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

Okay. Good morning. Welcome to the BofA SMID Cap Biotech Conference. My name is Geoff Meacham, I'm the Senior of Biopharma analyst, and welcome to the morning sessions. We're thrilled to have with us Kiniksa. Speaking on behalf of Kiniksa is CEO, Sanj Patel. Sanj, how are you?

I'm fairly well, how are you, Geoff?

Good. Good to see your face. Next year, maybe we'll do this in person. So let's just kick it off real quick. I know you're an efficient guy, so let's just go and give us a 30,000-foot view here of a quick background and then get right into some questions on our [indiscernible] a lot of stuff.

Absolutely. So again, thanks for having me here, Geoff. Please don't note I will be making forward-looking statements here that are subject to risks and uncertainties. Review of those statements and in our SEC filings. With me on the call today are Mark Ragosa, who's our Chief Financial Officer; Eben Tessari, who's our Chief Operating Officer; John Paolini, our Chief Medical Officer; and we have Ross Moat, who's our Chief Commercial Officer. So obviously, the whole team is here. We're very excited. We've had a great start with our launch in ARCALYST. 20 months in now, we've seen solid, steady progressive growth with our first approved and commercialized product for recurrent pericarditis. So that's obviously very exciting. And I'm sure Ross will give you a bit more of an overview and how that's going and what we plan to see. Beyond that, we're also really excited about the portfolio. Obviously, this is a company that got started only about 7 years ago. And since that time, now additionally to having the commercialized products, we've also got the pipeline and full view. We're very excited about KPL-404. That's our CD40 program, which interrupts the signaling between CD40 and CD154. We took that in via an acquisition of a company based in Massachusetts called Primato, and very quickly to that into a first-in-human study, and now we're in a Phase II study in Rheumatoid arthritis and could eventually to a lot of optionality for other rare indications too. So an awful lot going on. We'll also have mavrilimumab, and we continue to be very active in business development. So very exciting time for Kiniksa, Geoff. And thanks for being here and look forward to the questions.

Yes. No, of course Yes.

So let's talk a little bit about the launch in recurrent pericarditis. So give us maybe a status update on today, with respect to payer coverage, prescriber engagement. And then I know you guys recently expanded your field team. Kind of what are their metrics looking to next year that you think we should be looking to, outside of obviously guidance?

Yes, of course. Ross, do you want to start and I can jump in [indiscernible] as well.

Yes, I'm very happy to. Yes. Geoff, thanks a lot for the question. So yes, so far, we're delighted with the launch. I think going very well. What we've seen since the time of launch is a good, steady quarter-on-quarter growth and really feel in the ARCALYST has been well received by physicians, payers and ultimately patients who are suffering from the rare debilitating disease. Maybe if I touch quickly upon kind of payer coverage and prescriber engagement, and I've gone to talk about the field team expansion that we're currently going through as well. Firstly, for payer coverage. Of course, the key players now all have ARCALYST coverage policies in place. We're kind of 20 months or so out from our launch. And what we've seen, right, since the early stages of launch, about every single quarter is a greater than 90% approval rate on all of the completed cases, and that's really across all of the different payer mixes as well. So we've been very pleased with the payer appreciation of ARCALYST and the value proposition that we think we're coming to the market with to help patients with this rare, flaring and debilitating disease. In terms of driver engagement, again, feel like things are going very well. We're acknowledging that there is a level of education in both the common pericarditis and of ARCALYST. And then just making people familiar and comfortable with prescribing ARCALYST as reasonably for cardiologists to start to prescribe. So there's a level of education that's required there. But having said that, we think we're making really good progress. We've added more than 100 individual doctors every single quarter since the time of launch. At the end of Q3, we had more than 650 individual, unique prescribers of ARCALYST in recurrent pericarditis. And also seeing a growing base of those that are becoming repeat prescribers as well. We have around 20% of the totality. Of acknowledging that, that's also of a growing base, of course. So the absolute number as well as the percentage has been growing there. And really importantly for us is the feedback from patients as well and the physicians are getting directly from patients, reporting very high satisfaction ratings with -- back to their physicians, which I think is very important for physicians to hear that from their patients around the clinical outcomes, as well as seeing that the drug is being approved, generally speaking, from the payers. And that the affordability is there for patients, they're getting on to drug, having good outcomes, which leads to a propensity to prescribe for the future as and when they see more patients. On the field expansion side of things, really aligned with our approach, we felt that this would be a good step to take -- to grow our field team. As you know, we're always very measured, very stepwise data-driven organization. And we launched with a fairly lean, very highly targeted field team. And our intention was to get a good launch under our belt to drive towards profitability for the collaboration that we have as quickly as possible. We did that within about 3 quarters. And now we're at a situation of kind of really taking the learnings from launch. Understanding that, of course, we did a lot of market research to understand the marketplace prior to launch. But what we've been seeing is the patients are very widely dispersed across the U.S. There's a limited number of key centers that are looking after the current pericarditis patients who present to many, many different physicians all across the U.S. And that, along with the learnings of for cardiologists, it takes some steps to make them really comfortable and familiar with ARCALYST and start prescribing ARCALYST as well. So we really felt that the expansion of the field team would help us to enable greater penetration, greater coverage, frequency with the target physician, so we maintain a very highly targeted approach. We've gone from around 30 representatives up to about 50. We feel like with that expanding field team, we can address around 70% of the recurrent pericarditis, the multiple relapse in pericarditis. And that will help us just to generate the greater frequency and coverage. Keep us on a good trajectory.

Okay. So just a follow up on that. Two quick questions.. one, maybe give us a sense for the geographic kind of nuances if there are any? And then the second thing is when you think about duration of therapy, is that in line with persistent rates? Is that in line is what you're seeing today in the real world, in line with what you had expected looking into the initial pivotal studies?

Yes. Maybe I'll make a start on that and then maybe hand over to John to talk about particularly the long-term extension data, which is reasonably new. I can come back and talk about how that may translate into the commercial setting. I mean, maybe to start with the first part of your question, which is around the geographic distribution of patients or any differences we see. I mean, really, we just see that patients are very widely spread across the U.S. Historically, as I mentioned, they are just not very many key centers that are really looking after pericardial diseases. There are a few, but they're far between. So that means that patients which are kind of really spread and then we need to try to meet that in a very targeted, robust way. And that's why we're focusing the field team. We also, because of that geographic distribution, acknowledge that digital marketing and those types of strategies are very important to us as well. So we've been very active around education through different congresses, speaker meetings, webinars, patient webinars, health care professional webinars. And building a database of known pericardial patients that we can then opt into our system so we can communicate with those patients, very tailored to where they are within their journey with recurrent pericarditis as well. So we have multiple different ways of trying to, very efficiently, reach a kind of dispersed population. John, maybe I'll hand over to you for the for the duration and the long-term extension comments, then I'll come back.

Sure, happy to. Geoff. Nice to see you again. So yes, I'll touch on the long-term extension data. Obviously, we're very pleased with the data that were presented at the AHA last month. And there were really 2 key takeaways from that. First, from a natural history perspective, it shows that recurrent pericarditis is a chronic autoinflammatory disease, which is driven by IL-1. And then second, from a treatment perspective or management perspective, that ARCALYST treatment beyond 18 months resulted in continued treatment response. So just to put the data into a little bit of context, patients entered the trial on average about 2.5 years into their disease. And then the median duration of continuous rilonacept therapy after that point was 27 months with a maximum of 35 months of follow-up on treatment in the trial. So the new data that were presented at the AHA, first, that the on-treatment annualized incidence of pericarditis recurrence during the trial, while patients were on rinolacept treatment up to this 18-month decision milestone, was 0.04 events per patient year. So that's -- 2 orders of magnitude lower than the 4.4 events per patient year that these patients were experiencing in that 2.5 year span of their disease prior to entry into the trial while on just standard therapies. So then subsequently, at the 18-month decision milestone, those patients who continue to receive rilonacept after that point, experienced still a 98% reduction in risk of recurrent pericarditis events. That's a hazard ratio of 0.02, with a 30 p value of 0.001. Compared to those who chose to suspend therapy at that time, where those patients had a 75% recurrence rate. So there was only one pericarditis recurrence, which took place in patients continuing on rilonacept. And that actually, again, occurred in the setting of a treatment interruption of about a month. And importantly, that patient subsequently went back under control once they reinitiate therapy. So when we pull that all together and realizing that it is critical to distinguish data that are generated in clinical trial setting from those that come out in the real world, it still speaks to kind of the scientific and medical underpinnings. First, that these data from RHAPSODY are consistent with our observations from the real-world natural history data, which shows that recurrent pericarditis is a chronic disease. It's mediated by IL-1, it's characterized by multiple recurrences inappropriate and completely treated and it can last for several years. And then from a treatment perspective, it shows that the consequences of premature interruption or suspension of therapy really results in unmasking of the underlying autoinflammation, and that leads to pericarditis recurrence. And then finally, we learned that reinitiation of rilonacept resulted in resolution of pericarditis recurrence. And that's an important piece of information on chronic biologics therapy, as you know. So that's the totality of the new data set. But now I'll turn it over to Ross to talk about how that translates into the commercial side.

Yes. Thank you, John. So some of the things that we're focused on as an organization now is also disseminating those data from the long-term extension study through either of our sales team, through the commercial capacity, through our medical team in the field and, obviously, congresses and other routes to get this data out there as well, which we think is very important and accretive to the original study and the original portion of the study that we gained the able on from the FDA. So what we're seeing in the commercial setting up until the end of Q3 in terms of duration of therapy is that the average duration has been approximately 12 months for the commercial patients. Acknowledging as well that many physicians will see the 12-month time period as a time to pause. We look at the patient, often it ties in with the revaluation or revalidation of the payer approval for the patients as well. So that's a moment in time where they will pause to relook and think. But that's what we've seen so far. And then more recently, we've also started to see that of those patients who discontinued ARCALYST therapy, actually, about 35% of those patients came back on to commercial ARCALYST therapy after having stopped. And often those patients came back on within around 8-week time period, which again is in validation with what we saw during the clinical studies of patients that had events, we gained symptomology and started back on therapy. So that's an important insight. So it may be the case that the duration of therapy maybe longer than the 12 months that we're seeing at the moment. But ultimately, we just need to wait for those data to build and become more robust over time. So we learned from that. But ultimately, our goal is to make sure that patients are treated throughout the duration of their disease and do not have to stop therapy, experience symptomology again and go back on to therapy. So wonderful safety net to have. We want patients to be treated throughout the duration of therapy of their disease.

Right. That makes sense. Maybe last one on ARCALYST, Sanj, for you. When you think about the investments to make commercially, you've made them expanded the sales force some. What are you looking for sort of in terms of the -- to see from the adoption rate, to further invest in the business versus obviously the decisions to go back into the pipeline and maybe the external BD? I'm just trying to think of capital allocation among the sort of the different buckets.

Yes. I mean more of the same. I mean we've obviously seen to date a steady progressive growth and Ross just elucidated that we're expanding the sales force. But it is a very sort of dispersed geographic setting for these patients and these cardiologists in fact, and to some extent, rheumatologist. So the additional sales force will allow us to get out there. We expect a continued and hope for a continued steady progressive growth. But really, obviously, as you sort of elucidated -- highlighting is that the pipeline is very attractive with KPL-404 in particular. We are around in the middle of a Phase II study in ascending dose study in RA. That will read out the first half of '24. So clearly, aside from that continued execution in ARCALYST and continued steady growth, I think we're also very much interested in allocation towards 404. Part of the reason why I think in some ways, we rationalized our portfolio in ARCALYST and vixarelimab, as you may recall, we did a deal with Roche Genentech for $100 million in near-term upfront payments, and then potentially significant milestones from that company. And that kind of non-diluted capital was very important to allow us to continue to allocate capital to programs like 404. Similarly, with the deal with Worden Medicine for both ARCALYST and mavrilimumab in China, a region that we would not have commercialized in ourselves, again, bringing in a lot of capital. I think at this time, in particular, is incredibly important, and we're really pleased what we've seen so far with our CD40 program. Obviously, now really remains to be seen what the data looks like. We think we feel really good about the high concentration liquid formulation, potential to allow subcu dosing and potentially differentiated. But I think as we said at the very beginning, we are very data-driven, and we look forward to seeing that. And then we'll make the next steps from there on out. But it's certainly a good position to be in as far as clinics concerned.

Yes. So let's talk about 404 a little bit. So you mentioned 2024, are there any events between now and then, either follow-on from prior studies or that we could further kind of help elucidate the other differentiation or maybe you give us more confidence in the new dosing, the subcu dosing?

Yes. Maybe John can give a little bit of background, I'm sure Eben would want to jump in because he's very keen on the program too. Maybe John described the design. And then at this point, what we've disclosed is that we will have data in the first half of '24. We have not disclosed any other information that may or may not come along during the study design. But John, do you want to cover that?

Sure, happy to. So as you know, we completed the single-dose study, which really gave us a real window into which potentially unique about KPL-404, which is that we have a high concentration liquid formulation that allows us, really enables, subcutaneous dosing at a practical level. And so we really wanted to carry that forward into this current study, which has really 2 phases. There's a pharmacokinetic lead-in piece, which is really a multiple ascending dose study. And then there's a parallel design efficacy portion, where we're really testing the raw horsepower, if you will, of the mechanism as well as of this drug and being able to benchmark that, all with subcutaneous dosing, against other assets in this space. And we can certainly go into the specifics of the data -- of the design, but that's kind of the overarching objective of what we're trying to accomplish with a relatively small sample size in a brief period of time.

Right. And obviously, RA is the lead indication here. But from a mechanism standpoint, maybe just help us with how you think about this in other INI indications potentially.

Eben, do you want to cover that?

Yes, sure. I can certainly start us off. So one thing that we actually like a little bit about the CD40, CD154 antagonism space is that there are high dose IV approaches ahead of us, which provide a really good base of reduced risk path forward if they're to achieve success, where we could follow behind with a more conveniently administered program. And I think at last count, there have been up to 12 or so different indications, either studied or being studied with this mechanism. So we think really important mechanism for a whole host of diseases, either purely autoimmune or antibody-driven and/or with a Th1 tone. So we're -- as Sanj and John both mentioned, really excited to see the RA data, and move forward as quickly as possible.

Perfect. Okay. And from a long-term strategy perspective, Sanj, when you get to a derisking point with this program, is this something you think that you could take forward into a larger scale study, if successful? Or is this potentially an opportunity?

I mean it really dependent on the data and how we progress. But I think we've shown that we can do innovative deals, both the Roche deal on Huadong Medicine deal. I think depending on how good that data is I think that can open up an awful or optionality, both not just the value that could be created by positive data in RA, but also, as we've said before, there are a number of other rare, devastating autoimmune conditions that CD40 is perfectly positioned for potentially. So the rare indications we would most likely like to execute on ourselves, but we're certainly open to partnering as we've done before, providing it creates the amount of value for the company. That's what we're always focused on.

Perfect. So let's talk a little bit about mavri. You still have some residual development there. Just give us kind of where this fits into the strategy in Kiniksa and kind of priorities with respect to capital allocation.

Yes. Maybe I'll start and then if anybody else wants to jump in, feel free. So this is a molecule that we're still very excited about. As you'll recall, the shown positive safety and efficacy through Phase IIb in RA. And obviously, we have positive Phase II results in GC as well, giant cell arteritis. But really, I think, obviously, building the sales force that we've had mainly focus on cardiology, we felt it was the right time to pivot mavrilimumab to more rare cardiovascular indications. So we're doing that through collaborative research agreements, which obviously is more of an efficient way to generate data on that. We have, obviously, deal with Huadong is for mavrilimumab and ARCALYST in Asia Pacific, excluding Japan. So there is obviously, hopefully, value being created there and a number of other milestones. So more to come and watch your space with mavrilimumab. But clearly, 404 is one that's going to get the bulk of our allocation and our attention. But we still very much like Malone. And we think there's a lot of value that can be created with that mechanism, especially knowing that it has had some positive Phase II data to date.

Yes. Perfect. Okay. And then Sanj, you mentioned the Roche Genentech deal. And just give us a sense, I mean, this is obviously an example of doing a pretty creative deal, very capital efficient. Just the thought process behind that really.

Yes. I mean, first of all, first and foremost, we love vixarelimab. Great molecule antibody, focusing on IL-31 and [indiscernible] But I think obviously, you'd have to be blind not to realize the current market conditions and nondiluted capital is very, very important. So while I think we were fully prepared to continue that molecule. We were certainly aware that there are others in that space. And Roche were very keen. They follow us for a while, as had other large pharma partner companies interested in that mechanism, and they just convince us that we're very keen to actually not just take it on our license it, but also actually license it and pursue the other indications, which, again, can potentially mean even more nondilutive capital through milestones. So it was the right thing to do at this particular time given the need for nondiluted capital. And as you said, important areas where we can allocate capital. So a bitter sweet, but I think a brilliant deal for Kiniksa at this point in time.

Yes. And lastly, when you think about the external landscape, BD, M&A, et cetera, are you guys -- maybe give us a sense for how aggressive you would be from here? It seems to me you have a lot going on already commercially and pipeline-wise, but I wasn't sure whether you would be looking at other maybe earlier-stage stuff to kind of add to the platform or portfolio?

Yes, we are very much focused on BD and Eben and his team. In fact, Joe Pure was one of our earliest BD associates left about 1.5 years ago, and has now come back as Chief Business Officer, and he is certainly working with Eben to look at assets. I often say there's an awful lot out there, but there's an awful lot of things out there that don't have the quality that we would desire. Our bar is very high. Obviously, as you see from the data we've generated in our current portfolio. So we are looking. But unless we are convinced it will create more value, we're going to be incredibly discerning to that point. But it's certainly a large focus for us. And you've said, as I've said, augmenting and rationalizing is very important to create the value that Kiniksa deserves and we're very much focused on.

Perfect. All right. We'll look forward to seeing you next year. And happy holidays, and 2023 is going to be fantastic. So good to see you guys.

And go England on Saturday.

Right. All right. I have no one else to cheer for.

Not for long.

That's right. All right. See you, guys. Take care.

Thank you. Bye.