Welcome to the Kiniksa Pharmaceuticals fourth quarter and full year 2021 earnings conference call and corporate update. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Rachel Frank, Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining Kiniksa's call to discuss our fourth quarter and full year 2021 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. Eben Tessari, Kiniksa's Chief Operating Officer, will follow with a brief review of a recently announced strategic collaboration as well as our portfolio. Then Mark Ragosa, our Chief Financial Officer, will review our fourth quarter and full year 2021 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, 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 fourth quarter and full year 2021 results today. We continue to make a lot of progress in bringing ARCALYST to patients in need and executing across our portfolio of clinical stage product candidates. I'm delighted to report that the net revenue for ARCALYST for the fourth quarter of 2021 was $18.7 million, and the total ARCALYST net revenue since our launch in April 2021 was $38.5 million. As Rachel said, Ross will cover our commercial performance in more detail, and as you'll hear, we are very pleased with the success of Kiniksa's first commercial launch. This has been marked by continuous growth in prescriber adoption, expansion in payer coverage, and strong patient adherence. Moving forward, we plan to continue this robust commercial execution.
In addition to the launch, we remain focused on building the maximum value across our portfolio of clinical stage product candidates. These are vixarelimab, KPL-404, which is our CD40 program, and mavrilimumab. Eben will provide an overview of each of these programs, and we continue to be energized by our progress across the entire portfolio, and we believe that we're well-positioned for longer term growth. With that, I'll turn it over to Ross to discuss our commercial performance in more detail. Ross.
Thanks, Sanj. We're thrilled to report that Q4, our third quarter of launch, continued with very positive momentum and ended in great shape with a net revenue of $18.7 million. This represents a 55% growth versus Q3 and results in a total 2021 net revenue of $38.5 million. The primary driver of our results has been the steady incremental growth of recurrent pericarditis demand and the increase in uptake by prescribers. The other indications that we support, CAPS and DIRA, remain broadly consistent and stable with previous quarters. With three-quarters of launch under our belt and greater experience in the commercial marketplace, we're providing a net revenue guidance for 2022 of between $115 million and $130 million. On slide eight, I will dive into more detail in the drivers behind the recurrent pericarditis revenue.
We're extremely happy with the growth that we've seen to date, and the results represent a continued steady uptake and adoption of ARCALYST from physicians, payers, and patients in this previously unmet and debilitating ultra-inflammatory cardiovascular disease. We have seen a consistent increase in the prescriber base since launch, with over 300 individual prescribers who had written ARCALYST for recurrent pericarditis by the end of Q4. In 2021, we placed a huge emphasis on improving the awareness of both the disease and ARCALYST as a treatment. As a result of these efforts, we are now starting to see an increase in repeat prescribers, where a physician who has already prescribed ARCALYST since launch identifies and treats subsequent patients. The proportion of prescribers who have written for two or more patients has consistently increased each quarter, on an ever-increasing base.
At the end of Q4, 17% of the total prescriber base, meaning more than 50 physicians, had already become repeat prescribers. On the payer side, market access continued to be strong, meaning that patients and prescribers can have high confidence that their prescription will result in access to treatment. In Q4, the approval rate of completed cases grew to 95%. In terms of duration, of all of the payer approvals since launch, the median time prior to requiring a pre-authorization from payers is one year. Additionally, 2/3 of ARCALYST prescriptions were also written for one year of therapy. While it's still too early to know the average duration of therapy, approximately 70% of the recurrent pericarditis patients who started ARCALYST in the second quarter of 2021 were still on therapy at the end of the year.
Overall, we're very pleased with what we're seeing in the real world, and as the data builds, we look forward to sharing more information on the duration of therapy. Turning to slide nine, I would like to highlight several key points on the demographics of those patients who are receiving ARCALYST treatments for recurrent pericarditis. Firstly, from the market research conducted on current prescribers of ARCALYST, we see that the highest share of penetration is within those patient groups we have been targeting, and the most representative of the RHAPSODY population who are suffering from multiple recurrences and the highest burden of disease. Secondly, owing to ARCALYST's broad label, in some cases, physicians are also exercising their flexibility to prescribe for patients who are earlier in their disease course and on their first recurrence.
Regarding prior therapies, we're seeing that patients are largely coming from NSAIDs and colchicine, which is what we'd hoped to see, and a smaller proportion are coming from corticosteroid treatments. This demonstrates that we're making good progress in our goal for ARCALYST to be positioned immediately after NSAIDs and colchicine and prior to corticosteroids. Our recent research also shows that there is a 60/40 split in whether the patient is actively in a flare at the time of prescribing ARCALYST. This is important information, as we know the majority of patients are in between flares and are often suffering in silence with residual pain or are anxious and in fear of their next flare. Our messaging emphasizes ARCALYST's ability to reduce the risk of future recurrence by 96%, so it's encouraging to see physicians utilize the preventative part of the indication.
On slide 10, I would like to highlight how we're interacting with patients and healthcare professionals to increase the awareness of recurrent pericarditis and ARCALYST. We've been very active delivering disease education through our field team, social media, patient advocacy supports, and direct advertising. For example, a couple of weeks ago, we held a national webinar with over 60 registered patients, where a leading cardiologist shared his experience and interviewed a patient who has been receiving ARCALYST for the last 6 months. Through these activities, we're increasing the awareness, and at the same time, we have built a database of over 2,300 patients and caregivers across the U.S. who opted in to receive further education on the disease and treatment.
In Q4, we initiated a tailored communication plan to this patient group designed to provide targeted information on recurrent pericarditis depending on their stage in the disease and to give them the tools and resources to ask their physician about ARCALYST. Throughout 2022, we plan to accelerate our efforts even further and reach even more patients. Before handing the call over to Evan, I'd like to reiterate how excited we are about the sequential growth that we've made since launch. We truly believe ARCALYST is becoming recognized as a breakthrough treatment that provides a targeted approach to the underlying driver of this disease. Eben, over to you.
Thanks, Ross. Slide 12 is a high-level overview of the strategic collaboration we announced this morning with Huadong Medicine to develop and commercialize ARCALYST and mavrilimumab in the Asia-Pacific region, excluding Japan. Kiniksa will receive $22 million upfront and is eligible to receive up to approximately $640 million in specified development, regulatory, and sales-based milestones. Kiniksa is also eligible to receive tiered royalties ranging from the low teens to the low twenties on annual net sales. Huadong obtains exclusive rights and responsibility for the development and commercialization in the Asia-Pacific region, and Kiniksa will otherwise retain all existing development and commercialization rights for both assets. Through this collaboration, we're accelerating our ability to bring multiple therapeutics to patients suffering from severe autoimmune and autoinflammatory diseases across the Asia-Pacific region.
Additionally, the collaboration provides non-diluted capital and resources to expand our clinical trials into the region to help accelerate our drug development and commercialization efforts. Moving to slide 13, I'll provide a brief overview on where we stand with our three clinical-stage programs. Starting with vixarelimab, we are currently enrolling a global randomized placebo-controlled phase IIb dose-ranging study in prurigo nodularis. Given we expect data from the phase II trial of vixarelimab in the second half of this year, I'm gonna spend some time walking through some of the key areas of potential differentiation for this molecule in the subsequent slides. Before that, for KPL-404, we are enrolling and dosing a phase II proof-of-concept study in rheumatoid arthritis.
RA is a disease where dose response has been well-characterized, and this 12-week study is designed to provide not only PK characterization, but also an early signal of efficacy with chronic administration in this population. The results from this study may also enable optionality to evaluate the therapeutic potential of KPL-404 across a range of autoimmune diseases with pathologies believed to be mediated by CD40 signaling. As for mavrilimumab, we remain highly encouraged by the potential broad utility of mavrilimumab, which has demonstrated positive clinical data across multiple indications. We are evaluating mavrilimumab for the development in cardiovascular diseases where the GM-CSF mechanism has been implicated and that has synergies with the company's existing commercial infrastructure. Moving to slide 14, you can see the details of the KPL-716 study in prurigo nodularis in more detail.
As you can see, we're enrolling and dosing patients across a range of once monthly dosing regimens. The primary efficacy endpoint is the percent change from baseline in weekly average worst itch NRS at week 16. The objective is to define a minimum effective dose level with practical monthly sub-Q dosing. A key secondary efficacy endpoint is the proportion of patients achieving a score of 0 or 1 in PN-IGA at week 16, which could be a key differentiator owing to the additional blockade of Oncostatin M in addition to IL-31. Slide 15 highlights that based on our phase II data, we believe vixarelimab has the potential to deliver a differentiated profile based on its novel mechanism of action and dosing regimen compared to other assets in the development for prurigo nodularis.
We believe vixarelimab is differentiated because it blocks both IL-31 and oncostatin M, the latter of which has been implicated in both fibrosis and hyperkeratosis. Now furthermore, with a prevalence of around 300,000 patients in the U.S., we believe prurigo nodularis could be a meaningful commercial opportunity even with multiple other large products. From there, I'll turn it over to Mark.
Thanks, Eben. Good morning, everyone. Over the next few minutes, I'll walk through our fourth quarter and full year 2021 financial performance and review our 2022 financial guidance. You can find our detailed financial information in today's press release, and I'd like to call your attention to a few items. First, fourth quarter in 2021 revenue, driven primarily by ARCALYST sales and recurrent pericarditis, was $18.7 million and $38.5 million respectively. Second, as a reminder, Kiniksa is responsible for the sales and distribution of ARCALYST for the approved indications in the U.S., including CAPS and DIRA, and splits profits on sales 50/50 with Regeneron after deducting 100% of profit split eligible COGS, 100% of field force expenses, and commercial and marketing expenses subject to specified limits.
In the fourth quarter, the ARCALYST collaboration generated a profit of approximately $1.7 million, following three quarters of commercial availability for recurrent pericarditis. This resulted in a collaboration expense in the fourth quarter of approximately $835,000, which is reflected as a separate line item within our operating expenses. Third, Kiniksa's overall net loss was approximately $36.3 million and $157.9 million for the fourth quarter and full year 2021 respectively. Lastly, in turning to our financial guidance, we expect continued commercial execution to drive total 2022 ARCALYST net revenue between $115 million and $130 million. As previously disclosed, we ended 2021 with cash reserves of approximately $182 million, which we expect to fund our current operating plan into 2024.
With that, I'll turn the call back to Sanj for closing remarks.
Thanks, Mark. It's a really exciting time for Kiniksa. In addition to the success of our commercial launch in recurrent pericarditis, we're also building a footprint as an emerging leader in the development of immune modulating therapies. The collaboration we've announced today in the Asia Pacific region with Huadong Medicine is aimed to help accelerate the development and commercialization of ARCALYST and mavrilimumab. We're also really encouraged by the data with vixarelimab in prurigo nodularis and KPL-404, our CD40's potential in a range of autoimmune diseases. We look forward to evaluating mavrilimumab in cardiovascular diseases that have synergies with our existing commercial infrastructure. Importantly, as Mark mentioned, we are well capitalized, and we have cash reserves that are expected to fund our operating plan into 2024.
Ultimately, we are determined to continue to help patients in need and firmly aim to fulfill our plan of becoming a global generational company. With that, I want to thank everyone for your time today, and I'll turn it back to the operator for the Q&A session.
Certainly. Once again, ladies and gentlemen, if you have any question at this time, press star then one. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Anupam Rama from JP Morgan. Your question please.
Hey, guys. Thanks for taking the call and congratulations on the quarter. Just a quick question on the ARCALYST launch. Thinking about 2022 specifically for Q1, is there any seasonality with payer or gross to net dynamics we should be considering specifically for the quarter? Thanks so much.
Thanks. Anupam. Ross, do you want to take that?
Yeah, very happy to Sanj. Hi Anupam, nice to meet you again. Yeah, there are, you know, the typical dynamics in Q1 that are not, you know, specifically related to ARCALYST, but just broader for the market such as, you know, insurance plan changes. You know, we may have to support patients through bridges. They kind of change insurance plans, co-pay resets and so on that happen at this time of the year as well. There are definitely, you know, extra headwinds that we have there that we're focused on in Q1. But ultimately, as it relates to gross to nets, we obviously haven't shared our year-end gross to net yet. But in our Q3 10-Q, the year to date was around 10%.
While we, you know, expect like in Q1, you see some fluctuations quarter to quarter, particularly in the early stages of launch, ultimately, we don't really anticipate any kind of big swings in either direction and just expecting the gross to net to be relatively consistent over time.
Thanks so much for taking our question.
Thank you. Our next question comes from the line of Paul Choi from Goldman Sachs. Your question please.
Good morning team, and thanks for taking our questions. One on KPL-404 please. As you're advancing here through RA and thinking about the path forward there, can you maybe, you know, talk to us about how you're thinking about positioning it in the initial indication or and just how you're thinking about the potential commercialization path there, just given the level of crowding in the indication. And then secondly, what would be your focus area for next development assuming positive proof of concept here? Thank you very much.
Thanks, Paul. John, maybe you wanna start and then Ross and I can jump in.
Happy to do so. Thanks Paul for your question. Nice to talk to you again. The phase II program is really designed as not only as part of a proof of concept approach, but really the multiple ascending dose portion of the phase II trial establishes the ability of KPL-404 to be given subcutaneously and to target the receptor and to demonstrate an early signal of efficacy. That information from the PK portion of the study actually helps us bridge not only into the proof of concept portion, but also in RA, but also into other potential indications. That's really where the strong utility comes.
I think Evan may have some additional comments about the fact that KPL-404 is a high concentration liquid formulation that allows for subcutaneous dosing, and that could also form the foundations of additional differentiation. Eben, over to you.
Yeah, that's right, John. Coming out of this proof of concept study, I think we'll have a pretty good view as to the power of the mechanism and the ability to differentiate from other CD40 antagonists in the space.
Ross, I'm not sure if you wanna make any comments on the commercial front, but certainly as John and Eben have talked about the indication for rheumatoid arthritis is primarily as a proof of concept. You know, obviously we're looking forward to seeing the PK characterization and potential efficacy indications in the second half of this year. But really the idea was to then hopefully have a sort of an opportunity to jump into other rarer indications where there is a potential for us to show differentiation and potentially, you know, be first in class and first treatment option for patients in other disease areas. But, you know, certainly we understand that rheumatoid arthritis is a very crowded marketplace.
That isn't our primary focus for a commercialization at this point, but certainly be great to get that result in the second half of this year. Ross, anything to add?
No, I think that's been covered well, Sanj. I think we, you know, we really, you know, believe in the utilization of KPL-404 across multiple diseases that we're very excited about for the future.
Great. Thank you.
Thank you. Our next question comes from the line of David Nierengarten from Wedbush Securities. Your question please.
Hey, a couple of questions. A quick commercial one on the 60% of patients who aren't flaring when presented and prescribed ARCALYST, are they I don't know if you could describe kind of their patient history or general, you know, patient profile. You know, are they patients who've been you know, third or fourth line recurrence, and the doctor is you know, obviously prescribing to prevent recurrence? Are they a little bit earlier in their disease? I'm curious about that. On KPL-404, I didn't quite catch it.
Did you with the you know announcement or comment on the xenotransplantation you know use or potential use, is that you know is organ transplant a you know a future direction for you that you're considering or is that a one-off you know I hate to say experiment, one-off use you know in that patient? Thanks.
Thanks David. Maybe I'll make a comment on the latter part and then John, you can jump in as far as John or Ross can jump in as far as the earlier question on ARCALYST. Yeah, we're certainly very excited by the xenotransplantation that occurred at the University of Maryland. Obviously that there's a great team there. We've really enjoyed working with them. Yeah, very excited. You know, so far the patient from what we understand is continues to do well. It certainly has the potential that we would consider other ones. At this point, there's nothing to disclose, but we are certainly very interested in continuing to understand, you know, the real potential for CD40, KPL-404's potential in xenotransplantation. I'd definitely watch this space, David. I think it's very, very exciting.
Ross, do you wanna cover the ARCALYST question?
Yeah. Thanks. Thanks Sanj. Yeah, happy to just cover that question. Hi David. Yes, you're picking up on the 60% of patients who are not actively in flare since the time of launch that patients have gone on to ARCALYST. This is really from market research of a subsection of prescribing physicians that we've worked with through market research to try to understand some of the patient dynamics. We were very pleased when that results came back that there is a you know good healthy split between patients who are in a flare and going into the clinic in debilitating pain and so on and having ARCALYST prescribed to them at that stage.
You know, owing to the broad label that we have, which I think is important for two things. One is, the label does not stipulate how many recurrences a patient must have before prescribing ARCALYST, and it also does not stipulate whether the patient must actively be in a flare or not.
We're very pleased, you know, with the data coming out of our phase III RHAPSODY study of the 96% reduction in risk of future flares that physicians are really taking that on board, and delighted with that market research results showing that they're not only waiting for patients to attend the clinic or the emergency department in debilitating pain, but are really utilizing it to prevent patients to try to give them an opportunity of a life free of flares. And that's very much how we like the drug to be used. Very happy with that, what came out of the market research there. We expect the 60% not in flares is very much within our target population of those two or more recurrences.
However, that's the 14,000 patients that we're very focused on as a field team perspective and a very targeted approach. A quick follow-up. I presume that there hasn't been a noticeable difference in payer response to that, you know, in patients being able to obtain their prescriptions. Yeah, correct. No noticeable differences there, at least with the payer uptake. Previously, we said it was above 90% in Q4. Actually grew to 95% of all the completed cases, again in an approval. We're seeing very broad coverage there. As you can see from the slide on the demographics, some of those patients are 2+ recurrences, in fact, most of them are. But some are on their first recurrence. We're seeing, you know, kind of broad access across the group.
If you think about whether it's commercial Medicare, Medicaid as well, we're also seeing strong access across all of the payer mixes as well.
Yep. Cool. Thank you.
Thank you. Our next question comes from the line of Geoff Meacham from Bank of America. Your question please.
Hi, this is Alexandria Hammond on for Geoff Meacham. Thank you for taking the time to answer our question. So you mentioned that 70% of RP patients stayed on ARCALYST treatment. Can you provide any color on why 30% of the patients discontinued treatment? Was it just that they completed their treatment regimen? One additional question. Can you provide any color on the decision not to initiate a phase III trial of mavrilimumab for GCA? What other indications are you thinking about moving forward? Thank you very much.
John, maybe Ross, you can start with the first part, and I'll come back and cover the mavrilimumab piece.
Yeah. Happy to start with that first part. Yes, we announced out of those patients who started ARCALYST therapy in Q2, which was our first launch quarter, 70% of them were still on therapy at the end of 2021, meaning that 30% had stopped. I think your analysis is probably correct that many of those patients would have just completed the intended course of treatment and in discussion, either by the patient or with the physician, decided to try to stop off of medication. There also could be other reasons as well, of course, of patients stopping, which could be, you know, just multifaceted.
Generally being very pleased with the number of patients who remained on therapy through that time period, which means that, you know, many of those will be at kind of six to nine months' worth of treatment duration. Of course, 70% of them still remain on therapy, which is why we need more time to work through what the average duration will be further down the line, and look forward to sharing more data there. Over to you, Sanjy.
Yeah. Alex, thanks for the question on mavrilimumab and GCA. So let me start by saying, you know, we continue to be very excited by the progress we've made with mavrilimumab. As you know, that's demonstrated robust safety and efficacy across multiple indications to date.
You know, you're right, this morning we did announce that we're evaluating development of mavrilimumab in cardiovascular diseases, and this is where the GM-CSF mechanism has been implicated. You know, certainly we've got synergies with our existing commercial infrastructure. Rather than initiating a phase III trial in GCA, we certainly are moving in that direction. You know, at this point, we feel that strategy offers the greatest potential value, certainly given the fact that the competitive landscape in GCA evolved significantly since we began the mavrilimumab trials in GCA. Also that we've already built a specialty cardiovascular sales force to help commercialize ARCALYST, and we believe could also be leveraged to you know, cover some indications in that same area with mavrilimumab.
Obviously on top of that, we've just announced this morning the collaboration with Huadong Medicine is very exciting, and that will obviously be built for ARCALYST and mavrilimumab in the cardiovascular space potentially. You know, very exciting movement there, and we continue to be very jazzed by Mavri in general.
Great. Thank you so much.
Thanks, Alex. Thank you.
Our next question comes to the line of Liisa Bayko from Evercore ISI. Your question please.
Hi. Just a couple of questions. First, for rilonacept, can you break out sales between RP and CAPS?
Ross, do you want to cover that?
For the quarter.
Yeah, I can cover that. I mean, we have it directionally shown on one of the slides as well. Yeah. Breaking out the $18.7 million. But ultimately, CAPS and both DIRA as well really remain stable. So I think you probably see, you know, historically it was around kind of $2.5 million-$3 million a quarter in CAPS and DIRA revenue, and that's kind of what we're seeing continue to play through.
Okay. Thank you. And then for vixarelimab, can you talk about your expectations for this next data readout at week 16? So it's a little longer than you've treated before. You're studying lower doses. Should we expect the data to be relatively consistent with what we've seen before, even though not studying lower doses, less frequent dosing. How should we think about that, and what do you wanna see in this next data set to kind of feel like you're in a good competitive position in terms of the different efficacy metrics you're looking at?
John, you wanna start with that?
Absolutely. Hi, Liisa. Nice to talk to you again.
Mm-hmm.
Thank you for your question. You're absolutely right that the phase IIb program is really a continuation of the phase IIa program. Remember that the phase IIa program had endpoints at 8 weeks, and we used weekly dosing of vixarelimab subcutaneously in order to really test a high subcutaneous dose to give the raw horsepower of the mechanism. What we saw there was a reduction in pruritus that was rapid and sustained. We also saw through the PN-IGA score of clear, almost clear attainment of 0-1 that there was also lesion resolution that occurred very rapidly. It met the endpoint at week 8, but even got to that point even at week 6 with clear separation at week 4.
We believe that may be part of the second mechanism of vixarelimab, you know, beyond IL-31 inhibition to block OSM as well. Carrying forward into phase IIb, it's really to define, as Evan said, a minimum efficacious dose. The way that we do that is to then explore lower concentrations of drug. The monthly dosing, and you can see this in our slides, you know, that are posted on the web, that show that we're exploring lower doses and also extending the interval of dosing in order to probe those lower concentrations. The study is powered, of course, to demonstrate similar outcomes in terms of reduction in pruritus as well as 0-1 attainment on the IGA.
We've extended the primary efficacy endpoint to week 16, in order to provide greater resolution on those endpoints, as well as to get additional exposures with the primary study as well as the long-term extension. Thanks for the question.
Okay, great. Thank you. Then just for KPL-404, I know you've just, you know, recently initiated the study in RA. And you're looking at different cohorts. Should we expect any readouts of those, you know, different dose cohorts this year? Is that really something that's more next year or thereafter? Can you give us a sense of timing? Thank you.
Yeah. Thanks, Lisa. No, we have actually disclosed when we expect data from that. We've obviously, as you said, started enrolling in you know in multiple sites. We're looking forward to that, but we'll obviously come back to you in a future date when we know maybe a better handle of when we expect to have results.
All right. Thank you so much.
Cheers.
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Sanj Patel, Chief Executive Officer, for any further remarks.
Thanks, operator. No, just very pleased obviously with the quarter and the full year 2021 results. Got an awful lot going on. Excited with the Huadong Medicine collaboration. Can only help us fuel and accelerate our development. Thanks for joining in and stay tuned. Cheers.
Thank you. Ladies and gentlemen, for your participation in today's conference, this does conclude the program. You may now disconnect. Good day.