Kiniksa Pharmaceuticals International, plc (KNSA) Earnings Call Transcript & Summary

Good afternoon, and welcome, once again, to the Morgan Stanley 18th Annual Global Healthcare Conference. I'm one of the biotech analysts from Morgan Stanley. My name is David Lebowitz. Before we get started, we'd run through the requisite disclosures. Please note that this webcast is for Morgan Stanley clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, I'm happy to introduce today, I have with me Kiniksa Pharmaceuticals. And I guess if they could start out, give a brief introduction to themselves. Start with -- I guess hand it off to CEO, Sanj Patel, to his team, provide a top-level description and of course if they have any disclosures themselves, that would be a great time to put those out there.

Great. Thanks, Dave. Good afternoon, everyone, and thanks, obviously, to Morgan Stanley for hosting us today. Please note that we will be making forward-looking statements this afternoon that are subject to both risks and uncertainties. A review of these statements and risk factors are found under the heading of Risk Factors in our SEC filings. Joining me on the call today are John Paolini, our Chief Medical Officer; Qasim or Q Rizvi, whose our Chief Commercial Officer; and Eben Tessari, our Chief Business Officer. We're excited to review the progress we are making across our entire portfolio of immune-modulating product candidates. It's been a very busy 2020 so far. We've had encouraging data across our pipeline, helping to further validate our mechanisms and demonstrate their potential and broad utility. We recently announced exceedingly positive Phase III data for rilonacept in recurrent pericarditis, for which there are currently no FDA-approved therapies. The primary efficacy endpoint was highly statistically significant. Rilonacept treatment resulted in a 96% reduction in the risk of recurrent pericarditis events, and all major secondary endpoints were also highly statistically significant. We plan now to submit an sBLA to the FDA for rilonacept in recurrent pericarditis this year, and we look forward to bringing this potential treatment to patients as fast as humanly possible. We've also announced clinical outcomes data from the open-label treatment protocol with mavrilimumab, or Mavri, in severe COVID-19 pneumonia and hyperinflammation. Here, Mavri-treated patients experienced earlier and improved clinical outcomes compared to control group patients, including earlier weaning from supplemental oxygen, short hospitalizations and no deaths. We're now enrolling and dosing in a Phase II/III study for Mavri in severe COVID-19 pneumonia and hyperinflammation. Finally, we announced data from a Phase IIa study of Vixarelimab, or Vixa, in patients with prurigo nodularis. The study here met its primary efficacy endpoint, which was the reduction in weekly average Worst-Itch NRS from baseline of week 8 were statistically significantly greater in patients who received Vixa versus those who received placebo. Additionally, a statistically significantly greater percentage of Vixa recipients achieved a PN-IGA score of 1 or 0 at week 8 compared to placebo recipients. The time now to initiate a Phase IIb dose-ranging study for Vixa in prurigo nodularis in this -- in the fourth quarter this year. In addition to these advancements, we also expect data from both our global Phase II study of mavrilimumab in giant cell arteritis as well as data from our single ascending Phase I study of KPL-404, which is our anti-CD40 program, which is also in the fourth quarter. We are well capitalized with our cash reserves, expecting to fund our current operating plan into 2023. There's an awful lot there, Dave. So I'll hand it back to you for additional questions.

I guess we'll start out with rilonacept. It targets IL-1 alpha and IL-1 beta, and you're using it to -- you're developing it and preparing a submission for recurrent pericarditis. I guess to start out with, could you talk about the mechanism of action for the drug itself and how it can actually help patients with this particular disorder.

Yes. John, why don't I hand it over to you to walk through the mechanisms? I can always jump in and describe the disease a little bit as well.

Happy to do so. And good afternoon, David. So rilonacept is an IL-1 alpha and IL-1 beta cytokine trap. And the data implicate both IL-1 alpha and IL-1 beta as key mediators of inflammation in recurrent pericarditis. And rilonacept blocks the signaling of both of these cytokines. Now in pericarditis, injured pericardial cells are releasing IL-1 alpha, which binds to the receptors and the macrophages, which then stimulates release of active IL-1 beta through the action of this NLRP3 inflammasome. It's a cascade amplification system that ultimately results in a self-perpetuating cycle of pericardial inflammation. Now the objective of treatment, of course, is the resolution of the acute pericardial inflammation as well as prevention of subsequent episodes. And so in that way, targeted blockade of IL-1 signaling could provide an alternative to corticosteroids, which have broader immunosuppression, and carry, of course, additional morbidity. And I think Sanj would like to talk to some of those impacts of the disease as well as the current treatments.

Yes, sure. I mean, certainly, it is obviously a disease with significant unmet need. And pericarditis is a painful and debilitating autoinflammatory cardiovascular disease, and as I said, there's no FDA-approved therapies currently. It typically presents with chest pains, often associated with changes in electrical conduction and sometimes a buildup of fluid around the heart, which is called pericardial effusion. Patients with pericarditis are deemed recurrent if they have an additional episode after a symptom-free period of about 4 to 6 weeks. And they're deemed chronic if symptoms persist for any one episode that lasts longer than 3 months. I think John may have touched on it, but there's initial treatment with NSAIDs with or without colchicine. And then while adequate for some patients or most patients, approximately 20% to 30% of patients experience a painful recurrence. And in these cases, that's where corticosteroids are typically added. Now many of these patients have multiple recurrences or can't be weaned off steroids, leading to physicians to often try other systemic agents as a third line option. So these patients, in particular, have a higher incidence of severe complications, such as cardiac tamponade and constrictive pericarditis and then often resort to use of opioids to manage their pain and deal with the significant anxiety and depression, really due to the unpredictability and severity of the recurrences. So as I said, there's still significant unmet need. The FDA did grant Orphan Drug designation for rilonacept in recurrent pericarditis early this year. And in terms of populations, we believe there are approximately 40,000 patients in the U.S. seeking treatment for recurrent pericarditis. So that gives you a bit of an overview of the disease and the unmet need and where we think there's real place for rilonacept.

So you talked about recurrence and the use of corticosteroids and one question that comes to mind is, are these patients treated with these corticosteroids on a chronic basis given -- despite the potential side effect profiles of these drugs? Or are the corticosteroids used to treat it more on an acute basis when there is a flare-up, so to speak, or recurrence? And with that in mind, rilonacept, would that be used in a similar way? Or more of a by, I guess, recurrence basis? Or would that be more of a continuous chronic therapy?

Sure. Maybe I'll address that. So it's actually both. So these patients, as Sanj mentioned here, initially, are attempted for -- NSAIDs and colchicine are used. But it's when they break through that or can't be managed without it, corticosteroids are introduced. But what we see is that patients who have recurrent disease, tend to have more recurrences and more brisk recurrences. And so many of these patients end up being dependent upon corticosteroids, can't come off of them and end up being on them for extended periods of time, often for years. And so the objective here of the rilonacept program in recurrent pericarditis is you'll see from the RHAPSODY data was to see about rilonacept as a potential treatment that could essentially replace, if you will, and treat the acute pericarditis episode, replacing NSAIDs, colchicine and even corticosteroids, and then while on treatment, prevent subsequent recurrences.

That was very helpful. I guess with that, could you run through the Phase III data and what was achieved?

Sure. Happy to do so. So as you know, RHAPSODY was a global pivotal Phase III study of rilonacept in recurrent pericarditis. It utilized an event-driven, randomized withdrawal design, which is, of course, well known in rare diseases. And so in RHAPSODY, acutely symptomatic patients with recurrent pericarditis who are failing their background regimens of either NSAIDS, colchicine or steroids and, therefore, representative of the real-world pericarditis population, were enrolled in a 12-week single-blind run-in period and they received weekly rilonacept while those background pericarditis medications were tapered and discontinued. And in fact, the RHAPSODY data showed that during the run-in period, there were rapid and sustained reductions in both reported pain and inflammation as early as after the first dose with a median time of treatment response, which combines pain and CRP response of 5 days. And in fact, patients were able to taper and discontinue their standard-of-care treatments with a time to monotherapy rilonacept of 7.9 weeks. Now in the pivotal portion of the study, the clinical responders on monotherapy rilonacept were randomized 1:1 to either continued weekly rilonacept or to placebo in a double-blind, randomized withdrawal period. As Sanj mentioned, the primary efficacy endpoint, which is time to first adjudicated pericarditis recurrence in the randomized withdrawal period, was highly statistically significant. And the rilonacept treatment, in fact, resulted in this 96% reduction in the risk of recurrent pericarditis events or a hazard ratio of 0.04 and a p-value of 0.0001. And then moving on to the major secondary endpoints, those were also highly statistically significant. And so, for example, patients on rilonacept experienced none or minimal pericarditis pain for 98% of trial days compared to 46% on placebo. Overall, from a safety perspective, rilonacept was well tolerated in the study with an adverse event profile that was consistent with the FDA-approved label for the treatment of CAPS. And the most common adverse events were injection site reactions and upper respiratory tract infections. Back over to you, David.

Now you have an sBLA that's going to be submitted later this year. I guess what needs to go into -- I guess what needs to be completed to get that sBLA ready for submission? And then once that submission is in, what preparations do you need to do for launch?

Yes, happy to start, and then I'm sure you've unleashed Q with his excitement around the preparations for commercialization. But everything's on track as far as the sBLA. We are planning to submit that later this year. We're currently in the process of transferring the DLA from Regeneron to Kiniksa. Just as a reminder, Kiniksa licensed rilonacept from Regeneron in 2017, which is already an approved treatment for CAPS. And so that's underway. And the plans for the sBLA are certainly underway. And certainly, with that very positive Phase III data, we plan to be on track. But why don't, with that, hand it over to Q. He can tell you how really we're leveraging the very successful data in the Phase III and how that's really helping the commercial preparations.

Yes. Dave, this is Q. So I think the best way to think about this launch is similar to a rare disease launch, where patient acquisition and retention is absolutely critical. So our efforts are focused on developing tactics and programs to really help drive that initial broad uptake and adoption of rilonacept. And at the same time, ensuring both the patients as well as the physicians have a really positive experience working with Kiniksa. And once they've got their patients on rilonacept, the patients have a really positive experience being on the drug. So with that context, I think internally, the things that we're really focused on is kind of building core capabilities in 3 areas, the first one around strategic insights and commercial operations. We really want to make sure that we're appropriately sizing the organization for this opportunity, that we're building the right technology and platform to enable effective customer interaction and communication. But we're also very focused on making sure we're building capabilities around payer, reimbursement, value and access; paying very close attention to patient services, the distribution model, payer and channel management. And then, finally, the third area we're working on is making sure we really put in place a strong, science-driven sales and marketing organization. So things are going really well. We're on track, and we're kind of excited about this opportunity. In parallel, externally, we're focused on building really strong and credible relationships with our key stakeholders. So that will include payers, physicians as well as patients and advocacy groups. And we're doing this really through generating further evidence that supports the high unmet need and the burden of disease in recurrent pericarditis. So we've started to do disease education. We're building disease awareness with payers, physicians and advocacy groups. And the feedback we've had so far on the data, the data speaks for itself, it's very compelling and it's very exciting for both patients and physicians. Our focus at launch is really going to be trying to address the patient population that has the highest unmet need. And those are the patients that are refractory or having multiple relapses or on steroids and the physicians just cannot get them off steroids. And so though the overall recurrent pericarditis patient population is 40,000, 4-0, we're going to hone in and really be laser-focused on the initial opportunity around 14,000 patients. Those are the ones with the highest unmet need. And in fact, they're the patient population that's really well represented in RHAPSODY that we have really exciting data for. And really, the key reason to focus at launch on those patients is, I mentioned the high unmet need, but they're also very easy to identify, and it provides a clear call to action for physicians to prescribe. And we really want to make sure that we execute this launch flawlessly. So having a clear call to action and helping physicians identify patients becomes critical. So having said that, we do believe that data from RHAPSODY is really compelling. And as physicians gain more experience with rilonacept over time, there's likely to be broader utilization. And in particular, patients that maybe have a single reoccurrence but an associated risk factor, such as tamponade or effusion or constriction, again, that will be a decision between the patient and the physician. And obviously, all our promotional efforts will be within the FDA-approved label. So maybe I'll stop there and hand it back to Sanj briefly to talk about kind of how we're thinking about duration and price.

Yes. Okay. Thanks, Q. Now, specifically, in terms of duration, I think based on our pretty extensive market research, we think that patients could initially be treated for about 6 to 9 months, but really at least 12 months longer term. And that expectation is consistent with the data set we're providing to the regulators as part of the sBLA filing. In fact, some thought leaders have actually recommended treatment duration of greater than 12 months basically to lever the inflammatory process to be sufficiently arrested in some patients. In addition to that, in RHAPSODY, the mean duration of rilonacept treatment was 9 months, but actually ranging up to 15 months when the branded portion of the trial closed. And importantly, patients seemed willing to stay on rilonacept. In RHAPSODY, we saw that 74 out of 75 eligible patients rolled into the long-term extension portion of the study. So really important, highlighting that they really wanted to remain on rilonacept, and that could really be a good indicator for the sort of patient satisfaction and outcomes that we've seen so far and what we hope to see in the commercial setting. Q mentioned price. In terms of pricing, we expect this to be in line with the high unmet need of the disease. The gross price of rilonacept, also known as ARCALYST in CAPS is $20,000 a month based on the weekly administration.

I guess we're going to move on now to mavrilimumab. That's a terrible botched job. Mavrilimumab.

Mavrilimumab or Mavri. Just call it Mavri.

They got to make these words -- antibodies is easier to pronounce but I have trouble with all of them. In any case, I guess, you have 2 trials going on there. You're looking at it in COVID-19 and giant cell arteritis. Start with the more recent move in COVID-19. Could you just, I guess, elaborate a little bit more on the data you've seen to this point that makes you think it -- makes you find it intriguing and what next steps are.