Q1 2023 Kiniksa Pharmaceuticals Ltd. Earnings Call

Speaker 2: Good day and thank you for standing by and welcome to the Kinnixah Pharmaceuticals first quarter 2023 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 11 on your telephone.

Speaker 2: You will then hear an automated message advising your hand is raised. Through their questions, please press the R11 again.

Speaker 2: and this be advised that today's conference is being recorded.

Speaker 2: I would now like to hand the conference over to your speaker today, Rachel Frank, head investor relations, please go ahead.

Speaker 3: Thank you, operator. Good morning, everyone, and thank you for joining Connected Call to discuss our first quarter 2023 financial results in recent portfolio new execution.

Speaker 3: Pressurely highlighting these results can be found on our website under the Investors and Media section.

Speaker 3: As for the agenda, our Chief Executive Officer, Saunj Keitha-Tel, will start with an introduction. Roth's vote, our Chief Commercial Officer, will provide an update on our also commercial execution. Then, Marker goes to that, our Chief Financial Officer will review our first quarter, 2023 financial results.

Speaker 3: And finally, thoughtful returns for posting remarks and to kick off the Q&A session for which Evan Tissari, our chief operating officer and John Palimini, our chief medical officer, will also be on the line. Before getting started, please note that the goal of being making forward-looking statements today that are subject to risks and uncertainties that may cause actual results to differ materially from these statements. A review of such statements in risk factors can be found on this slide, as well as under the caption, risk factors, containing our SEC violence. These statements is only articulated this presentation and we undertake no obligations to update such statements accepted required by law.

Speaker 4: With that, I'll turn it over to Fange. Thanks Rachel and good morning everyone. I'm happy to review our first quarter, 2023 financial results date.

Speaker 4: We have continued to execute across our cardiovascular and autoimmune franchises.

Speaker 4: which positions us for success and growth in 2023.

Speaker 4: On the commercial side, Q1 represented another quarter of growth for our list with a net product revenue of $42.7 million.

Speaker 4: We are encouraged by our commercial execution to date, and with recent increased prescriber adoption and patient enrollments, we're seeing clear signs of success from our field team expansion.

Speaker 4: We've also continued to see high patient satisfaction, strong payer approval rates, as well as longer graduation of therapy.

Speaker 4: With that in mind, we have raised our 2023 expected Oculus guidance range to $200 to $215 million.

Speaker 4: We also remain focused on building the maximum value across our portfolio of clinical stage assets, and that includes KPL 404, which is our CD40 antagonist program. We're currently enrolling the third and final cohort of our phase 2 study in rheumatoid arthritis.

Speaker 4: which is designed to evaluate the efficacy, dose response, PK, and safety of chronic sub-Q dosing over a duration of 12 weeks.

Speaker 4: And we expect data from the study in the first half of the lecture.

Speaker 4: Additionally, we continue to pursue collaborative study agreements with Mavrilinemab to evaluate its potential in rare cardiovascular diseases.

Speaker 4: This is a molecule that we continue to be excited about and it has the potential to impact a number of diseases.

Speaker 4: So with that, I'll turn it over to roster with you, our commercial execution.

Speaker 4: our commercial execution for!]

Speaker 5: Thank you, Senator.

Speaker 4: Our customers have now been on the market for two years, and I'm delighted to share further details on our first quarter 2023 commercial performance and our plans for continued growth in recurring pericolators.

Speaker 4: We've been very encouraged by the meaningful acceleration in Q1 in both total and repeat prescribers in large parts due to our expanded field force.

Speaker 4: Total prescribers since the launch of Archaeist and Recurricutators are now in excess of 1000, which is a growth of more than 200 versus Q4 and is the largest jump we've seen to date.

Speaker 4: Additionally, repeat the drivers through to 23% off the much larger total describing base.

Speaker 4: The underlying patient growth seen in Q1 drove a net revenue of $42.7 million, representing approximately 7% growth versus the prior quarter.

Speaker 4: Our revenue growth is despite the Q1 seasonal related impacts to insurance plan changes and resets of co-pays which are very typical for specialty drugs in the first quarter of the year.

Speaker 4: These impacts resulted in a grossed annex of 10.7%, which is higher than in prior quarters. In addition to growing the Scriber adoption, we're also continuing to see high reports of prescriber and patient satisfaction and strong compliance in adherence when patients are on therapy. I'll also highlight that the pay approval rate in Q1 remains greater than 90%.

Speaker 4: Some of those learnings led to the expansion of our field team from around 30 to around 50 representatives during Q4 of 2022. I'm pleased to share that in the early days of this expansion, our field team are executing well. So far, we're seeing a significant jump in total activity.

Speaker 4: and increased reach and frequency with our target doctors.

Speaker 4: And as a result of those metrics, we're seeing an acceleration in the total prescriber base and a more meaningful jump in overall patient enrollment than we previously seen.

Speaker 4: We believe these are all early indications of the type of impact we need to be making in the marketplace to continue to advance our business and help many more patients suffering from this debilitating disease.

Speaker 4: In addition to the efforts of our sales team, there is an increase in interest as a growing number of both private and academic institutions across the US to build their own referral networks and to streamline patients' access to centres and healthcare professionals who focus on the treatment of paracardiol diseases in particular with current paracarditis.

Speaker 4: We believe this growth in expertise, specific to the current paracolitis, will help improve patient care in the future.

Speaker 4: Additionally, we're continuing to make inroads into digital marketing, having built a database of approximately 4,500 pericarditis patients and caregivers where we're advanced in education, so patients can self-advocates for archolous, inappropriate.

Speaker 4: Turning to slide 9, I'd like to provide an update on duration of therapy. As we find more patients over longer periods of time in the commercial setting, we've seen an evolving picture in the average total duration of therapy.

Speaker 4: With previously seen an average of approximately 18 months and now the latest data we've seen an increase through approximately 20 months.

Speaker 4: What we're currently seeing is patients are initially staying on treatment for around 14 months before trial and the stop. This is an increase of two months over what we saw at the end of Q4. Then once patients stop treatment given the persistence of the disease, many are seeing an unmasking of the disease with a return of symptoms.

Speaker 4: so they restart our course. In fact, approximately 45% of all patients who stop our list go on to restart the vast majority within eight weeks of the stop.

Speaker 6: These factors will continue to evolve the social duration of treatment, and our efforts are placed on educating physicians and patients on the natural history of the disease, which is a median of three years.

Speaker 7: and that continued treatment with Arctis results in continued treatment response.

Speaker 8: We continue to be delighted with our ongoing commercialisation effort, including the early results from our expanded field team.

Speaker 9: These results, along with the feedback that we get in from physicians and patients, the growth in the prescribed rates, the strong pair of approval dynamics and the growth in total duration of therapy, mean that today, we are increasing our 2023 Archelles Sales Guidance.

Speaker 10: from a range of $190 to $205 million to $200 to $215 million.

Speaker 11: We continue to have a growing, profitable collaboration with Arclist, as well as a significant opportunity ahead as we build and develop the marketplace.

Speaker 12: With that said, we're highly ambitious and we now continue to do what we do best, which is driving the opportunity and solidly executing to grow our business and help patients. And now hand over to Mark to cut off our financial results. Mark. Thanks Ross. Good morning everyone. Our detailed first quarter, 2023 financial results can be found in the press release we issued earlier today. I'd like to call your attention to a few items on this slide as well as review our 2023 Arthas Net Product Revenue Gardens.

Speaker 13: Total revenue in the first quarter of 2023 included Arcliffe's net product revenue of 42.7 million in collaboration revenue of 5.7 million from our VIXI Relo-Map Global License Agreement with Genentech. To date, we have recognized close to 94 million of the 100 million in upfront and near term supply payments received from Genentech. We expect to recognize the balance over the course of the next year.

Speaker 14: Second, Arcliffe's collaboration operating profit continued to grow in the first quarter of 2023 and was 16.6 million compared to 4.5 million in the first quarter of 2022.

Speaker 15: Third connected net loss in the first quarter of 2023 was 12.3 million compared to 25.2 million in the first quarter of 2022.

Speaker 16: Fourth, we received a $20 million supply-related milestone from Genentech in the first quarter. The mid-inch low limited our net cash burn to approximately $3 million and brought our end-of-period cash balance to $187.5 million. Importantly, these reserves as well as continued arcoise commercial execution.

Speaker 17: or expected to fund our current operating plan into at least 2026.

Speaker 18: Lastly, turn to our financial diets with an uptick and enrollment and new to brand patients from the recent sales force expansion, as well as slightly longer average duration of therapy. We now expect 2023 ArthlasNet product revenue up between 200 and 250 million.

Speaker 19: This represents close to 70% year-over-year net product revenue growth at the midpoint, and reflects our expectation for continued execution against our opportunity to help recurrent parodidious patients by reshaping the treatment paradigm with arco-esp.

Speaker 20: With that, I'll turn the call back to Sanj for closing remarks.

Speaker 21: Thanks Mark. As you've heard today, in the team there's a lot to be excited about in terms of a summary. In addition to our successful commercialisation of our list, we also have a pipeline of mid-state clinical programmes that are aimed at making a meaningful impact on patient lives.

Speaker 22: As a reminder, we're rolling in the third and final cohort of the Phase 2 study of KPL 404 in rheumatoid arthritis, and that data is expected in the first half of next year.

Speaker 23: Ultimately, our mission is to continue to help patients in need, create massive value, and make a generational impact. We believe we are strategically positioned to do exactly that. I do want to thank you all for your time today. I'm going to hand it back to the operator for the Q&A session. Thank you. Thank you so much. And as a reminder, to ask a question, please press star 1 1 on your telephone keypad and wait for your name to be announced.

Speaker 24: Your first question comes from the line of ball joy of Goldman Sachs. Your line is now open.

Speaker 25: Thank you. Good morning and congratulations to the quarter. One clinical question to start, maybe for John , which is, as you look at the landscape in the RA and the 404 CD4 program, you're now enrolling the next cohort on.

Speaker 26: How do you think about what you'd like to see with regard to potential disease activity scores as you top line data here and what would sort of be the data you'd look for to think about a go-forward decision on your phase two.

Speaker 27: And my second question for either Saunj or Ebene is, you know, as you survey the landscape for assets, you know, what are your thoughts on valuations?

Speaker 28: For assets, I could either fit into the IRIS cardiovascular eye eye space that would be potentially synergistic with your commercial and or R&D efforts.

Speaker 29: Sure. Good morning, Paul. And thank you so much for the question. So regarding the expectations if you will for the phase two study that's going on now in the rheumatoid arthritis PTL 404, what we like about this program is that there's a lot of external proof of concept of your own benchmarks in this disease area as well as with this particular pathway of blocking the CD4, the CD154, Costigular Toli Interaction.

Speaker 30: And so we've looked at those benchmarks, as you will, as a way of positioning the size of the study, which, as you know, with a parallel design, which is going on right now, is really testing the efficacy of the, essentially very practical five-millimeter and per kilo-subcutaneous dose, administer either bi-weekly.

Speaker 31: versus placebo, and then asking the question whether 500 grams per kilogram administered weekly to the entire class of concentrations in the model it delivers even more efficacy. And our intention is to then compare that against those astable fence points, whether those are other assets in the rheumatoid arthritis phase.

Speaker 32: where I think the reduction in DAS28 CRP as well as attainment of low or no disease activity with the DAS28 score are really well established benchmarks in the disease without going into specific numbers. And then similarly, we can also look at the two, if you will, assets that are in that space.

as well as one CD-40 asset and one CD-154 targeting asset. And those also have some established benchmarks. So we'll be looking at that. And then the most important one, we're really focusing on our own asset and testing how it is delivering using that a practical set of tiniest steps.

In terms of beating Paul, we continue to be very active, highly active. In fact, we've got a very strong team under Evan looking at a number of opportunities. As you can imagine, there are quite a few things for us to look at right now. We do believe there are opportunities that could add substantial value. We do.

But our bar remains very high and so will be very discerning as you have been to date. And to the extent that we do find something that's tangible, both statistically and commercially, then we'll obviously lose a day at that point.

Okay, thanks. I'll hop back in queue.

Thank you so much. Your next question comes from the line of Jeff Meacham of Bank of America. Your line is now open.

Great, thanks. Hey, guys. Good morning. Thanks for the question. Just had a few. The first is when you look at Arcola's duration of therapy, you guys gave some stats on patients who have restarted after discontinuation. The question is, are there themes in why a patient would discontinue?

see the kind of the investments needed here to get to, you know, perhaps the next step as their scenario that you could sort of code develop some indications or some geographies and still retain, you know, broader, broader rights. Thank you.

Yeah, hi Jeff. Thanks for the question. This is Ross. So maybe I'll make a start on the first part, which is around the duration, which, as you said in the prepared remarks that we've seen a growth in the duration elongation of the duration through to around 20 months in total for patients now. So in terms of the restarts rates that's remained pretty consistent.

And there's not really any correlation right now, very many numbers are still recently small and data builds over time in terms of which patients are stopping therapy and which ones are then restarting. Ultimately comes down to a judgment from the physician and the patients on how long they've suffered with recurrent paracumptus.

players they've had or the cadence of those players have been or informed through cardiac MRI imaging, for example, looking for whether there's underlying auto-inflammation still present within the patients and not for trial and a stop. So I think there are multiple factors there that go into making that judgment call.

I guess it's positive to know that when patients do stop therapy that they have after is there as a safety net to be able to go back onto therapy and that's well proven that they go onto control again. Very quickly and continuous treatment results and continuous treatment response.

But our focus really is on the education for physicians and for patients around the tenacity of the disease and how long it can persist. We don't want patients going back and having to restart therapy because they suffered a flare. Again, we want treatment throughout the course of the disease and adequately treat it throughout the entangeration.

So it's an evolved and picture of this one.

at this point.

All right, thank you.

I'm sorry, go ahead. So we'll be the second part of your question.

Yeah, the other question is just on 404. Obviously a pretty robust marketplace in I&I, but is there a scenario maybe where you co-develop some indication, some geography? I just wanted to get kind of the strategy there with respect to maximizing the value of the asset. If you were looking to use a

Yeah, no, that's a great question. It really depends on the data, the results. We're certainly open to it. I think you've seen that we're open to sort of creative, collaborative deals in the past. But at the same time, the results are excellent and we really believe there's an opportunity for us to go along and create more value ourselves.

and then go from there, but it's certainly an option.

Okay, thanks.

Thank you so much and there are no further questions. I would now like to turn the conference back to Sajh Patel, Chief Executive Officer.

Great thank you for the questions and joining us on the call today we have an exciting year ahead of us and very much looking forward to providing additional updates in the future. So with that have a great day thank you. This includes to East Conference calls thank you for participating and you may now disconnect.