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

All righty. Let's go ahead and get started. Welcome, everyone, to the 46th -- 42nd Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by my squad, Malcolm Kuno, Priyanka Grover and LaRhea Hall. Our next presenting company is Kiniksa and presenting on behalf of the company, we have CEO, Sanj Patel. Sanj?

Thank you, Anupam. Always a pleasure, and thank you to JPMorgan for hosting us today. It's good to be here and see all of you in person. I'm joined by a fabulous team, I must say, that helped us position ourselves to both near and long-term growth. Today, I'll provide a corporate overview, also our strategy moving forward, our commercial execution with ARCALYST as well as give you an overview of our portfolio. Please note, I will be making forward-looking statements today that are subject to risks and uncertainties. A review of those statements and risk factors are found on this slide as well as on the heading of Risk Factors in our SEC filings. This is what Kiniksa is all about. The patient on this slide is Ana, and she suffers from recurrent pericarditis. It's our goal to help many more patients like her by providing life-changing therapies. I'm going to show you a short video of just some of the patients that we've been able to help to date as well as just how serious and debilitating this disease is. [Presentation]

Thank you for watching that. We are building a generational company by acquiring, developing and commercializing our assets. The company was formed just 8 years ago, and we focused on creating significant optionality. We acquired programs that had differentiated mechanisms and all with the aim of helping those patients with debilitating diseases. Fast forward to today, we have a commercial asset called ARCALYST that has growing revenues. We also have a pipeline program called KPL-404 or abiprubart or abi for short that we just had results announced last week. Our corporate strategy has allowed us to really focus in on capital allocation. And looking to the future, we plan to increase value by focusing on the following key areas, and that's continuing to build the recurrent pericarditis market with ARCALYST, completing the Phase II study of abiprubart and announcing next steps for that program, maintaining a strong financial position and allocating capital to the greatest value drivers. Kiniksa offers a unique and compelling value proposition, and we're well positioned for significant growth. We're in a position of financial strength that's largely driven by the growing ARCALYST revenues. And it's thanks to our thoughtful investments in the commercial infrastructure that the ARCALYST collaboration was profitable after only 3 quarters after launch. Our near and midterm financial priorities are: to continue the solid double-digit revenue growth from ARCALYST; increasing the collaboration profit; and importantly, self-funding our pipeline growth. The 2 pillars of the company are the cardiovascular and the emerging autoimmune franchise. I'll focus on the cardiovascular side first with ARCALYST, which is an IL-1 alpha and IL-1 beta inhibited -- inhibitor. In just 3.5 years, we ran both a Phase II study, a Phase III study, got Breakthrough Therapy designation, Orphan Drug designation and attained FDA approval in March of '20, 2021. In fact, it is the only FDA-approved therapy for recurrent pericarditis. And since launch, we've been establishing ARCALYST as the standard of care for this disease. And it's certainly our goal to reach as many more recurrent pericarditis patients as possible. And we're doing that by having a strong focus on sales force excellent. In fact, since launch, our field teams have been working diligently to reach those patients with the highest unmet need. They initially focused on the approximately 14,000 patients that suffer from 2 or more recurrent pericarditis events every year. But on top of those 14,000, there's another approximately 26,000 patients that are on their first recurrence. And thanks to the broad ARCALYST label, we're already seeing some physicians prescribing for those additional patients. It's the registry and other initiatives that are allowing us to continue to expand the knowledge both around ARCALYST and recurrent pericarditis. And we have a personalized treatment support program that is called Kiniksa OneConnect that is helping patients through their journey. Slide 8 shows our unaudited net revenue numbers. Q4 represented another quarter of consistent growth for ARCALYST. The net revenue number of $71 million represents roughly 78% annual growth versus the fourth quarter of 2022. Our full year net revenue for '23 was $233 million. And our most recent guidance was $220 million to $230 million. At the end of Q4, we've penetrated roughly 9% into the target patient population. And our goal is to increase that number significantly going forward. Slide 9. So we've already made tremendous progress towards that additional growth, and we're already seeing increasing patient and physician adoption. In fact, thanks to the experience we've had to date as well as the data that we've generated to date, we've outlined some core priorities to help us achieve that future additional growth. And this includes ensuring that physicians have a proactive mindset when identifying and treating patients with recurrent pericarditis. It's overall increasing the awareness around ARCALYST, advancing the steroid-sparing treatment paradigm and educating the entire community on the duration of disease and the treatment duration. It's because of all of those and the importance of face-to-face interactions with physicians that we've recently expanded our sales force. We're now starting 2024 with roughly 85 representatives. And our goal here is to increase the number of patient enrollments starting this year. So Slide 10 shows you that we've had tremendous growth with ARCALYST since we launched in April of 2021. And it's thanks to that execution as well as our projections for future growth that we anticipate that our net revenue for 2024 will be between $360 million and $380 million. Slide 11 and moving on to the advancing autoimmune franchise. And that's now particularly with KPL-404, or abiprubart or abi. This is a monoclonal antibody that inhibits the signaling between CD40 and CD154. And I mentioned that we announced data last week from the Phase II study. That study was designed to evaluate the efficacy, dose response, PK and the safety of chronic subcu dosing over a period of 12 weeks. Slide 12 gives you an overview of that data. We saw a meaningful clinical effect in the 3 doses reported so far. In cohorts 1 and 2, multiple doses of abiprubart were well tolerated and supported the advancement to cohort 3, which is the proof of concept portion. In that cohort, the primary efficacy was statistically significant at the 5 mg per kg weekly dose level. However, owing to a notably high placebo rate, the 5 mg per kg biweekly dose level was not statistically significant. And in terms of safety overall, abi was well tolerated and there were no dose-related adverse events reported. In terms of target engagement, abiprubart significantly reduced rheumatoid factor by over 40% in both dose levels of cohort 3. And this is an important clinical marker of disease activity as well as an autoantibody PD marker. Overall, the data demonstrates that abiprubart showed strong biological activity and the potential to reduce autoantibody production in autoimmune disease. Obviously, we're looking now forward to the cohort 4 data that we anticipate in Q2 of this year. We'll look at the totality of the data and then determine the next steps for the program. Obviously, very excited about that while, as always, being credibly data-driven and thoughtful about our capital allocation. So as you can see, we've made a lot of progress over the last few years with both ARCALYST and abiprubart. Kiniksa also has a molecule called mavrilimumab. This is an anti-GM-CSF molecule that we've taken through successful studies and, in fact, through Phase II studies now in RA and giant cell arteritis. We're now positioned and looking for potential partnerships because we believe that mavrilimumab has a number of indications that it could be -- have an impact on. We, in fact, do have an existing strategic license agreement with Huadong Medicine, and that's to develop and commercialize both ARCALYST and mavrilimumab across the Asia Pacific region, excluding Japan. We also have a license agreement with Roche/Genentech to develop and commercialize vixarelimab. This is an anti-IL-31 and oncostatin M antibody that we developed through Phase IIb in prurigo nodularis. Our execution has laid the path for continued commercial success and advancing our portfolio in 2024. Obviously, very excited about the growing ARCALYST revenues and the pipeline in general. But business development is also a key part of our overall corporate strategy, and we continue to look for molecules that have strong biologic rationale and validated mechanisms. We're particularly interested in late-stage immunology products and cardiology products where we could leverage our existing specialty field force. Importantly, we are well financed, and our cash flow and cash reserves allow us to operating our business into at least 2027 and gives us immense optionality to invest in our business. Ultimately, we're also very excited about the future. I'll start -- I will end how I started, which is that we're determined to produce more life-changing therapies to help patients and to also building sustainable value. So with that, I want to thank you all for being here and listening in. I'll hand you back to Anupam for the Q&A session, and so will the team members may join me on stage. Thank you.

Thanks, Sanj. So like I've said in other sessions, there's kind of 3 things I want to highlight. There are 3 ways to ask a question, right? So old-school, raise your hand, and I'll call on you. There's the portal. You can submit your question in the portal, it'll show up on the iPad, and I'll ask it for you. Or there's like an intermediate route where you can just e-mail me. So -- and I'll ask your question. But we do actually have a couple of e-mail questions that came to me. So I'll ask them. But -- so there have been no U.S.-based American guidelines for recurrent pericarditis. With the efficacy that you've seen with ARCALYST, how is the company working with KOLs to get guidelines in place?

Sounds like a great John question to me.

Thanks, Anupam, and I appreciate the question. So as you know, professional guidelines, whether they're coming from the American Heart Association, American College of Cardiology, are initiated by those by those organizations. And so in that sense, they take the initiative. What we can say is that the last -- our guidelines that were taken up were in 2015, and those were the European Society of Cardiology guidelines. Those predated pretty much all activity in the space. The American Heart Association, American College of Cardiology have picked up on those, and those are the guidelines that are out there. But I think importantly, these European guidelines because they predated a lot of this work, positioned interleukin-1 pathway inhibition after failure for NSAIDs and colchicine as well as corticosteroids. And so what we're seeing is initiative on the part of individual academic investigators, who are writing in the literature their thoughts about the management of recurrent pericarditis and the advancement or the evolution of that treatment paradigm with the availability of ARCALYST as the only approved therapy of recurrent pericarditis, and specifically pointing out that the data from RHAPSODY point -- a steroid-sparing paradigm, as Sanj mentioned, meaning the idea here is not only in taking patients who are dependent upon corticosteroids and helping them to come off of that with monotherapy rilonacept or ARCALYST but also advancing the treatment paradigm such that patients who are failing NSAIDs and colchicine could be started on ARCALYST instead of going to corticosteroids, and thus, the 2 manifestations of corticosteroid sparing. And so that approach in the literature is where the academic community is at this point in providing guidance other clinicians about how to manage the disease.

Another e-mailed question we have is what are the range of scenarios that are -- that come to fruition for KPL-404.

Well, first of all, we're very excited about the molecule. And I think what we've learned from Phase II across all cohorts is that we have a very active molecule. Obviously, very pleased with what we've seen so far. Clearly, I did say, though, that there was a notably high placebo rate, which unfortunately meant that the 5 mg per kg dose level didn't meet statistical significance at the biweekly level, but certainly met at the weekly. But having said that, certainly pleased with the activity level. I think there are a number of next steps. There will be a next step. I think we will look forward to the full dataset, and what we've shown so far is the top line data. But once we've seen the totality of the data together with the data from cohort 4, I think the plan is elucidate next steps, and I'm sure there will be a clinical trial plan that we hope to -- we expect to announce that shortly after seeing the cohort 4 data. What that exactly will be remains to be seen. I think we'll look, obviously, the dosing dynamics, which is very important to ensure we're designing the next trial correctly. Obviously, the big question on everyone's list is what's the indication. And we look forward to announcing that shortly after the cohort 4 data. Anything to add, John?

[ It's a great time ].

Questions from the audience?

Just on cohort 3, the statistics on that? Or would you have any statistics you could do with a placebo arm or to a prior placebo arm or something along those lines?

Right. So the analysis that was undertaken first shows a change from baseline. And so in that sense, using the model that are just for baseline characteristics, it shows a very strong effect, if you will, in both the weekly and the biweekly dose. And then, of course, then there's the placebo adjustment that took place. And so while numerically similar in terms of the weekly and the biweekly, it was only the weekly dose that achieved statistical significance in that. As Sanj mentioned, it is due in part to a high placebo effect. In terms of looking into the statistical analysis further to understand -- we have not seen so far any particular markers that point to why that result might be the case. It is what it is. We can always speculate a bit. But one thing that we have noted, of course, is that the nature of that portion of the clinical trial was that there was weekly intervention, if you will. The patients came in for dosing either placebo every week, active drug every week or alternating active and placebo. And so sometimes in clinical trials, when you have a high-touch environment, that can increase the placebo effect. It can also increase the compliance with oral medications that patients are taking in the background. And there are a number of different factors. I think at the end of the day, it is what it is. I think one other piece that we can distill from the dataset beyond the DAS28-CRP is to look at responder analyses as well as to look at the ACR results, which again point to a similarity in response between the weekly and the biweekly dose. So maybe that's helpful.

Cohort 3 in the second quarter -- am I...

Cohort 4.

Sorry, cohort 4. What would be the statistics you would use in that press release?

Well, let me just tell you about the design of the study. So the design here is a 3:2 randomization of 400 milligrams given subcutaneously monthly after a loading dose. And it's a similar 12-week DAS28-CRP end point. The difference in the trial design, however, is that it's a lesser-touch intervention, if you will, and that patients are coming in only every month for their clinical dosing. And so in that sense, it more replicates, for example, clinical practice. Whether that -- how that plays out into the actual dataset, we just simply have to see, but it's similarly powered to be able to discern a difference between active and placebo.

Questions from the audience?

Can you talk about where you think the therapy that you're developing for rheumatoid arthritis would fit in? There's lots of drugs in that disease. But clearly, you've chosen to do this because you think it's going to be additive. Or in some way, how do you see that?

Yes. Maybe I'll start, and then John, you can take over. Actually, the Phase IIb in RA was primarily because RA is a well-characterized disease and it would be a very good proxy or a good marker of disease activity. And so the idea was always that we would do that Phase II trial, understand the data and really apply it to other indications that are more suited to a company of our size that could potentially commercialize that really well. So really, RA -- now not to say that potentially, there is a path forward in RA with partnerships and larger companies. Obviously remains to be seen on the totality of the data. And as John mentioned, this is a highly active drug. And there was, as I showed in the presentation, a very significant reduction in rheumatoid factor, over 40% in both dose levels of cohort 3. But really, RA was chosen as a sort of first step into smaller indications. And those are -- that indication would be announced after cohort 4.

Good. That makes good sense.

Yes. Thank you.

Questions from the audience? Oh, there's one right there.