Q4 2022 Kiniksa Pharmaceuticals Ltd Earnings Call
Speaker 1: and full year 2022 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one, one on your telephone. You will then hear an automated message. Advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded.
Speaker 2: our Chief Operating Officer and John Pellini, our Chief Medical Officer, will also be on the line.
Speaker 2: Before getting started, please note that we will be making forward-looking statements today that are subjects to risks and uncertainties and may cause actual results to differ materially from these statements. A review of such statements and risk factors can be found on this slide as well as under the caption, risk factors, continued in our SEC filing. These statements speak only as a date of this presentation and we undertake no obligations to update such statements except as required by law. With that, I will turn it over to Simon. Thanks Rachel and good morning everyone. I'm looking forward to reviewing our fourth quarter and full year 2022 financial results today. In 2022, we continue to execute across our cardiovascular and all-term new franchises which positions us for continued success and growth in 2023. On the commercial side, as we announced in January , Q4 represented another quarter of continued growth for our list. The net product revenue of $39.9 million represents approximately 20% transmitter 200 years is completed on 71th February 2021. The appeal of the GMAT system enables for all mixed programs in the government that fund the reject,? privacy, land safety, ticket-free protection, and lengthy Standard
Speaker 2: versus the previous quarter Q3. Our full year 2022 net revenue of $122.5 million is right in the middle of the guidance we gave at the beginning of the year, which was $115 to $130 million. We are very pleased with our commercial execution today. And as we move into the year ahead, we're highly focused on reaching more patients with recurrent pericarditis by expanding the breadth and depth of our prescribed base. We also provide more details on this in a few moments. We also remain focused on building the maximum value across our portfolio of clinical stage assets, including KPL 404, which is our CD40 and Taganis program, but currently conducting a phase 2 study in rheumatoid arthritis, which is designed to evaluate the efficacy dose response, PK, and safety of chronic subcute dosing over a duration of 12 weeks. In terms of where we are right now with this program, we fully enrolled the first and second cohorts of the PK leading. And we're now focused on starting the third and final cohorts, which is the efficacy portion. We expect the proof of comfort data from the study in the first half of next year. We continue to pursue collaborative study agreements, with Mabolina Mab, to evaluate its potential in rare cardiovascular diseases. This is a molecule that we continue to be excited about.
Speaker 2: and had the potential to impact a number of diseases. And with that, I'll turn it over to Ross to review our commercial execution of Arches. Ross, thank you, Sand. I'm pleased to share further details on our fourth quarter and four year 2022 commercial performance and our plans for continued growth in recurrent paracadabas. Throughout the year, we continue to deliver solid, sequential, quarter on quarter growth of Architect revenue. The growth in Q4 resulted in a net revenue of $39.9 million, representing approximately 20% sequential growth versus the prior quarter. This means our four year 2022 net revenue was $122.5 million. Our team has continued to activate an ever-growing paracadabase, and there are now more than 800 unique prescribers for recurrent paracadabase since launch, which is a growth of more than 100 additional new prescribers every single quarter. We continue to hear from both prescribers and patients that have an a positive experience with Architect. And this is resonating in the repeat prescriber rate, where considering we have a larger overall prescriber base, we have maintained around 22% of the total prescriber base who have risen for two years. Two or more patients. Slide eight outlines some of the key metrics and drivers of the Architect's growth. Since launch, we have been laser focused on the 14,000 target population of the current paracadabase patients who have had two or more flares. At the end of 2022, we've achieved $122.5 million in net revenue by activating approximately 5% of this target population on Architect's treatment. This penetration demonstrates that Architect is being well received.
Speaker 2: We have meaningful and growing revenue and we continue to have a significant opportunity ahead of us. The pay approval rate in Q4 remained greater than 90% of all completed cases as it has been every quarter since launch. Another important driver of growth, which I will highlight in more detail on the next slide, is duration of therapy, which is currently at approximately 18 months in total. Additionally, compliance continues to be strong at greater than 85% with refills generally completed on time, highlighting that once a patient starts on therapy, they see the benefits and stay adherent throughout the duration. Our growth system at also continues to be very healthy and 9% overall in 2022. All these metrics point in the direction of a successful, progressive, commercial launch with significant room for substantial growth and we are extremely excited by what we can achieve with this franchise. I'd like to take a moment to highlight the total duration of therapy metric I mentioned on the previous slide. As we follow more patients over longer periods of time, we believe that average total duration of therapy is now at approximately 18 months. This may continue to evolve, but what we're seeing in the commercial setting is that initially patients are staying on treatment for around 12 months.
Speaker 2: and then a high proportion of approximately 45% of restarting treatment fairly quickly after trial and a stop. This reflects what we know about the persistence of the disease, where 60% of multiple recurrence patients suffer for two years. And from our clinical data showing that continuous treatment with arcelists throughout the disease results in the long-term prevention of flares. We acknowledge that treating this debilitating and complex disease with arcelists requires an evolution in mindset and practice for cardiologists. Whereas the focus in the past was aimed at minimizing treatment duration in particular with steroids due to their toxins, to burden and potentially worsening and prolonging the disease. But now with arcelists, the aim is to treat continuously throughout the duration of the disease. And we are rapidly advancing the education on this to cardiologists across the US.
Speaker 2: Our commercial launch strategy has been successful and now we're continuing to execute and enhance this strategy to reach many more patients in 2023 and beyond. We're focused on a dual approach of continuing to broaden our base of prescribers as well as deep in the depth of repeat prescribers. At the end of last year, we expanded our sales force to around 50 sales representatives, which we believe will enable greater core frequency with our target doctors as well as broaden our reach overall. We understand the importance of having multiple calls on our target base and how to provide the education needed to ensure far biologists become comfortable with addressing the root cause of recolon paratelitis by prescribing a targeted biologic therapy. We're planning to make far stronger inroads into digital marketing, having built a patient database of more than 3000 paracadytosis patients where we will advance the education so patients can self advocate for arceless if and when patients have their next recurrence. Currently patients are widely spread throughout the country. We plan to lead the charge to support centres who wish to advance their services by focusing on paracartis and target diseases and creating networks of local referrals, the senses who specialize in the management of these diseases. We also want to be at the leading edge of evidence generation.
Speaker 2: For example, with our longitudinal registry called Regiments, which is focused on the severity and burden of the disease, as well as understanding and educating further on the outcomes associated with appropriate disease management. Turning to slide 11, our efforts on commercializing the first and only FDA approved drug for recurrent paratitis has resulted in a cracking launch with hundreds of patients getting access to therapy. The next stage for us is to dig much deeper into the opportunity. We believe we have built strong foundations that do just that. Our data are exceedingly compelling. We have an ever growing prescriber base, physicians and patients are reporting positive experiences with arclas, and we have an excellent built in our execution strategy brilliantly. Looking to 2023, we expect to grow our arclas net revenue to between $190.205 million. This would represent a significant year-on-year growth of greater than 60% at the midpoint of that range. We're delighted with our current commercial performance, and I'm very excited about the growth we have ahead. With that, I hand over to Mark to cover our financial results. Thanks Ross. Good morning everyone. Over the next few minutes, I'll walk through our fourth quarter in full year 2022 financial performance, and review our 2023 financial guidance. You can find our detailed financial information in today's press release. And I'd like to call your attention to a few items. First, fourth quarter total revenue.
Speaker 2: was 61.9 million in consisted of Park ListNet product revenue of 39.9 million as well as collaboration revenue of 21.9 million from our license agreement with Genentech. Full year 2022 total revenue was 220.2 million. It consisted of Park ListNet product revenue of 122.5 million as well as collaboration revenue of 97.7 million from our license agreements with Wadong Medicine and Genentech. Second, Park List Collaboration Product grew to 15 million to the fourth quarter and collaboration expense was 7.5 million. Full year 2022, Arcliffe's collaboration profit was 36.2 million and collaboration expense inclusive of a 6 million dollar payment related to our license agreement with Wadong was 24.1 million. Third, over the course of the year net income benefited from collaboration revenue as well as the release of evaluation allowance on non-cash deferred tax assets.
Speaker 2: For the fourth quarter and four year 2022, net income was $4.5 million and $183.4 million respectively. Lastly, turning to our financial guidance, as Ross just mentioned, we expect total 2023 ArclosNet revenue of between $190.2 million and we ended 2022 with cash reserves of $190.6 million. We expect these reserves as well as continued Arclos commercial execution to fund our current operating plan into at least 2025. And with that, I'll turn the call back to Sange for closing remarks. Thanks, Mark. We believe there is a lot to be excited about as we move into the rest of the year. As a corporation, we're revenue-producing and continue to have a profitable Arclos collaboration. And as both Ross and Mark mentioned, we expect a full year.
Speaker 2: 2023 net product revenue of $199 to $205 million, which represents greater than 60% growth year over year at the midpoint of that range. As I mentioned previously, in addition to our successful collaboration and commercialization of our list and the current protocol DICAS.
Speaker 2: We also have a pipeline at mid-stage clinical programs aimed at making a big impact on patient-wise.
Speaker 2: As a reminder, we're rolling patients in the face to study in rooms at our fighters, and we expect data in the first half of next year. Importantly, we are well capitalized. We are growing archa-list revenues, non-dialy into capital from strategic outlines in transactions, and continued financial discipline, which all support providing a cash runway into at least 2025. Ultimately, our mission is to continue to help patients in need create massive value and make a generational impact. And without, I want to thank all of you for your time today, and we're handed back to the operator for questions.
Speaker 1: And thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. So, would you draw your question? Please press star 1-1 again. Please stand by, we'll compile the Q&A roster. And one moment for our first question. And our first question comes from a new palm rama from JP Morgan. Your line is now open. Hey guys. Thanks so much for taking the question. Use a quick question on the guidance. What's that delta between the bottom end and the got a cop end of the guidance range of 190 to 105 million. It's just great market penetration and seasonal factors.
Speaker 2: which we can be considering is it compliance, the reinitiation, post-dosing, what metrics are should we be considering there and then a quick second question. What type of pull-through are you seeing from the expanded sales force? Thanks so much. Hi, Ann if I'm Mrs. Ross, maybe I can take that question. So thanks very much for the two parts. So I'll take the guidance one first. So we provided guidance which is a 50 million delta, which is the same as what we provided last year as well. Knowing that there were some uncertainties of course, so the things that you mentioned, the prescriber continued growth in the paper scribers, compliance and adherence rates as well. Also the total duration of therapy, which we announced today that is we're expecting 18 months worth of duration which is higher than what we announced in previous calls. So I think there's multiple facets there that are important going into the guidance which is why we provided the range. I look forward to executing against that. But the feedback we get from the field is incredibly positive. The thing that we realize is that patients are just
Speaker 2: in the field making a difference. And we've seen an uptick in activity rates associated with that in Q4. And we're waiting to see what the three puts. That is in the results in terms of enrollments and new patients coming onto therapy as we move throughout the year.
Speaker 1: Thanks so much for taking our questions. And thank you. And one moment for our next question. And our next question comes from Paul Bachelet from Goldman Sachs. Your line is now open. Thank you. Good morning, Kim. And thank you for taking our questions. I also want to ask a question on the guidance, particularly with regard to any.
Speaker 2: sort of patient behaviors and if you had seen anything exiting the fourth quarter, they might have indicated some patient economic sensitivity in the RP market and just maybe if you could articulate how much conservatism, you know, because of this is built into your guidance and then a couple follow-up questions. Yeah, hi, so we haven't really seen anything of notes in Q4 around the kind of economic sensitivity of patients, of course, which is not our first time now in the commercial setting, getting to the end of a year and of course starting off Q1 as well and we know that there's some seasonal implications in all specialty medicine, around how to around changes of insurance plans, we set in of co-phase and all those types of dynamics. So we have an experience where bus patient services team on the Connector One Connect, which we set up prior to launch and have been amazing at supporting patients all throughout their journey on our list.
Speaker 2: So they have very high contact rates with the patients to understand the situations and changes to insureances and so on moving forward. So we work very closely with the patients to make sure that economic circumstances like that are dealt with in as appropriate way as we can and to try to support patients going on to go back to commercial therapy if they're provided bridge therapy and so on throughout you know insures grant changes as well. So we have all those programs in place for eligible patients and look forward to continuing to support those patients they're unsure they can remain on commercial therapy. Okay, thanks for that. And then I want to maybe just ask you know with the growing patient base you know what your potential relative exposure in the early part of the year.
Speaker 2: a wealth of services to support them through each eventual analysis. So we're quite confident in having all the programs in place that we can to support patients throughout the year.
Speaker 1: I'll take the other part of the question on the enrollment. The answer will be, obviously, said is that we'll have results in the first half of next year and we're certainly on track to meet that objective and no updates. Thank you. And thank you. And one moment for our next question.
Speaker 1: And our next question comes from David Nearing Garden from Wettwush. Your line is not open.
Speaker 1: Thanks for taking the question. I have a question on the patients who discontinue. Do they have after treatment of course initial treatment? Do you know or are they tending to be patients who are on an earlier line or less severe? I'm just trying to get a handle for the duration of therapy in patients who might be a little bit earlier in line than the initial group of patients that you have treated over the past year and a half. Thanks. Yeah, hi David. This is Ross. Thanks. It's a great question. And really we need to wait for it. They could build on that. So try to understand some of the the deeper dynamics on the types of patients that maybe you know stop in and restart in and there's anything.
Speaker 2: any particular trends there to be aware of. But at the moment, it's relatively early days with very small enzymes that we can't really draw, you know, very clear conclusions to at the moment. So really our focus is on educating around the duration of the disease with physicians to make sure that they know that 60% of patients do have disease for two years. You know, the median is three years in that particular data set that we use. And some patients have it for many years beyond that as well. It's a very long tail. So, you know, we know the importance of treating throughout the disease and to try to help physicians to understand that and play their aims. I think it. You know, what we have seen is the approximate end of the initial treatment duration is around 12 months on average, which is probably driven by the fact of the majority of the subscribers. We've been at the prescribing for 12 months of one of the refills and also that the payers are also approving for 12 months before engender.
Speaker 3: one moment for our next question.
Speaker 1: And our next question comes from Jeff Meacham from Bank of America. Your line is not open. Hey guys, morning. Thanks for the question. I just have a couple. So our class, you know, another question on persistence rates. You know, where do you think it could ultimately go? I guess it's the question. And then when you look at new starts.
Speaker 2: If you guys shorten the time to onboarding, you know, the, I guess the question would be like whether you guys have shortened this diagnostic path, you know, to try to get, you know, patients on drug at an accelerated rate. And then the second one for Sons, the question is how important is profitability as a strategic objective? You know, it is very differentiated among, you know, Smithcath peers. Well, I wasn't sure that we're this ranks as a priority for you guys in the near term. Thank you. Thanks, yeah, maybe I'll have a last one for the first part and I'll come back to the second one. Yeah, thanks, Anne. So maybe if I take your question around persistence rates and duration first, yeah, this is the first time we've announced that we expect the total average duration to be around 18 months. And we know that that may well have a long tail with it due to what we know about the disease. But yeah, that's the, you know, a longer time period than we have previously. And anticipated and mentioned and does is there the ability for that to be even longer? I mean, the answer is quite possibly yes, but we just need to wait for the data to build on that. You know, we know what the initial treatment duration looks like. We know what the restart.
Speaker 2: percentage looks like so far but knowing that when you get that far out the number of patients that we are tracking are reasonably limited, you know, we've really been on the market for 21 months or so now. So we track that with a very keen eye and look forward to sharing more information on that as time goes on. But for now we've said that the
Speaker 2: approximate average duration will be 18 months, what the therapy from what they've seen through to the end of 2022. The second part of your question around the diagnostic path or time through to diagnosis and then initiation on Arclis. Again, it's difficult to tell knowing that the patients are very widely spread.
Speaker 2: throughout the US and we're making very key efforts on educating physicians, promoting arclists, creating the awareness and we'll see in that success in the prescriber rates and patients on therapy and how the revenues are building. But remembering what we're doing here is ultimately building a market where we are the first and only approved therapy and we're going in and educating physicians and actually changing the treatment paradigm which I think takes sometimes to do if you look at other analogs in a similar type of market space as well and this is a rare flare in disease. So it takes some time but we've always said we see this as a good steady sequential launch. We've 5% into the penetration of the target's population so far.
Speaker 2: tremendous issues that you report?
Speaker 3: Okay, great. Thank you guys. Appreciate it. And thank you. And one moment for our next question. And our next question comes from Lisa Baker from Evacore ISI. Your line is not open. Thank you.
Speaker 1: Hi, there. Thanks for taking the question. Just curious on how you're thinking about growth to met for 2023. You've guided to around 10% for 2022. I know it came in more at 9%. What are you thinking for this year? Sounds like a fantastic question to mock or go say cheap. Thank you, Lisa. So as Ross mentioned, growth to net was 9% for the year to date. And I don't think, while there's always some quarterly fluctuations, we do not expect big swings at this point in growth to net going for, but certainly have not provided formal guidance.
Speaker 1: Okay, so wait, so 9% was for a year to date or was for? Yeah, 2022, yes exactly. So, your date, 2022. Okay. And then just back to the patient who restarted, I want to clarify to make sure I understand what percentage of patients, I guess, discontinued therapy, are you saying 45% of those who discontinued restarted or 45% like what is the 45% I'm trying to understand, does that represent patients who discontinued or those are the restart of the patients who discontinued and if so, what was the discontinuation? Yeah, so maybe I can clarify that Lisa, the 45% is 45% of all of those patients who discontinued orchless treatments for the current pericardation throughout 2022. So, regardless of when they stopped, so even if they stopped therapy after, you know,
Speaker 1: a graph which shows that kind of discontinuation distribution in broad terms without specifics on it. So that gives you a little bit of a flavor there, but yeah, the average is 12 months. Okay. And then can you discuss the valuation release a little bit more? I know you quantitative, I dismissed it. Okay.
Speaker 4: Yes, sure. So I'm happy to take that. So this is happening in the third quarter of this year. So if you go back and go back a little bit in the second quarter, we had a full valuation allowance against our preferred tax assets. As we were in a three-year cumulative tax loss position in both the US and the UK. And then with the proceeds from the VIXA license agreement, plus sort of actual forecast at Arclav Sales.
Speaker 2: We reached a three-year cumulative tax game position in the UK, and as such we were required to release the valuation allowance on our UK deferred non-tax, non-cash deferred tax assets, and that was the main driver of the reported $172 million income tax benefit in 2022. Okay, and you've had 85% compliance of FAR. Is that pretty stable, do you think, or do you have a good shift around from here? The H5% complies rate on our list. Yeah, we just said in totality across 2022, it was greater than 85% as a compliance rate. And we put a lot of effort into our touch points with patients to make sure that they kind of help all the way along the journey, and that they also understand the high importance of compliance and adherence to therapy driven from our data showing that it's continuous.
Speaker 2: between the duration and results in continuous response. So we have adherence calls and various other touch points with patients that are on therapy as appropriate. So that was great to then 85% across the totality of 2022. Okay, great. Thank you. And thank you, and one moment please. And I am showing no further questions. I would now like to turn the call back over to Saan's Patel Chief Executive Officer for closing remarks. Thanks, Dr. Opery. So thank you everybody for the questions. And during the call today, we clearly got a very exciting year ahead of us and we look forward to providing additional updates in the future. Thank you, Laura. This concludes today's conference call. Thank you for participating. You may now disconnect.
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