portfolio, and we believe well-positioned for growth. With that, I'll turn it over to Ross to review our commercial performance in more detail.
Thanks, Sanj. We're extremely pleased to share with you that Q1 represented continued positive growth in our launch trajectory, generating $22.2 million and close to 20% sequential growth versus Q4. This growth is in spite of the typical seasonal headwinds associated with specialty drugs at the start of the year. Concluding Q1 now gives us 12 months of experience on the market in recurrent pericarditis, and we have generated $60.7 million in net sales launch to date. 2022 will be our first full year of sales, and we are excited by the continued momentum we've generated and the feedback we're gaining from prescribers, payers, and ultimately patients who are experiencing the transformational impact that ARCALYST can bring to this disease. We continue to guide to full-year net revenue of between $115 million and $130 million.
On slide eight, I will dive into more detail on the drivers behind the recurrent pericarditis revenue. Owing to our efforts to enhance the awareness of ARCALYST, in Q1, we saw a continued increase to the prescribing base. We now have more than 400 individual prescribers, predominantly cardiologists, who have identified and prescribed for at least 1 recurrent pericarditis patient. Furthermore, we also saw an increase to the absolute number of physicians who have prescribed for 2 or more patients. Repeat prescribers account for around 17% of our ever-increasing prescriber base. This demonstrates the continued growth in the breadth of prescribing, as well as the positive experiences physicians and patients are having, resulting in a growing depth of prescribers.
On the payer side, as I mentioned a moment ago in regard to the typical Q1 seasonality insurance issues, we saw a substantial number of our patient population switch insurance plans in Q1, requiring new approvals and interim supports on our free goods bridge program. Nevertheless, we continue to see a very high approval rate across all payer segments, resulting in a 95% approval rate in totality. Therefore, almost all of these patients came back onto commercial therapy during the quarter. In terms of duration, we're just about at the one-year stage since our launch, so we have a small cohort of the early launch patients who have been on continuous therapy throughout this time. We continue to see robust adherence, compliance, and the timely refill of scripts.
We realize we still need more time to determine how long patients will ultimately remain on continuous commercial therapy. What we do know today is that of those patients who started ARCALYST in the first launch quarter, around 60% remain on therapy at the end of Q1. While this will continue to evolve, the limited data on-hand suggests continuous treatment durations of around 12 months. Additionally, as you can see from the lower right-hand side of this slide, we recently conducted market research on product satisfaction in recurrent pericarditis. We're delighted to hear that patients are experiencing a very high level of satisfaction on ARCALYST, especially when compared to other treatments that have been prescribed. This speaks well to our ambition of ARCALYST becoming the standard of care in recurrent pericarditis.
Moving to slide 9, we're pleased to see renewed avenues now open for us for disease awareness and promotional activities. For the first time since we launched deep in the COVID-19 pandemic, the main target conferences are now available for dissemination of data and opportunity to meet face-to-face. In April, we attended ACC, and we made a big splash to a wide audience with our commercial booth, which resulted in over 400 individual details with healthcare professionals. Additionally, over 120 delegates attended our ARCALYST product theater. We now have ACR and AHA both on the horizon in November, so we're delighted with these opportunities ahead to reach more physicians. The results from research we recently conducted show that following an interaction with our field force, physicians become significantly more aware and knowledgeable of recurrent pericarditis and ARCALYST.
As you see from the bottom right of this slide, their likelihood or intent to prescribe ARCALYST in the subsequent months also significantly increases. Moving to slide 10, I'd like to share more information on how ARCALYST is starting to become the standard of care in recurrent pericarditis. Following the strength of data from our phase 3 study, RHAPSODY, which resulted in 97% of patients experiencing rapid symptom relief, 92% of days with minimal or no pericarditis pain, and a 96% reduction in the risk of recurrence. We are now starting to see key thought leaders in this space publish and contribute to the new and evolving treatment paradigm.
An example of this in a recent publication from a pericardial disease expert published in Current Cardiology Reports emphasized ARCALYST as a treatment of choice for recurrent pericarditis, specifically ahead of the use of corticosteroids and even ahead of NSAIDs and colchicine if patients are intolerant. Indeed, this is exactly how we've been positioning ARCALYST promotionally. If we look at the prior treatments our patients have been on, we see that ARCALYST is generally being utilized ahead of steroids. In addition, payers are generally not mandating step edits of these non-specific therapies. We believe this is acknowledgment from physicians and payers that they are appreciating the steroid-sparing data from RHAPSODY and the ability for ARCALYST to specifically inhibit interleukin-1 alpha and beta, which is the underlying driver of recurrent pericarditis.
These data set us up well for our anticipated continued growth and how we plan to become the standard of care in helping recurrent pericarditis patients. In summary on my final slide, we're now one year out from launch, and we have had a cracking start. I'd like to take a moment to thank our fantastic Kiniksa teams in the office and in the field who have worked incredibly hard to bring ARCALYST to patients in need. It's rare to have a successful drug launch, but to do so in the midst of a global pandemic is an incredible performance. We're delighted that physicians and payers are embracing a new treatments approach. Of course, we look forward to continuing to support our patients who are providing constant positive feedback on their experience and the improvements they feel while under ARCALYST treatment.
Since launch, we've recorded $60.7 million of net revenue. We've set a solid foundation that will empower our growth in the quarters and the years ahead. I'll now hand over to Mark for our financial results. Mark?
Thanks, Ross. Good morning, everyone. Our detailed Q1 2022 financial results can be found in the press release we issued earlier today. Over the next couple of minutes, I'd like to call your attention to a few items on this slide. First, total revenue in the Q1 of 2022 was $32.2 million and consisted of product revenue of $22.2 million, representing ARCALYST net sales, and collaboration revenue of $10 million, representing the upfront payment from Huadong Medicine for the mavrilimumab rights in the Asia Pacific region. Of note, the upfront payment of $12 million from Huadong Medicine for ARCALYST rights in the Asia Pacific region was deferred and will be recognized over the life of the agreement.
Second, operating expenses, which this year also included cost of goods sold and collaboration expenses, were $55.5 million in the Q1 of 2022, compared to $49.3 million in the Q1 of 2021. Third, collaboration expenses in the Q1 of 2022 were $8.3 million and consisted of two obligations to Regeneron, an ARCALYST profit split expense of $2.3 million and an expense of $6 million representing 50% of the $12 million upfront payment from Huadong Medicine for ARCALYST rights in the Asia Pacific region. Fourth, Kiniksa's net loss in the Q1 of this year was $25.2 million, compared to a net loss of $49.5 million in the Q1 of last year.
Fifth, Q1 2022 financials do not reflect the net cash impact from our collaboration with Huadong Medicine, and we ended the period with cash reserves of approximately $145 million. Finally, we expect total 2022 ARCALYST net revenue of between $115 million and $130 million. Based on our cash reserves as well as continued ARCALYST commercial execution, we expect to be able to fund our current operating plan into at least 2024. With that, I'll turn the call back to Sanj for closing remarks.
Thanks, Mark. In essence, it's a really exciting time for Kiniksa. In addition to the successful start and commercial launch in recurrent pericarditis, we're also building a foundation as an emerging leader in immune modulating therapies. On the commercial side, you've heard we're revenue producing, and after only three quarters, the ARCALYST collaboration is already profitable. Looking to the rest of the year, we guided, as Ross said, and Mark, an estimated net revenue of $115 million-$130 million, which would represent a more than 200% growth year-over-year. We've got a near-term milestone coming up with the data from the phase IIb trial of Vixarelimab in the second half of this year.
We're also enrolling in the phase 2 proof of concept study in RA with our CD40 program, and this could provide additional optionality for a range of autoimmune diseases. As I said earlier, we're also utilizing the data from our mavrilimumab program to evaluate rare cardiovascular diseases that have synergies with our existing cardiovascular commercial infrastructure. Importantly, as Mark just said, we're well capitalized and have cash reserves expected to fund our operating plan into at least 2024. The bottom line is we have no need to raise additional capital at this point, and we continue to drive our portfolio forward. As I mentioned earlier, we're also very much interested in potentially augmenting our pipeline with additional assets through our business development activities. That remains a key focus.
Ultimately, we are determined to continue to help patients in need, help create massive value, and aim to fulfill our goal of becoming a generational company. With that, I want to thank you for your time today, and I'll hand it back to the operator to open up for questions. Thank you.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Anupam Rama with J.P. Morgan. Your line is open.
Hey, guys. Thanks so much for taking the question. A quick one for me. I know you said that you have 400 prescribers plus right now, which has grown from 300 plus in the 4Q update. What portion of your target prescribers have been penetrated? I guess I'm trying to understand where the new scripts will be coming from. Will they be coming from new prescribers or repeat prescribers? And then a second question, which is, can you remind us how long an initial script is written for? You know, we've heard some patients on Anakinra from 12-24 months. How do you think about that 60% of patients on therapy from 2Q 2021 staying on therapy here in year two? Thanks so much.
Thanks, Anupam. Ross, do you wanna start with that and myself or John or other can jump in?
Yeah, very happy to. Hi, Anupam, this is Ross. You're absolutely right. As we announced, we've got more than 400 individual but unique prescribers of ARCALYST so far in recurrent pericarditis. That's grown substantially since our time of launch, around 100 or more than 100 in every quarter since we launched with the growing depth of prescribing, currently 17% roughly of the 400 base. We're very pleased with that. In terms of your comments around the whether it's, you know, kind of the target physicians or not, I mean, most of the prescribing is coming from our current target base.
As you know, we spent a lot of time prior to launch really understanding who we're looking after, which physicians and which centers are looking after recurrent pericarditis patients, and we have a highly targeted approach around that. Very pleased to see that the majority is coming from the target base. Although we also recognize that we're not reaching all of the recurrent pericarditis patients across the US with our targeting strategies. Non-personal promotion continues to be incredibly important to us, as does the contacts that we make at congresses and through other routes, as well. There is a mixture of non-targets prescribing as well, but to a much lesser extent.
In terms of the duration, your 12-month prescription comment is right. We see that the majority of prescribers prescribe ARCALYST for 12 months as an initial script. Some obviously prescribe for less than that as well, often indicating that they may want to see the patient in the clinic after a 3-month or 6-month time period, particularly when they're new to prescribing ARCALYST. They may renew the prescription after that. Yes, the majority are 12 months. Linked in with that as well, the majority of the payer approvals are also for 12 months before requiring for a reauthorization of that approval. That kind of bodes well also to the potential duration.
As we said, around, you know, 60% of those Q2 early launch patients were still on therapy through the end of Q1, which again kind of builds into the confidence of duration potentially being around 12 months, although acknowledging it's a small cohort, the data will continue to evolve, and we need to see, you know, a more robust number of patients get into that time point and wait to see what the right-hand side of that curve looks like over time to be able to provide more information around the actual eventual duration.
Thanks so much for taking our questions.
Thanks, Anupam.
Thank you. Our next question comes from Paul Choi with Goldman Sachs. Your line is open.
Hi. Thank you. Good morning, and congratulations on the progress here. I was wondering if you could maybe elaborate a little more on your comments regarding Q1 payer dynamics and, you know, how we should think about ARCALYST dynamics in the future here in Q1. How much of it was, I guess, due to the new RP indication versus continued processing versus CAPS, which I think, you know, has of course been on the market for a while.
Yeah. Paul, this is Ross again. Yes, the vast majority of the comments are around recurrent pericarditis. CAPS obviously continues as does DIRA, and we continue to support those patients through our patient services program in exactly the same way as we do with recurrent pericarditis. I think now at this stage of our launch, 12 months out, you know, the vast majority of patients that are on ARCALYST are now in recurrent pericarditis as opposed to the other two indications. That's more greatly associated with recurrent pericarditis.
For the Q1, you know, payer dynamics, I mean, it's really down to the payer plans and people changing insurance and supporting people through bridge once they get the approvals under the new insurance plans, as well as, you know, renewed co-pay payments and, you know, increasing the Kiniksa support around that to help patients through that time point, as well. We see the Q1 dynamics or headwinds there as transitory, and we expect things to kind of return to somewhat normality in Q2 and beyond.
Okay. Thanks for that, Ross. One pipeline question with regard to Vixarelimab. I guess, you know, given the data's coming up here in the second half of the year, can you maybe just sort of frame you know as to how you would think about what would be a competitive result in you know given what is a you know somewhat crowded landscape and just how you're thinking about what areas you'd focus on for differentiation versus some of the other sort of clinical stage assets in the category? Thank you very much.
Thanks, Paul. John, do you wanna start and then maybe Eben jumps in?
Sure. Happy to do so, and thanks for the question, Paul. Good morning to you. As you remember, the phase IIa study already demonstrated proof of concept of Vixarelimab in Prurigo Nodularis in terms of the primary and secondary endpoints being highly statistically significant, but also with clinically meaningful outcomes in terms of reduction of pruritus as well as lesion resolution. The purpose of the phase IIb study is really just to test for practical monthly subcutaneous dosing, and that's the purpose of this study with 180 patients.
In that sense, we will gather important information over 16 weeks with regard to reduction in pruritus as well as following patients longer in terms of lesion resolution, which as you know, Vixarelimab has a dual mechanism of action, blocking not only interleukin-31, which is implicated in pruritus, but also blocking Oncostatin M, which has been implicated in hyperkeratosis and fibrosis, so a dual mechanism. I'll turn it over to Eben to talk about the competitive landscape. Thank you.
Yeah. Thanks, John. Maybe I'll just add that, you know, we think that if we are able to replicate the results of our phase IIa study with the monthly dosing out of the IIb program that we're currently running, Vixarelimab is incredibly well positioned, given the data we've generated to date versus the two main other competitors in the field.
Great. Thank you.
Thank you. Our next question comes from the line of David Nierengarten with Wedbush Securities. Your line is open.
Hey, thanks for taking the question, and congrats on the profitable franchise. It's really cool to see. Just a couple questions on the commercialization. The patient turnover, you know, are there or do you have a handle on any of the patients who are essentially, I hate to use the word, but feel they're cured or feel that they won't have a recurrence and so have dropped off therapy? On a related note, are there patients or do you have a better handle, maybe I should say, on the proportion of patients coming in who might have you know, preexisting conditions that really you know, prevent them or would you know, prevent them from going on steroids or some of the you know, other treatments that are used?
you know, these, maybe they're not long-term recurrent patients, but they have, you know, their first episode and the doctor notices they have underlying conditions that aren't amenable to, you know, treatment with steroids, and so they go on, ARCALYST. Thanks.
Yeah. Hi, David Nierengarten, this is Ross . Maybe I can take a start on those two questions. Firstly, around the patient turnover. Yes, since the time of launch, obviously we've seen some patients that have stopped therapy, whether that's through the physician believing that they are, you know, they came in at a particular time point in their disease, and they needed a shorter duration and then try to stop. Or whether it's through, you know, the patient's belief that they are, you know, somewhat over the condition and are able to try to stop as well. We've seen that to some degree, although I think the percentages kind of show that, you know, most patients remain on therapy for a longer time period.
You know, ultimately, we also see patients that are coming back and restarting on therapy as well if they tried to stop and, you know, in recurrent pericarditis, what happens is, symptomatology will come back pretty rapidly and aggressively if the duration is too short. We know from the RHAPSODY data as well, it's well published, the patients can restart on therapy if they do get symptoms again of recurrent pericarditis or enter into another flare. We've seen several patients restart on therapy as well, so it's good that physicians and patients know that as a safety net, I guess if they do stop therapy too early.
Ultimately in the main stage for the physicians to really judge based upon the baseline characteristics of the patients and, you know, the cadence and severity of their flares, what the appropriate duration would be, for the patients, and try to guide them towards the natural history course of the duration of the disease, and matching treatment against that. On the side of the proportion of patients who have preexisting conditions kind of preventing them from steroids, and it's not something that we've looked at in huge amounts. I mean, I think it's widely acknowledged that steroids are probably not the best solution for this type of disease.
We also know that, you know, the toxicity effects of being on long-term steroids or high doses of steroids can be very detrimental to patients. It's also well published that being on steroids increases the risk of recurrence when you take patients off the steroids and really, you know, go back to square one for these patients. We want to avoid that, and I think that's what we're seeing is becoming more and more commonplace in the field since the time of launch. People are understanding that steroids are not the best treatment answer here, and ARCALYST targets the root cause of the disease.
Generally it's not because of preexisting conditions, but more so understanding the underlying mechanism of action of the disease and ARCALYST as a treatment addressing that, and getting patients onto the right treatment first time around.
Got it. Maybe one quick follow-up on you know sales and marketing. Do you anticipate you know any additional spend incremental spend to you know continue to market ARCALYST maybe you know to the less frequent prescribers or the you know patients who you know maybe are more on the acute side or of things rather than you know two or three recurrences?
Yeah. Maybe I'll make a start on that. I know if Mark or anyone else wanted to jump in, obviously please feel free to do so as well. I mean, ultimately it's something that will always be under evaluation. You know, we're always looking at the best, most efficient way of addressing the opportunity, and we did a lot of work prior to launch to get, you know, the field team in right and the non-personal promotion side of things correct, so we could reach as many recurrent pericarditis patients as possible. We've always had a very methodical, data-driven approach in how we address the market, so it's something we constantly look at.
You know, whether that means in the future, you know, maximizing more non-personal promotion opportunities, more congresses, looking at the field team and many other areas, then we will obviously always continue to look at that and make sure that we're driving value for patients and for Kiniksa and for all our stakeholders.
I think you said it very well, Ross. I mean, bottom line is obviously we're very excited about the opportunity. Clearly, it's a growing opportunity and we're doing a lot of analytical work right now and continue to look at it, but it's been a great bit of execution on the commercial side. We'll just continue looking at that. I think you're definitely right, there is increasing opportunity, and so we're very much focused on that.
All right. Thank you.
Thank you. Our next question comes from the line of Geoff Meacham with Bank of America. Your line is open.
Hi, this is Alexandria Hammond on for Geoff Meacham. Thank you for taking our question. Given you have cash to get you to 2024, can you provide any additional color on your BD strategy? Have the depressed M&A valuations changed your appetite at all? And, what qualities are you looking for in assets besides just being in your general wheelhouse? Thank you so much.
Thanks, Alex. Maybe I'll make a couple of comments and Eben, feel free to jump in. You know, obviously as you said, we feel great about the cash position, which allows us to get into at least 2024. You know, obviously that's relying on our continued commercial execution as well. On top of that, you're right. It's clearly very obvious right now that there's a lot of depressed valuations out there and technologies that are, or products that are undervalued and trading below cash. So we're certainly very keen to look at ways to augment our pipeline. We've got some great products that are in the immunomodulating space, but there are technologies or products that we could add. So we're looking at that very keenly.
You know, ideally it'd be great for it to be able to have synergies with our existing commercial infrastructure, as well as our development pipeline as well. We've got a team here that's very adaptable. Obviously, a lot of rare disease experience, but now obviously with full year of commercial execution on ARCALYST, we've shown that we can execute commercially as well. We're looking across the various stages of development for products and technologies. It's certainly an exciting time for a team like ours, as you know, created this franchise and this company in just around six years from a blank piece of paper, primarily through business development.
We do have our own research as well, looking at early-stage programs, most of those are in the immune modulating space, but we're open to looking at other rare diseases and other opportunities where we can bring value and ultimately execute. Having the cash is nice. We'll be very judicious. Capital allocation is very important to us. Obviously having values that are realistic as well are important too. Eben, anything that you wanna add?
No, I think you said it really nicely, Sanj. You know, it's really about, maximizing value to patients, and we're always looking.
Thank you. Our next question comes from the line of Liisa Bayko with Evercore ISI. Your line is open.
Hi there. Most of my questions have been answered, just one. Maybe you can talk about the shape of R&D for this year. Just looking historically, it seems to bounce around a little bit, but how should we be thinking about the shape of your R&D spend for this year? Thank you.
I'll give Mark. I don't have much. A bit of muscle memory, so go ahead, Mark. Jump in.
Yeah, Liisa Bayko, I don't think, you know, there's much to comment on regarding where we're allocating our resources right now beyond what we've disclosed publicly. Really, obviously, the commercialization of ARCALYST, but on the R&D front, you know, the progression of the clinical trials of Vixarelimab PN and KPL-404 in RA. Really, you know, the timing of clinical trials is key here to R&D. You know, you know, as I mentioned, you know, Vixarelimab is sort of in the final stages of the phase IIb. We're expecting in the second half of this year, and we just initiated the RA trial sort of at the end of 2021.
Thanks.
Thank you. I'm showing no further questions at this time. I would now like to turn the conference back to Sanj Patel, Chief Executive Officer.
Thanks very much, operator. No, thank you for all the questions and obviously for everybody joining our call today. Hope you got a sense of the excitement that we've all got, and we definitely look forward to providing additional updates as we move into the rest of the year. I think Ross said it very eloquently and appropriately. We've had a cracking commercial execution start, and we certainly intend to keep that going. Let's crack on. Thank you, everybody.
This concludes today's conference call. Thank you for participating. You may now disconnect.