Welcome to the next session of the Wells Fargo Healthcare Conference. My name is Eva Fortea. I am one of the biotech analysts on the platform, and we have with us today Ross Moat, COO, and John Paolini, CMO of Kiniksa. Thanks so much for being here.
Thank you very much. Very happy to be here, Eva. Thank you.
Perfect. Maybe we can start with a quick overview of Kiniksa, past 12 months, next 12 months, before we jump into questions.
Certainly happy to. Thank you very much, Eva, and thanks to everyone in the room for joining us and everyone online for listening in. We are very happy to be here, and thank you for the hospitality and the meetings that we have set up today. John and I are here from Kiniksa, we will be making some forward-looking statements, which are subject to risks and uncertainties, a full copy of which can be found in our SEC filings. Maybe if I start with a high-level overview of the organization, then we can dive into whichever part of the organization you would like to, Eva. Kiniksa is a well-capitalized, growth-orientated organization. We have been around for around 10 years now as a company. We have been a commercial stage organization for just over 5 years, with ARCALYST in recurrent pericarditis. ARCALYST is doing very well commercially.
In Q2, we announced a net revenue of around $243 million, which is one of the largest quarter-on-quarter growths, in fact, the largest quarter-on-quarter growth that we've had launched to date. We feel like we're still relatively nascent in that market, with a substantial opportunity left to help more and more patients. We're very pleased with how ARCALYST is going, and we increased our net revenue guidance for 2026, for the full year, to between $980 million and $995 million. Behind the commercial asset, we also have a pipeline of drugs, which are progressing rapidly at different stages into the clinic and through the clinic. We have KPL-387, which is being investigated in recurrent pericarditis. We announced just a couple of months ago some of the phase II data, for that, which is the dose-focusing portion of our total studies.
We're pleased to say that we have moved forward with the target product profile into the phase III, which is the monthly subcutaneous drug, which will hopefully be in an auto-injector formulation for recurrent pericarditis. Not only did we announce that data around the phase II, but also that we have initiated the phase III study and are already dosing and enrolling patients in the phase III study. Behind that, we also have KPL-1161, which is an Fc-modified drug, which could go into different indications that are IL-1 mediated, of which there are many. This is potentially a quarterly drug, which again is focused on the inhibition of IL-1α and β. The organization is well capitalized. We have around $525 million in cash reserves at the end of Q2 and have historically been profitable. We're very excited about the future.
With that, maybe we can dive into the questions, Eva.
Perfect. Lots of things to ask about. Maybe we can start with ARCALYST. Revenue continues to exceed expectations despite already being standard of care. What are the biggest drivers of growth at this point? Has the launch started to mature, or do you still expect year-over-year growth that's exceeding expectations?
Yeah, it's a great question. We certainly think that there's a lot of growth opportunity left within this marketplace, and there are several ways of looking at that opportunity, whether it's by the number of patients or the number of prescribers, and we can go into some of those metrics. Ultimately, we feel like we're relatively nascent and making good progress. There's a lot to do in this marketplace. I think one by one, we're making progress, and we're switching on more and more physicians to this new way of prescribing and treating patients with recurrent pericarditis. The literature is also being populated with the new paradigm of how to prescribe and how to treat this disease, which we're very pleased with. Ultimately, as we've announced before, we're around 21% penetrated into the population that has two or more recurrences.
You'll know, if you've been following Kiniksa for a while, that the recurrent pericarditis population is around 40,000 patients, and that's the indication for ARCALYST. If you subdivide that into the number of flares a patient has suffered, and you look at those that are in two or more recurrences, that's a 14,000 population out of the 40,000. We're about 21% penetrated at the end of 2020, sorry, at the end of Q2 of this year, into that population of the 14,000. That's without even accounting for the larger number of patients that are on the first recurrence and within the label, which is an additional 26,000 patients. I think that tells us that, to get to 21%, we've been making good progress.
Clearly, there's an awful lot more to do within the two-plus recurrence group, and we're getting growing utilization in the first recurrence group as well, and physicians ultimately making the decision that they don't have to wait for their patients to suffer future flares before treating them earlier on in the disease with targeted interleukin-1 alpha and beta inhibition.
Got it. Very helpful. You mentioned the second quarter, highest quarter of new patient enrollment since launch. What's driving this acceleration?
Thank you. I think there's a lot of things. It's kind of multifactorial, all the things that we're focused on as an organization and how we've been evolving this marketplace. Some of those things are, as I mentioned earlier, around the population of data in publications. We've always been promoting ARCALYST since the time of launch, 5 and a bit years ago, as a therapy which is steroid-sparing, which is one of the things that physicians used to reach towards to treat this disease, really through lack of other treatment alternatives. The population of now or the populated data, is really showing that physicians should be using interleukin-1 alpha and beta prior to corticosteroids. So after the utilization of NSAIDs and colchicine, prior to corticosteroids, opt for interleukin-1 alpha and beta inhibition.
That's how we've been promoting it since the time of launch and is aligned with our data. As I think more physicians kind of understand that and get the messaging through dissemination of the data, and particularly through the ACC Concise Clinical Guidance, which was published midway through last year, in August of last year, which affirms that type of treatment paradigm. I think more and more physicians are coming on board with that and recognizing the new way of treating the disease. So certainly publications and just experience in the marketplace of this evolving treatment paradigm are certainly helping. Obviously, our field execution continues to be incredibly important.
We're very focused upon that from obviously a commercial viewpoint, but also from a medical affairs viewpoint around data dissemination and progression within the marketplace of the understanding and the knowledge of not just recurrent pericarditis, but of ARCALYST and how to prescribe the drug. Additionally, we've also invested and worked heavily in DTC and AI as well, in a very targeted fashion. So for DTC, which is direct to consumer, I kind of don't think of the historic big pharma, big spend type of DTC campaigns, but more things that are very focused and targeted for rare disease populations, where you can work to try to identify patients that are suffering from the disease and serve up relevant adverts, particularly to that household or that patient population, to inform and educate and empower patients to go and speak to their physicians about recurrent pericarditis and ARCALYST.
That's something that we've embarked upon from earlier this year, and we've started to see some good successes through. We think that level of empowering patients to go and speak to their physicians is very important, because when you ask or when we ask patients in our market research of their awareness of treatment options for recurrent pericarditis, only 14% of patients were aware of ARCALYST. But when patients were aware of ARCALYST and they went to speak to their physicians about ARCALYST, about 80% of those patients ended up with an appropriate ARCALYST prescription. So we know that by empowering patients, that can make a significant difference to their relevant identification and treatment to really help them with this disease. So DTC has been very important for us so far this year.
As I mentioned with AI, we've been utilizing more innovative ways of targeting physicians and thinking through when patients are flaring and which patients will flare and when to go and see physicians. We've moved on from more of a historic way of targeting a marketplace, of just identifying which physicians to go and see. Now, more importantly, trying to understand when we should be seeing those physicians, when it's most appropriate, that they might be likely to see a recurrent pericarditis patient. We've been evolving, along with the work and the experience that we have within the marketplace now over the last five and a half years. As we said, up to the end of Q2, we're quite happy with how it's going, but an awful lot left to do.
Got it. Very helpful. You mentioned the 21% penetration at the end of second quarter in this patient population with multiple recurrences. What's the realistic ceiling for this patient population, and which constraints bind first? Is it diagnosis? Is it the prescriber conversion? Is it persistence?
Well, I think all of those things are very important. We've never guided forward of what we think the ultimate peak penetration could be into the marketplace.
Right
The 21% of the two-plus recurrence group tells you that there's significant room left in the two-plus recurrence group, let alone, as I said, those that are earlier on in the disease in the first recurrence, which are a much larger population. We think there's significant opportunity. If you also look at it from a prescriber perspective, out of the 40,000 patient population in a given year that are suffering from recurrent pericarditis, they actually interact with about 25,000 physicians, mainly cardiologists, to some extent rheumatologists. If you overlay that with the prescriber base of ARCALYST, a total of 25,000 physicians, about 5,000 of those have prescribed for ARCALYST so far.
Again, we've got a lot of education and awareness to do, but ultimately, we're kind of creating this new wave of how to look after patients for recurrent pericarditis, and one by one, more physicians are taking that on board. Quite where we get to, we don't know. But we're certainly placing huge efforts behind it, and what you will know hopefully about Kiniksa is that we will never rest on our laurels. We very much focus on the next thing and how we can get better and better as we continue to grow as an organization.
Got it. Very helpful. Maybe just touching upon the discontinuation rate and kind of patient restart. Is there anything about these patients that discontinue and then restart again that could help predict whether this is going to happen, maybe some specific patient characteristics or reason for discontinuation?
Yeah. So maybe if I provide some high-level thoughts on treatment duration and
Yeah.
the natural history of the disease, and John, if you've got anything to add around predictive factors or that type of thing, please add in. We have seen that the average duration of treatment for ARCALYST has grown over time. We know that this is a long disease in most patients, a chronic multi-year disease. Often not lifelong, but certainly multiple years for many patients. The natural history studies, or the largest natural history study of this disease, shows that the median duration of the disease is around three years. We actually don't know what the average duration of the disease is. This is for patients with two or more recurrences, because that largest data set actually ends at eight years. At that eight-year time point, there was still about 25% of the patients within that large cohort that were still suffering from the disease.
We know that the average is longer, but the median is three years. ARCALYST was really designed to be used for long-term, throughout the course of the disease. If you stop ARCALYST earlier on in the disease, and the disease is still there in the background and the auto-inflammation will come back, and symptomology starts to build up again, then patients know that they can go back onto treatment and get under control again and see through the natural history of the disease. That's what we've seen over time. We've seen that the treatment of ARCALYST has grown. The median is around three years now for ARCALYST treatment. Whether that grows or not, we'll see what happens in the future.
Around 45% of patients that stop treatment go back onto treatment, and often that's when they stop because they think they may be through, either of their own volition or through consultation with their healthcare professional, that they think they may be through the disease. If they're not and symptomology builds back, then about 45% of those patients go back onto treatment until they think it's the appropriate time to stop again. Generally, that's what we've seen. John, have you got anything further to add around the risk factors?
Yeah, I think when you go back all the way to 2018, 2019, and look at how clinicians were treating recurrent pericarditis, they would treat it episodically. They would see the flare, they would treat, and they'd say, "Okay, well, we'll give you six months of treatment, and then we'll stop and see what happens." I think what time has shown is that, as Ross said, now with this understanding that the disease is longstanding, if you withdraw therapy prematurely, the disease will come back. Now I think where the dialogue has shifted is to how to evaluate a patient at the time of diagnosis or at the time that an expert is seeing this patient for the first time and understand for how long that patient would need to be treated.
There are risk scores or risk factors that one can use to look at a patient at the time of presentation and use those in order to understand or predict at some level what the likelihood of drug-free remission might be at one, three, or five years. When you look at these patients based upon risk, and you can identify that this patient might have three- or five-year disease, that is really very informative to the physician, but also informative to the patient to manage expectations that this is a long-term chronic disease, perhaps not lifelong, but therefore you may need three years of treatment or five years of treatment. That, I think, is leading to a greater continuity of treatment and the idea of treating to the duration of the disease rather than having a fixed duration of treatment that's somewhat arbitrary.
Got it. Makes sense. For these patients that are restarting, are they restarting due to having a pericarditis attack, or is it changes in biomarkers or predicting factors that suggest they could have a pericarditis attack in the future?
Right.
Yeah. Usually when patients do decide to stop treatment with ARCALYST, it's nice that they know that there's a safety net there, that they can just restart ARCALYST. We know through the clinical trial data that if you stop and you do suffer a flare or symptomology building back, then you go back onto treatment, you get under control again very quickly throughout the next duration until you think the disease has come to its natural end. I think when patients know that's a nice thing with their physician, they know they can kind of stop and start as required. I think, John, have you got anything else to add on that?
Yeah, I think the trial data show that, right, premature cessation leads to recurrence, and that was a fairly high rate as you would expect because these were high-risk patients. I think you have nice data from the real world that also shows that that pattern does in fact carry through as well, that patients who still have underlying disease tend to recur and go back on therapy.
Sure.
Got it. Very helpful. Maybe just touching upon the patients in first recurrence, you've previously said about 20% of prescriptions are for patients in first recurrence, or 80% multi-recurrence. Is there anything about these patients in first recurrence that kind of helps predict why ARCALYST is prescribed and how duration of therapy may differ from this multi-recurrence? Or why are these patients on patient characteristics, stuff like that?
I can say a little bit from the RESONANCE Registry.
about what we know about some of these patterns. I think you have some data with regard to use at the time of diagnosis. With regard to the patient registry, what we have identified is that for patients who are on NSAIDs and colchicine, which is the first-line therapy for treatment of recurrent pericarditis, the rate of recurrence is actually reasonably high, one-two recurrences per year while on therapy. We just showed data at the European Society of Cardiology meetings to this effect. What you then see is, of course, for second-line therapy, if you escalate to rilonacept, the event rates drop precipitously, almost to zero.
What we also showed in that registry is that while there's a small group of patients, what it showed is that patients who were started on rilonacept at the time of diagnosis, so at the time of their first recurrence. They essentially burned through their NSAIDs and colchicine at the time of their incident event, got started on rilonacept, and again, their event rates dropped. In that case, they dropped to zero. I think what it shows is that if you identify patients who are at high risk and are likely to have long enough disease, longer than, for example, the six months of therapy of NSAIDs and colchicine, which is what's written into the ACC Concise Clinical Guidance.
A clinician could actually spare the patient from experiencing that future recurrence by coming to the end of their NSAIDs and colchicine, stopping, and then flaring, almost expectantly if you look at the risk factors. Starting them on continuous IL-1 pathway inhibition with rilonacept from that point of diagnosis and carrying that out for the duration of the disease is a way of bringing event rates down and creating a better life for their patients. I don't know if you want to comment on what you're saying.
Yeah, exactly. I think what we have seen since the time of launch of ARCALYST is that, to begin with, I think a lot of the utilization was in the 2+ recurrence group. Over time, that's shifted a bit. We still have the majority of usage within that group, and we still think that can grow a substantial amount. But over time, as physicians become more and more confident and comfortable with the drug and how to prescribe the drug and how to manage patients when they're on the drug, we have seen growing utilization in that first recurrence group. As you said, it's around 20% of all prescriptions that are now coming in that are within the first recurrence group, and 80% are in the 2+ recurrence group. That 20% is up from about 15% this time last year.
We can see that physicians are just getting more comfortable, more knowledgeable, and using the drug earlier on in the disease. The information around the risk factors is still relatively new, and physicians are trying to work through that to try to get more predictive, if you like, of which patients will suffer from what durations of disease so that it can guide their treatment decisions and ultimately when to trial a cessation of ARCALYST.
Got it. Maybe just switching gears to gross to net. It's been declining over the past several quarters. What has driven this?
Yeah. The gross to net year-to-date to the end of Q2 was 7.2%, down from about 8.4%, I think, in Q1 of this year. The main driver of that is ultimately through the co-pays and the co-pay utilization. We made some changes at the beginning of this year around the co-pay programs to increase the effectiveness and efficiency of our program. That brought the gross to net down a little bit when we were working with AI and some machine learning to try to identify certain patients and their different payer types and how much co-pay was required for those patients for support. Then as you go from Q1 into Q2, of course, the co-pays drop as a lot of patients hit their maximum co-pays, usually at various points within Q1. So in Q2, that had a slight reduction in the gross to net.
What we have said historically and still holds true is that usually in Q1 is the largest gross -to -net. The pattern drops a bit in Q2, Q3, and ticks up again a little bit in Q4, and that is the historical pattern that we have seen with ARCALYST.
Got it. Maybe just on the IP and potential future competition, how much of the protection from the IP and exclusivity state comes versus the patent protection versus the orphan nature of recurrent pericarditis versus the complexity of ARCALYST as a fusion protein?
Well, as you know, ARCALYST is a complex protein and a cytokine trap and is complex to manufacture. The IP protection ultimately is with the Orphan Drug Designation and market exclusivity associated with that, which goes through to 2028, followed by other extensions around the methods of use and so on to 2039. The IP protection is very much there, but also, as we have spent a lot of time and knowledge in this marketplace, we really understand the throughput of patients and the physicians, how they think about this disease and everything that we have done to really build this marketplace with ARCALYST and to change the treatment paradigm. We think there is a lot of knowledge and expertise in what has been done within this marketplace over the years.
Got it. Very helpful. Maybe just switching gears to KPL-387. As you mentioned on your initial remarks, we got some early data a couple of months ago. Maybe can you share with us, what were the key efficacy, safety, and pharmacodynamic findings that supported your move-forward dose?
Sure. As you know, KPL-387, one of the core studies of that is the phase II/III program, which is a very efficient way of handling development in a seamless way. As you mentioned, we reported the results of the phase II portion, or the interval analysis of the phase II portion, which is a dose-focusing study. In that study, we had looked at four different dosing regimens. From there, we selected the 300 mg once-monthly dosing regimen subcutaneously. As Ross mentioned, which fits the target product profile of KPL-387. What the data showed was a rapid onset of action, so a rapid and sustained pain response and treatment response. That was in the range of four days, as well as suppression of inflammation with time to CRP normalization of eight days.
That's a very rapid and robust finding with an injectable drug. In addition, it showed durability of response, which is another key element that throughout the monthly dosing interval, disease control was maintained. With that profile that came from the interval analysis, that is what supported moving forward in our essentially seamless design, the initiation of the phase III portion of the study, PASTORALE, which is now, as Ross mentioned, enrolling and dosing patients. It's that robust data set that fits the target product profile that enables the phase III pivotal study to initiate.
Got it. Maybe you can put this data into context, comparing it to ARCALYST and what we saw in its phase II? What's, in your view, the key differentiator for 387?
Keeping in mind, always cross-trial comparisons. Different populations, different eras. But the themes are quite similar, which is the three elements that I mentioned about cadence and magnitude of response, as well as durability. In that sense, those three elements of the KPL-387 efficacy profile are consistent with what we saw with ARCALYST over the course of the development program in phase II and phase III. That is, I think, the key point is that if you give the drug appropriately in the right amount at the right dosing interval, you can provide sustained blockade, if you will, of IL-1 alpha and IL-1 beta signaling. That is a key attribute that you need in order to move forward into the phase III program.
I think the phase III program is designed then to show the efficacy and safety of that regimen, that once-monthly regimen, subcutaneously administered liquid formulation, as a total package. That is what we aim to deliver, so that could be available to patients in the 2028 and 2029 timeframes.
Got it. Maybe just talking a little bit through the phase III; this is a placebo-controlled study. What are some of the challenges of enrolling in this study, given that ARCALYST is available in the U.S. for patients?
Maybe I will just say what the design is.
Yeah.
and then maybe we can put this in the context of the trial. And treatment options. As you pointed out, it is a placebo-controlled trial. It is what is called a randomized withdrawal trial, so it draws upon many of the elements, if you will, of the RHAPSODY program that was very successful that supported the registration of ARCALYST. An important element of that is that in this kind of trial design, which is taking patients who are acutely flaring despite standard therapies, it enables all patients to receive active drug in order to bring their disease under control. Then in that randomization portion, while it does allow for the regulatory piece, which is the comparison of active drug to placebo, what it does is it minimizes the amount of time that patients with an active flaring and uncomfortable disease are actually exposed to placebo.
In the protocol, there are defined windows for what constitutes basically enough of a signal that then patients can go back onto KPL-387 therapy and put their disease under control, and then enable the accrual of long-term efficacy and safety data with regard to control. With regard to enrollment of the trial, this is a global trial. We have centers throughout the world, and so treatment paradigms vary, of course, across different geographies. This trial is well-designed in order to bring in patients regardless, across a spectrum of different background therapies and background therapy histories. It enables us to enroll this study in the U.S. where ARCALYST is currently available as well as other IL-1 pathway inhibitors. But also, around the world where such options may not be available to clinicians.
In that sense, there are patients around the world who can benefit from the trial.
Got it. Very helpful. You previously mentioned the auto-injector. How critical is the auto-injector to your launch strategy, and can you just give a sense of where you're at?
Yeah, certainly can. It's difficult to say how critical it is, but we think it might be a good thing to add on. We believe-
obviously for ARCALYST, there's a lot of room left for ARCALYST, but for KPL-387, we also think having additional treatment options may also be very helpful. With a target product profile of a monthly drug that focuses on what we know are the drivers of this disease, which are the two key cytokines of interleukin-1 alpha and beta, we think is very important. If that's going to be in an auto-injector, we think that could also be important. When we ask physicians and patients around preferences and think through different target product profiles, including KPL-387, ARCALYST, and other things that are in the clinical realm right now, generally, that feedback came back very positive around KPL-387, that more than 75% of patients would pick KPL-387.
Patients that are naïve to interleukin-1 alpha and beta treatment said that they would have a higher propensity to start therapy if it was in an auto-injector. When you ask healthcare professionals about preferences, around 92% of healthcare professionals said that they would be highly likely to prescribe the KPL-387 profile. Clearly, the profile resonates very well. That has to be backed up with data coming out of the clinic, which we're obviously very focused on. We think that drug could be meaningful.
Got it. Very helpful. And maybe just on the transition study, can you give us a quick overview on what is the objective of this study, what do you hope to learn? Also, patients enrolled in the study have well-controlled recurrent pericarditis.
with very specific baseline characteristics. How are they selected, and how do you think about how they correlate with real-world patients?
Mm-hmm. Yeah. It actually is a very real-world kind of trial.
Right.
This is the transition to KPL-387 monotherapy dosing and administration study. The idea is that you have patients who have well-controlled disease, as you mentioned, some of those specific requirements, and studying the efficacy and the safety of the different regimens that are used to transition patients from, whether it is NSAIDs and colchicine or corticosteroids, or IL-1 pathway inhibitors, be it anakinra or rilonacept, and then moving them onto monotherapy with KPL-387. The purpose of this study, it is nothing novel in the sense that we have had to do this before, is to inform how physicians can move from one therapy to another. For example, we did this also with rilonacept. In the phase II and phase III program, we generated data on transition from NSAIDs and colchicine and corticosteroids.
In fact, we published some of that in the Journal of the American Heart Association. With regard to transition from anakinra to rilonacept, that was already covered in the label because there was an approval for DIRA, Deficiency of Interleukin-1 Receptor Antagonist, where patients were brought to stabilization on anakinra, then they were transitioned to rilonacept. So that posology, if you will, was covered in the label from that study. So essentially, this study is designed in a similar way to provide that information to clinicians of how to move back and forth from therapies.
But if you take a step back and think about it in the totality of the program, what this is saying is that we have designed the program around the spectrum of different clinical presentations where patients can present either acutely flaring despite their standard therapies, or they can be well-controlled while on standard therapies. Either way, the development program shows how to transition patients to KPL-387 monotherapy and then maintain them long-term for the duration of the disease.
Got it. What is the role of the transition study regarding the FDA potential approval? Was this something that the FDA requested, or is this something that you plan to pursue to incorporate on label?
Right. It is not an obligatory study.
It's an informative phase II study. As I mentioned, it's called a posology study to use a European term, or it's a dosing and administration study in order to provide that information to clinicians so they understand what those different regimens are to make those transitions. In general, that tends to inform either the clinical trials section or the dosing administration sections of labels. That's our intent is to provide that information to the agency as well as to the literature so that physicians are well-informed at the time of launch as to how to best utilize KPL-387, as I mentioned, whether patients are actively flaring or stable on existing therapies.
Got it. Maybe during your prepared remarks, you mentioned different potential indications for 387 and also 1161 and potential quarterly dosing there. How are you thinking about indication selection and perhaps the pros and cons of the monthly versus the quarterly?
Yeah, I think there's a lot of dynamics there. It's something we're conscious of and constantly looking at. Obviously we have not announced any indication or indications for KPL-1161 at this stage, but we are focusing on trying to get that drug into the clinic by the end of this year. Clearly there are a lot of IL-1 alpha and beta-mediated diseases, some of which have clinical data and literature behind, and others will be more exploratory. But we're definitely aware of where all the literature is and the diseases that are mediated by that pathway. We'll announce potential indication at a future time.
Got it. Maybe just last question. As Kiniksa approaches sustained profitability, how do you balance the near-term earnings with investing opportunities to create long-term value?
Yeah, it's a great question, because obviously everything is important. We're very focused on value and growth as an organization. It's incredibly important to us to stay very focused on ARCALYST, because we think that has huge potential left for the future and has done well up until this moment in time at the end of Q2. We're also very focused on the rest of the pipeline and bringing through KPL-387 in the phase III study and KPL-1161 into the clinic by the end of this year. Ultimately, focused on creating value for the future.
Great. Well, these were all of our questions. Thanks so much for joining us today.
Thank you so much.
Thank you very much, Eva. Thanks for having us.