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

Welcome, everyone, to the afternoon session of the 40th Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Priyanka Grover, [ Malcom Kuno ] and [ Jadel ] Smith from the team. Our next presenting company is Kiniksa and presenting on behalf of the company, we have CEO, Sanj Patel. [Operator Instructions] With that, Sanj, take it away.

Thanks, Anupam. It's good to be here again, albeit virtually, and thanks also to JPMorgan for hosting us today. I'm happy to highlight the commercial launch of our first approved product, ARCALYST, which is up to a very strong start. I'll also review our pipeline, which includes additional immune modulating assets, all of which have the potential for multiple follow-on indications. There's a lot to cover, so let's get started. First, please note that I will be making forward-looking statements today that are subject to risks and uncertainties. A review of these statements and risk factors are found on this slide as well as under the heading of Risk Factors in our SEC filings. On Slide 3 here, you can see an overview of our sequential pipeline as well as the opportunities for each of the assets. All 4 are based on validated mechanisms and have the potential for differentiation. In 2021, in addition to the launch in recurrent pericarditis, we've continued to execute across our pipeline of clinical stage product candidates. On Slide 4 here, I'll highlight the key 2021 accomplishments. Starting with ARCALYST, we've had a very strong first 9 months of sales in recurrent pericarditis. And moving forward, we plan to continue this robust commotional execution. For Mavri, we generated Phase II and Phase III data in COVID-19-related ARDS. And while the Phase III data did not replicate the positive results we saw from the Phase II study, we continue to be excited by the potential of mavrilimumab in other indications, and we're assessing the next steps for this molecule. Our next program, Vixa, is potentially a first-in-class molecule. We're enrolling a Phase IIb dose-ranging study in patients with Prurigo Nodularis, and we expect data in the second half of this year. KPL-404 is our CD40 program. We believe this is a potentially best-in-class treatment for a range of autoimmune diseases. In December 2021, we started enrolling patients in a Phase II proof-of-concept study in rheumatoid arthritis. I'll now move into key areas of focus for 2022 that I just mentioned in a bit more detail. Slide 5, for ARCALYST, I'll focus on our commercial strategy. As a reminder, ARCALYST is a once monthly -- weekly IL-1 alpha and IL-1 beta cytokine trap, and is also approved in America for CAPS and Dara, both of which are rare autoinflammatory diseases. In March 2021, we received FDA approval for ARCALYST in recurrent pericarditis, which is a debilitating autoinflammatory cardiovascular disease, for which there are no other FDA-approved therapies. On Slide 6, you'll see that our focus right now is on the patients with the highest unmet need. And these are the refractory to multiple relapsing and steroid-dependent patients. There are approximately 14,000 patients in the U.S. who meet that criteria and a good snapshot to patients that were studied in the RHAPSODY pivotal Phase III trial. Rhapsody also generated data on 4 key areas of unmet need. That's the resolution of the episodes, prevention of future episodes, steroid-sparing disease control and their quality of life. We're focusing on these patients first because they have the highest unmet need, and they are also the easiest to identify, and they also provide a clear call to action to physicians to prescribe. Based on the broad label as well as the physician experience over time, they could also be even broader utilization. And this could include patients with a single recurrence associated with a risk factor such as cardiac tamponade, effusion or constriction. This will, however, be a decision between the physicians and the patients, and our current promotions are within the FDA-approved label. Turning to Slide 7. We built a highly specialized and collaborative field force, and that's to help drive awareness, overcome access barriers and to help ensure positive patient and physician experience. Our field teams include clinical sales specialists, the payer teams, medical science liaisons and patient services. We've made sure that each of these teams are aligned and coordinated with the goal of creating the best possible customer experience. And these effective specialist teams are educating physicians on the scientific evidence showing that ARCALYST targets the primary mediators of the disease pathophysiology. On Slide 8, that collaborative field force has driven impressive ARCALYST revenue growth. In our first quarter of sales, we reported net revenue of $7.7 million. In Q3, our second quarter launch, we continued with very positive momentum and ended with a net revenue of $12.1 million, and that represented a 57% quarter-on-quarter growth. As expected, CAPS and Dara patient demand remained broadly consistent and stable. On Slide 9, we dive into more detail on the drivers behind the current pericarditis growth and that we've seen through the end of Q3 2021. The growth we saw represents continued uptake in adoption of ARCALYST from physicians, payers and patients. At the end of Q3, there were more than 200 unique prescribers who have prescribed ARCALYST for recurrent pericarditis since the launch. There was also an increase in prescribers who are writing for multiple recurrent pericarditis patients. On the payer side, in Q3, more than 90% of completed patient enrollment cases were -- for RP, were approved for coverage. Additionally, while it's still early to provide definitive updates on duration therapy, it's important to state that so far, 2/3 of ARCALYST's prescriptions for recurrent pericarditis were written for 12 months of therapy. And we believe this is an excellent indicator of how specialists are thinking about the duration of treatment for patients with recurrent pericarditis. Ultimately, this will depend on the duration of the underlying disease as well as the patients that are willing to remain on therapy as well as compliance, adherence and payer approval duration. And we plan to provide full year 2022 net revenue guidance with our fourth quarter and full year 2021 financial results. Slide 10 highlights how we're engaging and educating patients and healthcare professionals on recurrent pericarditis through our digital marketing. These efforts are helping us to reach more patients in need, and that's a key focus in the coming quarters and years. The image on this slide depicts a recently launched promotional breakthrough campaign that reflects the strength of the ARCALYST data shown with the Kaplan-Meier curve here. and, of course, the compelling desire to patients who want to return to normal lives. We've conducted disease education, webinars, social media and advertising and approximately 2,000 patients and caregivers from our U.S. database have actively opted in to receive further education on the disease treatment and the disease itself. We've also designed a tailored communication plan to fit this patient group. We created targeted information on recurrent pericarditis depending on the stage of the patient's journey. We've also given patients the tools and the resources to ask their physicians about ARCALYST. Moving on to Slide 11 and Vixarelimab. Our lead indication here is Prurigo Nodularis. This is a devastating chronic inflammatory skin disease characterized by pruritic nodules. There are currently no FDA-approved therapies. And we believe that Vixa is differentiated in this space because in addition to blocking IL-31 signal, it also inhibits oncostatin M, and that's been implicated in both fibrosis and hyperkeratosis. And it's important to note that in our successful Phase IIa study, we saw a more rapid lesion improvement compared to placebo. Slide 12 shows the data from that successful Phase IIa study. The study met its primary efficacy endpoint, which was a statistically significant reduction in the weekly average Worst Itch NRS at week 8 in the Vixa recipients. It also met the secondary efficacy end point which was a statistically significant percentage of the Vixa recipients, achieving an IGA score of 0 or 1 at week 8 compared to the placebo recipients. And the images on the right of this slide shows a representation of the pruritus relief and the nodule improvement. Slide 13 highlights that based on our Phase IIa data, we believe that Vixarelimab has the potential to deliver a differentiated profile based on its mechanistic targets, dosing and presentation certainly compared to the other assets in development for Prurigo Nodularis. As I mentioned, we believe that Vixa is differentiated because it blocks Profile 31 and oncostatin M, and the latter of which has been implicated in both fibrosis and hyperkeratosis. As you can see from Slide 14, we're enrolling dosing patients in a randomized Phase IIb study of Vixa and Prurigo Nodularis across a range of once-monthly dosing regimens. The primary efficacy endpoint is the percentage change from baseline in weekly average Worst Itch NRS at week 16. And the objective here is to find a minimally effective dose level with practical monthly subcu dosing. A key secondary endpoint is the proportion of patients achieving a score of 0 or 1 in PN-IGA at week 16. And this could be a key differentiator owing to the additional OSM mechanism that Vixa has. We believe Prurigo Nodularis could be a meaningful commercial opportunity. There's a prevalence of around 300,000 patients in the U.S. alone, and we believe that this market could sustain multiple entities, especially one with a differentiated mechanism and data. And we expect data from this study in the second half of this year. As I land on Slide 15, I'm really excited to review our CD40 program, KPL-404. This is a monoclonal antibody that inhibits the interaction between CD40 and CD154. We believe this is a highly attractive molecule for blocking T-cell dependent and B cell-mediated autoimmunity. And importantly, Kiniksa owns the vast majority of the economics for this asset. Turning to Slide 16. In May of 2021, we announced positive data from our Phase I study with KPL-404. And based on that data, we started a Phase II study in rheumatoid arthritis at the end of 2021. This 12-week study was designed to provide PK data and an early signal of efficacy with chronic administration as well as the optionality to evaluate 404 across a range of other autoimmune diseases. On Slide 17, the CD40/CD154 interaction has been implicated in a number of devastating diseases such as Rheumatoid Arthritis, Sjogren's disease, Graves' disease, Systemic Lupus and solid organ transplant. These are all diseases where the external proof-of-concept has been demonstrated. And KPL-404 could also make a meaningful impact in multiple diseases, including first-in-class, de-risked or fast follower opportunities. And we think it has the potential to be a best-in-class therapeutic. So in closing, Kiniksa is rapidly becoming an emerging leader in immune modulation. We continue to demonstrate impeccable execution and that's been demonstrated by the fact that we're able to commercialize ARCALYST and bring it to patients with recurrent pericarditis in only 3.5 years after in-licensing it. We generated data from the Phase II and Phase III studies in COVID-19 related to ARDS. We're highly encouraged with the data with Vixarelimab, Prurigo Nodularis as well as KPL-404, our CD40's potential in a range of autoimmune diseases. Importantly, we are very well capitalized, and we have cash reserves expected to fund our operating plan into 2024. Ultimately, we are determined to continue to help patients in need, and we firmly aim to fulfill our plan of becoming a global generational company. With that, thanks very much, and I'll hand it back to you, Anupam, to answer you the questions.

Yes. Thanks, Sanj. If you will just take a quick second and introduce the broader team on the line, we'll get started with the Q&A.

Yes, happy to do it. So we have John Paolini, who's our Chief Medical Officer; Eben Tessari, who's our Chief Operating Officer; Ross Moat, Chief Commercial Officer; and Mark Ragosa, our CFO. So happy to...

Sanj, you mentioned in your presentation, the 200 physicians that had prescribed -- over 200 physicians that have prescribed ARCALYST. What portion of the total target prescriber base is this? And I think in your comments, you had also talked about you're seeing repeat prescribers. What are the trends on repeat prescribers?

Yes. I mean, maybe I'll ask Ross to jump in. I mean we're all very happy with the continued expansion and the breadth of awareness and prescribing for ARCALYST. But Ross, why don't you comment on that?

Yes. Very happy to Sanj. Hi, Anupam. Thanks for the question. So yes, firstly, we're delighted with the breadth of prescribing since launch. In Q2, our first quarter of launch, we saw more than 100 prescribers write ARCALYST for the first time. Then in Q3, we doubled that and we had more than 200 prescribers. So I think all of this really demonstrating that physicians have been very receptive to the ARCALYST launch. Our initial targeting strategy is to focus on around 350 accounts across the country who have the largest throughput to becoming pericarditis patients. And then to expand once we're comfortable with the uptake in those initial accounts, to around 800 accounts, which will result in a coverage of around 70% of the total current pericarditis patients in the U.S. So given the nature and the rarity of the disease, the pericarditis is a flaring disease as well. It will take some time for this to really build into repeat prescribing although our focus and targeted approach in the field will ultimately provide us with the very best opportunity for those initial prescribers to see the next batch of patients and become repeat prescribers further down the line.

And then what are you seeing in terms of time from script written to prescription fill?

Yes, happy to take that as well, Sanj, that's okay. And the previous experiences is of vital importance to us. We know there are many patients who are in debilitating pain, particularly at the point of initiation if they are indeed in a flare at that time. And that's why we implemented our Quick Start program, which allows eligible patients to receive their first fill prior to any insurance approvals as well. So it will really help patients to get the help that they need very early on. We also partnered with a robust specialty pharmacy network, and that's really to provide a rapid delivery to patients and a good quality of service to these patients across the U.S. And finally, we've discussed in prior calls as well, many of the payer coverage policies are now formalized, meaning we have less reliance on the medical exception processes, and ultimately, faster times through to approval, all of which go into helping patients get access as quickly as possible. And our patient services team, Kiniksa One Connect, are ultimately dedicated to supporting all hof the patients right from the time of the very first prescription all the way through their complete journey on ARCALYST.

And then you talked about this a little bit in your presentation, Sanj, but duration of therapy being a lever to be thinking about. My understanding is that patients on anakinra could be on for 12 to 24 months, and you guys are seeing 12 months scripts being written. How do you guys think about, say, duration of therapy with this product long term and particularly as it relates to, I think, street models, which have maybe some 12 months of therapy.

Yes. John, maybe you can cover sort of the real-world evidence that we've seen in the history of records. And then it might be good for Ross for you to jump in and talk about the activities post launch.

We're happy to do so. And Anupam, nice to talk to you again, and thanks for the question. Yes. So maybe I'll speak to the natural history of recurrent pericarditis. So we know from that is that the length of treatment really should be contingent upon the duration of the underlying auto inflammation. And we also know that premature cessation of treatment often results in recurrence of disease signs and symptoms. So when you dig into the real-world evidence on the natural history, what we see for the broad recurrent pericarditis population on average, the underlying auto inflammatory process usually lasts for about 2 years from about the first episode. However, it can be substantially longer when patients have a greater burden of recurrences. And we certainly saw that in Rhapsody. Now from a patient management perspective, when you think about how physicians are looking at this, a lot of attention in this disease has really been put on the flares, right, the recurrence of flares. And we actually believe that the treatment paradigm for recurrent pericarditis is really resembling the long-term management of other chronic diseases, which are really aimed at trying to keep the disease under control. But what we know historically with the long-term treatment, with the standard oral therapies, they're often associated with lots of toxicities, right? GI toxicity from corticosteroids and NSAIDs, the many side effects of long-term steroid use. So what we're seeing is that physicians are constantly weighing the trade-off between taking patients off therapy because of tolerability and the risk of the underlying disease. And so what we see are serial cessations of treatment, and they're often premature and they're often repeatedly unmasking the underlying disease. And that, of course, then leads to those recurrent pericarditis episodes that we hear so much about. So let's contrast that with rilonacept. Because in Rhapsody, from that experience, the data showed a profound and a sustained reduction in pericarditis recurrences. And that's without the long-term toxicity factors that have historically limited the standard oral therapies. And in fact, what we saw in that trial was that continuous therapy resulted in continued treatment response. There's a 30-fold reduction in annualized incidence of recurrence while on treatment compared to pretrial, and 92% of trial days were characterized as none-or-minimal pain. So that's kind of what the data show, both in terms of natural history and specifically to rilonacept. But I'll turn it over to Ross to talk a little bit about what we're seeing in the post-launch world. Ross?

Yes. Thanks very much. So I think John nicely covered what we know from the epidemiology and how long the disease persists. So ultimately, the duration of ARCALYST therapy will be linked to the physician's assessment of where the patient is in their particular disease cause. And then, of course, factors such as compliance, adherence, duration of payer approval will also need to be taken into account for what the ultimate duration will be. At this stage of launch, we've got 2 real-world insights into the duration and Sanj mentioned one during the main prepared remarks as well, which is so far 2/3 of the physicians wrote ARCALYST for 12 months duration. So I think that's an insight into the thinking of physicians and their assessment of the patients when they first see them. And then the second point is that of the patients who initiated ARCALYST in our launch quarter, Q2 of last year, almost all of those patients were still on therapy right through the end of Q3. And then, of course, the data will build as we move forward from here. But additionally, the compliance and adherence was strong for those patients, and they generally get in the refills on time. So overall, I think we're very pleased with what we've seen so far. We're very pleased to how physicians are reacting and how they're prescribing and identifying the patients from recurrent pericarditis. It's early days, and we'll learn more as the data builds over time.

And to date, you've provided quarterly guidance on ARCALYST. Is that a trend we should expect to continue? Or is there any thought to giving annual guidance in the future?

Yes. So obviously, in the early parts of the launch, as you saw last year, we provided quarterly guidance, you say Q2, Q3 and Q4. We had a press release out this morning. We said that we'll provide full year 2021 and the Q4 results, obviously, during the time of the Q4 results call. At that time, we'll also provide an annual expectations for 2022. We haven't really sort of specified the real cadence at the moment, still thinking through it. Certainly, the early part of the launch, I think it was appropriate to do the quarterly expectations. But moving forward to this point, at least it in the first quarter -- Q4 results, we will do an annual guidance. Q4 expectations were $16 million to $17 million, FYI.

Yes. For 1Q specifically, are there any seasonal trends we should be thinking about in terms of the launch? I know 1Q is always an interesting dynamic for many products.

Ross, do you want to cover that?

Yes, happy to, Sanj. In terms of epidemiology, we don't expect any seasonal difference in when we cover pericarditis patient's events actually occurred. So I think many of the variables that we've previously been looking at continue to be important in Q1, particularly around the trajectory of new physician prescribing as well as repeat prescriber business we've already touched upon. I think to your point, Anupam, the gross to net may be a little fluid going into Q1, particularly as co-pays reset, and that's seen across the board. But we don't really anticipate any big swings in the gross-to-net, we've said that previously as well. So overall, we're just very focused in Q1. We feel like we've had a good launch during Q2 and Q3 of last year. And we're focused on continuing to execute on the strategy, determine to help patients in this severe debilitating disease where there was previously no approved therapies help these patients.

Maybe switching a little bit to the pipeline. So what is the Phase IIb study in Prurigo Nodularis power to show? What's a clinically meaningful outcome? And what is your assumption on placebo performance?

Maybe I can tackle that one. So I think it's first important to start with the Phase IIa study since Phase IIb is really a continuation of Phase IIa in terms of outcomes, expectations and many of the powering assumptions. So when we looked at the Phase IIa study, that established proof-of-concept for dual inhibition of IL-31 and OSM, and that's, of course, by targeting OSMR beta. So that trial, of course, met the primary efficacy endpoint, which was the reduction in weekly average Worst Itch NRS from baseline at week 8, and it was significantly greater in those who received Vixarelimab versus placebo. However, in addition to the pruritus reductions, you can also look at it from the disease perspective. And there are nearly 1/3 of patients achieved statistically significant, clear or almost clear at week 8, but the important finding is also that the magnitude of response was also significant at week 6 with early curve separation as early as week 4. So now looking forward, when you look at that Phase IIb study design, that's again a placebo-controlled dose-ranging trial. And what we're doing is we're testing 3 different monthly subcutaneous dose regimens of Vixarelimab to 180 patients. They have moderate-to-severe Prurigo Nodularis. They're experiencing severe pruritus, and that drives the primary efficacy endpoint, which is the percent change from baseline in the weekly average Worst Itch NRS this time at week 16. And so the objective of the study though, by testing these 3 different regimens is to demonstrate dose response and also to define a minimum efficacious dose using that practical subcutaneous dosing regimen. And we're going to use the totality of the data that come from that trial, both the weekly data from IIa and the monthly data from the base study of IIb as well as the long-term extension, which actually has biweekly dosing. Now importantly also, a key secondary efficacy end point is the proportion of patients achieving that score of 0 to 1 on the PN-IGA or the Investigator Global Assessment score, and that's at week 16. And that's important because that's a measure of the change in disease severity. And that also could provide key differentiation data via the OSM mechanism. And in this sense, it extends the experience from the Phase IIa experience at 8 weeks, all the way out to 16 weeks in the Phase IIb. So we can then pull all of those data together for them figuring out the appropriate dose to carry forward into Phase III. Thanks for that.

Okay. And then maybe a quick question on your cash position and runway. Does the setback with Mavri in COVID potentially extend the cash runway at all?

Well, we announced this morning in our press release that the current year-end cash reserves of $182 million will fund the operating plan into 2024. And that, obviously, is the other milestones that are going to continue, which is the second half data for -- second half 2022 data for Vixarelimab. We did also just a premature start enrolling and dosing with our CD40 program, the anti-CD40 and KPL-404. Those are in a Phase II study with Rheumatoid Arthritis, we're going to continue that. So that really includes all that. And we are assessing next steps for mavrilimumab really like the molecule, obviously, showing efficacy and safety in a range of indications into Arthritis as well as GCA. So it's a molecule we very much like, still a lot of value, and we're going to announce next steps when appropriate.

Maybe a final question for me here. What are the range of potential future indications we should be thinking about for KPL-404 post this proof-of-concept study?

Maybe Eben, give you a chance to jump in there? I know this is a hot topic for us, and we're very excited with that molecule. So Eben, why don't you jump in?

Sure. I want to echo Sanj's excitement. And really, we believe that inhibiting the CD40/CD154 pathways is really inhibiting a central control node of aberrant immune activation. And so you can really imagine leveraging those RA data, which given the long history of RA development have relatively solid and benchmarkable clinical outcomes. And from there, there are a whole host of diseases that are sort of RA like and that they're canonically Th1-driven, which you can imagine and other companies are currently exploring such as Sjogren's, lupus, lupus nephritis, et cetera. But that's not all, as CD40 does play a central role in these responses, there are many other opportunities within that subset to explore based on positive data and a robust PK/PD relationship coming out of the Phase II.

Okay. Sanj and team, I want to thank you guys so much for the presentation and productive discussion. I hope you guys have a great rest of the meeting.

Thanks. Great to see you, as always, Anupam. Keep cracking on.

Thank you.