Q3 2022 Kiniksa Pharmaceuticals Ltd Earnings Call

November 1, 2022

The conference.

Vince will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

Good day and thank you for standing by welcome to the connector Pharmaceuticals third quarter earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one.

One on your telephone please be advised that today's conference is being recorded I would now like to hand, the conference over to Rachel Frank Head of Investor Relations. Please go ahead.

Thank you operator, good morning, everyone and thank you for joining this call to discuss our third quarter 2022 financial results and corporate update a press release highlighting these results can be found on our website under the investors and media section.

For the agenda, our Chief Executive Officer, John J Patel, who will start with an introduction John Paolini, Our Chief Medical Officer will provide a clinical update Ross note, our chief commercial officer will provide an update on our commercial execution, then Barbara <unk>, Our Chief Financial Officer will review, our third quarter 2022 financial results.

And finally, Toms will return for closing remarks and to kick off the Q&A session for which <unk>, our chief operating officer will also be on the line.

Before getting started please note that we will be making forward looking statements today that are subject to risks and uncertainties that may cause actual results to differ materially from these statements.

Ah reviewed such statements and risk factors can be found on this slide as well as under the caption risk factors contained in our SEC filings.

These statements speak only as of the date of this presentation and we undertake no obligation to update such statements, except as required by law with that I will turn it over to <unk>.

Thanks, Rachel and good morning, everyone. We're excited to discuss our continued commercial execution with all clubs today highlight the long term extension data from Rhapsody, which was the pivotal phase III study in recurrent pericarditis.

<unk> an update on <unk> four.

We're very pleased with the continued momentum of <unk> in recurrent pericarditis.

Third quarter of 2022 was strong with an off with net product revenue of $33 $4 million.

Representing 24% sequential growth.

We're also very much focused on building value across our entire portfolio of clinical stage assets, including four which is our CD 40 in fact in this program.

We're conducting a phase II study of <unk> for rheumatoid arthritis, which is designed to evaluate the efficacy.

Dose response, pharmacokinetics and safety chronic subcutaneous over.

Over 12 weeks.

Currently enrolling the second and final cohort of the multiple ascending dose portion of the study and we expect data proof of concept from the trial in the first half of 2024.

Additionally, long term extension data from Rhapsody demonstrated prolonged treatment beyond 18 months resulted in continued treatment response.

These new data highlighted that patients who continued walnuts at treatment experienced a 98, 2% reduction in the risk of recurrent pericarditis events.

The abstract was just published in the full presentation detailing these data will be presented at the upcoming American Heart Association scientific sessions later this week.

So with that I'll turn it over to Dr. John <unk> to review the long term extension data as well as provide updates on our phase III study with <unk> for rheumatoid arthritis.

John .

Thanks, John .

As was just mentioned today, we announced that an abstract highlighting the long term extension data from Rhapsody was just published in circulation and will subsequently be presented in detail at the American Heart Association scientific sessions 2022, this coming weekend.

As a reminder, Rhapsody was the pivotal phase III trial of <unk> in recurrent pericarditis and we've reported in 2020 that the study had met its primary efficacy endpoint, specifically with patients randomized to a lot of stats experienced a 96% reduction in the risk of an adjudicated recurrent pericarditis event.

With a highly statistically significant P value of less than 0.0001.

The long term extension was designed to provide supplemental information about the history of the disease and potential duration of therapy.

As a reminder, at the end of the event driven randomized withdrawal study. The median duration of <unk> cell therapy had reached nine months to 14 months patients were then offered the opportunity to continue uninterrupted for an additional 24 months of open label with a lot of sub treatment a long term extension.

Looking at the far right of the graphic during the long term extension of the time 18 months. After vacations. Most recent recurrence investigators made a decision for each patient based upon clinical status and at their discretion to one continue rollout of stepped on therapy.

To suspend will offset and remained on study for observation or three discontinued from the long term extension without observation.

Endpoints included pericarditis recurrence and quality of life.

Turning to the next slide before reviewing the data I will point out that the data on this slide have been excerpted, specifically from the published abstract and represent the results at the time of the abstract submission in April of 2022.

The trial concluded in June of 'twenty, two and final data will be presented by professor Masimo Marcio on behalf of the Rhapsody investigators at the American Heart Association on November six.

A more detailed final data presentation is currently under embargo until the time of that presentation.

Overall these abstract data from the long term extension demonstrate that continued willingness of treatment for 18 months and beyond resulted in continued treatment response here are the details in May of 2020 event, driven based trial ended and $74 75 eligible subject.

<unk> continued into the long term extension in.

In April of 2021, with the commercial launch of <unk> to <unk> 45 U S subjects, who wish to remain on therapy were switched to commercial archivist therapy.

Meanwhile, the 2009 non U S subjects in Italy, Israel, and Australia continued on study until the long term extension formally ended in June of 2022.

The data cutoff date for data included in the published abstract was April of 2022.

The median duration of continuous rollout of cell therapy from the run in through the data cutoff point and the LTE was 18 months for U S patients and 27 months for non U S patients the maximum duration through the data cutoff point was 27 months for U S patients and 33 months for non U S patients.

The annualized incidence of investigator assessed pericarditis recurrence is while on therapy for all patients and a 74 during the portion of the long term extension prior to the 18 months decision point was 0.04 events per patient year.

After that point as I mentioned before once patients have reached the point 18 months from their most recent pericarditis recurrence. They were given the option to continue a lot of set treatment or to suspend the allowed us a treatment for observation the figure on the right of the slide highlights data from this latter portion of the trial starting.

With this decision point after patients had already been treated with continuous rollout of set for 18 months.

The primary outcome of the study is that patients who remained on continuous rollout of step therapy. After the 18 month treatment milestone experienced a 98, 2% reduction in the risk of recurrent pericarditis events compared to those who suspended therapy at the <unk>.

Months milestone the hazard ratio was 0.018 with a P value of less than 0.0001.

Specifically of the 33 patients who continued to allow us a treatment beyond 18 months only one subject experienced occurred carditis recurrence at 23 four weeks into the long term extension and this event was associated with a treatment interruption of four weeks.

Meanwhile, 75% of patients who chose to suspend treatment experienced a pericarditis recurrence with a median time to event of 11 eight weeks.

These long term data speak to the natural history of recurrent pericarditis as being a chronic auto inflammatory disease characterized by multiple occurrences mediated by IL, one and demonstrate that duration of therapy should be matched to the duration of the disease.

Turning to <unk> hundred four we continue to be encouraged by the Optionality that our high concentration liquid formulation could provide and targeting chronic diseases.

External proof of concept has already been demonstrated with other agents that inhibit the CD 40, CD 154 interaction by various targeting mechanisms and so we're particularly excited about the potential of kcl for a floor to enable practical subcutaneous administration in chronic diseases at.

At present, we are focused on our ongoing phase II trial of <unk> in rheumatoid arthritis for which we recently filed a protocol amendment with the FDA.

An updated version of the trial design can be found here on the slide and will be posted shortly on clinical trials Dot Gov.

At a high level. These study design modifications include first removing the third or 10 milligram per kilo <unk> cohort and the multiple ascending dose or PK portion of the study, leaving only the two cohorts shown here.

Second advancing the proof of concept portion of the study consisting of parallel randomization to be the third cohort of the study rather than the fourth.

And then thirdly, replacing the 10 milligram per kilo by a weekly dose level group and the proof of concept portion with a five milligram per kilo subcutaneous once weekly dosing group to focus the study on the practical five milligram per kilo subcutaneous administered dose and to assess whether we.

<unk> administration adds benefit over biweekly administration.

We have completed the first cohort and we are currently enrolling the second and final cohort of the PK.

PK portion.

Following completion of this PK portion of the trial the proof of concept portion or cohort three will commence the.

The company expects data from the proof of concept portion of the trial in the first half of 2024.

I'll now turn it over to Ross for the commercial update.

Thanks.

Thank you John I'm.

I am pleased to share further details on our quarterly commercial performance and our plans for continued growth in recurrent pericarditis as you had some signs Q3 represented yet another quarter of consistently strong growth driven by patient identification in recurrent pericarditis, which led to a quarterly growth of <unk>.

94% or $6 4 million and <unk>.

Resulted in a Q3 net revenue of $33 $4 million.

With these results we have recorded $82 6 million in net revenues. So far in 2022 and are pleased to continue to guide towards a range of $115 million to $130 million for the totality of 2022.

On slide 12, I want to highlight some of the key drivers behind our increase in revenue.

We're pleased to report a robust execution continues to drive awareness of recurrent pericarditis and darkness.

This is reflected in the strong growth of both the total and repeat prescribers in.

In the 18 months since launch we've seen more than 650 unique prescribers prescribe <unk> for the column Pericarditis, which is a growth of more than 100 additional new doctors every single quarter since our launch.

Furthermore, we continue to hear from both prescribers and patients that are having a positive experience with our finished and this is resonating in the repeat prescriber rates. While we now have around 22% of the total prescriber base, who have written for two or more patients.

One components of that positive experience with the payer approval rates in Q3, which remains greater than 90% of all completed cases.

In terms of duration on commercial therapy, while this number will continue to evolve as we follow more patients over longer periods of time as of the end of Q3, the duration of initial therapy in the commercial setting was on average approximately 12 months.

And for those patients who chose to stop initial therapy, whether of their own volition or from a belief of having come to an end of that disease duration around 35% went on to restart commercial therapy. The majority band within eight weeks from when they stopped openness.

Moving to slide 13, I want to highlight how <unk> is starting to become the standard of care in recurrent pericarditis and a few additional considerations that speak to the duration of the disease.

As you can see on the left hand side, we're pleased to external full need as a starting to suggest the treatment paradigm towards airlines.

Notional positioning, notably using <unk> as the head of corticosteroid use.

We believe this is a sign that <unk> is making headway towards becoming the standard of care for patients suffering multiple occurrences.

We also acknowledge that treat in this debilitating and complex disease with Arclight requires an evolution of mindset and practice for cardiologists.

Whereas the focused in the past was aimed at minimizing treatment duration in particular with steroids due to the toxicity Bud and the drug potentially worsen in them for longer in the disease now with all finished the aim is to treats continuously throughout the duration of the disease to ensure adequate control and to prevent the currency.

This mindset shift is important because what you see on the right hand side of this slide is that the majority 60% of patients with multiple occurrences of a disease duration of at least two years.

As you heard from John we now have the long term extension data that further supports our message the patients need to be treated throughout the course of the natural history of that disease and the continued treatment results in continued treatment response.

In summary, our first 18 months on the market as the first and only FDA approved drug for recurrent pericarditis as resulted in hundreds of patients getting access to therapy. The.

The prescribing base continues to rapidly grow with more than 650 unique prescribers and both physicians and patients are reporting positive experiences with Oculus. This has provided a solid foundation for our future commercial place.

Our net revenues have been steadily growing every single quarter since launch most recently by 24%.

Collaborations profitability is growing and we are on track to deliver within the revenue guidance that we stated right at the start of the year of $115 million to $130 million in net revenue.

More importantly, we are just getting started the darkness and our mission is to find and help many many more patients within our addressable population.

I'll now hand over to Mark to cover the financial results.

Thanks, Ross our detailed third quarter 2022 financial results can be found in the press release, we issued earlier today.

There are few items I'd like to call your attention to this morning first total revenue in the third quarter of 2022 was $99 1 million consisted of Arcalis net product revenue of $33 4 million, representing 24% sequential growth and collaboration revenue of $65 7 million.

The Victrola map global license agreement with Genentech.

Second <unk> collaboration profit grew in the third quarter of 2022 two.

To $9 2 million and resulted in a collaboration expense of $4 6 million.

And third net income in the third quarter of 2022 was $224 1 million and was driven by both collaboration revenue as well as an approximately $177 million tax benefit. This tax benefit was primarily due to the release of evaluation allowance on approximately $186 million.

Of noncash deferred tax assets.

Lastly, we received the $80 million upfront payment for the <unk> Global <unk> Global rights in the third quarter and our cash balance at the end of the period was approximately $200 million we.

We continue to expect these reserves as well as Arcalis commercial execution to fund our current operating plan into at least 2025.

With that I'll turn it back to <unk> for closing remarks.

Mark in addition to our successful commercialization of Amp lift in your current broker dices.

Also strengthening our foundation as an emerging leader in immune modulating therapies.

As a corporation, where revenue producing and continue to have a profitable on close collaboration.

And as we look to the end of the year, we maintain our estimated net revenue guidance of $150 million to $130 million.

We are well capitalized our cash reserves as well as our continued commercial performance with <unk> puts <unk> in a strong financial position and our cash reserves are expected as Mark said to fund operations into at least 2025.

<unk> ambition is to continue to outpace soon need create massive value.

Aim to fulfill our goal of becoming a global generation company and with that I want to thank all of you for your time today and hand, it back to the operator for questions.

Certainly as a reminder, if you would like to ask a question. Please press star one one on your telephone please standby, while we compile the Q&A roster.

And our first question will come from it and your Pam <unk> Rama of Jpmorgan. Your line is open.

Hey, guys. Thanks, so much for taking the question.

Two quick ones from me.

The first one is the 35% of patients that re initiated therapy. After discontinuing arcalis. How soon after did symptoms return and how soon do they re initiate therapy are there any trends worth noting here that may be similar or different to what you saw in Rhapsody.

And then the second question is what are the timelines to better understanding the maverick strategy and sort of rare indication.

I'm, assuming sort of moving in that direction is assumed in the 2025 cash guidance. Thanks, so much.

So let me start and then maybe jump in jumping on that road.

Yes, very happy to say.

This is Ross thank you very much for the questions.

Last time, we announced some information about restarts and I guess since the time of launch we've always talked around the average duration of therapy and continuous therapy now we're at a situation where we have.

Our bank of patients who have stopped therapy throughout the time of launch and starting to see that.

At a high proportion of those patients stay backbones of therapy, which I think really speaks to the tenacity of the disease. The median to treat throughout the course of the disease.

Believe there are different reasons why patients stopped therapy, whether that's in consultation with the health care professional whether they are just feeling better and want to try to stop.

Its reasons, but.

But yes, that's 5% of the pay all of the patients stopped regardless of which stage of initial therapy. They had went onto resolves architects in the commercial setting and they did so within eight weeks of stopping therapy, which is actually quite consistent with what we saw within the <unk>.

<unk> study if you will.

Remember, we did have two patients within the treatment arm of Rhapsody.

Hudson some temporary stops therapy.

Okay, and if you think about the washout period and so on.

As well it really makes sense, but within within eight weeks.

<unk> started back on therapy.

So we're pleased to note that uplift is there as a safety net when patients stop therapy, but ultimately you want to make sure that patients are treated throughout the duration adequately so that they can come off therapy eventually.

Rebound.

Okay.

And nice to nice to talk with you regarding that preliminary out. So as you know we continue to be excited about the mechanism enthusiastic about the mechanism and <unk>.

<unk> has a positive data in phase II.

Rheumatoid arthritis, and a giant cell arteritis and our goals at this point is really around pursuing collaborative study agreements to evaluate the potential novel women that are in rare cardiovascular diseases, where the GM CSF mechanism has been implicated in solar are keen to do additional work on the mechanism.

Thanks, so much for taking our questions.

One moment.

Our next question comes from Paul Choi of Goldman Sachs. Your line is open.

Hi, Thanks, Good morning, Congrats on the progress on thank you for taking our questions.

Regarding the details on the <unk> phase III trial can you maybe elaborate a little bit more on.

What types of patients you'll allow N in terms of other Comorbidities. In addition to <unk> and just how youre thinking about data collection for.

Other endpoints in order to make a determination for other indications to pursue and then I had a follow up question.

Yes.

So thanks, Paul I appreciate the question.

So regarding the specific inclusion criteria.

We've disclosed publicly at least as you can find on our clinical trials dot Gov. When they are primarily from the inclusion criteria as you might imagine is primarily focused on the patient criteria around the rheumatoid arthritis and the difficulties that they've had in achieving disease control on the currently available regiment.

Most of the additional Comorbidities that are listed in the trial. There are primarily what you might expect for a phase II program.

Regarding data collection. The data collection is primarily focused on the rheumatoid arthritis endpoints Dash 28, CRP is a prime example, while we are collecting other information and we have as you might imagine a rich biomarker. The plan that we also feel would help us understand more about.

The downs.

<unk> stream signaling that is inhibited.

Blockade of CD 40, so we continue to follow that only with our own data set but also of the datasets that are coming out in the literature.

Okay, great. Thanks for that John and then one for Ross just on the commercial piece can you maybe just update us on where you are with regard to coverage among the major plans and so forth are there any sort of bellwether for any other.

Meaningful commercial plans that are still still remaining out there or just in terms of percentage of potential lives covered here. Thank you.

Yes.

Yes, thanks, very much but I would say maybe just that.

Look backwards for us we're really pleased with the coverage that we have had vitale from the gates inflow enjoys being above 90% of all completed cases.

All the major plans have policies in place now for at least that's been the case for quite some time and actually some of the major plans are also we looked at that.

Payer coverage at the one year time point as well and most of those have stayed the same moving forward without any meaningful changes.

But maybe of notes looking forward as well.

The payer challenges is a constant barrier that we look at it.

And we try to work with payers on one.

One example of some of the headwinds that we see is that we.

Did receive notice from Cvs Caremark fairly recently that they will actually replace are placed on the exclusion list before the caps indication.

That will go into effect as of January of next year.

Evs, if confirmed with as the old current patients will be grandfathered across and into the new plan for next year.

So ultimately as an example, where we need to work through with Cvs trying to understand what the potential impact on recurrent pericarditis patients may be knowing that the exclusion ultimately is forecast.

That has some.

Some logistical operational ramifications across other indications of how we ensure that coverage continues as well. So it's a constant barrier and hurdle that we tried to overcome on block with across all of the pipelines.

Historically, very happy with where we are at 90%.

It's probably worth just mentioned and that no doubt plan.

As for caps cast of course is a very small percentage of our total commercial scripts.

Got it thank you very much for taking our questions.

Yes.

One moment.

And our next question will.

It will come from.

Geoff Meacham.

The bank of America.

Your line is open hi, this is Alex.

This is alexandra on for Geoff Meacham. Thank you for taking our question.

Can you provide any additional color on the timelines for the near term payments for Victoza and what is the range of royalties we should expect.

Then secondly can you walk us through your capital allocation strategy is BD, a key with a focus on late stage assets. Thank you.

Okay sure. Thanks for the question.

Eric can help you out with that.

As we no longer control development is it's tough for us to help with.

Timing to biosurgery suffice it to say we.

We do expect.

More miles milestone achievements.

Coming out of it in terms of capital allocation certainly we're always opportunistic on the BD side and highly active but the bar is pretty high or anything there.

We believe we have a robust really exciting portfolio and there's always.

A given take tradeoff for brand new things, but suffice to say very highly accurate.

Yes.

Thank you.

And Im showing no further questions I would now like to hand, the call back to <unk> Patel, Chief Executive Officer for closing remarks.

Well. Thank you operator, and thank you everybody for the questions. The joining the call today, we clearly have some exciting milestones ahead of us and hopefully we're able to get a sense of our excitement.

Look forward to providing additional updates in the future so with that we'll just platform. Thank you.

And this concludes today's conference. Thank you for participating you may now disconnect.

Okay.

The conference will begin shortly.

As Johan during Q&A, you can dial star one one.

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The conference will begin shortly to raise Johan during Q&A, you can dial star one one.

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Good day and thank you for standing by welcome to the <unk> Pharmaceuticals third quarter earnings Conference call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded I would now like to hand, the conference over to Rachel Frank Head of Investor Relations. Please go ahead.

As for the agenda, our Chief Executive Officer, <unk> Patel, who will start with the introduction John Paolini, Our Chief Medical Officer will provide a clinical update Ross note, our chief commercial officer, who will provide an update on our commercial execution, then Mark <unk>, Our Chief Financial Officer will review, our third quarter 2022 financial.

No.

Finally, Scott will return for closing remarks and to kick off the Q&A session for which <unk>, our chief operating officer will also be on the line.

A review of the entity risk factors can be found on this slide as well as under the caption risk factors contained in our SEC filings.

These statements speak only as of the date of this presentation and we undertake no obligation to update such statements except as required by law.

That I will turn it over to <unk>.

We're very pleased with the continued momentum of <unk> in recurrent pericarditis.

Third quarter of 2022 was strong with an off with net product revenue of $33 $4 million.

Representing 24% sequential growth.

We're also very much focused on building value across our entire portfolio of clinical stage assets, including four which about CD 40 in fact in this program.

We're conducting a phase III study of <unk> in rheumatoid arthritis, which is designed to evaluate the efficacy.

Dose response, pharmacokinetics and safety chronic sub Q dosing over 12 weeks.

Currently enrolling the second and final cohort of the multiple ascending dose portion of the study and we expect data proof of concept from the trial in the first half of 2024.

Additionally, long term extension data from Rhapsody demonstrated we'll onset treatment beyond 18 months resulted in continued treatment response.

These new data highlighted that patients who continued longest treatment experienced a 98, 2% reduction in the risk of recurrent pericarditis events.

The abstract was just published in the full presentation detailing these data will be presented at the upcoming American Heart Association scientific sessions later this week.

So with that I'll turn it over to Dr. John <unk> to review the long term extension data as well as provide updates on our phase III study with <unk> for rheumatoid arthritis John .

Thanks Vince.

As a reminder, Rhapsody was the pivotal phase III trial of <unk> in recurrent pericarditis and we reported in 2020 with the study had met its primary efficacy endpoint, specifically with patients randomized to <unk> experienced a 96% reduction in the risk of an adjudicated recurrent pericarditis.

With a highly statistically significant P value of less than 0.0001.

The long term extension was designed to provide supplemental information about the history of the disease and potential duration of therapy.

As a reminder, at the end of the event driven randomized withdrawal study. The median duration of <unk> therapy had reached nine months up to 14 months patients were then offered the opportunity to continue uninterrupted for an additional 24 months of open label will honest of treatment and a long term extension.

Looking at the far right of the graphic during the long term extension of the time 18 months. After vacations. Most recent recurrence investigators meeting decision for each patient based upon clinical status and at their discretion to one continue rollout of stepped on therapy.

To suspend rollout of SAP and remained on study for observation or three discontinued from the long term extension without observation.

Endpoints included pericarditis recurrence and quality of life.

The trial concluded in June of 'twenty, two and final data will be presented by professor Masimo Imagio on behalf of the Rhapsody investigators at the American Heart Association on November 6th.

More detailed final data presentation is currently under embargo until the time of that presentation.

Overall these abstract data from the long term extension demonstrates the continued rollout of treatment for 18 months and beyond resulted in continued treatment response here are the details.

May of 2020 event, driven based trial ended and 74% 75 eligible subjects continued into the long term extension in.

In April of 2021, with the commercial launch of <unk> to <unk> 45 U S subjects, who wish to remain on therapy were switched to commercial <unk> therapy.

Meanwhile, the 2009 non U S subjects in Italy, Israel, and Australia continued on study until the long term extension formally ended in June of 2022.

The data cutoff date for data included in the published abstract was April of 2022.

The median duration of continuous rollout of cell therapy from the running through the data cutoff point and the LTE was 18 months for U S patients and 27 months for non U S patients the maximum duration through the data cutoff point was 27 months for U S patients and 33 months for non U S patients.

The annualized incidence of investigator assessed pericarditis recurrence is while on therapy for all patients and a 74 during the portion of our long term extension prior to the AGM a decision point was 0.04 events per patient year.

After that point as I mentioned before once patients have reached the point 18 months from their most recent pericarditis recurrence. They were given the option to continue a honest that prevent or to suspend real honest treatment for observation the figure on the right of the slide highlights data from this latter portion of the trial starting.

With this decision point after patients had already been treated with continuous <unk> for 18 months.

The primary outcome of the study is that patients who remained on continuous rollout of cell therapy. After the 18 month treatment milestone experienced a 98, 2% reduction in the risk of recurrent pericarditis events compared to those who suspended therapy at the 18 month milestone.

<unk> ratio was 0.018 with a P value of less than 0.0001.

Specifically of the 33 patients who continued rollout of SAP treatment beyond 18 months only one subject experienced occurred carditis recurrence at 23 four weeks into the long term extension and this event was associated with a treatment interruption of four weeks.

Meanwhile, 75% of patients who chose to suspend treatment experienced a pericarditis recurrence with a median time to event of 11 eight weeks.

These long term data speak to the natural history of recurrent pericarditis as being a chronic auto inflammatory disease characterized by multiple occurrences mediated by IL, one and demonstrate the duration of therapy should be matched to the duration of the disease.

Turning to <unk>, we continue to be encouraged by the Optionality that our high concentration of liquid formulation could provide and targeting chronic diseases.

External proof of concept has already been demonstrated with other agents that inhibit the CD 40, CD 154 interaction by various targeting mechanisms and so we're particularly excited about the potential of kcl 404 to enable practical subcutaneous administration in chronic diseases at.

At present, we are focused on our ongoing phase II trial of <unk> in rheumatoid arthritis for which we recently filed a protocol amendment with the FDA.

An updated version of the trial design can be found here on the slide and will be posted shortly on clinical trials Dot Gov.

At a high level. These study design modifications include first removing the third or 10 milligram per kilo sub Q cohort and the multiple ascending dose or PK portion of the study, leaving only the two cohorts shown here.

Second advancing their proof of concept portion of the study consisting of parallel randomization should be the third cohort of the study rather than the fourth.

And then thirdly, replacing the 10 milligram per kilo biweekly dose level group and the proof of concept portion with a five milligram per kilo subcutaneous once weekly dosing group to focus the study on the practical five milligram per kilo subcutaneous administered dose and to assess whether we.

<unk> administration adds benefit over biweekly administration.

We have completed the first cohort and we are currently enrolling the second and final cohort of the PK.

PK portion.

Following completion of this PK portion of the trial the proof of concept portion or cohort three will commence the.

The company expects data from the proof of concept portion of the trial in the first half of 2024.

I'll now turn it over to Ross for the commercial update.

<unk>.

Thank you John I.

I am pleased to share further details on our quarterly commercial performance and our plans for continued growth in recurrent pericarditis as you had some <unk> Q3 represented yet another quarter of consistently strong growth driven by patient identification in recurrent pericarditis, which led to a quarterly growth of <unk>.

94% or $6 4 million and resulted in a Q3 net revenue of 33 $4 million.

With these results we have recorded $82 6 million in net revenues. So far in 2022 and are pleased to continue to guide towards a range of $115 million to $130 million for the totality of 2022.

On slide 12, I want to highlight some of the key drivers behind our increase in revenue.

We're pleased to report a robust execution continues to drive awareness of recurrent pericarditis and doctors and this is reflected in the strong growth of both the total and repeat prescribers in the 18 months since launch we've seen more than 650 unique prescribers prescribe <unk> for recurrent pericarditis.

Which is a growth of more than 100 additional new doctors every single quarter since our launch.

Furthermore, we continue to hear from both prescribers and patients that are having a positive experience with <unk> and this is resonating in the repeat prescriber rates, while we now have around 22% of the total prescribing base, who have rich in for two or more patients.

One components of that positive experience with the payer approval rates in Q3, which remains greater than 90% of all completed cases.

And for those patients who chose to stop initial therapy, whether of their own volition or from a belief of having come to an end of their disease duration.

35% when selling to restart commercial therapy, the majority band within eight weeks from when they stopped office.

Moving to slide 13, I want to highlight how oculus is starting to become the standard of care in recurrent pericarditis and a few additional considerations that speak to the duration of the disease.

As you can see on the left hand side, we're pleased the external so Nathan starting to suggest the treatment paradigm towards airlines promotional positioning notably using Oculus ahead of corticosteroid use. We believe this is a sign that <unk> is making headway towards becoming the standard of care for patients suffering.

Multiple of the currencies, we also acknowledge that treat in this debilitating and complex disease with <unk> requires an evolution of mindsets and practice for cardiologists.

Whereas the focused in the past was aimed at minimizing treatment duration in particular with steroids due to the toxicity Bud and the drug potentially lessen in and prolong in the disease now with all the elements the treats continuously throughout the duration of the disease to ensure adequate control and to prevent with currencies.

This mindset shift is important because what you see on the right hand side of this slide is that the majority 60% of patients with multiple occurrences of a disease duration of at least two years.

In summary, our first 18 months on the market as the first and only FDA approved drug for recurrent pericarditis as resulted in hundreds of patients getting access to therapy.

The prescribing base continues to rapidly grow with more than 650 unique prescribers and both physicians and patients are reporting positive experiences with Oculus. This is providing a solid foundation for our future commercial plans.

Our net revenues have been steadily growing every single quarter since launch most recently by 24%.

Collaborations profitability is growing and we are on track to deliver within the revenue guidance that we stated right at the start of the year of $115 million to $130 million in much revenue.

More importantly, we are just getting started with darkness and our mission is to find and help many many more patients within our addressable population.

I'll now hand over to Mark to cover the financial results.

Thanks, Ross our detailed third quarter 2022 financial results can be found in the press release, we issued earlier today.

There are few items I'd like to call your attention to this morning first total revenue in the third quarter of 2022 was $99 1 million and consisted of <unk> net product revenue of $33 4 million, representing 24% sequential growth and collaboration revenue of $65 7 million.

The Victrola map global license agreement with Genentech.

Second Arcalis collaboration profit grew in the third quarter of 2022 two.

To $9 2 million and resulted in a collaboration expense of $4 6 million.

Of noncash deferred tax assets.

Lastly, we received the $80 million upfront payment for the <unk> Global <unk> Global rights in the third quarter and our cash balance at the end of the period was approximately $200 million we.

We continue to expect these reserves as well as <unk> commercial execution to fund our current operating plan into at least 2025.

With that I'll turn it back to <unk> for closing remarks.

Thanks, Mark in addition to our successful commercialization of <unk> in the current broker diapers were also strengthening our foundation as an emerging leader in immune modulating therapies.

As a corporation, where revenue producing and continue to have a profitable <unk> collaboration.

And as we look to the end of the year, we maintain our estimated net revenue guidance of $115 million to $130 million.

Broadly, we are well capitalized our cash reserves as well as our continued commercial performance with <unk> puts <unk> in a strong financial position and our cash reserves are expected as Mark said to fund operations into at least 2025.

Ultimately our mission is to continue to help based in need create massive value.

Aim to fulfill our goal of becoming a global generation company and with that I want to thank all of you failed time today and hand, it back to the operator for questions.

Certainly as a reminder, if you would like to ask a question. Please press star one one on your telephone please standby, while we compile the Q&A roster.

And our first question will come from <unk> Rama of Jpmorgan. Your line is open.

Hey, guys. Thanks, so much for taking the question two.

Two quick ones from me.

The first one is the 35% of patients that re initiated therapy. After discontinuing arcalis. How soon after did symptoms return and how soon do they reinitiate therapy are there any trends worth noting here that may be similar or different to what you saw in Rhapsody.

And then the second question is what are the timelines to better understanding the maverick strategy and sort of rare CV indication.

I'm, assuming sort of moving in that direction is assumed in the 2025 cash guidance. Thanks, so much.

First let me start and then maybe John can jump in on that.

Very happy to say.

This is Ross thank you very much for the questions.

First time, we announced some information around <unk> I guess since the time of launch we've always talked around the average duration of therapy and continuous therapy now we're at a situation where we have.

Our bank of patients who have stopped therapy throughout the time of launch and starting to see that.

At a high proportion of those patients stay backbones of therapy, which I think really speaks to the tenacity of the disease. The median to treat throughout the course of the disease.

I believe there.

Reasons why patients stopped therapy, whether that's in consultation with the health care professional whether they are just feeling better and want to try to stop.

Areas reasons.

But yes, that's 5% of the pay all of the patients that stops regardless of which stage of initial therapy. They had went onto resolves arcalis.

In the commercial setting and they did so within eight weeks of stock.

In therapy, which is actually quite consistent with what we sold within the <unk> study.

Remember, we did have two patients within the treatment arm of Rhapsody, who had some.

Temporary stocks for our therapy, and if you think about the washout period and so on.

<unk> is well maybe it makes sense that within within eight weeks patients starting back on therapy.

So we're pleased to note that given the outlook is there as a safety net when patients stop therapy, but ultimately you want to make sure that patients are treated throughout the duration adequately so that they can come off therapy eventually.

We don't.

Okay.

And I know from nice to nice to talk with you regarding that preliminary out. So as you know we continue to be excited about the mechanism enthusiastic about the mechanism and macro element that has a positive data in phase II with both in rheumatoid arthritis, and a giant cell arteritis and our goals at this point is really around pursuing <unk>.

<unk> study agreements to evaluate the potential novel novel rare cardiovascular diseases, where that GM CSF mechanism has been implicated in solar are keen to do additional work on the mechanism.

Thanks, so much for taking our questions.

One moment.

Our next question comes from Paul Choi of Goldman Sachs. Your line is open.

Hi, Thanks, Good morning, Congrats on the progress and thank you for taking our questions.

Regarding the details on the <unk> hundred <unk> phase II trial can you maybe elaborate a little bit more on.

What types of patients youll allow and in terms of other Comorbidities. In addition to <unk> and just how youre thinking about data collection for other.

Other endpoints in order to make a determination for which all other indications to pursue and then I had a follow up question.

Yes.

So thanks, Paul I appreciate the question.

So regarding the specific inclusion criteria.

Disclose publicly at least is what you can find on our clinical trials dot Gov. When they are primarily from the inclusion criteria as you might imagine are primarily focused on the patient criteria around the rheumatoid arthritis and the difficulties that they've had in achieving disease control on the currently available regimens.

Most of the additional Comorbidities that are listed in the trial. There are primarily what you might expect for a phase III program.

Regarding data collection. The data collection is primarily focused on the rheumatoid arthritis endpoints Dash 28, CRP is a prime example, while we are collecting other information and we have a as you might imagine a rich biomarker plan that we also feel would help us understand more about.

The.

Downstream signaling that is inhibited without blockade of CD 40. So we continue to follow that only with our own data set but also of the datasets that are coming out in the literature.

Meaningful commercial plans that are still still remaining out there or just in terms of percentage of potential lives covered here. Thank you.

Yes.

Yes, thanks, very much Paul and say, maybe it's just that.

Look backwards for us we're really pleased with the coverage that we have had vice out from the gates inflow enjoys being above 90% of all completed cases.

All the major plans have policies in place now for a property thats been the case for quite some time and actually some of the major plans both as we look at that.

Payer coverage at the one year time points as well in most of those have stayed the same moving forward without any meaningful changes.

There may be a notes looking forward as well.

The payer challenges is a constant barrier that we look at.

And we tried to work with payers on one.

One example of some of the headwinds that we see is that we did receive notice from Cvs caremark fairly recently that they will actually replace are placed on the exclusion list before the caps indication.

That will go into effect as of January of next year.

The asset confirmed with us for all current patients will be grandfathered across and into the new plan for next year.

Some logistical operational ramifications across other indications of how we ensure that coverage continues as well. So it's a constant barrier and hurdle that we tried to overcome luck with it.

Plus all of the pipelines.

Historically, very happy with where we are at 90%.

It's probably worth just mentioned and that no doubt plan.

As for <unk>, which is a very small percentage of our total commercial scripts.

Got it thank you very much for taking our questions.

Yes.

One moment.

And our next question will.

It will come from.

Geoff Meacham.

Bank of America.

Your line is open hi, this is Alex.

This is Alison Hannah on for Jeff Meacham. Thank you for taking our question.

Can you provide any additional color on the timeline spend near term payment through mixer and what is the range of royalties we should expect.

And then secondly can you walk us through your capital allocation strategy is BD, a key with a focus on late stage assets. Thank you.

Yeah sure. Thanks for the question.

I can help you out with that.

As we no longer control development, if it's tough for us to help with.

Timing to Biocryst suffice it to say we.

We do expect.

More miles milestone achievements.

Coming out of it.

Terms of capital allocation, yes, certainly we're always opportunistic on the BD side and highly active but the bar is pretty high or anything there.

We believe we have a robust really exciting portfolio and there's always a.

But given take tradeoff for brand new things, but suffice to say very highly accurate.

Yeah.

Thank you.

And I'm showing no further questions I would now like to hand, the call back to <unk> Patel, Chief Executive Officer for closing remarks.

Forward to providing additional updates in the future so with that we'll just platform. Thank you.

And this concludes today's conference. Thank you for participating you may now disconnect.

Q3 2022 Kiniksa Pharmaceuticals Ltd Earnings Call

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